Replies to post #255635 on Biotech Values

[WorstLuck]

in this particular case the cvr is puny relative to the buyout price, and it is years out versus months out. So here using the CVR as any reflection of the value of the asset is even more flawed than usual where it is a meaningful percent of the purchase price and the potential payday is much sooner. So in this case my opinion is that most of the value of the asset was baked into the purchase price. they paid a 33 percent premium - maybe 3 percent was due to the kit inhibitor, maybe 30 percent, we have no clue. I don't think it is zero or de minimus which is what the lack of any premium on the buyout for the CVR would insinuate that is all.

That sounds more like rationalization than logic, at least to me. A cvr has value. It gets arbed out at some kind of discount to the true value (normally). It makes no difference the size of the cvr relative to the purchase price but the time is discounted (math isn't that hard).

When (if) the tender closes we will know the premium. There is noise right now but I'd guess somewhere in the range of .25 cents or so if the deal is expected to close on time based on typ arb. And it could be higher of course once HSR is disclosed if there is something being held back on that. That's still pretty low interest. I originally penciled something like $1, maybe a little more.

How much they "paid" as part of the 129? saying 30 of 33 percent of the premium is something you know isn't right so why put it out there? If you think a buck a share is for kit, that's like a 65M upfront. Who would think they are paying 20/share for kit to take all the risk and then a measly 6/share cvr?

The point I think is you are trying to find a high value somewhere later, if things go right. I'm looking at what things look like now and potentially after a P1. And I'm mindful that things don't have to go right.