Based on valuation, I would short MCHM anywhere north of $4.
There are 22 M shares outstanding, so at the present stock price of $8, the market cap is about $170 M.
To value the stock, you can compare to the R&D expenses, since this is a development-stage biopharmaceutical company.
From the 10k:
"Research and developmental expenditures approximated $4,318,800, $2,084,800 and $1,736,600 during the years ended December 31, 1998, 1997 and 1996."
Hey, that's not very much R&D expenses, for an R&D company.
So, that means that at $170 M market cap, you are paying 41X the current run-rate for R&D, and 63X the average for the last 3 years.
R&D companies have price/R&D multiples that are all over the map, but 41 and 63 are definitely at the high end.
That's for a company that has a product that in my opinion has little promise. (They sell a cream, which is supposed to be used with a vibrator to give some, but not all, males an erection.)
They have $1 per share of cash, so that could put a floor on the stock price. |
