Hi Kogarahboy, Thanks for your valuation attempt and...

Hi Kogarahboy,
Thanks for your valuation attempt and contribution, always interesting to see what peoples views are on this subject. Although still a quite a sensitive topic as it really hinges on the assumptions and calculations one uses to derive crude valuations - in particular discount rates and P/E ratios. Although i do agree with the fact that alot more information is known now compared to 11 months ago.
My question is what discount rate did you use (50% or 15% pa) - looks like you used 50% which seems way too high. If you look at the high yield bond market in the US, the highest yielding bonds are probably between 10-15%. If you add a further 500bps (5%) for a further risk premium - a more realistic discount rate would be ~20%.

"That is, $400 mil 2 years from now discounted back to today to get 10 cents per share valuation …. Or it could be a combination of lower p/e (say 17 or 18, but with a very much higher discount rate."

Here are the valuations i get for Cardiocel - using a simple PV calculation in excel
The present value of $400m 2yrs from now = $0.22c (using 15% p.a Discount rate)
The present value of $400m 3yrs from now = $0.19c (using 15% p.a Discount rate)
The present value of $400m 3yrs from now = $0.17c (using 20% p.a Discount rate)
The present value of $400m 2yrs from now = $0.13c (using 50% p.a Discount rate)
(assumes cashflow/payment in each year is zero apart from the final $400m cashflow in yr 2 or 3)

So not sure how exactly sure how you got to 10c, perhaps you used a different calculation methodology - hence what i mentioned above how many can derive different valuations (higher and lower ) using the assumptions that make most sense to them given the nature of the business/ product cycle and information on hand.

Cheers all