Our Early-Stage Biotech Valuation Expertise:
We specialize in providing precise and tailored biotech valuations to healthcare investors, universities, research institutes, biotech firms, and large pharma.
Our approach combines industry-standard methodologies with proprietary models, enriched by a network of subject-matter experts who offer decades of real-world experience. We leverage this expertise to ensure that each valuation is perfectly aligned with the specific subject matter. Additionally, we utilize proprietary data sources to validate our assumptions with real-world evidence, assuring the highest level of accuracy and reliability in our valuations.
For more information on our valuation methodology and approach, click here.
Sample of biotech valuation projects:
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Valuation of DNA vaccine pipeline: Our client was a US biotech company developing a proprietary platform technology for in vivo expression of DNA coding for a therapeutic antibody or protein. The approach involves direct injection of plasmid DNA into muscle cells using electroporation. The company was looking to raise additional private investment and required an objective valuation to support the fund raise.
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Valuation of an integrin-targeting oncology asset: A preclinical-stage biotech company developing an integrin-targeting oncology asset engaged Alacrita to quantify the value potential of its lead asset in pancreatic ductal adenocarcinoma (PDAC), triple negative breast cancer (TNBC) and non-small cell lung cancer (NSCLC). For each indication, Alacrita was required to estimate projected sales and a rNPV valuation of the lead asset, focusing on the US and European markets.
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Valuation of a biotech company entering licensing deal with Big Pharma: A biotech startup had entered a major licensing deal with Big Pharma and was able to fund operations via the upfront payment rather than needing to raise a Series A. This introduced a complication for the seed investor as initial funds had been placed as a convertible loan due to be priced by the Series A valuation. The client's board of directors engaged Alacrita to conduct a valuation of the company as input into setting the conversion price.
- Valuation of viral vector manufacturing spinout: A listed biotechnology company had developed a significant capability in viral vector manufacturing and was considering spinning it out into a joint venture with a major CDMO. The client had already generated a profitable business serving third parties using its platform and asked Alacrita to conduct a valuation exercise to determine the value of its potential contribution to the joint venture.
Biotech Valuation Case studies
Valuation of a biotech company entering licensing deal with Big Pharma:
Challenge: A biotechnology startup had entered a major licensing deal with Big Pharma and was able to fund operations via the upfront payment rather than needing to raise a Series A. This introduced a complication for the seed investor as initial funds had been placed as a convertible loan due to be priced by the Series A valuation. The client's board of directors engaged Alacrita to conduct a valuation of the company as input into setting the conversion price.
Solution: Alacrita used its proprietary Monte Carlo simulation rNPV methodology as the core of the valuation approach. The model needed to account for unusual complexity in the underlying partnering deal which involved multiple candidate mAbs as well as potential future candidates that could be developed during the deal horizon. Furthermore, owing to the nature of the infectious disease being targeted, the precise composition of the final product carried significant uncertainty. Alacrita therefore developed scenarios for all potential permutations and combinations of the client's multiple assets and modeled the cash flows of each. We then probability-weighted each scenario based on expert input from specialist medical consultants to arrive at a composite rNPV value. The final valuation also included the cash on hand at the client at the time of valuation as well as the effect of tax.
Valuation of inhaled epinephrine for anaphylaxis for biotech company:
Challenge: A privately-held biotech company developing a novel inhaled formulation of epinephrine, delivered using an asthma-type inhaler device and in development for the emergency treatment of anaphylaxis, requested an objective valuation to support fundraising and future partnering activity. Not only is comprehensive data on the true incidence of these acute allergic reactions quite limited, in many cases prescriptions are renewed by those at risk simply because their Epipen units have expired unused. In addition, epinephrine products were never originally approved by FDA based on formal clinical trials, and placebo treatment of patients is unethical, which creates interesting options for development of improved products.
Solution: A team of Alacrita consultants first built a Target Product Profile to describe the aspirational performance of the client product at launch, including the basis for differentiation from other epinephrine products/devices. This included a description of the way in which the client would develop the product, considering other R&D activity in the area, and how the data generated would impact medical interest and market uptake. After costing out the clinical path, we added assumptions for other development activities, commercialization planning and execution, as well as a sales forecast and cost of sales. In this instance, we used a product volume-based forecast methodology because sales data was more robust than epidemiology. We then completed a risk-adjusted NPV analysis using Alacrita's proprietary model which incorporates Monte Carlo simulation to quantify the impact of uncertainty. The client was able to use the slide deck deliverable in discussions with investors, as we also included a change in value analysis through development milestones.
Valuation of DNA vaccine pipeline:
Challenge: Our client was a US biotech company developing a proprietary platform technology for in vivo expression of DNA coding for a therapeutic antibody or protein. The approach involves direct injection of plasmid DNA into muscle cells using electroporation. The company was looking to raise additional private investment and required an objective valuation to support the fund raise.
Solution: The Alacrita team considered 2 approaches for enterprise valuation. First, a bottom-up risk-adjusted NPV analyses were performed for active R&D programs aginst 3 distinct indications. This involved development of a Target Product Profile for each program and cost-time-POS-revenue assumptions for development and commercialization. One of the indications involved non-dilutive funding from a Federal body, and there was cost sharing on platform CMC and process development. We also estimated platform value using an expected deals approach, whereby discounted cashflows from future drug discovery and development partnerships were quantified. In addition to providing material to support an investor pitch, the analysis highlighted valuable insights which the client could act upon (e.g. prioritizing the lead indications, value sensitivities by indication, and need for COGs reduction).
Valuation of an integrin-targeting oncology asset:
Challenge: A preclinical-stage biotech company developing an integrin-targeting oncology asset engaged Alacrita to quantify the value potential of its lead asset in pancreatic ductal adenocarcinoma (PDAC), triple negative breast cancer (TNBC) and non-small cell lung cancer (NSCLC).
For each indication, Alacrita was required to estimate projected sales and a rNPV valuation of the lead asset, focusing on the US and European markets.
Solution: Alacrita projected the addressable market considering the target patient population, market share, drug pricing, clinical development timelines and costs, etc. Using this information, we estimated potential product revenue in US and EU4+UK for PDAC, TNBC, NSCLC. We also considered the probability of success at each go/no-go development/regulatory pivotal point and the impact of that on the valuation.
For many of the input assumptions required for the valuation there was significant uncertainty, particularly given the early stage of development of the asset. We therefore used Monte Carlo simulation to express rNPV as a range and probability distribution. Outputs of the valuation model also included histograms and tornado plots, the latter highlighting input parameters that drive the sensitivity of the valuation.