Golfho, With the standard disclaimer about my not being a risk management expert, I find your risk weighted one chance out of six for success analysis worthy of a refinement. The refinement addresses how PPHM has multiple treatment (different anti-cancer and anti-viral) trials exhibiting the early success indicators warranting some future valuation characterization.
A risk portrayal concept that I have seen practiced assigns chance of success for a concept into a bell shaped curve plotted on an X and Y axis. The current or future valuation range is on the x axis and probability that the outcome will deliver that valuation is the scale for the Y axis. If a company is looking at prospective market capitalization, each of its business plan ventures can be translated into this bell shaped curve format, establishing its activities unique risk profile. However, when risk for achieving overall company valuation targets is assessed, the company with multiple "irons in the fire" would have the bell shaped curves for each unique venture overlaid with the others, presenting a consolidated risk profile. Per risk management techniques, if the individual risk profiles are independent of each other, meaning that one external event doesn't effect them all, the company that has multiple business ventures underway exhibits a much lower risk for not achieving at least some of its targets than a company dependent on a single venture for success.
Skipping the weighting techniques for consolidating the risks for simplicity, a company with a large quantity of independent ventures carrying a one out of six chance for success would have much less risk for being left with a zero valuation outcome than a company with just one venture.
Consider assigning this approach to rationale that tells an investor that it is wise to diversify their portfolio to reduce the risk of loss of principal (a generally accepted practice). Compared to a single company in a portfolio, assembling a portfolio of investment changes the risk reward balance so it is much less likely that an investor will "lose it all" or conversely, that targeted gains can be achieved. That is why investing in a stock index fund is riskier than investment in a single stock that might be carried in the fund. A stock fund can drop in value significantly when macro economic factors affect all stocks, but risk if investment failure is hedged.
Analogies are never perfect, but I observe that the PPHM technology for anti-PS treatments has multiple applications and multiple products diversified sufficiently amongst different trials so that the risk of PPHM failure is much diminished from the sort of single trial outcome characterizations to which P
PHM was vulnerable to a few years ago. Results for additional ISTs and trials are coming in, fortifying the diversity of both results for single treatment applications and results for different, independently affected treatments (e.g. Anti-cancer applications are unique from anti-viral are unique from imaging applications). PPHM and interested Pharma are now seeing the array of what PPHM has accomplished and can assign weighted valuation considering risk. Month by month, that array is getting larger, as PPHM broadens its activities of the like we are seeing reported on this month at conferences.
The key value changer that is needed to resolve fundamental PPHM company valuation, per my observation, is whether PPHM will need to move its technology to commercial use without a partner or does PPHM get to grow their intellectual property aided by the financial and intellectual resources of a partner. A partner can choose to withhold their participation until an acceptable agreement is reached as can PPHM. However, applying more resources via partnering should accelerate the timeline to and extent of commercial success, just as rewards must be shared by more parties.
I see PPHM valuation in a go it alone risk context having greatly improved since PPHM announced it has $80 million in cash as of the end of February, sufficient to go solo with the FDA approved trial design for a Phase 3 NSCLC trial. PPHM's valuation will be revisited when interim Phase 3 trial results come in, with favorable results writing that 1/6th probability of commercial success into a much more favorable balance. Enough on this, as I presume you caught the key points here.
Have you worked in consideration of the portfolio of treatments for PPHM into your valuation base when discounting for risk and time? Which PPHM activities would you rate as independent for enhancing value and writing down risk?
Best wishes and IMO,
KT
