PharmaDeals Review Business Commentaries
Dr Fintan Walton, PharmaVentures’ CEO, provides monthly comment on topical biotechnology and pharmaceutical industry issues. Includes access to Fintan’s commentaries broadcast on PharmaTelevision.
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Valuation Methodologies in Biotech
From issue 82 of the PharmaDeals Review (2007-04-01)
Five methods are commonly used to value companies – market capitalisation, asset valuation, comparable market multiples, comparable transactions and discounted cash flow (or DCF). The one used depends on the development stage of the company and its pipeline, but whichever approach is chosen, one key principal should drive valuations: find the highest value of all assets, tangible or intangible. Although many biotechs have already accessed the financial markets through the stock exchanges, so there is information available on market capitalisation and asset values, the majority of biotechs are privately held, so net assets and shares are rarely used as a means of valuation; rather, for the most biotechs, the comparable transactions (benchmarking) and DCF approaches are used. This features analyses the strengths and weaknesses of these two methods, looks at the significance (and value) of development options in valuation and at the utility of cash to biotechs at various stages of their development.
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Therapy Focus: Attention Deficit Hyperactivity Disorder
From issue 82 of the PharmaDeals Review (2007-04-01)
Attention deficit hyperactivity disorder (ADHD) is a highly publicised disease that is estimated to affect between 3 and 5% of children, and becomes apparent in the preschool and early school years. In addition, over 8 million adults in the US may exhibit the symptoms of ADHD, while only an estimated 600,000 are being treated. Medications have been used to treat the symptoms of ADHD for decades, with stimulants being the most often prescribed type. However, these can cause side-effects and provide potential for drug dependency and abuse. In this article, the current treatment options, market information and deal making trends are discussed, with reference to drugs in the pipeline.
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Flexibility and Fortune: AstraZeneca’s Strategic Shift
From issue 81 of the PharmaDeals Review (2007-03-01)
AstraZeneca showed remarkable flexibility for a multinational of its size when, at the beginning of the 2007, it announced a strategic review, revealing its intention to focus on active internal growth only in certain key disease areas, while maintaining a number of its current therapy areas, but exiting from a total of seven others. To fuel the pipeline in its active growth areas, AstraZeneca is to increase its externalisation activities through both the signing of licence agreements and the formation of development alliances. The company’s commitment to this process has already been clearly demonstrated with the signing of four deals worth over US$2 B. This feature discusses the challenges faced by the company – foremost, the loss of revenues from patent expiries – and analyses the deals that have been signed so far.
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H5N1: Preparing for the Worst
From issue 81 of the PharmaDeals Review (2007-03-01)
The threat of a pandemic avian influenza outbreak with the potential for human-to-human transmission has loomed over the world since 2004, yet the supply of vaccines to protect the global population, should this event happen, remains frighteningly low. Current forecasts predict that should the outbreak happen tomorrow, there would only be sufficient vaccine for 75 million people, or just one quarter of the US population. To extend the current vaccine stockpile the US Department of Health and Human Services has given research contracts totalling a potential US$246.5 M to GlaxoSmithKline, Novartis and Iomai for the development of their adjuvant technologies.
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The Pharmaceutical Deals of 2006: Lessons for 2007
From issue 81 of the PharmaDeals Review (2007-03-01)
The number of deals made within the pharmaceutical industry fell in 2006 for the second year in a row. Should that be taken as an indication that the industry is turning away from deal making? Far from it, according to PharmaVentures’ new report The Pharmaceutical Deals of 2006 – Lessons for 2007. In this report, a team of experts analyses deal making trends for 2006 in eight indication and interest areas (CNS; anticancer; drug delivery; cardiovascular; metabolics and gastrointestinal; respiratory; infectious diseases; and inflammation and musculoskeletal); all eight saw a fall in the number of deals, although this was offset by a significant leap their value. The trends identified are placed in the context of several years of alliances and partnerships, and the experts reflect on what they reveal about the changing landscape of the industry, and highlight the key drivers which will continue to direct deal making strategies through 2007.
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