This document discusses valuation and financial modeling in the biotech industry. It provides an overview of key concepts including:
- Valuation is important for investing, financing, partnering and selling companies. It involves assessing risks and potential rewards.
- Various types of investors are involved at different stages from angel/venture capital to institutional/retail investors. Exits can include IPOs or acquisitions.
- Financial models use tools like net present value and discounted cash flows based on assumptions about clinical and market risks/rewards.
- Risks include financial, clinical, regulatory and reimbursement hurdles. Approval pathways and standards of care impact regulatory risk.
This document provides information about a project assignment for a course on the time value of money. It includes details such as the student's name, registration number, course, and semester. The objectives are to discuss techniques for investment evaluation like present value, future value, and annuities. Formulas are provided for present value, future value, ordinary annuities, growing annuities, perpetuities, and their applications in areas like loans, savings, and project evaluation. The conclusion emphasizes the importance of understanding these time value of money concepts for efficient financial management in construction projects.
1) The document provides solutions to problems related to interest rates and bond valuation. It includes calculations of real rates of return, nominal interest rates, yield curves, and bond valuations.
2) Bond valuations are calculated using the present value of interest payments and maturity value. Changes in required returns impact bond values, with higher required returns lowering prices.
3) Yield curves from the past show how expectations of future interest rates have changed over time, from stable to downward sloping to upward sloping. Risk premiums incorporate default, interest rate, liquidity, and other risks.
The document discusses various types of financial statements and analysis techniques. It provides information on income statements, balance sheets, cash flow statements, and their components. It also describes various analysis methods used to evaluate financial statements such as comparative statements, trend analysis, and ratio analysis including liquidity, activity, solvency, and profitability ratios. The document aims to explain financial statements and the analysis techniques used to evaluate the financial position and performance of a business.
Basic principle of financial statement analysiskhomsasatun
the basic principle of financial statement analysis. purpose's analysis, method of financial statement analysis, and technic of financial statement analysis
The Cost of Capital, Corporation Finance and The Theory of InvestmentRaju Basnet Chhetri
This article develops a theory of capital structure and its implications. It proposes three main propositions:
1) The market value of a firm is independent of its capital structure and depends only on expected returns.
2) The expected yield of common stock increases linearly with leverage.
3) The cutoff point for a firm's investments, known as the cost of capital, depends only on expected returns and is unaffected by capital structure.
The authors provide preliminary empirical evidence from utilities and oil companies that supports the first two propositions. They also discuss how the propositions can inform corporate financial planning and investment decisions. The theory contributes a new framework for understanding how capital structure relates to firm valuation and investment.
This document discusses various methods for valuing equity, including balance sheet methods, discounted cash flow methods, and relative valuation methods. Balance sheet methods include book value, liquidation value, and replacement cost. Discounted cash flow methods include dividend discount models like the single period, multi-period, zero growth, constant growth, two stage growth, and H models. It also discusses free cash flow models. Relative valuation methods include price to earnings ratios, price to book value ratios, and price to sales ratios. The document provides formulas for calculating some of these methods.
This document discusses techniques for evaluating investment projects, focusing on net present value (NPV) analysis. It provides the formula for calculating NPV and explains how to use NPV to evaluate projects. It also discusses other methods like internal rate of return (IRR) and profitability index (PI). The document notes some limitations of these techniques and provides guidance on how to address factors like mutually exclusive projects, capital rationing, and risk when evaluating capital budgeting decisions.
The document discusses various financial ratios that can be used to analyze a company's financial statements. It provides ratio calculations and analysis for a company called D'Leon for the years 2002-2003. Key ratios like current ratio, inventory turnover, days sales outstanding, profit margin, and return on equity are presented. Limitations of ratio analysis are also discussed.
This document provides information about a project assignment for a course on the time value of money. It includes details such as the student's name, registration number, course, and semester. The objectives are to discuss techniques for investment evaluation like present value, future value, and annuities. Formulas are provided for present value, future value, ordinary annuities, growing annuities, perpetuities, and their applications in areas like loans, savings, and project evaluation. The conclusion emphasizes the importance of understanding these time value of money concepts for efficient financial management in construction projects.
1) The document provides solutions to problems related to interest rates and bond valuation. It includes calculations of real rates of return, nominal interest rates, yield curves, and bond valuations.
2) Bond valuations are calculated using the present value of interest payments and maturity value. Changes in required returns impact bond values, with higher required returns lowering prices.
3) Yield curves from the past show how expectations of future interest rates have changed over time, from stable to downward sloping to upward sloping. Risk premiums incorporate default, interest rate, liquidity, and other risks.
The document discusses various types of financial statements and analysis techniques. It provides information on income statements, balance sheets, cash flow statements, and their components. It also describes various analysis methods used to evaluate financial statements such as comparative statements, trend analysis, and ratio analysis including liquidity, activity, solvency, and profitability ratios. The document aims to explain financial statements and the analysis techniques used to evaluate the financial position and performance of a business.
Basic principle of financial statement analysiskhomsasatun
the basic principle of financial statement analysis. purpose's analysis, method of financial statement analysis, and technic of financial statement analysis
The Cost of Capital, Corporation Finance and The Theory of InvestmentRaju Basnet Chhetri
This article develops a theory of capital structure and its implications. It proposes three main propositions:
1) The market value of a firm is independent of its capital structure and depends only on expected returns.
2) The expected yield of common stock increases linearly with leverage.
3) The cutoff point for a firm's investments, known as the cost of capital, depends only on expected returns and is unaffected by capital structure.
The authors provide preliminary empirical evidence from utilities and oil companies that supports the first two propositions. They also discuss how the propositions can inform corporate financial planning and investment decisions. The theory contributes a new framework for understanding how capital structure relates to firm valuation and investment.
