Pipeline-in-a-drug, page-178

The discount rate is supposed to reflect the risk free rate of return (i.e. what could you get as a return 'risk free' as an alternative). US Treasuries are often used or a companies WACC. And whilst many pundits increase the discount rate to reflect any increased risk (say looking at a small cap volatile cashflows vs a large cap or a large cap miner with mines in Africa vs mines in Australia, or looking at a clinical stage biotech vs a BP) KJT already provided for this risk by discounting the value (chance) of each cashflow separately rather than putting it in the discount rate.

So while he may have used a 8-12% as the 'discount rate' some of those cashflows were only given a % chance of occurring based on average approvals which effectively increases the discount rate (a 50% chance of getting approval applied equates to a doubling of the discount rate used, a 33% chance triples the discount rate applied, etc)

Not sure what discount rate was used by @Kjt1969 though?