Initiation25 Oct 2018 19:18
This is the first note that Align have written for Valirx, with Valirx as a client. It is also the first note written with a valuation and a target price. It is therefore the initiation of formal analyst coverage.
Before then, there was one report with no valuation or target price. It was not a research note in any real sense of the word.
One can nit pick either way about this but the reality is that it doesn't really matter.
What is of note is their definition of a “Conviction Buy”. This recommendation means that Align were either paid in shares or used their fee to buy shares. It "is derived from our conviction in either taking equity as payment for our research services, or applying our fee to the purchase of equity in a covered company whilst absorbing the cash cost of our freelance analyst payments".
Putting their money where their mouth is then.
FWIW, their 10.28p valuation is pretty much my valuation. I posted a few weeks ago with a valuation of 9.4p, stating:
"Value of drug in P3 (pre results) of this nature is in my view around $500m. VAL own 55%, which is around $275m. If the outlicensing deal gives them nothing up front and no milestones (unlikely) and a 20% royalty, then this leaves VAL with a $55m share of the product's value for VAL. Convert this into £ and VAL's share is worth £41.7m on just a 55% share of a 20% licensing deal...Then 101, 201 and 301 must be valued and there will be renewed confidence in the company if a deal on 401 is done, with shareholders also knowing the days of massive dilution are gone given the higher market cap. That said, I'll be conservative and only top this up from £41.7m to £50m. What share price value is £50m? Answer, about 9.4p."
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