Hello, I know this is going to be akeen to a pull-out-of-the-hat situation but I've recently been tasked to run a pre-clinical biotech deal. I've read through lots of tips on WSO for valuing a biotech company and it's been really helpful!
However, I was wondering if anyone has a template that I could refer to. It would mean a lot!
Meanwhile, thank you in advance and stay healthy! :)
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To be a honest, a template isn't really going to help you. You need to build a sophisticated assumption tab looking at things like prevalence rate, probability of success for the therapeutic area, addressable market, peak penetration, drug price, cost per patient per trial, sales force reps to market the drug, etc. Once you can complete this your model builds itself. Use SOTP for each asset. For your comps, they should be same therapeutic area, same indication if possible and in the same phase.
Hi I am currently beginning to try to build a model with an assumptions dashboard that covers peak penetration, patent expiry, probability of NDA approval, probaility of success to approval, cost of trial, cost per patient, etc. But have encountered a few obstacles along the way...
First, I guess what I'm struggling with is NOLs (from the new CARES act) and biobucks due to partnerships (Upfront fee, Milestone payments, Regulatory milestones, Profit sharing etc). Furthermore, since this is a M&A deal, valuation of NOL may be a tall order.
Second would be the comps table. Since I can't use EV/EBITDA or P/E ratios, I'd figured to build a EV/R&D, EV/sales and NPV comparable given the same phase, same method and same illness that it is trying to cure. But I'm not sure if it's the right approach.
Thus, I thought it could help if there was a biotech model to refer to.
Anyone else has a model to share? Would be greatly appreciate it thank you!
https://www.wallstreetoasis.com/forums/healthcare-ibd-summary-resources
A summary of WSO threads and other resources related to healthcare.
You may want to 1) model the potential market for each drug in the pipeline, taking into account what share of that market your firm may capture. Don't forget patent expiration risks. 2) Use probabilities (something like first quartile estimate=0.25, median estimate=0.5, third quartile estimate=0.25) to create 3 scenarios from which you deduce 3 potential levels of revenue, then gross profit/ebit/ebitda/net income. 4) Calculate FCF from these estimates and build a probability-weighted DCF model. 5) Sensitize.
This article is good too: https://www.investopedia.com/articles/stocks/06/biotechvaluation.asp
Thank you and I have referred to your post prior to asking these questions. I just some visual reference to confirm that my model is right.
Bump. Anyone has a template?
Bumps
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Hey man I'm also looking for a template. Did you ever manage to find one?
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