This document discusses various methods for valuing equity, including balance sheet methods, discounted cash flow methods, and relative valuation methods. Balance sheet methods include book value, liquidation value, and replacement cost. Discounted cash flow methods include dividend discount models like the single period, multi-period, zero growth, constant growth, two stage growth, and H models. It also discusses free cash flow models. Relative valuation methods include price to earnings ratios, price to book value ratios, and price to sales ratios. The document provides formulas for calculating some of these methods.
This document discusses techniques for evaluating investment projects, focusing on net present value (NPV) analysis. It provides the formula for calculating NPV and explains how to use NPV to evaluate projects. It also discusses other methods like internal rate of return (IRR) and profitability index (PI). The document notes some limitations of these techniques and provides guidance on how to address factors like mutually exclusive projects, capital rationing, and risk when evaluating capital budgeting decisions.
The document discusses various financial ratios that can be used to analyze a company's financial statements. It provides ratio calculations and analysis for a company called D'Leon for the years 2002-2003. Key ratios like current ratio, inventory turnover, days sales outstanding, profit margin, and return on equity are presented. Limitations of ratio analysis are also discussed.
Meaning of Financial Management
• Managerial activities which deals with planning and controlling of firms and financial sources. • Financial management is an area of financial decision making, harmonising individual motives and enterprise goals.
Mergers and Acquisitions Framework PowerPoint Presentation Slides SlideTeam
The document outlines the key steps in a mergers and acquisitions (M&A) framework, including understanding business requirements, identifying targets, conducting due diligence, negotiations, integration, and performance monitoring. It discusses determining growth opportunities, setting M&A criteria, assessing strategic and financial fit of targets, valuation, and deal closing. The framework is meant to guide companies through the M&A process from initial planning to post-acquisition monitoring.
The document summarizes the case of JPMorgan's "London Whale" trading losses. It describes how JPMorgan's Synthetic Credit Portfolio (SCP) grew significantly from 2011-2012 as it invested in both high-yield and investment grade credit derivatives. Large losses occurred in early 2012 as investment grade positions performed poorly and could not be offset by gains in high-yield. In response, risk metrics were adjusted and limits increased to hide mounting problems. The SCP continued growing in a position it could not exit from. The summary warns that Citigroup must carefully monitor its growing credit derivatives portfolio and avoid conflicts of interest to prevent a similar catastrophe.
The document provides an overview of key components to include in a marketing plan, such as market and product definitions, competition analysis, positioning, communication strategies, launch plans, pricing, distribution, and a 12-month schedule. It also outlines different marketing strategies like single market, multi market, total market strategies as well as strategies based on market dominance including leader, challenger, follower, and nicher.
This document discusses multinational capital budgeting. It begins by defining capital budgeting and how it involves allocating resources to maximize returns. For multinational firms, this includes projects located beyond national boundaries. The objectives are then outlined as comparing subsidiary and parent perspectives, demonstrating how to evaluate international projects, and assessing risk. Key considerations for multinational capital budgeting are also reviewed such as exchange rate fluctuations, inflation, financing arrangements, blocked funds, salvage values, competition, government incentives, and real options. Methods for adjusting project assessments for risk are also described.
The document provides an overview of financial management. It defines financial management as planning and controlling a company's finances to achieve its objectives in the most cost effective way. It discusses various short term and long term sources of finance, traditional and modern approaches to financial management, and key concepts like time value of money, risk-return tradeoff, and types of interest rates. It also provides a brief introduction to the Indian capital market and its primary and secondary segments.
The document summarizes the key points from the Financial Stability Report 2015 presented by Reserve Bank of India. It highlights that while India's macroeconomic fundamentals are relatively strong, continued global growth uncertainty remains a risk. The banking sector shows improvement with credit growth of 9.7% and asset quality stable, but stressed advances are still high. The report also covers trends in financial inclusion, insurance and pension sectors regulation aimed at strengthening stability.
Cómo presentar un proyecto a inversores. Fundacion Organizacion para el Desar...enendeavor
Cómo presentar un proyecto a Inversores. Por Emiliano Chamorro. Presidente de la Fundación Organización para el Desarrollo Analista de inversiones. Miembro del Club de Inversores Ángeles del IAE.
The bullion bank makes money through gold trading and lending operations. It buys discounted gold from small-scale miners and pawnshops, then sells it to investors at market price, profiting from the difference. The bank also lends money cheaply to miners and pawnshops secured against gold deposits, earning interest and shares of mining profits. This allows miners and pawnshops to purchase gold at a discount and sell at market price, repaying loans with interest within 200 days for a 100% return.
The slide is about evaluation of investment in projects before starting the project. Useful for Finance Manager, Finance Students, Entrepreneurs and Project Managers
This document provides an overview of financial statement analysis. It discusses evaluating business prospects and risks through credit analysis, equity analysis, accounting analysis, and financial analysis. These analyses examine a company's liquidity, solvency, profitability, and cash flows. Ratio analysis and valuation methods are also covered. The purpose is to evaluate a company's performance and financial position over time using its financial statements and additional information.
This document discusses various capital budgeting techniques used to evaluate business investment projects, including net present value (NPV), internal rate of return (IRR), profitability index (PI), payback period, and average rate of return (ARR). It provides examples of how to calculate each metric and explains the appropriate decision rules and limitations of each approach.
