Understanding and Delivering the Value of Biotech Assets
The life sciences have always been at the forefront of innovation. Biotech companies and research universities, by their very nature, continuously develop complex assets with potential to revolutionize health outcomes. Realizing this potential requires a focused development plan that will enable the optimum application of scarce financial and human resources. Key to delivering such a plan is a comprehensive analysis of the asset and the market in which it will be positioned, presented as a robust data package.
Role of a Robust Data Package (RDP)
An RDP serves as the foundation upon which an asset valuation is built. It contains detailed, organized, and verifiable information about the asset and its market. Clearly the precise contents of the package depend upon the asset’s developmental status, with a contents list growing as it moves closer to market. At a minimum, it will explore the volume of the addressable market, unmet needs, pricing dynamics, competitive environment, potential market share, opportunities for new IP, critical data to be generated and value inflection points.
The RDP serves multiple purposes, but primarily it provides a “warts and all” assessment of an asset’s potential and identifies the “killer” experiments. This informs strategy and decision-making and underpins productive interactions with external parties.
Identifying and Understanding Value
The first application of an RDP is to build a shared internal understanding of the asset with a view to enabling improved deal terms (or at least an acceptance of what is realistic) or preparation of an internal development plan that maximises “bang for buck”.
Importance of Understanding Value
Early understanding of an asset’s potential and the costed paths for realizing that potential offers two main benefits.
- A sound basis for decisions on the best strategy for an asset (choice of lead indication, internal/external development, target exit point and even whether to discontinue its development).
- An ability to articulate the properties of an asset that will ensure alignment of internal and external expectations. In turn this will enable communication with potential investors, partners, and other stakeholders (such as pressure groups, regulators and learned bodies), leading to better outcomes from such interactions.
Conclusion
In an increasingly competitive environment the ability to understand, credibly quantify and communicate an asset’s value has never been more critical. It drives strategic planning, investor relations, and resource allocation. An RDP underpins these critical success factors. By generating an RDP early and maintaining its currency, biotech companies can better deliver value, drive growth, and maximize potential for delivering societal benefits.
Written by Paul Fletcher & Graham Finch
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