Agoracom: Small Cap Investment - Mannkind

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Re: Valuations

in response to

Re: Valuations

opc

posted on Nov 07, 2012 07:47PM

I thought that my valuation post was bullish.If we assume that if all goes according to plan, that the share price goes to $10, and that the other assumptions below are reasonable, then the expected share price is $5.78.This is almost 3 times the current price.How many stocks can you say that about?Remember that the $5.78 is risk adjusted and that there were some conservative assumptions used to get to the $10 share price.

For those with a math background, here is how I got to $5.78. Of course if you do not agree with my assumptions, you can change them or let me know and I can put them in my spreadsheet and re-post.

P = Event of Finding a Partner (Includes other Commercialization Risks)
~P = Event of Not Finding a Partner
F = Event of FDA Approval
~F = Event of Not Getting FDA Approval
P(P\|F) = Probability of Finding Partner Given FDA Approval

Assume P(~F and P)	0%
Assume P(F)	85%
Assume P(P\|F)	60%

Assumed Share Price if F and P	10
Assumed Share Price if F and not P	2
Assumed Share Price if not F and not P	0
Assumed Share Price if not F and P	N/A


P(F and P) = P(P) = P(F) * P(P\|F)	51%
P(F and ~P) = P(F) - P(P)	34%
P(~F and ~P) = 1 - P(F)	15%
P(~F and P)	0%

Expected Share Price	5.78