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.
Inhaltsverzeichnis
Contents
Acknowledgements
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
Summary
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
Conclusion
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
Calculations
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
Conclusion
Appendix 1
Example 1
Example 2
Example 3
Appendix 2
Biosimilar Update
5 Decision Trees and Real Options
Decision Trees
Discount Rate
Deriving Scenarios
Conclusion
Decision Tree Example
Real Options
Valuing Options
Estimation of the Input Variables
Conclusions
6 Biotechnology Investing
Types of Healthcare Investment
Biotechnology Sector Evolution
Biotechnology Investment Cycles
Biotechnology Business Models
Focus on People
Cash
Product Pipeline
Commercial Risks
Newsflow
Lessons from Biotech Investing
7 Early stage Valuation
Private Valuation
Discounted Cash Flow Method
Comparable Valuation
Venture Capital Method
Discount Rates
Conclusion
Glossary
References
Index
