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Valuation in Life Sciences : A Practical Guide - Boris Bogdan

Valuation in Life Sciences

A Practical Guide

Hardcover Published: 29th April 2010
ISBN: 9783642108198
Number Of Pages: 370

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Valuation is a hot topic among life sciences professionals. There is no clear understanding on how to use the different valuation approaches and how to determine input parameters. Some do not value at all, arguing that it is not possible to get realistic and objective numbers out of it. Some claim it to be an art. In the following chapters we will provide the user with a concise val- tion manual, providing transparency and practical insight for all dealing with valuation in life sciences: project and portfolio managers, licensing executives, business developers, technology transfer managers, entrep- neurs, investors, and analysts. The purpose of the book is to explain how to apply discounted cash flow and real options valuation to life sciences p- jects, i.e. to license contracts, patents, and firms. We explain the fun- mentals and the pitfalls with case studies so that the reader is capable of performing the valuations on his own and repeat the theory in the exercises and case studies. The book is structured in five parts: In the first part, the introduction, we discuss the role of the players in the life sciences industry and their p- ticular interests. We describe why valuation is important to them, where they need it, and the current problems to it. The second part deals with the input parameters required for valuation in life sciences, i.e. success rates, costs, peak sales, and timelines.

From the reviews:

"`Valuation in Life Sciences: A Practical Guide' leads readers step by step through the theory of life sciences valuation. ... it is an important read for biotech investors. ... It is the first book of its kind that combines industry data and valuation theory together with practical advice. It includes valuation techniques and tools that allow investors to pick undervalued biotech stocks." (GEN - genetic engineering news, February, 2007)

"Valuation in Life Sciences: A Practical Guide opens up the black box and describes, step by step, a relatively simple procedure for quantitative valuation in life sciences. The book guides the reader through the recommended procedure of quantitative valuation ... . This book is recommended to those who would like to acquire a profound understanding of quantitative valuation and use a simple spreadsheet approach of their own cases." (Rudolf Gygax, Nature Biotechnology, Vol. 25 (9), 2007)

"This book provides some interesting examples - for business development and licensing executives - of where ROV may be used. ... For the general reader and business development executive there is a good explanation of ROV and its applications in life science ... . The book may also be of interest to biotechnology company business development executives and university technology transfer officers ... . this book is essential reading as it not only provides the mathematical theory but also the applications in different types of deals." (Roger Davies, Business Development & Licensing Journal, Issue 4, 2007)

From the reviews of the third edition:

"The content and discussion contained in `Valuation in Life Sciences' is excellent. The Swiss authors provide a practical guide to what mathematical tools gives meaningful valuations ... . Recommended for anyone planning to be involved in the development of a biotech venture." (C. Mathews, Amazon, December, 2010)

"The authors always keep the necessary rigour to make the book a valuable reference to professionals such as business developers, investment bankers, or analysts. ... it an excellent textbook for students as well. ... `Valuation in Life Sciences' addresses also the financial beginner with guided and easy-to-understand examples in Excel. I highly recommend the book to everyone in financial biotech." (Amazon, November, 2009)

"This book is an excellent overview of business development valuation and great for those who want to catch up on some techniques and tools. It gives an accurate picture of BD in pharma. For those in the business ... it remains a very valuable tool." (J. Serres, Amazon, March, 2009)

Introductionp. 1
The Life Sciences Industryp. 2
Academiap. 2
Biotechp. 3
Pharmap. 4
Valuationp. 5
The Role of Valuationp. 5
Current Problems in Valuationp. 6
Basics of Valuationp. 11
Introductionp. 11
Fundamentalsp. 11
Cash Flowsp. 11
Discountingp. 13
Valuation Methodsp. 29
Discounted Cash Flows Valuationp. 29
Decision Treep. 32
Real Optionsp. 36
Difference Between Real Options and Financial Optionsp. 59
Valuation of Financial Optionsp. 60
Valuation in Life Sciencesp. 67
Fundamentalsp. 67
Drug Developmentp. 67
Medical Device Development and Approvalp. 70
Costp. 72
Success Ratesp. 74
Timep. 76
Peak Salesp. 77
Discountingp. 96
Volatilityp. 100
Project Valuationp. 103
Project Valuation: DCFp. 105
Project Valuation: Decision Treep. 113
Project Valuation: Real Optionsp. 121
Simulations of Projectsp. 134
Sensitivity Analysis and Sensitivity-Simulationsp. 143
License Contract Valuationp. 146
Fundaments of Licensingp. 146
Valuation of License Contracts: DCFp. 152
Valuation of License Contracts: Real Optionsp. 160
Advanced Topics in Project and License Contract Valuationp. 169
Early-Stage Licensing with Possible Sublicensingp. 169
Simulation of License Contractsp. 194
Discovery and Preclinical License Deals: What's Realistic?p. 195
How to Read a Dealp. 197
The Virtual Company Modelp. 201
Negotiating License Dealsp. 208
Valuation License Contracts with Multiple Indicationsp. 218
Valuation Projects with Multiple Marketsp. 232
Technology Valuation and Feed Ratep. 233
IP Valuationp. 235
Pipeline Valuationp. 243
Portfolio Managementp. 245
Introductionp. 245
Qualitative Approachesp. 247
Qualitative Approachesp. 248
Optimal Portfolio Structurep. 250
Company and Stock Valuationp. 255
Introduction to Company Valuationp. 255
Theoryp. 258
Interpretation of Valuation Resultsp. 273
Simulation on Company Levelp. 275
Case Company Valuationp. 275
Stock Valuationp. 278
Advanced Company Valuationp. 284
Mergers and Acquisitionsp. 290
Other, Less Serious Approachesp. 293
Exercisesp. 305
Introductionp. 305
Exercisesp. 305
Solutionsp. 311
Case Studiesp. 331
Introductionp. 331
p. 331
p. 338
p. 346
p. 354
Referencesp. 363
Indexp. 365
Table of Contents provided by Ingram. All Rights Reserved.

ISBN: 9783642108198
ISBN-10: 3642108199
Audience: Professional
Format: Hardcover
Language: English
Number Of Pages: 370
Published: 29th April 2010
Publisher: Springer-Verlag Berlin and Heidelberg Gmbh & Co. Kg
Country of Publication: DE
Dimensions (cm): 24.2 x 16.5  x 2.9
Weight (kg): 0.72
Edition Number: 3
Edition Type: Revised