Examine the components of investment management with our content ready Portfolio Analysis PowerPoint Presentation Slides. The topic-specific investment strategies PowerPoint complete deck has various content ready PPT slides such as introduction to investments, objectives of portfolio management, types of investment, market scenario overview investment instruments, securities portfolio, analysis and valuation of equity securities, industry analysis PESTEL, SWOT analysis, discounted cash flow method, financial statement analysis, company cash flow statement, investment in special situations, fixed income and leveraged securities, bond valuation system, reinvestment risk table, type of convertible securities, options analysis, warrants summarization overview, derivative products, put and call options, stock index futures and options, stock indexes comparison table, broaden the investment perspective, international security market highlights, global market trends, mutual funds investment criteria overview, investment in real estate, diversified real estate classification, KPIs and dashboards, etc. Download this visually appealing easy to use financial management PPT slide to showcase factors of investing. Bedeck your ideas with our Portfolio Analysis PowerPoint Presentation Slides. Your audience will get glued onto them.
Ramesh Kumar N presents information on capital budgeting analysis. He has over 32 years of experience in banking and finance. Capital budgeting is the process of analyzing long-term investment projects to determine if they will increase shareholder value. It is a critical decision for companies, as projects involve large investments and risks. Techniques for evaluating projects include payback period, net present value (NPV), internal rate of return (IRR), and profitability index. NPV is the preferred method as it considers all cash flows and time value of money, consistent with maximizing shareholder wealth.
This document discusses key concepts related to risk and return including:
1. Definitions of actual, expected, and required returns. Expected return should equal required return for fair pricing.
2. Sources of total risk including systematic and unsystematic risk. Unsystematic risk is diversifiable while systematic risk requires compensation.
3. Measures of return such as holding period return and arithmetic/geometric means. Measures of risk include variance, standard deviation, and downside risk.
4. The relationship between risk and return showing that higher risk investments require higher expected returns. Investor indifference curves illustrate risk preferences.
5. Models relating return and risk including the CAPM and multifactor models. Security pricing relates
A derivative payoff diagram, often called a "profit and loss (P&L) diagram" or "payoff profile," is a graphical representation that shows the potential profit or loss of a derivative contract at different underlying asset prices, expiration dates, or other relevant variables. These diagrams are commonly used in options and futures trading to visually understand the potential outcomes of a position.
1. Call Option Payoff Diagram:
2. Put Option Payoff Diagram:
These are simplified payoff diagrams for individual options. More complex diagrams can be created for combinations of options and positions, such as spreads, straddles, and strangles, to visualize potential outcomes under various scenarios.
Financing Acquisitions Using Debt CapitalGreg Tobben
SC Credit Advisors provides financing advisory services for middle market acquisitions. The document includes a case study comparing two capital structures for a $100 million acquisition - a more conservatively leveraged structure with $60 million total debt and an alternative with $75 million total debt. It also discusses considerations for evaluating debt capital and different capital solutions for acquisition types such as conventional, distressed, or those involving multiple acquisitions. SC Credit Advisors aims to develop tailored financing solutions to allow clients to focus on running their businesses.
MEDTECH 2013: Morning Plenary, Roger Kitterman, Managing Partner of Innovatio...MedTechAssociation
Roger Kitterman, Managing Partner of Innovation Fund, Partners Healthcare, presents at MEDTECH 2013 on October 8, 2013 on Trends in Early Stage Medical Technologies: A Venture Perspective.
MaRS Best practices: Valuations in the biotech industry - Wayne SchnarrMaRS Discovery District
Speaker: Wayne Schnarr, healthcare consultant and analyst, Equicom, TSX
Canada's biotechnology and cleantech communities have a history of developing world-leading technologies —but for these industries to grow, they must have access to new capital to fund research and development that will allow Canada to maintain its position as a world leader.
Meaning of Financial Management
• Managerial activities which deals with planning and controlling of firms and financial sources. • Financial management is an area of financial decision making, harmonising individual motives and enterprise goals.
Mergers and Acquisitions Framework PowerPoint Presentation Slides SlideTeam
The document outlines the key steps in a mergers and acquisitions (M&A) framework, including understanding business requirements, identifying targets, conducting due diligence, negotiations, integration, and performance monitoring. It discusses determining growth opportunities, setting M&A criteria, assessing strategic and financial fit of targets, valuation, and deal closing. The framework is meant to guide companies through the M&A process from initial planning to post-acquisition monitoring.
The document summarizes the case of JPMorgan's "London Whale" trading losses. It describes how JPMorgan's Synthetic Credit Portfolio (SCP) grew significantly from 2011-2012 as it invested in both high-yield and investment grade credit derivatives. Large losses occurred in early 2012 as investment grade positions performed poorly and could not be offset by gains in high-yield. In response, risk metrics were adjusted and limits increased to hide mounting problems. The SCP continued growing in a position it could not exit from. The summary warns that Citigroup must carefully monitor its growing credit derivatives portfolio and avoid conflicts of interest to prevent a similar catastrophe.
The document provides an overview of key components to include in a marketing plan, such as market and product definitions, competition analysis, positioning, communication strategies, launch plans, pricing, distribution, and a 12-month schedule. It also outlines different marketing strategies like single market, multi market, total market strategies as well as strategies based on market dominance including leader, challenger, follower, and nicher.
This document discusses multinational capital budgeting. It begins by defining capital budgeting and how it involves allocating resources to maximize returns. For multinational firms, this includes projects located beyond national boundaries. The objectives are then outlined as comparing subsidiary and parent perspectives, demonstrating how to evaluate international projects, and assessing risk. Key considerations for multinational capital budgeting are also reviewed such as exchange rate fluctuations, inflation, financing arrangements, blocked funds, salvage values, competition, government incentives, and real options. Methods for adjusting project assessments for risk are also described.
The document provides an overview of financial management. It defines financial management as planning and controlling a company's finances to achieve its objectives in the most cost effective way. It discusses various short term and long term sources of finance, traditional and modern approaches to financial management, and key concepts like time value of money, risk-return tradeoff, and types of interest rates. It also provides a brief introduction to the Indian capital market and its primary and secondary segments.
