Replies to post #255636 on Biotech Values

[dewophile]

It makes no difference the size of the cvr relative to the purchase price but the time is discounted (math isn't that hard).

The size of the cvr relative to the purchase price does matter before the deal closes and the cvr is priced. If you suppose an asset is worth 1 dollar and the deal is poised to close at 10 dollars. you are going to damn well hang onto much of that 10% value if you think it is highly likely to close. if it is 1 dollar and the deal is set to close at 100 dollars, well the opportunity cost of sitting tight for that 1% may not be worth it. The arb risk of the deal falling through alone may not make it worth hanging on for an added 1%.let alone the opportunity cost of hanging onto shares and not rolling the 99% into some other investment

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?

As a counter to show how ludicrous it is to intimate the value is minimal because there is no premium to the 129 dollar buyout price

Who would think they are paying 20/share for kit to take all the risk and then a measly 6/share cvr?

no but they easily could be paying 6-8 a share for kit plus the CVR. BPMC jumped up over 10 dollars the day of the phase 1 data release (although it was part of other business updates too). THRD's first drug was worth 600M or so before it ran into liver issues which was at a similar stage as BPMC now. My guess is no one valued the drug at 1 dollar a share plus CVR. SNY was probably at 5 dollars, BPMC at 10-12, and they met in the middle somewhere and figured 7 up front and a CVR that is likely to be worth around 1 dollar simply because only 2 dollars of that can be realized in the next 10-18 months and the other 4 dollars is years out so pennies on that residual