Proteon logo     Print Page | Close Window

SEC Filings

PROTEON THERAPEUTICS INC filed this Form S-1 on 09/16/2014
Entire Document

Table of Contents

market and income approaches, and various methodologies for allocating the value of an enterprise to its common stock. We generally used the market approach, in particular the guideline public company and guideline transaction methodologies, based on inputs from comparable public companies' equity valuations and comparable acquisition transactions, to estimate the enterprise value of our company.

Methods Used to Allocate Our Enterprise Value to Classes of Securities

        In accordance with the Practice Aid, we considered the various methods for allocating the enterprise value across our classes and series of capital stock to determine the fair value of our common stock at each valuation date. The methods and scenarios considered consisted of the following:

    Probability-Weighted Expected Return Method, or PWERM.  The PWERM is a scenario-based analysis that estimates the value per share based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to us, as well as the economic and control rights of each share class. Our PWERM analyses assume a range of exit scenarios, including an IPO, and allocate the value in each scenario according to our capital structure, probability-weighting each exit and discounting the value to a present value equivalent using a risk-adjusted discount rate.
    Option Pricing Method, or OPM.  Under the option pricing method, shares are valued by creating a series of call options with exercise prices based on the liquidation preferences and conversion terms of each equity class. The values of the preferred and common stock are inferred by analyzing these options. Our OPM analysis evaluates a scenario where we remain private and is modeled over a weighted average term to exit using a recent financing round as the basis for fair market value determination.
    Hybrid Method.  The hybrid method employs the concepts of the PWERM and OPM merged into a single framework.

        The foregoing valuation methodologies are not the only methodologies available and they will not be used to value our common stock once this offering is complete. We cannot make assurances as to any particular valuation for our common stock. Accordingly, investors are cautioned not to place undue reliance on the foregoing valuation methodologies as an indicator of future stock prices.

Results of Operations

Comparison of the Six Months Ended June 30, 2013 and June 30, 2014

  Six Months
Ended June 30,
Period Change
  2013   2014  
  (in thousands)

Operating expenses:


Research and development

  $ 2,003   $ 2,785   $ 782  

General and administrative

    1,417     1,656     239  

Total operating expenses

    3,420     4,441     1,021  

Loss from operations

    (3,420 )   (4,441 )   (1,021 )

Other income (expense):


Interest expense, net

    3     (854 )   (857 )

Other income (expense)

    5     (99 )   (104 )

Total other income (expense)

    8     (953 )   (961 )

Net loss

  $ (3,412 ) $ (5,394 ) $ (1,982 )