Challenge:
In preparation for fundraising, a biotech company developing a clinical stage radiolabeled peptide to diagnose pulmonary diseases required an independent valuation of its technology in three indications.
Solution:
Previously, Alacrita had evaluated the peptide during its early clinical trial in one indication and developed a Business Plan to support the company’s strategy. We therefore begun the valuation exercise with a discovery session with the key management team to understand the current state of play of the asset, and any relevant inputs for the valuation model that had already been internally developed. These included target patient populations, peak market share and penetration, Phase 3 trial costs and timelines, and product pricing.
Using this information, we developed a valuation model for the radiolabeled peptide in each of the three indications, producing projections for addressable market and associated product revenues in US and EU5. There remained a level of uncertainty for some of the input assumptions such as sales growth and curve. While the product was considered first-in-class, more effective and cheaper to manufacture than standard imaging agents, giving it several advantages over standard of care competitors, it was recommended that a deeper analysis of competitive non-radioactive diagnostic modalities was also needed to validate the market share and sales growth assumptions in the valuation.
To address this, we developed a range of sales growth scenarios and used Monte Carlo simulation to capture ranges of input values (Min, Mode, Max) for all input assumptions. The output of the Monte Carlo simulation of the programme was risk-adjusted NPV (rNPV) expressed as a range.
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.