Hi TonyWAIW
For some reason you’ve ignored the main thrust of Kjt1969's post, which was that seven different analysts did their own independent risk adjusted valuations of Neuren and, despite the considerable uncertainties involved, all ended up within a few dollars of each other. He simply didn’t get it. And frankly, nor do I.
Kjt1969 noted that even a tiny +-5% change in input values results in a +-18% variation in NPV, yet the analysts’ models would have to be within +-2% of each other in every value to end up with such a narrow range of similar valuations. He has asked, quite reasonably I think, how likely that is.
Kjt1969 hasn’t claimed that he knows everything. He has stated that he’d love to know how the professional analysts do calculate their published risk adjusted valuations and asked if anyone who knows an analyst can ask them. He has demonstrated a willingness to learn.
In my view, Kjt1969 has generously invested a great deal of time, effort and thought into calculating a risk-adjusted valuation for Neuren, as seen in the following posts
https://hotcopper.com.au/threads/neuren-where-to-from-here.7916912/page-54?post_id=73096813https://hotcopper.com.au/threads/pipeline-in-a-drug.8031669/page-24?post_id=74124164Although you accuse Kjt1969 of ignoring the “100s of millions of dollars” that it takes to get a drug to market, you will see from the second link to his post in June, that he hasn’t ignored this in his calculations; he has allowed for US$300 million to bring each of the current indications to market (Ph 3 and Ph 2s where needed) and another US$150 million to get the drugs to market in ROW.
You also accuse him of ignoring things like execution and regulatory risk, yet, in his valuation, he has allocated a 45% (not 100%) likelihood of approval from Phase 2 to approval for NNZ-2591 and provided the reasoning behind that risk calculation.
You argue that “one black swan event would be devastating to shareholder value” for Neuren. Of course, it would and I’ve certainly been around long enough to know that. But doesn’t the risk of a black swan event apply to any and every deal? In the calculations for other deals, have you ever seen a discount factor applied specifically for Black Swan events?
Tony, like you, I personally don’t see NEU achieving a minimum of US$15bn in a takeover. But my thinking is based largely on “gut feeling” and is certainly not something I am capable of justifying with analytic precision. You clearly don't agree with Kjt 1969's attempted valuation for Neuren, which is fine. But can you provide your alternative analysis?
I think you’re being harsh on Kjt1969, who has put more effort and thought into what he posts than most here on Hot Copper. Kjt1969 has consistently provided the reasoning behind all of his valuation calculations and has invited review and correction. While we are all perfectly entitled to disagree with his calculations, it seems only fair, if we disagree, that we counter his arguments with alternative facts/calculations.
It genuinely concerns me that a high-effort, well-reasoned poster like Kjt1969 might be discouraged from continuing to post here. In saying that, I note your comments from less than a month ago, which were directed towards another poster
…that's a very harsh post. I'd like to think we are a bit better than that here on the NEU forum. We are all anonymous here and if we hope to benefit from others' knowledge and experience we have to take things in good faith. …. He had something to say and it was worth listening to….
I dont know what happening with you. Perhaps you are having a bad day. I hope not. In any event please don't discourage original thinkers to start or continue to post here. We all benefit.
(20min delay)