Please reread my post. I tried to say that the current market cap is a "push" for cash that has been and will be received from Immunex, PeproTech, the Techne contract, and other sources. Even discounted for time, I think that our most conservative poster (Bob) will O.K. that. I tried to argue that CIST's attorneys will effectively cut sweet deals with past sinners and that penetration to 50% of the IL-1beta market will effectively eliminate "burn" and create profit. Given that, the cash received/coming can be used without "burn" discount to justify inclusion of the current market cap in a _current_ valuation. This part of the analysis is very conservative, IMO, and I bounce it off of Mr. Worst Scenario, Esq. :-)
I then tried to estimate the _current_ value of the PAI-2 and IL-1 patents and added that to the _current_ market cap. I then divided that total by shares outstanding. Here's a shortcut for you, Mike...... I came up with roughly the same estimate for _current_ valuation that Russell got.
One rational question to ask is, did I count the value of the IL-1 patents twice, as I used them to both negate burn and to assign a big chunk to current valuation. So, I'll fudge a little and kill two birds with one stone..... I'll bring my estimate down by $0.10/share to $1.50/share. Now you don't have to reread my post at all, Mike. Just go to Russell's, as we come up with the exact same number.
R&D Systems (Techne) cut a license deal AND entered into an agreement to fund the CIST periodontal study at a time when CIST was broke. For me, that's a clear indication of the leverage derived from the IL-1 patents.
Some might try to think in terms of a new biotech going public. Biotechs with good patent portfolios and ugly burns attract market caps of, say, $100 million. At that point, they've raised, say, 30 million in cash. The difference between market cap and cash raised from the IPO is often called "technology value". In CIST, we have a biotech with a proven patent portfolio, little or no burn (R&D and admin costs offset by reagent revenues), at least one product in clinical testing and a second in human preclinical studies, and an assigned (by the market) technology value of approximately zero.
One other thought......... the current value of the IL-1 patents would be greater, IMO, in the hands of Techne, Genzyme, Fujisawa, etc. than what I've estimated for CIST. If you can force a customer to source a necessary reagent from you, it tends to increase sales across a broad range of reagents (one-stop shopping). IL-1beta is a big-time reagent. So, $1.50/share. If anyone is working on a viable clinical application of IL-1 (say, for example, Vical and the adjuvant peptide), Katie bar the door.
This is fun.
Disclaimer: I own CIST, and I have a vested interest in its appreciation. Do your own homework. I am not qualified to make recommendations.
Everyone have good Holidays! Rick |
