Hey Pandelis - thanks for the numbers. I must be doing something...

Hey Pandelis - thanks for the numbers. I must be doing something wrong as I got a silly number using the data - any chance of loading a screen shot of your SS?

Down / Up ramp - never a consideration! As I mentioned SRX is often considered to be above fair value, particularly on Skafold score.

The big question is to how value the results of the clinical trial?

If they don't get to 1st line use, then the SP will have a very hard slog as the recent high growth will be hard to come by.

Assuming they do get to acceptable 1st line use as a treatment of choice then the numbers would blow away any fair value. It would be fair to assume, maybe, that the last couple of years growth is an indication that the medical dudes think highly of the product and results of using it. So I remain confident that the results will yield reasonable numbers.

One measure I use for a quick and dirty valuation is the Benjamin Graham Intrinsic Value Formula

IV = (EPS x (8.5 +2g) x 4.4)/Y

IV = Intrinsic Value
EPS = Diluted Earnings Per Share
8.5 = Fair Price to Earnings Ratio for No Growth Company
G = Conservatively estimated growth in EPS for the next 7 to 10 years
4.4 = The average yield for high grade corporate bonds in 1962 when the model was introduced
Y = The Current Yield on AAA Rated Corporate Bonds

Then the issue is what is a reasonable number for Fair Price to Earnings ratio? I would use 15 for a growth company

For G I use 22% for SRX as there is a history of above this rate.

10 year AAA bonds in Aus are about the 4 to 5% range and so very close the the 4.4 average yield value.

so (0.32 * (15 + 2*22) * 4.4) / 4.5 = $18.

The biggest variable is the Fair Price number, and a number of 10 yields $16.90.

Of course if SRX can't meet the 22% compound growth then the above is all fairy dust! Alternatively if 1st line 'standard of care' status is forthcoming then the future growth rates may be nearer 40/50% for a few years. And a valuation nearer $40.

Happy for any errors or too optimistic assumptions to be aired. Discussion and challenge is the way to go.

Cheers