How to Approach Valuing Pre-Revenue Biotech in Healthcare Investment Banking?
Hey y'all, I am just curious how investment banks think about valuation for early-stage biotech firms, especially those in Phase I or pre-clinical stages without revenue. Since traditional comps and DCFs don’t work well, are scenario analyses or probability-weighted models more common? Would love to hear from anyone with experience in healthcare IB or biotech M&A. Also I'm a current Georgetown student, so would you say Georgetown is well-represented in Healthcare NYC IB. Thanks so much!
Out year (post-commercialization) revenue multiples, discounted back. Future revenue not easy to estimate, but you can at least assume that the company/product will capture X% of whatever the addressable market is.
Ok great. Do you know any banks with a particularly strong HC IB focus/division? And do you know how Georgetown is for HC IB? Thanks.
Centerview is clear frontrunner for healthcare - winning most big biopharma deals. 2nd tier is JPM, GS, MS and 3rd is evr, laz, and pwp
You usually start with an Epidemiology model which starts with you measuring the target patient population through the incidence or prevalence of cases, along with factoring in diagnosis rates, adherence, compliance, etc.. Then you just keep working down based on average sales price (ASP) after rebates are paid out while also estimating for your market share. From there, you just build a launch curve to estimate how long it'll take you to hit peak rev. Most multiples in the industry are paid on this peak rev number. For the DCF tho, the Revenue is sensitized with a POS number based on the stage and indication. I'd check out Pharmagellan's guide and there are some others. It's basically getting really granular with your estimate on revenue and then you just tack on some seemingly random sensitivity
Ok thank you. Also, do you know how strong Georgetown is for Healthcare IB at firms like Centerview and Evercore, and how it compares to like Northwestern or UMich? Thanks.
Probability of Success (“POS”) adjusted DCFs. For any indication (eg cancer, COPD etc) there are tables that show likelihood of moving from Ph1 to Ph2, Ph2 to Ph3 etc to approval. You adjust your CFs for these success rates as you go through your outer years and typical timeline to approvals and discount those probability adjusted CFs back.
Ok thank you. Also, do you know how strong Georgetown is for Healthcare IB at firms like Centerview and Evercore, and how it compares to like Northwestern or UMich? Thanks.
Gtown places well into banking in general. Idk about HC specifically. I would take gtown over the other schools you listed if that’s your goal…
Side note: You are a bot
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