The document summarizes the key points from the Financial Stability Report 2015 presented by Reserve Bank of India. It highlights that while India's macroeconomic fundamentals are relatively strong, continued global growth uncertainty remains a risk. The banking sector shows improvement with credit growth of 9.7% and asset quality stable, but stressed advances are still high. The report also covers trends in financial inclusion, insurance and pension sectors regulation aimed at strengthening stability.
Cómo presentar un proyecto a inversores. Fundacion Organizacion para el Desar...enendeavor
Cómo presentar un proyecto a Inversores. Por Emiliano Chamorro. Presidente de la Fundación Organización para el Desarrollo Analista de inversiones. Miembro del Club de Inversores Ángeles del IAE.
The bullion bank makes money through gold trading and lending operations. It buys discounted gold from small-scale miners and pawnshops, then sells it to investors at market price, profiting from the difference. The bank also lends money cheaply to miners and pawnshops secured against gold deposits, earning interest and shares of mining profits. This allows miners and pawnshops to purchase gold at a discount and sell at market price, repaying loans with interest within 200 days for a 100% return.
The slide is about evaluation of investment in projects before starting the project. Useful for Finance Manager, Finance Students, Entrepreneurs and Project Managers
This document provides an overview of financial statement analysis. It discusses evaluating business prospects and risks through credit analysis, equity analysis, accounting analysis, and financial analysis. These analyses examine a company's liquidity, solvency, profitability, and cash flows. Ratio analysis and valuation methods are also covered. The purpose is to evaluate a company's performance and financial position over time using its financial statements and additional information.
This document discusses various capital budgeting techniques used to evaluate business investment projects, including net present value (NPV), internal rate of return (IRR), profitability index (PI), payback period, and average rate of return (ARR). It provides examples of how to calculate each metric and explains the appropriate decision rules and limitations of each approach.
Examine the components of investment management with our content ready Portfolio Analysis PowerPoint Presentation Slides. The topic-specific investment strategies PowerPoint complete deck has various content ready PPT slides such as introduction to investments, objectives of portfolio management, types of investment, market scenario overview investment instruments, securities portfolio, analysis and valuation of equity securities, industry analysis PESTEL, SWOT analysis, discounted cash flow method, financial statement analysis, company cash flow statement, investment in special situations, fixed income and leveraged securities, bond valuation system, reinvestment risk table, type of convertible securities, options analysis, warrants summarization overview, derivative products, put and call options, stock index futures and options, stock indexes comparison table, broaden the investment perspective, international security market highlights, global market trends, mutual funds investment criteria overview, investment in real estate, diversified real estate classification, KPIs and dashboards, etc. Download this visually appealing easy to use financial management PPT slide to showcase factors of investing. Bedeck your ideas with our Portfolio Analysis PowerPoint Presentation Slides. Your audience will get glued onto them.
Ramesh Kumar N presents information on capital budgeting analysis. He has over 32 years of experience in banking and finance. Capital budgeting is the process of analyzing long-term investment projects to determine if they will increase shareholder value. It is a critical decision for companies, as projects involve large investments and risks. Techniques for evaluating projects include payback period, net present value (NPV), internal rate of return (IRR), and profitability index. NPV is the preferred method as it considers all cash flows and time value of money, consistent with maximizing shareholder wealth.
This document discusses key concepts related to risk and return including:
1. Definitions of actual, expected, and required returns. Expected return should equal required return for fair pricing.
2. Sources of total risk including systematic and unsystematic risk. Unsystematic risk is diversifiable while systematic risk requires compensation.
3. Measures of return such as holding period return and arithmetic/geometric means. Measures of risk include variance, standard deviation, and downside risk.
4. The relationship between risk and return showing that higher risk investments require higher expected returns. Investor indifference curves illustrate risk preferences.
5. Models relating return and risk including the CAPM and multifactor models. Security pricing relates
A derivative payoff diagram, often called a "profit and loss (P&L) diagram" or "payoff profile," is a graphical representation that shows the potential profit or loss of a derivative contract at different underlying asset prices, expiration dates, or other relevant variables. These diagrams are commonly used in options and futures trading to visually understand the potential outcomes of a position.
1. Call Option Payoff Diagram:
2. Put Option Payoff Diagram:
These are simplified payoff diagrams for individual options. More complex diagrams can be created for combinations of options and positions, such as spreads, straddles, and strangles, to visualize potential outcomes under various scenarios.
Financing Acquisitions Using Debt CapitalGreg Tobben
SC Credit Advisors provides financing advisory services for middle market acquisitions. The document includes a case study comparing two capital structures for a $100 million acquisition - a more conservatively leveraged structure with $60 million total debt and an alternative with $75 million total debt. It also discusses considerations for evaluating debt capital and different capital solutions for acquisition types such as conventional, distressed, or those involving multiple acquisitions. SC Credit Advisors aims to develop tailored financing solutions to allow clients to focus on running their businesses.
MEDTECH 2013: Morning Plenary, Roger Kitterman, Managing Partner of Innovatio...MedTechAssociation
Roger Kitterman, Managing Partner of Innovation Fund, Partners Healthcare, presents at MEDTECH 2013 on October 8, 2013 on Trends in Early Stage Medical Technologies: A Venture Perspective.
MaRS Best practices: Valuations in the biotech industry - Wayne SchnarrMaRS Discovery District
Speaker: Wayne Schnarr, healthcare consultant and analyst, Equicom, TSX
Canada's biotechnology and cleantech communities have a history of developing world-leading technologies —but for these industries to grow, they must have access to new capital to fund research and development that will allow Canada to maintain its position as a world leader.
