General Comments / Chat, page-4666

Some potential factors causing variation:

• Variation in after-tax profit. Some of the buyouts perhaps by Pharma with higher after tax profit than the average.
• Hard negotiations by the seller ( seller’s market for certain opportunities )
• The effect of competition from other potential buyers. i.e. Multiple competing offers for partnership or buyout ( e.g. partnership offer received from party A and party B makes compelling buyout offer )
  
• Peak sales estimates in articles ( which I used for determining buyout multiples ) are often analyst estimates and these may be different to internal revenue estimates by either seller or buyer
• An agreed transaction may be valuing additional / supplementary indications
• Shape of the revenue ramp up curve and revenue ramp down ( generics will take time to be adopted, sales won’t just suddenly drop to zero )
• Size of the upfront R&D cost relative to future revenue.
• Potential tax deductibility of the R&D being considered in the rNPV model ( in first years of revenue the tax deductibility of trials costs would improve the NPAT and have a knockdown effect to IRR of the results )

Synthorx transaction is a good example of a bidding war:

https://www.fiercepharma.com/pharma...itors-its-pricey-2-5b-buyout-biotech-synthorx

Pleased that you’re having a crack at doing your own DCF models!