Hi everyone - I thought I would provide a framework to valuing...

Hi everyone - I thought I would provide a framework to valuing paradigm based on my experience in the field.
I hope this provides people with some assistance regarding their projections and their "pirate share price" predictions.

Summary:

1. I would not use a comparative valuation methodology of other public market comparables. Paradigm is idiosyncratic and has its own timelines, own risk/reward etc.

Instead I would use a DCF and choose an appropriate discount rate that is a scenario-weighted probability of all the relevant outcomes. I would calculate the risk-adjusted NPV method that employs an increased discount rate that encompasses - the time value of money, the commercial risk and the risk of failure.

2. Set out in "forecasting for the pharmaceutical industry" by Arthur Cook (a lead authority on biotech valuations) I would then go through the following to calculate revenue and profit projections. Things to consider are:

• no. of potential customers/patients
• pricing
• gross margins
• revenue/ cash flow curve
• partnerships
• regulatory review

3. Develop a probability tree of all the potential scenarios
4. Discount back to the risk-adjusted NPV

My pirate day share price is very conservatively ~$4.25, my valuation a few years ago was $3, and we have come a long way since then. Given the huge steps we have made, there is a big margin of safety at current levels given we will be opening the indication soon.