I wonder if someone is interested in helping me out on how to value the stock of KDUS and also tell me what action a rational BOD would be doing now to enhance share value?
Here are the facts as I know them to be.
KDUS:
1. 13.1 shares O/S
2. Carl Icahn owns 25%
3. Approx $24 mil in cash
4. a 20-30% (not sure exactly) interest in Axiom, a private
biotech. Not aware of how much it's worth, but figure a min. of 20 cents per KDUS share.
5. No employees, so the burn rate, if there is one after assuming a 5-6% return on the $24 mil in cash would consist of the salaires of the CEO, who is the only employee, and the BOD and whatever the cost is to produce the SEC required documents (maybe there are more expenses, but I'm not sure what)
6. (Here's the tricky part) There's a good possibility/probability that KDUS will be receiving patent royalties beginning in 2004 or 2005 of perhaps $12 mil yr. or more--lets say $13.1 mil per year to make the arithmetic easy. I don't know how long the royalties continue for - but assume it's the length of the patent--I also don't know how long a drug patent in good for? Anyone know that? 7 years or so?
So with that, how do you figure the present value? It's got to be at least $2/sh just figuring the cash and Axiom shares...but how do you do the math and what discount rate do you use for the stream of royalties? If you expect $1/sh in 4 years, would that $1/sh convert to 60 cents now? The $1/sh in 5 years to 50 cents now? Do you just add the 7 or whatever it is years' worth of royalties up properly discounted and add those to the $2/sh cash for the right answer?
Then to the final part of the question-- if you're the BOD, do you try to sell the company now or is it best for SH to just sit tight and wait for the royalties to begin? And then, do you pass them on as dividends, or do something else?
Thanks to anyone interested in tackling this. BTW, I own some of this stock if you're wondering. |
