Replies to post #146854 on Biotech Values

[mcbio]

easy, PPHM can just take on 1.5b in new debt!

That alone won't do it as EV = market cap + debt - cash in its most basic definition. So, there would be a wash in the debt and cash. It would take a large debt issuance plus PPHM blowing through the cash and not also retiring the debt to accomplish the large EV I think.

[DewDiligence]

Quiz answer:

PPHM can just take on 1.5b in new debt!

As mcbio noted, adding (or removing) debt would not affect the EV at all. (The whole point of employing enterprise value rather than market cap in valuation analysis is to strip out the company’s financial assets and liabilities from the actual worth of the business.)

A: The only realistic way PPHM could achieve an enterprise value of $1.5 billion is if the US Dollar experienced several years of hyperinflation.