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Biotech / Medical : Biotech Valuation

CRSP 53.80

+2.6%

Jan 2 9:30 AM EST

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To: Biomaven who wrote (11)	2/25/1999 3:22:00 PM
From: LLCF	of 52153

<The CEPH financing is certainly unusual for a small biotech. It's pretty aggressive, but does keep dilution to a minimum. > You know I'm reading this thing now and I think I really like the idea first of all and the terms aren't bad either IMO. First look at the idea: Secured notes... this is the type of creative financing I can live with... and 11% is certaintly cheap for this type of company. Of course you have the kicker: warrants, just like a convertible bond would have... as for 6% of Provigil... well hell could these guys have done the deal without something like this?? Probably not.. and look at CEPH's stock price... certainly the market is yawning at Provigil... the market is giving off label "stayawake pill" potential almost nothing. Therefore the buyer of this thing certainly has reason to claim that this "kicker" isn't exactly a home run, although I'm sure thats the hope. Also, I think that they get to cancel 1/4 of the warrants knock a year off royalties if certain levels are reached shows that the company was at least semi-savy in negotiations... The warrants being struck so low is too bad, I have them worth 8 million dollars on my machine here! Ouch. And I agree with you're concern about the 3 year term... yet the other stuff goes for 2 more. Well, we know how to value this company now, everyone will be watching provigil sales like BEST BUYS computer sales numbers. Hopefully they are announcing them weekly! :) (you can tell I'm long) DAK

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