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DewDiligence

12/02/13 4:51 PM

#136 RE: marthambles #134

Re: Leerink’s discount rate

Didn't Leerink just revise their probability of success from 85% to 90% in this report?

You’re right—I got the 85% figure from the old Leerink report dated Aug 2013; however, Leerink is still using an unduly high effective discount rate by incorporating both a “probability” discount (10%) and a “time” discount (12%). The net effect of these two discount rates equates to a single discount rate of 20.8%:

1.0 - 0.90x0.88 = 20.8%.

Regardless of the method used, a 20.8% discount rate lowers the fair-value calculation to an unduly high degree, IMO.