Biotechnology Venture Capital Valuations

Biotechnology Venture Capital Valuations is an authoritative, insider's perspective on biotech venture capital for both the venture capitalist and the entrepreneur. Featuring partners, presidents, and CEOs of top venture capital and investment firms, Biotechnology Venture Capital Valuations provides best practices for venture capitalists and entrepreneurs at all stages of investment with a focus on determining valuations and structuring deals. These industry experts discuss their strategies for considering a biotech investment, locating investment opportunity, assessing risk, and negotiating with the entrepreneur, as well as offering different valuation methods for a variety of common scenarios. This book provides valuable insight for those investing capital as well as those needing it, including explanation of the different goals of the venture capitalist and entrepreneur, common mistakes made on both sides, and how best to establish a productive relationship between the two.

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.

The selection of biotech stocks for investment is more difficult compared with the selection of other stocks and industries that possess historical data, since biotechnology is a recently new science. In the first edition of this book, we described the crucial parameters for the valuation of an early stage biotech company without a drug in the market. In this edition, we analyze novel financial models that can value stocks of biotech companies with products in the market or products under development (in pre-clinical and clinical studies). All of these parameters should be helpful to potential new investors when creating a stock portfolio that includes highly promising biotech companies. Our strategy of selecting highly promising stocks based on all parameters described in this book and of performing a basic financial modeling analysis with DFC and/or real options valuation models has proven very successful, as this strategy provides returns higher than 100% in most cases. In the first edition of this book, based on our strategy, we suggested that Juno Therapeutics and Kite Pharma were "hot" stocks. At that time, Kite's stock was $50.19, while Juno's stock was $54.21. Since then, Kite's stock reached $179.79, with the company acquired by Gilead for $11.9 billion, while Juno's stock reached $86.96, with the company acquired by Celgene for $9 billion. Furthermore, Moderna Therapeutics, a private company that we valued at $5.5 billion in 2016 based on our real options financial model, today has a $7.5 billion valuation. This newly revised and expanded version was written to help investors in the selection of biotech stocks based on different scientific and financial criteria.

Managing directors and partners from ten of the nation's leading VC firms on spotting the best investments in life sciences.

Strategies for Biotechnology Venture Capital 2008/2009 is an authoritative, insider's perspective securing venture capital and achieving growth in the biotech industry for VCs, entrepreneurs, and industry executives. Featuring managing partners at top VC firms and CEOs of funded biotech companies, these experts provide key strategies for all stages of an investment with a focus on raising capital, establishing valuations, determining exit strategies, and structuring deals. From spotting opportunities and evaluating potential ROI to increasing fundraising and growing the company, these specialists offer strategies for building a management team, assessing potential exit scenarios, and navigating market opportunities. The different niches presented and the breadth of perspectives represented enable readers to get inside some of leading minds of today, as these insiders offer up their thoughts around the keys to successful deal-making in this ever-evolving industry.

This invaluable book tells the reader how to invest in the healthcare biotechnology and life sciences sector, one of the fast-growing sectors of the US economy. Aimed at biotech investors as well as bioentrepreneurs and venture capitalists, it has been written from the perspectives of risk management and asset management/allocation. It strives to teach readers how to fish, rather than giving them fish. The author has over ten years of Wall Street experience in biotech research, investment banking and asset management. He holds an MBA in Finance and a PhD in Biochemistry.