Incoming 2025 MM Biotech ER SA Looking For Advice

I'm a rising junior who accepted an offer to do Biotech Equity Research for Summer 2025 and I'm looking for some advice regarding how to prepare for my internship and have some questions about modeling. To give some context, I am currently studying Business and doing a minor in Biotech at my university and have a passion/interest in Biotech/Pharma. My mom had breast cancer and seeing her go through the clinical trial process, as absolutely heart-wrenching and painful the process was both for her and our family (a story for another time), made me realize the opportunity novel drug innovation has to potentially save lives or at least give individuals who are suffering some more time on this planet. I also realized towards the end of high school that I loved analyzing businesses and could hyperfocus on looking through financial reports, earnings calls, etc. I found Biotech Investing to be at the midpoint of these two and by some grace of god or luck after a lot of preparation and research involving trying to break down company's, their drugs, and the scientific basis for them on my own, the lovely people at one of the banks I had a superday at decided to take a chance on a kid without a STEM background which is traditionally a pre-requisite.

I know a few (although truly few based on WSO forums) of the top Biotech ER analysts came from a non STEM undergrad/No MD/PhD background and succeeded. I was hoping that I could get some advice on how to be successful in this role and in future roles Biotech related given my situation. 

Things I've already started doing:

  1. I'm self-studying Biology and Chemistry through recommended textbooks to understand the biopharmaceutical drug development process from a scientific perspective (also preparing to take Bio, Chem, Biochem, and Organic Chemistry during the school year)

  2. I spend every morning looking through Biotech M&A/deal news, then look at the leading candidates in each company's clinical pipeline, and watch Youtube videos to understand a bit of the basic science behind the candidates and the pathology of the underlying disease.

  3. I started writing an article on a SMID cap Biotech company called TG Therapeutics which I'm currently working on a preliminary DCF valuation for. I figured this would be the best way to understand the business side of Biotech companies in more detail (Goal is to maybe publish a few articles on Seeking Alpha and build my own coverage of sorts). 

If anyone has advice regarding other methods to really immerse myself in the industry and understand things from a more technical standpoint that would be amazing. 

Questions about Valuation:

  1. I've been reading through numerous scientific papers that detail adoption curves, clinical trial success rate probabilities by therapeutic class, prevalence data, etc. If I'm trying to project the peak sales for a multiple sclerosis Anti-CD20 Antibody drug that is third-in-class and offers only slight improvements over the standard of care what would be the best methodology to estimate peak sales? I read through Pharmagellan which gave some standardized curves for sales but the first-in-class drug, Ocrevus, has a significantly longer ramp to Peak Sales (Attributed to the growing Anti-CD20 sub-class among other factors) than is covered in the book and I want to base my ramp on Ocrevus. 

  2. Any suggestions for learning about the cost drivers/trends over time and how to granularly project them in a detailed Biotech model?

If anyone would be open to me PM'ing about these questions I'd truly appreciate any advice (also willing to attach my model if anyone has some time to take a look).

Overall I know this is an extremely hard industry to break into and be successful in without a primarily STEM background but the analysts who hired me told me that those who are successful are those who treat Biotech like a hobby/passion and I truly want to work in Healthcare/Biotech for the rest of my career. I wish I could change my major now or add an additional one but unfortunately it's too late. 

I apologize for the extremely long post but thank you to anyone who takes the time to read through it. Hope all of you had a great 4th of July and have a great week as work starts back up.

5 Comments
 

Based on the most helpful WSO content, here are some detailed insights and advice for your upcoming Biotech Equity Research internship:

Preparation and Immersion in the Industry

  1. Scientific Understanding:

    • Continue your self-study in Biology and Chemistry. Understanding the biopharmaceutical drug development process is crucial.
    • Focus on the molecular targets, mechanisms of action, and clinical data of drugs. This will help you understand the scientific basis of the drugs you will be analyzing.
  2. Industry News and Trends:

    • Keep up with Biotech M&A/deal news. This will help you understand the market dynamics and strategic moves within the industry.
    • Analyze leading candidates in clinical pipelines and understand the basic science and pathology of the diseases they target.
  3. Practical Application:

    • Writing articles and performing DCF valuations on Biotech companies is an excellent way to deepen your understanding. Publishing on platforms like Seeking Alpha can also help build your credibility and network.

Valuation Methodologies

  1. Estimating Peak Sales:

    • For projecting peak sales of a third-in-class drug with slight improvements over the standard of care, consider the following:
      • Benchmarking: Use the sales ramp of the first-in-class drug (e.g., Ocrevus) as a reference. Adjust for the competitive landscape and the incremental benefits of your drug.
      • Adoption Curves: Refer to standardized adoption curves but adjust them based on the specific characteristics of the drug and market.
      • Market Research: Look at equity research reports, company presentations, and SEC filings to understand market expectations and patent risks. Run sensitivities on these assumptions to account for uncertainties.
  2. Cost Drivers and Trends:

    • To project cost drivers in a detailed Biotech model:
      • Clinical Trial Costs: Understand the costs associated with each stage of drug development. This includes preclinical, Phase I, II, and III trials.
      • Regulatory Costs: Factor in the costs of obtaining regulatory approvals.
      • Manufacturing and Distribution: Consider the costs of manufacturing the drug and distributing it to the market.
      • Sales and Marketing: Analyze the costs of building and maintaining a sales force, especially if the drug requires specialized sales channels (e.g., hospitals, primary care physicians).

Additional Tips

  • Equity Research Reports: Use these as a framework but critically evaluate their assumptions. Look for divergent assumptions and develop your own view on the fundamentals.
  • Fairness Opinions: If you can find fairness opinions for relevant biopharma deals, they can be a valuable resource.
  • Networking: Reach out to professionals in the industry for advice and mentorship. This can provide you with practical insights and help you build a network.

Conclusion

Your passion and proactive approach are commendable. By continuing to immerse yourself in the scientific and business aspects of Biotech, you will be well-prepared for your internship and future roles. Remember, diligence in your assumptions and a critical approach to existing models will be key to your success.

If you have more specific questions or need further guidance, feel free to reach out. Good luck with your preparation and your upcoming internship!

Sources: Biotech finance part 2: valuation methodologies and modeling considerations, Biotech finance part 2: valuation methodologies and modeling considerations, Biotech finance: from IB to VC / HF to funded startup

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 

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