Challenge

A division of a multinational pharma company needed to evaluate a pipeline agreement with an antibody platform technology company. They wished to understand the overall value of the potential partnership.

Solution

We assessed the commercial potential of the opportunity, and gave a critical analysis of the risk adjusted NPV model in use by the negotiation team. We tested the underlying assumptions using real-world data incorporated into a Monte Carlo simulation model.

The approach gave greater insight into the impact of the underlying uncertainties, allowing the key outputs (e.g. NPV) to be expressed as a range, with confidence intervals, rather than as a single number. It also enabled material sensitivities to be identified.

We also reviewed a selection of early-stage biotechnology deals to generate a comparables analysis. This allowed the proposed transaction to be benchmarked against analogous transactions, and served as a useful cross-check for the rNPV analysis.

We helped the in-house team build the case for the deal at board level, emphasizing the value of the strategic logic of the deal and setting out the non-financial drivers of the opportunity.