I have no crystal ball, but I believe we're still in the early innings. Novo will be pushing OS hard for diabetes and possibly other indications, and Emis could/should be cash-flow positive later this year. Emis is still relatively unknown but will receive more attention as Novo succeeds with OS (more publicity this Tuesday when Novo presents OS in San Francisco). Emis s.p. will be volatile just like any other quickly-moving or speculative stock, and yes, it's hard to stomach those 10-20% drops, but I believe the s.p. will move higher even if not financially justified at this moment. This of course assumes nothing catastrophically negative happens (i.e., OS is not approved).
If Novo successfully moves forward with other indications or Emis finds additional partners or Emis up-lists to a new exchange, then the s.p. should benefit significantly. This also assumes Emis is not purchased or purchased at some low valuation.
What is a reasonable valuation? A very simple model could be gross sales / share count. If Novo achieves $5B in OS sales, then Emis receives $125M. $125M divided by 150 million shares equals $.83/share in earnings. $.83 x 15 (P.E.) equals $12.5 s.p. Of course the $125 million in royalties (probably) won't be achieved immediately, so some discount should be applied to the s.p. initially. Is 15 a good multiple for this type of business? It's a guess; since some biotechs / medical companies trade at lower multiples and some trade at much higher multiples.
My guess is that Emis will trade at a s.p. that is in excess of a reasonable / rational valuation (at least for the immediate future). It is after all trading on speculation as to what may (or could / or should) happen at some point in the future.
