Valuation wise many will be biased based on current holdings......

Valuation wise many will be biased based on current holdings... it is a very hard one to value in the ST and LT IMO and thus the beauty of being on a multi bagger. As we all find it very hard to dollar average UP as we all love to see a nice green arrow UP on our portfolio.

I think this is the question being asked of current investors now.

My 2 cents ST valuation;

Geoff MD has clearly stated he expects to be cashflow positive by July 2011. This means approx 10Mil in earnings for 2011 from Mercks and Bangs.

So take a 50% of 2011 sales as future profit (5Mil pa) and give it a high PE IMO being 20-25. As probability of more signings and sales is HUGE, so you could justify a much higher PE. So based on current signings I value and ST growth I will feel over 120M without more signings may be getting high. Being a SP of approx over 15c.

ST for many will be 15c IMO.

In saying the above I doubt it will reach 15c without any news of further signings, as they are expected NOW.

LT Valuation...

Totally based on future signings from the what must be 50 Coy's by now testing the products. This Coy has taken on a feel on expecting a large signing sooner or later. Insiders have taken on this opinion also with hugely bullish statements and predictions.

'It is ONLY a matter of time' feel is very obvious in this play.

If a signings like Roche happened yes it would be like farming out to a RIO or BHP if you are a miner.

50M pa is possible PLUS the 10M from Beads sector if we apply a modest PE=10 x 60M = 600M. Approx 90c.

Naturally PE will be higher as their are far more Coys than Roche to sign. Roche is only talked about so much here because the current MD is a former MD of Roche. Thus he looks to have an inside advantage- yet these guys will pretend that he does not. But for my money he does have the 2 largest PLUSES being inside knowledge and relationships + more debateable much better products to sell. How else would you get a ROche MD to take a lower salary with a small speccie in 2009. All proceeds as planned IMO... and Roche will ANN when they are all good and ready.

LT target is very possible to justify a $1 target on only a small percentage of the overall markets in royalties pa. Yet by then they will probably be producing very good income and growth potential still ver high.

It could happen sooner than you think- it is not completely out of the equation that a large signing will not have the 'untbelieveable' $1 mark happen. If we producing 12M pa then given a large signing with x 20+ growth.

12m can get a PE of over 60 = 720M approx $1+. As it approaches becoming a billion dollar Coy. Anything is possible in 2011 IMO. Although given the nature of the biotech field it is more probably in 2012-13 IMO.

Thus the beauty of a well researched multi bagger play. It gives you a sign that it is only a matter of time. How long it takes is the only question that needs to be asked.

Downsides are obviously 'no further signings'. Yet this now looks very very improbable IMO. You would need to rate the chances of this up with the chances of the world ending in 2011 IMO- Lol. Great pick for 2011 (ADO that is- not the world ending-Lol). IMO.

Yet you can see how any of us who attempt valuations can justify just about any amount... yet ultimately it will come down to signings and earnings.

Downside is total failure of the products- which is very very improbable now. Upside is a multi billion dollar Coy. For my money we will finish 2011 somewhere in between- Lol.

Will be a volitile ride all the way UP IMO.

Cheers JAY