Before moving forward with subject of this article you may download the excel model from the link below: Early-stage Valuation Model Valuing start-up and early stage biotechnology companies is particularly difficult. In particular, early stage biotech and pharma companies have high sunk costs (i.e. fixed costs that cannot be recovered) and at the same time…… Continue reading DCF and NPV Methods and the effect of initial sales and sales growth

Shire Pharmaceuticals acquired Viropharma for USD 4.2 bn. Was the price right? What does Comparable Multiples Method say? In order to determine whether the price was right, a sample of comparable (publicly listed) companies was collected together with their multiples (Figure 1). Values marked with red colour represent outliers. In Figure 2, the market value of…… Continue reading Viropharma Acquisition by Shire Pharmaceuticals: Was the price right?

Acquisitions has been one of the major strategies for growth in several industries including pharmaceuticals and biotechnology. It is well-known that 3/4 of all acquisitions end up as failures. This article focuses on how to identify the right acquisition targets based on the company’s needs and future prospects. Before deciding to pursue an acquisition the…… Continue reading Strategic Target Screening in M&A: When and How?

Stock Prices is the result of demand and supply forces in the capital markets. It is not necessarily linked with financial performance of the company, especially in the biotechnology sector. In fact, a significant amount of the biotech companies being acquired or after raising equity through an IPO (two of the main exit strategies) have…… Continue reading 5 Ways to Boost your Company’s Stock Price

Before reading this article, you can download the Excel version of the model from the link below: VC Financing Model – Revised All Entrepreneurs know that Venture Capitalists (VCs) want is two main things: (i) Return and (ii) Control. They want return because they have invested in a company that operates in one of the…… Continue reading A Simple VC Investment Model: What every Biotech Entrepreneur should know

In this article the Comparable Transactions Method (CTM) is discussed. In CTM the valuation of the company is based on the answering the following question: If the company was sold are there any similar transactions have taken place under similar conditions? Could these transactions be used in a comparative manner in the valuation of the…… Continue reading Valuation of Pharmaceutical and Biotechnology Companies: Comparable Transactions Method (Part 3)

In this article the Comparable Multiples Method (CMM) is discussed and analysed. CMM is based on a relatively basic principle; that the value of the target company (the company to be valued) can be derived through certain multiples (financial ratios) of similar (comparable) companies. Step 1: Analysis of the Target Company There are certain data that…… Continue reading Valuation of Pharmaceutical and Biotechnology Companies: Comparable Multiples Method (Part 2)