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Biotech / Medical : SANGUINE CORP. (SGNC) -- Ignore unavailable to you. Want to Upgrade?

To: dwlima who wrote (2513)	7/4/1998 2:00:00 PM
From: Mr. Forthright	Respond to of 5402

<<BUT, i do not see any way in which this way can outperform a DCF valuation. i am open to proof....and the comments of an author does not do it for me.>> I propose you call Hambrecht & Quist and others and ask for research reports on biotech companies. They ALL use the same model more or less. As for the comments of an author, well I won't bore you with that. Instead please read what Denise M Gibert (at the time she was Managing Director of Research at Smith Barney) wrote in 1993 in an industry analysis report published by the Association for Investment Management and Research (AIMR). I take it you know this organization. "For the second-tier companies, those not projected to be profitable until the mid-1990s, a common approach is to discount future earnings to approximate a present value. This methods requires a forecast through 1995 and 1996 and assumptions about the growth rate at that time. A theoretical multiple commensurate with the growth rate is applied to the future projected earnings to estimate a theoretical future price. A discount rate corresponding to the risk associated with the particular company (usually 20-40 percent) is then applied to discount the theoretical future price and yield a present value. Because of the large number of assumptions required for this analysis, different analysts can derive widely different present values for the same stock." Convinced? Do you believe the DFE method is the most appropriate one for SGNC? Which other valuation methods could be used for SGNC given its stage of development? My answer next week.

To: dwlima who wrote (2513)	7/4/1998 5:15:00 PM
From: wonk	Read Replies (4) \| Respond to of 5402

to say that valuing earnings is theoretically most correct is absolutely stupid in my humble opinion. i completely disagree with any author that would write that. Go back and read the quote. ...and the comments of an author does not do it for me. Lets see what this author's credentials are. Having completed thousands of business appraisal assignments, Dr. Pratt and his professional associates are frequently called upon to testify in state and federal courts as expert witnesses in business valuation disputes.... Dr. Pratt holds a Doctorate in Finance from Indiana University. He is a Fellow of the American Society of Appraisers in Business Valuation (the highest designation of the Society for outstanding contribution in the field). He also holds the professional designations of Chartered Financial Analyst, Certified Review Appraiser, Certified Business Counselor, Certified Financial Planner and Senior Certified Valuer. Dr. Pratt has been a member of the American Society of Appraiser's Business Valuation Committee since its inception in 1980; he currently serves as Chairman of the ESOP Valuation Advisory Committees ... Dr. Pratt is one of the most-respected individuals in the U.S. regarding business valuation issues. ww