Maximising revenue growth - assessing the potential value and proposed licensing terms for a preclinical anti-viral

The issue:

Our client, a small, privately-owned biotech company entering licensing-out negotiations with a listed, big pharma-backed biotech company, engaged PwC to advise management on how to understand the potential value of its preclinical anti-viral in order to assess proposed licensing terms.

Our approach:
  • Estimated the expected net present value (“eNPV”) of the compound for an anti-viral indication and modelled how this eNPV would improve with success through future stages of development.
  • Prepared cash flow projections from scratch using industry benchmarks on development times, costs and pricing and statistics on disease prevalence and diagnosis.
  • Estimated market penetration based on the potential partner’s likely marketing strength
  • Complemented this analysis with benchmarks on licensing deal parameters (upfront, milestones, royalties) to illustrate how the compound’s value could be split between partners
The outcome:

The client entered negotiations with a much better understanding of potential value and what levels of upfront, milestone and royalty rates were consistent with this value and related transactions.