valuation thoughts, page-352

Anyone see the KZA announcement with their trial on GBM using paxalisib? It is a very different drug and the clinical trial protocol used is not the same (GBM AGILE Study), but the reality of any news of inefficacy and safety issues should be noted and will also apply for CHM and any other biotech.

At any point that any of these programs do not produce efficacy and the correct safety readings, this is going down 30-50%. The same is also true for the other side, a program producing promising efficacy and safety readings will rocket the stock to 50-100% (please see KZA, DXB and OPT, which shows programs working in one indication and not working in another indication - you go back to square one).

We can get to 9B like Juno and Kite did when acquired by Celgene and Gilead respectively, however, this only assumates that all of the programs work perfectly. In CHM's case, I do not think we will have the perfect path as we are targetting solid tumours with CAR-T, which just hasn't been done before and with other biotechs divesting from the space. I know CHM has an amazing management team, but so have those solid tumour CAR-T companies. Even CRISPR therapeutics is divesting from using their CRISPR edited CAR-T Therapy (CTX130) on Renal Cell Carcinoma.

I expect more bad news than good, and even if the ratio between good and bad news is 50-50 or 60-40, we're only a 2x from here (57M market cap). No where close to the 9B valuation Kite and Juno Therapeutics reached. If we only decided to target blood tumorus with proven efficacy of cell therapies, then we would be talking about a different story and the initial Phase 1 reading will blow the heads of the media in Australia.

Also, don't forget about the capital raises which dilute your stock. Collaborations with other pharma companies is a good alternative to raise capital as they usually have an upfront payment of 50-200M dollars depending on how good the drug is, but this will also mean that the revenues generated by CHM from the collaborated program will capped to the negotiated percentage. A biotech does not have any leverage apart from being bought out.