value of bta , page-21

There are many ways to value a company. For a speculative biotech stock like Biota I prefer a real options approach, based on the NPV of each of their compounds cash flows with assigned probabilities.

Basically create a list of each of their compounds.
Come up with possible outcome for each one.
Determine value for each scenario based on DCF or WAG.
Assign probability.
Sum product of probability and value for each compound and outcome.

It appears some people are thinking Biota got a $231M grant and so their value should be $231M higher. While simple solutions often get you a ball park figure much quicker than a complicated process such as I outlined and may be as good a forecaster, some sense should be applied.

$231M in the bank now is worth more than the promise of $231M spread over five years. I know this is basic stuff for many of you, but it may benefit someone.

Below are some links to a very quick NPV spreadsheet (net present value) i.e. how much is $231M over five years worth today.

With a 15% discount rate the value is $149M
20% = $132M

You can download the spreadsheet and change the timing of the payments and the discount rate.

NPV of LANI Grant
https://spreadsheets.google.com/pub?hl=en&hl=en&key=0An1vMHz5fdp6dGtpWW80UkZNVTdlRHV3RzljUWFXZ2c&output=html

As Excel download
https://spreadsheets.google.com/pub?hl=en&hl=en&key=0An1vMHz5fdp6dGtpWW80UkZNVTdlRHV3RzljUWFXZ2c&output=xls

Further, basing the value today on the old market value plus a discounted grant is fraught with problems, that's why if you want to value Biota you have to do it from the pipeline up.

If all of that sounds like too much work, then take the easier path of inverting.
Start with the current enterprise value (EV): market cap less net cash.
List out their pipeline assets.
Assign a rough value to each so it sums to the EV.
Look at the assigned values and think if they make sense.