Challenge:
A young biotech company with a portfolio of clinical and pre-clinical stage bispecific antibodies (BsAb) to treat various cancers was in the process of completing a Series A funding round. The company was in discussions with a prospective investor for whom it wanted to prepare valuations and business case justifications for its pipeline, with much of the focus being on the lead clinical stage asset, followed by three earlier stage assets. The lead asset was being developed for gastric, ovarian and colorectal cancer, one preclinical stage asset was being developed for multiple myeloma, while the other two preclinical stage assets were being developed for various solid tumours. The company asked Alacrita to support it in validating its business plan by building an independent valuation of the pipeline, using some of the work already conducted in-house to build an investment case for the pipeline.
Solution:
Alacrita developed a valuation for the biotech company’s pipeline based on the aggregate of the valuations of its programs. For the lead program we developed projections for addressable market, penetration, pricing and the associated product revenues in the major markets in gastric, colorectal and ovarian cancer. We developed projections for development, launch and marketing costs, timelines and probabilities of success. We used Monte Carlo simulation to capture ranges for key variables and address uncertainity around key assumptions. The risk-adjusted NPV output was expressed as a range, with a tornado plot presenting parameters driving the sensitivity.
Alacrita then developed incremental valuations for the preclinical programs using a comparables analysis of current market cap and/or analyst valuations of public companies. We then developed an aggregate valuation for all the IP assets of the business and, allowing for cash and other assets of the business, derived a pre-money stock price valuation for the company.
Valuation Services
As a multi-disciplinary firm, in addition to valuations, Alacrita’s expertise in product development, strategy, and commercialization, allows us to draw on important insights that other valuation firms may not have. Understanding the key value inflection points for a pipeline asset and defining an overall value for a technology or business is vital, especially in transaction negotiations and commercial strategy, and few valuation firms are as well-placed as we are to do so.
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