Ann: Ceasing to be a substantial holder, page-73

Well for a start the company does not have a product to sell, only potential.

So first the market needs to apply some sort of value to the potential - say the value of a portion of the current market for drugs to treat FSGS aand CKD.

The market needs to assess the risks and apply a success probability to each risk to get a current value for this potential, for example:

• Successful Phase 2b trial. 50%
• Successful Phase 3 trial. 50%
• FDA approval following successful completion of Phase 3 trials. 80%
• No safety issues uncovered during phase 2b/3 trials 50%
• No competitor discovers a more effective treatment. 50%
• No Patents found to be invalid and overturned. 70%
• The company doesn't go bust. 70%
• Key staff working on the drug not run over by a bus or poached by a competitor. 80%
• Donald Trump does not ban all new drugs not invented by one of his campaign donors. 80%

So you combine all these to get a success probability (in this hypothetical case .5 x .5 x .8 x .5 x .5 x .7 x .7 x .8 x .8 would be around 11% chance of success. So if potential value is estimated to be $500 million, current risk-weighted value would be $55 million.

This is also a tiny company well under the radar of institutional investors in Australia. Apart from a few cornerstone investors and company management, the share price is only supported by retail investors such as those on Hot Copper, where the value is influenced by the sentiment of posters, not what Big Pharma may believe it to be worth. So yes the share price may well be undervalued.

The value Big Pharma might place on DMX-200 is essentially irrelevant to the current share price until they make their own determination as to the value of the company and make the (lowest ball) offer they can make to acquire the drug. In my mind there's no doubt that negativity here does impact the share price, and thus plays into the hands of any company wishing to acquire DMX-200 or Dimerix itself.