When biotech companies have catalysts (most commonly: positive Phase III approvals or FDA approval) there is usually a good opportunity to buy options. One way to optimize this is to try to determine the Event NPV.
In one recent example a company called Cempra was scheduled to release their Phase III trial results for a drug called Taksta sometime before 2/28.
This happened on 2/24 and overnight their stock went from $3.15 to $4.26 as it was reported that the drug met it's endpoints (35.2% gain).
This surpassed the predicted Event NPV of 26%.
I'm wondering how this Event NPV is calculated.
I'm assuming the obvious: Drug sales predictions, discount cash rate, market cap, are the main factors?
Is there a formula or more accurate method?
Submitted March 05, 2017 at 09:31PM by throwawaylifeswag http://ift.tt/2mVbDJg
