RespireRx Pharmaceuticals Inc (RSPI)

[Xtremetz1]

Just saw the posts about Eli and what they could get the company for. I’m sure if they could get the company for that price it would already be done. That’s pocket change for them. Fortunately for the RSPI shareholders. That’s not how valuation works in the Biopharma market. If they’re looking to buy the entire company. The earning potential of the intellectual property if brought all the way to market would be estimated with a 25 to 30 times multiplier. Then an adjustment would be made for approximation of what the complete drugs life cycle would expect to be to reach the market. Then an estimated yearly earning would be calculated based on the potential market share the drug is expected to capture. After the calculations are complete. The completion of life cycle plus an additional yearly amount for 7 to 10 years of sales would be discounted from the final purchase price. It would be divided by the total amount of shares and then multiplied by the agreed upon multiplier. This would be factoring in only one drug’s potential into the price. If they have additional Intellectual property that holds value then that would be factored into the estimated value of the company. If they’re not interested in any of the other IP then they would probably only offer to enter into a licensing agreement using a different formula. That would most likely insure revenue sharing of yearly sales for the life of the licensing agreement. That is most likely what you would see in this case. If they want to purchase the entire company than that would settle a lot closer to a $2 yo $4 range. That’s why you don’t see small companies in the Biopharma field selling for 6 million dollars. Large companies like Eli spend billions of dollars to capture market share or to maintain it. The smaller companies know the value. Once one large biotech company knocks on the door. They know others will follow in an attempt to gain market share in a particular drug market. I believe that this company just took a huge step in the direction of licensing or buyout because the drug has potentially multiple uses which limits the potential risk for a large biotech company. I’m excited to see how this moves over the next several months. If they quickly move forward with this technology then someone will want it or them.