Valuing Ellex Laser and Ultrasound, page-2

I'm not persuaded that the LiGHT trial adds a lot of value. The end point was not met and no amount of post-hoc analysis (i.e. removing the non-responders from the data) can maintain the random properties of the original data. This is why the FDA is most unlikely to accept this trial as proof of efficacy. Alas another Phase III trial will be needed, this time with participants selected on the basis of anticipated efficacy (ie disease not too far advanced). Because of this, I'm not expecting a premium much over about 4X revenue, and any premium will likely be based on the capability of the research team that is a core part of this division. However, that will be dependent on key folk wanting to stick around. So my valuation is 3X to 6X revenue. I'll be very happy with the top end of the range! However, there is another kicker for us. ELX without the Laser & Ultrasound division will be a high growth company (assuming iTrack performs) and so should enjoy a solid PE re-rate post sale. My hope is that this will compensate for unremarkable valuation for the L&U division.

What do others think??