Krispi,Thanks for the info. However, suggest you look at the...

Krispi,

Thanks for the info. However, suggest you look at the valuation model in a different way. The company has already provided their estimate of what the drug would cost patients per year , A$18K. there are about 100K patients with IIH and around another 30K new patients per year. Figure out what proportion of patients will have severe enough disease to warrant therapy, build in non-compliance due to side effects of treatment (it is not nil!) and due to need for daily s/c injection etc and work out estimated peak sales. Once you have peak sales, you can work out the NPV , after taking into account various costs (cogs, commercial costs etc). Risk adjust it for the probability of Ph3 success (again it's not 100%!) and probability of approval (again it's not 100%!). Then if they were to partner it , they would typically receive a minority percentage of project value.

Working out the potential cost savings to the health care system is useful, especially when considering pricing and reimbursement particularly in Europe , but only one component for this consideration and certainly not the way to estimate the value of the asset/Company. Also keep in mind, this treatment will not have a 100% success rate , even if "successful" in Phase 3.

When you run the numbers this way, you'll come up with a more realistic number and one that is multiple fold less.

Cheers
A.