پارسی   English   العربیه

Biotechnology Valuation: An Introductory Guide


Biotechnology valuation

An Introductory Guide

Karl Keegan

Written by experienced financial analyst, Karl Keegan, Biotechnology Valuation: An Introductory Guide is a hands-on guide to the valuation of biotechnology companies both from a private and public market perspective for industry professionals, investors and students.

Focused on product based biotechnology investments and drawing on the author’s extensive experience the book begins by valuing healthcare focussed biotechnology companies which are trying to develop new therapeutics using traditional valuation metrics for those readers unfamiliar with finance. The book then takes these principles and applies them to the unique aspects of biotechnology valuation. A background guide to the intricacies of drug development is provided including descriptions of the different clinical phases, relevant regulatory pathways and the attributes that contribute to make a successful drug. The financial analysis and the technical assessment are then combined to take the reader through multiple investment techniques that can applied for biotechnology company valuation including product NPVs, DCF valuation and real options analysis. Real world examples are used throughout the book to illuminate some of the softer aspects of valuation. The book also reviews the different methodologies used for valuing private companies in order to reduce risk and increase returns.

By highlighting some of the most common pitfalls of biotechnology valuation and providing a toolkit to establishing the value of a biotechnology company, Biotechnology Valuation: An Introductory Guide will enable the reader to develop a consistent approach and have a useful toolkit to tackle the valuation of a biotechnology company or individual drug, with confidence.



1 Introduction

Biotechnology Background

2 Traditional Valuation Methods

The Value of a Company

Accounts – Providing the Data for Valuation Analysis

The Income Statement

Balance Sheet

Cash Flow Statement

Income Statement Multiples

Balance Sheet Multiples


Discounted Cash Flow Analysis

Net Present Value

Constructing the DCF

Projecting the Cash Flow Stream

Choosing a Discount Rate

Other Thoughts

3 The Drug Development Process

The Drug Development Process

Drug Discovery and Research

Pre-Clinical Development

Clinical Trials

What Investors Should Look For When Analysing Clinical Trials


The Regulatory Process

Regulation in the US

Regulation in Europe

The Label

Timelines for Approval

Post Approval

Investment Lessons

Case Study #1

4 Biotechnology Company Valuation

Data Collation

NPV of the Pipeline


Sensitivity Analyses

DCF of Whole Company

EBIT DCF of Products

Comparables Valuation

NPVs are Additive

Using all the Tools Available to Reach a Valuation Conclusion

Market Models


Appendix 1

Example 1

Example 2

Example 3

Appendix 2

Biosimilar Update

5 Decision Trees and Real Options

Decision Trees

Discount Rate

Deriving Scenarios


Decision Tree Example

Real Options

Valuing Options

Estimation of the Input Variables


6 Biotechnology Investing

Types of Healthcare Investment

Biotechnology Sector Evolution

Biotechnology Investment Cycles

Biotechnology Business Models

Focus on People


Product Pipeline

Commercial Risks


Lessons from Biotech Investing

7 Early-stage Valuation

Private Valuation

Discounted Cash Flow Method

Comparable Valuation

Venture Capital Method

Discount Rates