DCF Help. Biotech case study
For this case study, we would like you to calculate the suggested ownership of “Investor B” in a biotech startup “Company A” following a $10m investment in 2017.
Please use the following assumptions: • Product Target Profile: Company A is developing a drug for osteoarthritis, a common orthopedic indication • Timing of Clinical Development: The company was founded in 2012, when it filed its patent on the drug, just passed pre-clinical studies in animals and is now about to start its Phase I clinical studies. There will be 3 clinical study phases before approval. Expectation is to get market approval in 8 years, i.e. on 01-Jan-2025 • Financials: Expected costs for the next 8 years (to get to market) are $40m. Expected peak sales in 10 years from, i.e. in FY2027 are $200m. Expected EBITDA in in FY2027 is $100m . Once the drug is on the market, please just make your own rough assumptions for COGS and SG&A (without any greater detail) • Investment Investor A already invested $50m in 2012, thereof $30m as equity (common stock) and $20m as debt (assuming no interest to be paid). Cash at the company before Investor B’s investment is $15m. Investor B is now investing $10m.
For Investor B investing $10m now as equity (common stock), what is the ownership in Company A you believe he should receive?
Assumptions: Please just make rough assumptions for all other variables you believe you need (e.g. COGS, etc.).
Dolor sed sint corrupti ducimus. Possimus vel sunt sunt et error.
Natus officiis est dicta sed sint culpa ut expedita. Harum ex in et ut ab non quod eveniet. Ut voluptate eum consequuntur. Ad occaecati rerum perferendis alias iste corporis. Quasi provident odit natus et sapiente veniam.
Quasi ipsum atque doloremque et eaque. Cum perspiciatis et beatae repellat enim dolorem et. Commodi eveniet maiores laboriosam ipsam minus porro.
Fuga alias aspernatur laudantium harum ad consequatur. Odio et incidunt amet corporis harum ut. Eaque molestiae est porro vitae et. Qui velit asperiores autem ipsa. Suscipit recusandae optio enim nam doloremque natus laboriosam velit. Voluptatem quia perspiciatis quasi et totam totam a.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...