MaRS Best practices: Valuations in the biotech industry - wayne schnarrMaRS Discovery District
Speaker: Wayne Schnarr, healthcare consultant and analyst, Equicom, TSX
Canada's biotechnology and cleantech communities have a history of developing world-leading technologies —but for these industries to grow, they must have access to new capital to fund research and development that will allow Canada to maintain its position as a world leader.
Pantheon Health is evaluating whether to license, buy, or develop the late stage prostate cancer drug Abira. The recommended strategy is for Pantheon to buy Abira and pursue a line extension. Other decisions include pricing Abira at $5,000 with future price decreases, using intravenous delivery, implementing a premium marketing strategy, and operating a patient assistance fund. This strategy is expected to generate $1.18 billion in net income and a 24% internal rate of return over 10 years.
Beacon VP Capital is an investment firm that focuses on biotech stocks related to drugs undergoing FDA review. It utilizes a team of PhD's and post-docs trained at Harvard and MIT to research drug applications and identify investment opportunities. The firm's strategy is to buy stocks of small to mid-cap biotech companies when the underlying science of their drugs shows promise, and sell when drugs are approved or denied by the FDA. Beacon VP aims to achieve above-average returns through rigorous scientific analysis of clinical data and an event-driven investment approach.
1. Select segments that are large, growing, and profitable. Focus on segments where the company can develop a sustainable competitive advantage.
2. Consider the company's resources and capabilities. Target segments that are accessible and can be served effectively with the company's available resources.
3. Target segments where customer needs closely match the benefits of the product or service offering. Focus on segments where the company can create and deliver superior customer value.
The document summarizes strategies that biotech companies can take to navigate challenges in obtaining financing. It recommends establishing strong policies and procedures, understanding complex agreements, and working with experts to avoid common pitfalls. Being prepared through measures like "audit-lite" reviews can help companies attract investors and limit risks.
Keeping House Compliance Risk Assessment Medical Device Summit.PPTXGina M. Cavalier
This document discusses the importance of conducting compliance risk assessments for medical device manufacturers. It notes that risk assessments can make compliance efforts more effective, lower legal risks, and save money in legal fees and penalties. The document outlines the key elements of a risk assessment, including who should conduct it, when it should be done, how to conduct it, what areas it should cover, and what to do with the results. It emphasizes that risk assessments have become an important part of an effective compliance program according to guidelines from the Department of Justice and regulations.
The document provides an overview of the NISM Research Analyst Certification Examination. It discusses the exam preparation, what topics will be covered, and how to study for and pass the exam. Some key points:
- The exam covers topics like economic analysis, industry analysis, company analysis both qualitatively and quantitatively, and valuation.
- Studying the NISM material, textbooks, and using online resources like mock tests on the NISM portal are recommended for preparation.
- The exam should not be seen as a test but as an opportunity to learn lifelong skills in financial analysis that can help one's career. Understanding of concepts is more important than rote memorization.
- Various valuation approaches
This document provides an introduction to Converge Advisory Group, an advisory firm that helps life sciences companies navigate challenges in research and development, regulatory approval processes, and commercialization. It outlines increasing costs of drug development and greater price pressures in the industry. Converge aims to provide strategic guidance through evidence-based solutions and leveraging artificial intelligence to analyze large datasets quickly. The firm works with pharmaceutical, biotech, and startup clients to develop strategies across a drug's lifecycle from discovery through commercialization.
This document discusses concepts related to business environment analysis including environmental analysis, diagnosis, scanning, and appraisal. It defines key terms like SWOT analysis, Porter's five forces framework, value chain analysis, and core competencies. The document provides explanations of various external factors that influence the business environment like political, economic, social, technological, and competitive forces. It also explains the analysis of internal factors like an organization's strengths, weaknesses, resources, and capabilities.
Using ROI to Build Trust and Differentiate in Today's Healthcare Marketbillians
As healthcare organizations endeavor to adopt more sophisticated business models and technology platforms, the byproducts of increased budget scrutiny, fewer selling opportunities, and the challenges of displacing competitor products have brought new complexity to healthcare sales. In this increasingly competitive marketplace, the onus is on healthcare suppliers to build trust and differentiate their solutions by quantifying the immediate and long-term value their products and services pose to provider and payer organizations.
What will you learn?
>> How to quantify full solution value as part of your go-to-market strategy
>> How to validate key value metrics with your current customers
>> How to model value realization to better engage future buyers
>> How ROI tools developed with your peers can build trust, differentiation
Early Valuation for Entrepreneurs by John ShumatePlatform Houston
Early Valuation for Entrepreneurs by John Shumate
John Shumate is CEO of ValuLogik and has focused his career on working closely with venture-backed companies. He has worked with hundreds of early- and growth-stage companies across many industries, many of them dealing with highly-technical products or business models. He believes strongly in the use of carefully-applied rigor to rationalize financial models, business plans, valuations, and other quantification tools. He has over a decade of financial experience, including buy-side and sell-side mergers and acquisitions; debt and equity capital raises; strategic consulting; complex financial modeling; business plan development; equity and derivative valuation; and venture incubation. John recently served as Vice President at Blue Equity, a growth-stage private equity firm, and Chief Financial Officer at BellaNovus, an early-stage medical device development company. He was a Senior Associate at bCatalyst, a business incubator and financial services provider to early-stage companies. He has also held analytical roles for Ethicon-Endo Surgery, a division of Johnson & Johnson, and Hilliard-Lyons, a regional brokerage house. John attended the Wharton School at the University of Pennsylvania, where he received a B.S. in Economics and dual concentrations in Finance and Management
The document summarizes research on the quality of life insurance advice provided by agents in India. It finds that agents overwhelmingly recommend whole life policies over term life policies, even when term policies better meet customers' needs for risk coverage at low cost. Agents are motivated to recommend whole life due to higher commissions. The research tests whether the quality of advice improves when disclosure requirements make agency problems more transparent or when competition is increased. It uses an audit study approach with standardized customer profiles to evaluate agent recommendations across conditions.
