July 2, 2007

Valuing Biotechs: Part 2

Risk-adjusted net present value is most useful for biotechs because it can place a value on an individual drug. This helps us out for small biotechs because most of these firms' value is derived from drugs in their pipelines. With rNPV, we can find the value of each drug in a company's pipeline, add them up, and get a value for the whole company. This could also be applied to larger biotechs, but rNPV really only values the pipeline, so we would also have to find a value for the drugs that are already marketed using a traditional discounted cash flow method.

To help you out, I have made a template for valuing drugs using rNPV. You can download it here and try it out for yourself. If you have questions, send me a comment.

To put all of this into practice, I will take you through my valuation for GenVec all this week.


Anonymous said...

I wasn't able to download rNPV template. Is it still available? I would appreciate if I can get one soon. Thanks.


Great stock value.