Challenge:

A privately capitalized biotech company in US, which was developing a pipeline of novel drugs to impact iron metabolism, wanted help with the valuation of in licensing opportunity for a rare disease indication to support the deal term negotiations.

Solution:

The Alacrita team used a TPP methodology to align all stakeholders around the assumed indication, level of product performance, and value proposition. We then created a prevalence-based market model of treatment for the rare disease, and built a sales forecast for the assumed TPP and documented the assumptions on all key drivers.

In parallel, we mapped the path through development to regulatory submission and approval, product launch and marketing and documented the cost, time and probability of success for each stage in the process. All assumptions were developed on the basis of delivering the agreed TPP to market and commercializing it. We consulted with subject matter experts from Alacrita's consulting associate network and drew upon our benchmarks database in order to propose assumptions.

We then used our proprietary risk-adjusted NPV Monte Carlo simulation model to produce a valuation of the licensing candidate, by uploading all the generated assumptions. Having agreed a base case valuation with our client, we then used a feature of the model to show value distribution between licensee and licensor for sets of deal terms in support of the negotiation.

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