EOM Pharmaceutical Holdings Inc. (IMUC)

[lecorb]

IMUC valuation if it gets Phase III approval

It's good to have a valuation model that both explains past price behavior as well as give you an idea about the odds that the market is putting on future events.

Here's mine for IMUC.

$500 million revenue potential in US
$500 million revenue potential in Europe

To be conservative, cut that in half.

Company with $500 million revenue at 15% net margin would have $75 million net income.
Valued at a 15x's PE, company worth about $1 billion

Oncology compounds in Phase III have 34% chance of getting FDA approval.
(Source: Internal Medicine News, "Cancer Drugs have worst Phase III track record)

Therefore company worth about $340 MM in Phase III.

If IMUC needs to raise $70 million for Phase III trial (I think I have seen estimates from $60-80MM), pre-money valuation of company if it gets approval for Phase III is worth $270MM ($340 - 70) or 3.85x's current price

IMUC at $1.20 is currently worth $70MM.
So if Phase III approved, stock should move to $4 - $5 range.

Or at $1.20, the market is saying IMUC has a 74% chance of going to zero, and a 26% chance of getting Phase III approval and going to $4.62.

If you use this model, then you are a buyer at $1.20 if you think their odds of getting Phase III approval are better than 26%. Less