Replies to post #10891 on Lexington Biosciences Inc. (LXGTF)

[Sabretooth0071]

There is no way to do as you ask, the only information is within the Lexington published financial reports.
At this present time trials are still on going and until they are completed and FDA approval is granted coupled with Wall St re IPO or third party company licensed by LEX or even buying the right to market if not a complete buy out, anything published by anyone other than the company is pure speculation.


As to a realistic present valuation, it is the value of the outstanding Stock and its present trading price.. IE;- +/- 38.000,000 X .10 = $3,800,000 but you try and buy the company for that figure !!!

Also remember that although the share price may go up when FDA approval is granted it will need to balance out and start selling to create revenue. I doubt for the first year a true value will be able to be obtained, but anyone can guess ….


Have a great day.

[gopherdat]

Valuation can be estimated using several methods based on either actual or future data sets or both. One good method and one that I as well like to use on companies that are in our currant situation is based on future "reasonable" expectations of free cash flow figured & applied to a multiple to get the estimated Market Cap based on anticipated sales.
Donald McInnes (Co-founder of Lexington Biosciences) mention this method in an article written on 05/31/2018 here: (I have included this article in efforts that some can see more validity in the following estimates and calculations.)

https://smallcappower.com/expert-articles/lexington-biosciences-stock-price/

About 2/3rds down the article you will see this statement:
"According to Global Industry Analysts Inc., the blood pressure monitor market is forecast to exceed $2.6 billion by 2020. Donald McInnes lays out the investment proposition: “If we partnered with an existing cuff manufacturer and they got 10% of that $2.6 billion per year market, that’s $260 million in sales. If we have a 10% licence on that, that’s $26 million a year of free cash for our shareholders that you would probably value at eight times cash or more. Eight times $26 million gets you to over a $200 million U.S. valuation. Today, our market cap is under $15 million Canadian. For an investor, this is a huge opportunity.”

At its core, Lexington BioSciences is hoping to change cardiovascular disease management from reactive to predictive. “The upside for investors is pretty high from where we are today with how big we see the wearable consumer healthcare market is,” said McInnes. “If we just capture a tiny fraction of what that might be, I think that translates into a lot of value for our shareholders.”

So here is where I see it, in my research on income producing companies that are showing positive free cash flow are on average showing a multiple factor of 15 to 20 times their free cash flow with several showing more than that. I have seen some even going as high as 70X + !
However my conservative estimate on that first year free cash flow is also 10-15% & at being 10% of market 2.6B as on the low side, bringing in also say $26M as Mr. McInnes states. However due to being the product HS is I think the multiple factor will be higher to lets say 12X instead of the 8X as said. (with 15 - 20 being the market average as I stated above)
So $26 Million in free cash flow X multiple factor of 12 = $312 Million Market Cap.
Now that would be divided by the outstanding shares at that time so here is my estimates on that. Currant OS is 38M (rounded up) + 5M PP + 5M warrants (currently included as part of the PP) + 13M future PP (based on the companies pull back from original PP to wait until SP increases to reduce liquidity) = estimated OS to be 60M at the time of the estimated $26M free cash flow would give us a SP equaling $5.20

Optimistically (and still realistically IMO) I am thinking more like 30% of the BP market due to the enhanced features of the HS such as mainly the endothelial measurement, not to mention the data reporting features as well, to reasonably (optimistically) equate the Market Cap to $78M X the multiple factor of 20 (as in with MANY companies) due to the enhanced measurements that does not require special training along with the most impressive accuracy of the device. I feel like at this point there will be plenty of big money investors that will see the value moving forward with the HS.
So $78M X 20 = $ 1.5 Billion Market Cap divided by estimated 60M outstanding shares would equate to $26.00 per share.
But as I said earlier, research will show still that a multiple factor much higher than 20 exist out there AND YES ON THE OTC ALSO with several companies as well as a select few even higher than 70!
So there you go:
Conservatively at $5.20 (at 26M Market cap as stated by Mr. McInnes applied to MY estimation of the OS at that time)
Optimistically at $26.00 based on my research done using this method of valuation. (applied to the estimated data set as stated above)
Hope this is what you were wanting.
Best Wishes to us all!

General disclaimer for this post to all.

Your money, your stock purchases, and your losses or gains should be based solely on your due diligence and solely on your decision alone.