The document analyzes Johnson & Johnson, a large pharmaceutical and consumer goods company. It provides background on JNJ's history and subsidiaries, compares its financials to competitors, evaluates its valuation, and recommends a buy/hold position due to the company being undervalued and having strong and stable profit margins. The outlook for JNJ and the overall healthcare industry is positive, with expectations for consolidation and growth driven by an increasing insured population.
Treating customers fairly what ce os must know- finalStephenRosling
This document discusses the importance of treating customers fairly (TCF) in the financial services industry. It outlines how TCF aims to build customer trust through principles like equitable treatment, transparency, and responsible business conduct. The document notes that while some organizations have TCF policies, many may not have dedicated roles to ensure compliance. It then provides examples of best practices for implementing TCF through initiatives like training, customer communications, and management information reporting. The presentation emphasizes that achieving TCF requires a holistic, cultural change across all business functions and product lines.
The document discusses how Expense Reduction Analysts (ERA) can help XXX Corporation find extra profit by reducing non-core expenses through their proven process. ERA analyzes a company's expenses, identifies potential savings opportunities, implements recommendations, and monitors for 24 months to ensure savings. Their average cost savings across all expense categories for clients is 19.7% with no fee unless savings are achieved. The document outlines ERA's approach and encourages XXX Corporation to work with them to lower costs and increase profits.
The document discusses the future of mortgage regulation from a behavioral perspective. It notes that regulators are increasingly focused on (1) regulatory convergence across jurisdictions to address customer detriment and harm, (2) specific problem areas or "hotspots" in mortgages like buy-to-let lending and interest-only mortgages, and (3) a new approach of "behavioral regulation" that aims to design out biases and protect consumers. Behavioral regulation requires firms to identify and address biases, track acceptable consumer behavior, and ensure products meet consumer needs rather than being supply-driven. Exploiting biases risks regulatory intervention and damage to reputation.
Lesson 4 OMTE 001 Environments And Strategic Management.pptxRodantesRivera3
The document discusses strategic management and how a company's strategy is influenced by analyzing its external environment and internal strengths and weaknesses. It explains frameworks for evaluating the business environment like PESTEL and Porter's Five Forces, and tools for situational analysis including SWOT. Additionally, it covers the stages of strategic management, different types of strategies, and how factors of the external environment can impact a company's strategy.
This document provides an outline for a valuation masterclass presentation on assessing the value of companies. It discusses that valuation requires forecasting future cash flows and assessing risk. It then outlines several key valuation methods that will be covered in more detail, including using market multiples, discounted free cash flow, and discounted earnings. The presentation aims to provide associates with analytical frameworks and tools for determining a company's intrinsic value.
Similar to Art And Science Of Biotech Valuations Gs Final (20)
2. Art and Science of biotech
valuations
Valuation and financial
modelling
is a qualitative and numerical
assessment of
risks and potential rewards
3. • Each biological target, product and
company has a unique set of risks and
potential rewards.
• Despite the uniqueness of each molecular
entity and company, it is possible to establish
a general valuation process in biotechnology
4. Where is valuation important?
• Investing
• Financing
• Partnering
• Selling
5. Who invests in Biopharma?
• Angel investors
• Venture capital
• Institutional funds
• Retail investors
6. Investors establish valuations
The value of a company is the price the next
investor is willing to pay
• Private company – price set by the VC willing
to lead the next round
• Public company:
Daily basis – set by the next trade
Financing – set by the lead investor
7. Why would you buy shares of a
company ?
Mature Healthcare
• Capital gains from an increase in share price
• Income from dividends and distribution
Biotechnology
• Capital gains from an increase in share price
8. Investors also want liquidity
Exit Strategy
• IPO
• Sale or Acquisition of the company
9. What impacts daily buying & selling?
• Valuation
• Liquidity
• Some institutions may only buy deals
• News flow
• Clinical events which can impact share prices
• Development partners
• Competitive products
• Broad market performance
• Sector preferences
• Rising resource commodity prices attract
high risk money
10. Investors in mature companies pay for
growth
• Investors in mature companies pay for growth
from:
• An increase in sales of products or services;
and / or an increase in profitability (earnings
per share or eps); and / or
• An increase in dividends or distributions.
11. Biotech investors also pay for growth
• Share prices in development stage
biotechnology companies should be impacted
by clinical, regulatory and financial events
• Investors pay for:
Reduced risk; and / or
Increased potential reward.
12. Valuations by stock analysts
• How do stock analysts value a biotechnology
company that is several years from product
approval and profitability?
• Discounted earnings / cash flow
• Comparative valuation
• Event-based stock movement
14. The basics
The components of financial modelling in
increasing order of importance are:
• The Excel spreadsheet
• The assumptions for the spreadsheet
• What you do with the numbers
15. Valuation Tools – Analysing the
numbers
• Net Present Value (NPV)
The preferred valuation tool
• Risk-Adjusted NPV
Risk adjustments can be done here or at the portfolio
level
• Internal Rate of Return (IRR)
Uses the same spreadsheet and assumptions
• Payback Period
Very useful in manufacturing projects
• Monte Carlo Simulation
A structured sensitivity analysis
16. Net Present Value (NPV)
• A project or product cash flow analysis that
takes into account the fact that $1 received or
spent in 2010 is worth more than $1 received
or spent in the future
• NPV = C 0 + C 1 /(1+R1)1 + C 2 /(1+R)2+ … Cn
/(1+R)n
• C = cash flow in the specified financial period
• R = cost of capital (risk free or risk adjusted)
17. NPV – $100 received in the future
• What is the value today of $100 received in
future years (risk-free discount rate of 5%)?
