Challenge:
A drug discovery company preparing for a forthcoming funding round wanted to update a valuation of the business based on a series of contract research projects and the proprietary value in its other research collaborations, and to understand which projects would maximise longer term value.
Solution:
We worked with our client to develop a current valuation for the company based on individual valuations for its portfolio of research assets. Each individual valuation was underpinned by realistic input assumptions (e.g. the addressable market, penetration, pricing and associated product revenues, costs, timelines, and probabilities of success at each go/no-go point, and deal structure). Given the uncertainty around many input assumptions, we used Monte Carlo simulation to capture a range of values for each assumption. We helped our client understand how the deals would affect the value accumulating over time. Our client used the results in negotiations for the funding round and in selecting between different strategic options for development of the business.
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