In his book ‘Capitalism, Socialism, and Democracy’, Joseph Schumpeter argues that capitalism is ever-changing as new innovations create new markets and rendering existing ones obsolete over time, thus ‘destructing’ them . This process was described by Schumpeter as ‘creative destruction’. Here are a few examples of creative destruction: Smartphones replacing MP3 players which replaced CD…… Continue reading Generative AI and ‘Creative Destruction’
Valuation / ownership is one of the key subjects for negotiation between VCs and start-ups, especially at the seed stage where technology validation, go-to-market and commercial risks are high. The relevant model that includes the figures discussed later is attached in the link below: VC financing model This model can help founders get in the…… Continue reading Why do VC funds need substantial ownership in seed rounds?
VC investment in deep tech is on the rise. But how is deep tech defined? My favorite definition of deep tech is provided by Nathan Benaich (Founder and General Partner at Air Street Capital) ‘For a startup to earn the ‘deep tech’ label, there must be science or engineering risk in getting the idea to…… Continue reading Why a Deep Tech strategy makes sense
All my previous posts have been related to the market and financial aspects of the pharma and biotech industry. In this post, I am focusing on the human resources aspects and why Biotech is different. Biotech can be categorised as large biotech or big pharma (Novartis, Amgen, Biotech, Celgene and the like) and smaller biotech…… Continue reading How to address challenges in Biotech start-up recruitment
Few years back, I wrote a post where I constructed the efficient frontier curve based on a combination of 2 assets: biotech stocks (large cap and mid cap) and US treasury bills (see here). The sample included the returns of the two asset types between the period June 2007 – December 2016. In this updated…… Continue reading Portfolio Management and COVID-19: Market Signals, Biotech, and the S&P 500
How do VCs estimate their return on investment? There have been various studies which have produced varying results due to the different nature of VCs in terms of location, industry focus, fund size, preferred financing stage and team experience. In this post, I have developed a quick, simple, one staged model that determines the minimum…… Continue reading The Mathematics of Venture Capital Returns
Over recent years, biotechnology has uncovered new horizons in transforming patients’ lives. Insulin was the first biologic drug and was approved in 1982. Currently, the biotech market is valued at ~$100bn demonstrating explosive growth the past few decades. Now biotech has come to an era of gene therapy, personalised medicine, stem cell therapies and digital…… Continue reading Implantable biolectronics: The future of biomedicine?
Celgene recently disposed Otezla indicated for the treatment of psoriasis and psoriatic arthritis to Amgen in $13.4bn deal. Therefore, the question that is raised at this point is whether the deal was good for both companies strategically and financially. From a strategic perspective it will provide Amgen with rights of a blockbuster drug with growing…… Continue reading Is the Celgene / Amgen deal for Otezla fair?
The methodology for valuing biotech products using the risk-adjusted NPV (‘rNPV’) approach has been well established. The concept behind the rNPV method is taking into account the risk of success / failure in clinical trials for clinical development products. In this way, companies can prioritise their portfolio based on the expected value of each product.…… Continue reading Biotech rNPV Valuation using Monte Carlo simulation – A simple approach
Big pharma companies have undoubtedly been suffering from low R&D productivity pushing them to revise their business strategy. Although inorganic R&D strategies through M&A and in-licensing deals have boosted big pharma’s late stage pipeline, a viable organic R&D model to secure long-term survival is paramount. Novartis is a bright example of a big pharma company…… Continue reading Is Novartis leading the way in pharma R&D restructuring?
Regulators and payers have raised major concerns over recent spikes in drug prices. Unjustified high drug prices (see Valeant case) have triggered not only political comments from U.S. presidential candidates in the previous U.S. elections (see Hillary Clinton’s statement) but also a broader discussion on how drug prices can be regulated and whether the European drug pricing model…… Continue reading Can U.S. Drug Prices be Justified? A U.S. vs. E.U. Comparison
You can find my simple model for your use below: licensing-deal-model_ Drawing on past licensing deals in the biotech space, one can see a major shift in licensing deals strategy. Big pharma is placing large bets on early-stage assets that could potentially provide pharma with long-term growth. A major challenge that licensors and licensees face…… Continue reading A Simple Licensing Deal Model for your Biotech Start-Up