Challenge

A biotech company engaged in licensing discussions with a number of major pharma companies needed help with risk adjusted NPV (rNPV) valuations for each program.

Solution

Our theoretical valuation incorporated Monte Carlo simulations to reveal key areas of uncertainty within the model, focusing the direction of future market research. We also developed a realistic valuation, which considered the type of valuation and deal construct that the buyer/licensee may think appropriate given real-world valuations, precedents and their presumed view of the world.

These valuations proved pivotal for the management and board of directors in setting internal expectations and guiding the negotiation strategy.