PE is not really relevant when the main source of income is...

PE is not really relevant when the main source of income is dervied from a patent protected product. You are better off to estimate the cash-flow from the product over the remaining patent-protected life, and to discount this back to the present value. That will account for Relenza's royalties and their 'value'.

Value Lani seperately, using the same process. I think the analysts have done an OK job on the valuation of Relenza, afterall, we do need to be conservative when providing financial advice. Their valuation of Lani appears undercooked, but equally, what do we know? What are the royalties going to be, sale price, etc etc...so we can only provide an estimate of 'value' for Lani. Inevitably, they will use a low-case valuation in this instances, so as to provide a margin of safety in the reccomendation.

Btw, if we receive $166 million in royalties, pay tax at 30% --> $116.2 falls to the bottom line. Biota already have cash burn around $25-30 million, they have indicated they will increase this as they add to their pipeline, so lets assume $40 mil cash burn. Therefore, we are looking at profit of $116.2 - $40 = $76.2 mil profit under the scenario they sell 95 mil doses.

Adjust the numbers depending on sales, basically 70% of every royalty $ beyond the first $40 mil will fall to the bottom line as cash profit.