VALUATION 101

PUTTING THE FAIR VALUE THAT WORKS: PHARMA – BIOTECH SECTOR

CHALLENGES OF FAIR MARKET VALUATION

One of common challenges at the early stage of biotech ventures is to calculate realistic estimates of the value of technologies to bring investment for lengthy commercialization process. The valuation should adequately account for the novelty of discovery, market size and opportunity, time and cost of development and risk that the investor must bear on each phase of product development.

KEY FACTORS – INVESTMENT PERSPECTIVES
Z

NOVELTY & IP

MARKET & OPPORTUNITY

COST & TIME OF DEVELOPMENT

REIMBURSEMENT STRATEGY

RISK

MANAGEMENT TEAM

rNPV | ROI

SUCCESS PROBABILITY BY DEVELOPMENT PHASE
  • DISCOVERY ...% ...%
  • PRE-CLINICAL 9% 9%
  • PHASE 1 20% 20%
  • PHASE 2 29% 29%
  • PHASE 3 64% 64%
  • REGULATORY APPROVAL 85% 85%

VALUATION FACTORS

STAGE SUCCESS PROBABILITY BY DEVELOPMENT PHASE
  • DISCOVERY ...% ...%
  • PRE-CLINICAL 45% 45%
  • PHASE 1 70% 70%
  • PHASE 2 45% 45%
  • PHASE 3 75% 75%
  • REGULATORY APPROVAL 85% 85%

AVERAGE TIME TO COMPLETE (YR)

DISCOVERY

PRECLINICAL

PHASE I

PHASE 2

PHASE 3

NDA