YEAR NPV
2010 $100.00
2013 $86.38
2018 $67.68
2023 $53.03
2028 $41.55
18. NPV – effect of risk-adjusted discount
rates
• What is the value today of $1 billion received
in 8 years using risk-adjusted discount rates?
RATE NPV
10% $466.5 M
15% $326.9 M
20% $232.6 M
25% $167.8 M
30% $122.6 M
35% $90.6 M
19. Financial model utilization
These models are usually based on little
information and many assumptions
• The quality of your financial model will depend
upon the quality of your assumptions
• Better assumptions result from asking the right
questions
20. Financial model utilization
• They are generally not useful for absolute
valuations, unless they are based on historical
sales data
• What can you do with the financial models?
Compare NPVs for different deal structures for
the same product
Compare NPVs and risk profiles for different
products
22. Risks & Rewards
• Only about 10% of the drugs which enter
human clinical trials will eventually be
approved
• The development of novel healthcare
products is a high risk business
23. Risks & Rewards
• Neither pharma nor stock analysts are
good at picking winners
• Risk cannot be eliminated
• Risk can be mitigated by larger companies
through portfolio management
• Risks can be assessed
24. Risks & Rewards : A Balancing Act
• Assessment of risks is much more important at
the earlier stages of the development process
• Assessment of potential rewards, based on
product sales, becomes more important as the
product progresses through clinical development
• The only justification for taking these high risks is
the potential large reward from successful
product development
• Risks and potential rewards change with time and
must be continuously assessed and balanced
25. Risks & Rewards: Three Stage Process
• Approval Risks
What are the risks which could impact the
approval of this product?
• Market Potential
What is the market potential for this product?
• Market Risks
What are the risks which could impact the
market potential for this product?
27. Financial Risks
• Money has been, and is likely to remain, the
scarcest asset for Australian Biopharma
companies
• Funding must be continuously obtained from two
primary sources
• Capital markets
• Partners
• Supplementary funding is also available from
other sources Governments & Disease
associations
28. Show me the money
• Australian Biopharma companies have historically
been able to get sufficient funding from private
and public capital market sources, although
limited when compared to USA &EEC
• Liquidity was also available from periodic IPO
windows. In this context, companies preferred to
periodically get financing in the public markets
and continue development without a partner as
long as possible
29. Show me the money, PLEASE!
• The markets and financing strategies changed
dramatically starting in the fall of 2007
• Financing was more difficult
• Valuations plummeted
• IPOs were almost impossible
• Companies have been forced to consider all
strategic and financing options
• For many small biotechnology companies, the
focus became survival
30. Critical Questions
• Does the company have the financial
resources to get to the next critical value-
creation event, with a little breathing room?
• If the answer is no, can the company obtain
that financing?
• If the answer is yes, and the event is positive,
can the company then obtain additional
funding either from the capital markets or a
partner?
31. Partnering
• Big pharma:
• Has cash and infrastructure
• Needs products
• Small biotech:
• Needs cash and infrastructure
• Has products
• Partnerships will continue to be signed
32. Risks: Partnering Deal Hurdles
Buyer’s perspective:
• Buyers see thousands of opportunities every year
• Buyers are risk averse
• NIH (not invented here) syndrome by internal
R&D teams
• Detailed due diligence is expensive
• Valuation and deal terms
Seller’s perspective:
• Loss of control
• Valuation and deal terms
33. Regulatory Risks: The Critical Question
• The critical event prior to generating revenues
from sales is regulatory approval.
• “Is there a pathway to regulatory approval?”
• The starting point in assessing regulatory risk
is the end of the process.
34. Basic Approval Requirements
• Two adequately controlled phase III clinical
studies which have been designed to prove
the safety and efficacy of the new drug for a
specific therapeutic indication
• A single trial maybe acceptable for certain
diseases
35. Regulatory Approval Risks (1)
• Therapeutic indication
• Is this the first product which the agency will assess for
this therapeutic indication? If yes, is there a scientific
or medical consensus on how to assess the product?
• If there have been unsuccessful pivotal studies, was it
the product, therapeutic indication, intended
population or the clinical design?
• Is the proposed indication a new monotherapy, an
adjuvant to the current therapy or a rescue therapy to
be used only when there is no response to current
therapies?
36. Regulatory Approval Risks (2)
• Clinical Design
• Are there any differences in clinical design for
this new entity versus clinical trials conducted
for approved products?
• Are there any differences in clinical design for
the Phase 3 study and the preceding Phase 2
study?
• If there are differences, what are the
justifications for these changes?
37. Regulatory Approval Risks (3)
• Standard of Care
• Is there a single FDA-approved standard of care
for the chosen therapeutic indication?
• Is there more than one FDA-approved standard of
care for the chosen therapeutic indication?
• If there is not an FDA-approved standard of care,
is there a standard of care accepted or approved
by the relevant medical specialists?
• Are there products currently under regulatory
review or in pivotal trials which, if approved,
would result in a new standard of care?
38. Regulatory Approval Risks (4)
• Primary clinical endpoint
• Is there a clinical endpoint accepted by the FDA
for proving efficacy in this therapeutic indication?
• If not, are there clinical endpoints accepted or
approved by the relevant medical colleges?
• Are there any difficulties in attaining or
interpreting these endpoints?
• Is the primary clinical objective a superior safety
profile and non-inferior efficacy?
39. Regulatory Approval Risks (5)
• Statistical analysis
• What are the statistical assumptions used in
the design of the clinical trial?
• How are patient trial withdrawals registered?
• Is there any history of accentuated placebo
effects in this type of clinical trial?
