Challenge
A biotech company had developed preclinical data supporting the use of its lead drug candidate in enhancing male fertility. The product was being considered for both ex-vivo usage prior to IVF procedures, and as an in vivo product by the prospective father. Safety and tolerability of the compound had already been confirmed in Phase I trial trials for other indications, therefore the company’s plans were to move directly into Phase 2 trials for both treatment settings. To support forthcoming partnership discussions with pharmaceutical companies, Alacrita was asked to develop a valuation of the programs, focusing on both the US and EU5 markets.
Solution
Working with our client, we first developed target product profiles (TPPs) for two different formulations of the drug, including clinical vision and value proposition; indication statement; target patient population; delivery mode and dosing; regulatory approval pathway; efficacy endpoints and thresholds; safety and tolerability thresholds; and drug pricing. We then established estimates of key valuation input assumptions such as development and commercialization cost and timelines; peak market share; probability of success; and other relevant sales assumptions. Using these inputs we built projections for the addressable market for both products in key Western territories.
Given male infertility is an underserved area, there is very little by way of clinical trial benchmark data, drug price comparators and indeed technical probability of success in this space. Alacrita developed some of these inputs using our experience, judgement and feedback from our expert Associate network. A lack of marketed products for male infertility to use as benchmarks warranted a top-down approach to developing estimates for inputs such as drug pricing.
After discussing our input assumptions and rationale with the client, we developed a rNPV model for both products, and applied a Monte Carlo simulation to capture value ranges that were later aggregated to obtain a total value for both products in all territories of interest. This methodology accommodates for the significant uncertainty in input assumptions associated with early-stage products, and indeed those that are trying to pave the way for bringing products to market in a disease area that is severely underserved.
Valuations
Our expertise in performing business and asset valuations covers a wide range of technology types including small molecules, biologics and cell and gene therapies. Valuations have been a staple of our practice since our inception in 2009.
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