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Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

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

To: Biomaven who wrote (11)	2/25/1999 11:25:00 PM
From: LLCF	Read Replies (1) \| Respond to of 52153

Peter do you follow XOMA??? I thought maybe we could test this one for valuation. I picked it because a.) supposedly some sort of announcement is coming out shortly and b.) it seems pretty simple if I have the story right. Here's an over simplified example of why I (the very untrained eye)picked this one: Seems like an all or nothing deal here... the drug gets approved or Dr. Evil pushes the button on his desk and no more XOMA. It's my understanding that this will be a huge drug if approved?? Lets say the the stock goes to $10 with approval and $0 without. Mr. Market is putting odds of approval @ 35% currently (forget about the discount between now and when we really find out for sure). Any comments about: 1.) the actual meaning of the announcement due as early as next week? 2.) the value of this approval 3.) my methodology here Thanks for any comments. And perhaps we can revisit as the story unfolds? DAK