40. Regulatory Approval Risks (6)
• Statistical versus clinical significance
• A result can be statistically significant but the clinical
benefit can be so small that it may not be clinically
significant
• For example, is a statistically significant 2-week
increase in survival also clinically significant when
survival on the current standard of care is about 6
months?
• This result may previously have only impacted
potential sales but clinical significance is now being
discussed at FDA advisory committee meetings
41. Regulatory Approval Risks (7)
• Safety profile
• The safety hurdle has been raised at the FDA
• The safety concern is highest for drugs which
are intended for chronic use and for drugs to
treat patients with medical conditions which
are not immediately life-threatening but
chronic
42. Manufacturing Approval Risk (1)
• Manufacturing is a critical regulatory component.
The manufacturing process has to meet GMPs,
The facility has to meet GMPs and be inspected
• Companies may face the following situation, If
the process or facility used for Phase 3 / approval
is not commercially viable, changes need to be
made before significant sales can be developed.
• However, the cost of getting to a commercially
viable process and facility prior to Phase 3 can
require substantial scarce resources before
knowing whether the product can be approved
43. Manufacturing Approval Risk (2)
• GMP processes must be reproducible and validated
• Chemical synthesis of small molecules is usually not a
problem
• Isolation of natural products from a biomass can
usually be controlled
• Recombinant manufacturing of proteins is complicated
but controllable
• Upstream production
• Downstream purification
• Finished dosage form
44. Manufacturing Approval Risk (3)
• Manufacturing facilities are expensive
• Small molecules
• API – contract manufacturing
• Finished dose – contract manufacturing
• Biologics
• Capital cost of fermentation or cell culture
facilities is enormous
• Contract manufacturing is available
• Changes in manufacturing scale and facilities can
change the clinical activity of a biologic
45. Scientific Risk
• If the answers to the following five questions are yes,
there is probably an acceptable level of scientific risk.
• Do we know how the drug works?
• Do we know what causes the disease and how the
disease progresses?
• Is the drug’s target a key factor in disease progression?
• Are the animal models predictive of human results?
• Does the preclinical data show that the drug is as
effective as or superior to currently approved drugs or
drugs currently in clinical development?
46. Manufacturing costs
• COGS (cost of goods sold) are an important
component of due diligence conducted by
potential partners and investors
• Rough guideline for COGS at commercial scale:
• COGS for biologics should be less than 10% of
the selling price and preferably below 5%
• COGS for small molecule products should be
less than 5% of the selling price and preferably
less than 2%
47. Market Potential: Two Approaches
• There are two basic approaches to estimating the
market potential for a new product
• The starting point for one approach is the
number of patients with the medical condition,
which is further refined by considering factors
such as the number who are diagnosed, the
number who are treated, success of current
therapies and disease progression
• The starting point for another approach is the
sales of drugs currently used to treat patients
with this specific or similar medical conditions
49. Market Risks: First-In-Class
• Where several new drugs are structurally
related, have the same biological target and
similar safety and efficacy profiles, first-in-
class (first approved) should have a market
advantage
• If the new drug is going to be a second or later
market entrant, how is it going to take market
share?
50. Market Risks: Best-In-Class
• Where several new drugs are structurally
related and have the same biological target,
best-in-class (superior safety and/or efficacy)
would become the class sales leader even
when it is not first-in-class
• If a new drug is not going to be best-in-class
and it will reach the market after the superior
product, should product development be
terminated?
51. Market Risks: Three Levels of
Competition
• There are three levels of competition:
• Currently approved drugs
• Drug candidates at the same stage of
development
• Drug candidates at an earlier stage of
development
52. Competition: Currently Approved
Drugs (1)
• Currently approved drugs are competition
only if the new drug is attempting to replace
one of the currently approved drugs
• Currently approved drugs are not competition
if the new drug is going to be used in
combination with the currently approved
drugs or will be used only after the currently
approved drugs no longer provide the desired
clinical benefit
53. Competition: Drug Candidates (2)
• Drug candidates at a similar stage of development can
be categorized and the competitive threat assessed
with respect to:
• The biological target
• Drug of the same chemical class, different chemical
class or biologic
• Comparative safety and efficacy in similar clinical trials
• Drug candidates at an earlier stage of development are
less important from a risk perspective but their
development should be monitored
• Clinical trial patient recruitment competition
54. Market Risks: Reimbursement
• Obtaining reimbursement for new drugs and
medical procedures used to be a simple case
of submitting paperwork
• The pharmaceutical industry is fighting
constantly to prevent restrictive formularies
and comparative therapeutic testing
• Launching new medical devises and
diagnostics is much easier if the new products
can be covered by existing payment codes
55. Market Exclusivity: Patents
• The basic patent life is 20 years from date of
filing. Patent life extension is available in the
U.S. To account for regulatory delays and
compensate for pediatric testing
• Data exclusivity now provides periods of
exclusivity during which a generic product
submission cannot be filed or approved if it
relies in any way on the regulatory filings of
the originator product
56. Patent Risks: Critical Questions
• Are there issued or filed patents which will
provide a period of market exclusivity?
• Would the product infringe on other patents
(freedom-to-operate)?
• Assuming product approval in year 20xy, how
much market exclusivity is provided by both
patents, patent extensions and data
exclusivity?
57. Conclusion
• Valuation and financial modelling is
qualitative and numerical assessment of risks
and potential rewards
• Anybody can crunch the numbers
• Better assumptions lead to better numbers
• Better assumptions come from asking the
right questions
58. iQnovate
• iQnovate asks the right questions
• validates the answers
• provides insight on expediting the time to market
• Prices the clinical development strategy
• Maps out the RRC strategy (registration-
reimbursement-commercialization)
• iQnovate can work with your team to help you
make an informed investment decision