Biotechnology valuation An Introductory Guide Karl Keegan Written by experienced financial analyst, Karl Keegan, Biotechnology Valuation: An Introductory Guide is a hands-on guide to the valuation of biotechnology companies both from a private and public market perspective for industry professionals, investors and students. Focused on product based biotechnology investments and drawing on the author's extensive experience the book begins by valuing healthcare focussed biotechnology companies which are trying to develop new therapeutics using traditional valuation metrics for those…mehr
Written by experienced financial analyst, Karl Keegan, Biotechnology Valuation: An Introductory Guide is a hands-on guide to the valuation of biotechnology companies both from a private and public market perspective for industry professionals, investors and students.
Focused on product based biotechnology investments and drawing on the author's extensive experience the book begins by valuing healthcare focussed biotechnology companies which are trying to develop new therapeutics using traditional valuation metrics for those readers unfamiliar with finance. The book then takes these principles and applies them to the unique aspects of biotechnology valuation. A background guide to the intricacies of drug development is provided including descriptions of the different clinical phases, relevant regulatory pathways and the attributes that contribute to make a successful drug. The financial analysis and the technical assessment are then combined to take the reader through multiple investment techniques that can applied for biotechnology company valuation including product NPVs, DCF valuation and real options analysis. Real world examples are used throughout the book to illuminate some of the softer aspects of valuation. The book also reviews the different methodologies used for valuing private companies in order to reduce risk and increase returns.
By highlighting some of the most common pitfalls of biotechnology valuation and providing a toolkit to establishing the value of a biotechnology company, Biotechnology Valuation: An Introductory Guide will enable the reader to develop a consistent approach and have a useful toolkit to tackle the valuation of a biotechnology company or individual drug, with confidence.
KARL KEEGAN is currently a managing director and global head of life sciences equity research at CanaccordAdams, a global investment bank focussing on small to mid cap companies. Karl has been a financial analyst covering the biotechnology sector for over eleven years and has previously worked at Dresdner Kleinwort Benson, UBS and Banc of America. Karl and his team have been consistently highly ranked in institutional surveys throughout his career. Prior to embarking on his finance career, Karl completed postdoctoral assignments in the US and UK and worked in the pharmaceutical industry both as a bench scientist and in strategic planning. Dr. Keegan holds a BSc in Pharmacology from University College Dublin, Ireland, MPhil and PhD degrees in Pharmacology from University of Cambridge, UK and MSc in Finance from London Business School, UK. A native of Dublin, Ireland, he now lives in Kent, UK.
Inhaltsangabe
Contents Acknowledgements 1 Introduction Biotechnology Background 2 Traditional Valuation Methods The Value of a Company Accounts Providing the Data for Valuation Analysis The Income Statement Balance Sheet Cash Flow Statement Income Statement Multiples Balance Sheet Multiples Summary Discounted Cash Flow Analysis Net Present Value Constructing the DCF Projecting the Cash Flow Stream Choosing a Discount Rate Other Thoughts 3 The Drug Development Process The Drug Development Process Drug Discovery and Research Pre Clinical Development Clinical Trials What Investors Should Look For When Analysing Clinical Trials Conclusion The Regulatory Process Regulation in the US Regulation in Europe The Label Timelines for Approval Post Approval Investment Lessons Case Study #1 4 Biotechnology Company Valuation Data Collation NPV of the Pipeline Calculations Sensitivity Analyses DCF of Whole Company EBIT DCF of Products Comparables Valuation NPVs are Additive Using all the Tools Available to Reach a Valuation Conclusion Market Models Conclusion Appendix 1 Example 1 Example 2 Example 3 Appendix 2 Biosimilar Update 5 Decision Trees and Real Options Decision Trees Discount Rate Deriving Scenarios Conclusion Decision Tree Example Real Options Valuing Options Estimation of the Input Variables Conclusions 6 Biotechnology Investing Types of Healthcare Investment Biotechnology Sector Evolution Biotechnology Investment Cycles Biotechnology Business Models Focus on People Cash Product Pipeline Commercial Risks Newsflow Lessons from Biotech Investing 7 Early stage Valuation Private Valuation Discounted Cash Flow Method Comparable Valuation Venture Capital Method Discount Rates Conclusion Glossary References Index
Contents Acknowledgements 1 Introduction Biotechnology Background 2 Traditional Valuation Methods The Value of a Company Accounts Providing the Data for Valuation Analysis The Income Statement Balance Sheet Cash Flow Statement Income Statement Multiples Balance Sheet Multiples Summary Discounted Cash Flow Analysis Net Present Value Constructing the DCF Projecting the Cash Flow Stream Choosing a Discount Rate Other Thoughts 3 The Drug Development Process The Drug Development Process Drug Discovery and Research Pre Clinical Development Clinical Trials What Investors Should Look For When Analysing Clinical Trials Conclusion The Regulatory Process Regulation in the US Regulation in Europe The Label Timelines for Approval Post Approval Investment Lessons Case Study #1 4 Biotechnology Company Valuation Data Collation NPV of the Pipeline Calculations Sensitivity Analyses DCF of Whole Company EBIT DCF of Products Comparables Valuation NPVs are Additive Using all the Tools Available to Reach a Valuation Conclusion Market Models Conclusion Appendix 1 Example 1 Example 2 Example 3 Appendix 2 Biosimilar Update 5 Decision Trees and Real Options Decision Trees Discount Rate Deriving Scenarios Conclusion Decision Tree Example Real Options Valuing Options Estimation of the Input Variables Conclusions 6 Biotechnology Investing Types of Healthcare Investment Biotechnology Sector Evolution Biotechnology Investment Cycles Biotechnology Business Models Focus on People Cash Product Pipeline Commercial Risks Newsflow Lessons from Biotech Investing 7 Early stage Valuation Private Valuation Discounted Cash Flow Method Comparable Valuation Venture Capital Method Discount Rates Conclusion Glossary References Index
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