Genta, Inc (fka GNTAQ)

[fmrick]

A buyout of GNTA seems impossible. I can't imagine any Big Pharma company wanting to buy GNTA with mega noteholders on the balance sheet. That means if GNTA is going to hit pay dirt, it will have to do it on its own engine--which of course is possible.

Actually, that is where I see value. A buyout for $40 million would net $10-15 million for the existing shareholders. The rest would pay off the notes.

For the record, that is about what this is worth in my opinion. If you take the value of the drugs in the pipeline, discount for the chance of being approved, then discount for time (3-5 years), $40 million would be about $200 million. That is how you put a value on a developmental biotech company.

200 x 0.6 (60% chance of approval) x 20% discount per year for 5 years = about $40 million.

Take the $40 million and pay off the $26 million in debt, leaves $14 million for the shareholders, divided by 181 million outstanding, is about 7.7 cent per share. Not a bad return from here, actually.