In addition to @Corsair post, I would like to add on a couple of points and considerations for some trying to identify a value for MSB, and why it's probably too difficult to do so currently, as Corsair also mentioned (noting I am no professional in this space, and I don't mean to sound like a smug know it all who has read a finance text book):
NPV is really a basic building block towards identifying a stocks value, but its how it is applied to various models:
Common is the Discounted Dividend Model: there are various permutations of this, but the basic starting block is the Gordon Growth Model: D / (r - g) , where D is the annual dividend paid to the investor, r is the required rate of return on the stock, and g the periodic growth of the dividend (e.g. dividends increasing by 1/2% per period). This is a perpetuity model, but analysts will typically spread specific growth rates (different growth periods, look up the H-model for an example of how growth and dividends can be altered to more suitable match the future growth perspectives of the company (i.e. inception, rapid growth, maturity and decline). So how does this pertain to MSB, frankly we don't know yet, and as far as I can tell analysts have not even considered this potential thus far in their models (for good reasons, but i'd hypothesize that MSB is underpriced in that future dividends have not been made a consideration, or at least hav not been made a consideration with respect to future cash flows at this point in time).
So we don't have Dividends for MSB, so what do we do? next we could consider the Free Cash Flow to Equity (FCFE) - this represents free cash flow that can be paid to equity investors OR reinvested back into the company, after the payment to debtholders. Similar to the Dividend model, the basic formula FCFE / (r - g) can be applied (again this is a basic perpetuity version of the model, with many imaginable permutations and methods of calculation). This would be my model of choice given no dividends but continued positive earnings going forward (Net profit per share is retained and reinvested in the company).
Finally is the Free Cash Flow to the Firm Model. once again similar to FCFE, but we are discounting (rate of return in denominator) as a Weighted Average Cost of Capital - which is somewhat of a return of weighted average of the cost of debt (e.g. payments to hercules etc.) and return on equity, weighted by their market caps/values for their respective types of finance. This is generally usueful for all potential stakeholders but is typically a figure calculated by Investment bankers as it is a starting point for caclualting the value of a firm with respect to the ability to vary the finance/capital structure of the firm, and thus a value for potential acquirers of a company. Happy to be corrected (as I will admit I have not looked through bell potter or Edisons, for example, financial analysis in great detail let alone recently), but this could be a reason why discount rates are currently considered very steep (because the means of Debt acquired cost more, potentially, than the required rate of return for an Aussie equity plus a small cap premium?).
There are also multiples that can be applied (e.g. P/B, P/EBITDA etc. etc. again many permutations) but Im personally not a fan given book values and other metrics typically used are static/not current, accounting figures can be susceptible to manipulation (not necessarily to be missleading, but optimistic skewing of figures proposed by management, particularly accrual figures, for example), and they are typically taken as a comparison on other companies in the same sector (hard to imagine how MSB differs substantially to other biotech and life science companies?). There is also Economic Value added models (EVA), but I am also not a fan of these for the same reason that im no fan of multiples.
But ultimately I personally am not concerned with any of the above currently, given that the share Pirce value of MSB is essentially running on Cash at the bank, and announcements with trials, partnerships etc. which is impossible to model for a fair price currently IMO. I do appreciate, however, that analysts are trying to have an approach to any and all of the above as appropriate, discounting heavily and with conservative probabilities of product approval and success, and yet are still mostly putting out strong buy recommendations! I take their recommendations with a grain of salt and also a stroke of confidence.
So why am I confident? currently I am confident AGVHD is a done deal: Produced by Lonza (meets stringent FDA requirements regarding manufacturing standards and procedures), FDA approved name (okay not much but a tick nonetheless), It's a safe product (no safety issues reported) and the efficacy is strong prior to steroid use or as a first line of treatment (from what I can tell from the data, it increases, worst case scenario (e.g. grade D agvhd response rate first 28 days x 100 day survival rate), to a 50+%survival probability from80 - 90% mortality rate with materially statistical significance), which is significant given there are no other treatments on the market! my confidence in agvhd also rolls into the competency of MSB to have produced similar results for clbp and CHF treatments, and the market will also reflect an increase in confidence in other MSB product approvals once agvhd is approved, if it is. I could go on, but regardless of price targets, all i see is upside currently, and market reacts to announcements: upward if positive. GLTAH
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