Ann: Annual Report to shareholders, page-9

Tom - I've worked it out! Thanks very much for sharing your thoughts.

The average spend on PDLs for the last 5 years is ~$80M per year. The same average taken over the last 10 years is ~$65M.

There's pretty good correlation (R-squared = 0.74) between annual spend on PDLs, and PDL segment revenue.


The cumulative 5 and 10-year moving averages line up consistently too:



If I use the highest conceivable estimate of PDL expenditure necessary to maintain the company's competitive position, along with a Price/(10-year average owner earnings) ratio of 10, I arrive at a buy target of around $1.15. This price, to me, would provide a substantial margin of safety.

To everyone who reads this post: don't trust strangers on the Internet. It should go without saying that this is not financial advice. I'm not a professional investor, and I have lost money in the past. Always DYOR.