Dynamic rNPV Drug
Valuation Calculator 		     
           
           
           
  BEFORE GOING FURTHER, PLEASE READ THE FOLLOWING:  
  This Dynamic Risk-Adjusted Net Present Value (rNPV) Drug Valuation Calculator allows you to enter your own numbers, assumptions, and projections in order to help provide you with your own personal and customized valuation for a drug. The rNPV method of valuation is considered the preferred method by most biotech analysts. THE YELLOW HIGHLIGHTED CELLS WITHIN EACH OF THE TABS CAN BE ADJUSTED TO THE USER'S PREFERENCES. The valuation result is a discounted cash flow (DCF) valuation over 15 years showing the resulting Target Share Price. The DCF valuation is risk-adjusted by the probability of success percentages set forth in the assumptions for the drug. Up to 12 reputable third-party probability success models can be selected, or you can customize your own probability model to your liking. Projected sales can be customized according to the dynamic variables and provide for a high-degree of flexibility. ENJOY!  
   
   
   
   
   
    * Disclosures/Disclaimers: This calculator has been prepared by Robert Toczycki, the author, and is intended for informational and illustrative purposes only, and does not purport to show actual or accurate results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.  All investments entail risks. There is no guarantee that investment strategies will achieve the desired results. No representation is being made that any account, product, or strategy will or is likely to achieve profits, losses, or results similar to those disclosed, if any. No part of this calculator may be reproduced in any manner, in whole or in part, without the prior written permission of the author. This calculator is provided with the understanding that with respect to the material provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. The author does not purport to and does not, in any fashion, provide tax, accounting, financial, actuarial, record keeping, broker/dealer or any related services. You may not rely on the statements contained herein. The author shall not have any liability for any damages of any kind whatsoever relating to this material. You should consult your advisor(s) with respect to these areas. The author certifies that any and all calculations expressed in this valuation calculator accurately reflect his knowledge about how the calculations are performed, and the author was not directly or indirectly compensated related to building this calculator, nor to the specific calculations and/or valuations determined by this calculator. By using this calculator, you acknowledge, understand and accept the foregoing.  
     
     
     
     
     
     
     
     
     
   
   
   
  Copyright © 2019, Robert Toczycki. All Rights Reserved.    
               
   Assumptions  
                     
   Drug pipeline stage
                         
 
If curative, patient population decreases by number of patients treated the prior year.  Is this a curative treatment?
If curative, patient population decreases by number of patients treated the prior year.
                         
   Drug Probability of Success Model
                         
   Probability of Success                          
   Override Prob. of Success? / % Prob.
                         
   Total # treatments                          
   Region Assumptions U.S. EU ROW                          
   Total patient population (in thousands)                          
   % Patient population increase per year                          
   % Patients diagnosed                          
   % Patients getting any treatment                  
   # of years until approval                  
   % Initial market penetration                          
   % Maximum market penetration                          
   # of years to get max penetration                          
   Initial treatment cost (in thousands $)                          
   % Treatment cost increase per year                          
   Royalty Rate / Revenue % (% collectable)                          
   Account for Decline / Cannibalization?
                         
      # of years until decline begins                          
      % Initial decline                          
      % Maximum decline                          
      # of years to get max decline                          
   
   Number of patients  
   Number diagnosed  
   Number treated  
   Market penetration  
   Treatable patients  
   Decline rate  
   Patients treated  
   Treatment cost (in thousands $)  
 Milestones / Custom Adj ($M)
   Total product sales ($M)  
   Royalty / Revenue ($M)  
   Risk-Adjusted Revenue ($M)  
   
   Number of patients  
   Number diagnosed  
   Number treated  
   Market penetration  
   Treatable patients  
   Decline rate  
   Patients treated  
   Treatment cost (in thousands $)  
 Milestones / Custom Adj ($M)
   Total product sales ($M)  
   Royalty / Revenue ($M)  
   Risk-Adjusted Revenue ($M)  
   
   Number of patients  
   Number diagnosed  
   Number treated  
   Market penetration  
   Treatable patients  
   Decline rate  
   Patients treated  
   Treatment cost (in thousands $)  
 Milestones / Custom Adj ($M)
   Total product sales ($M)  
   Royalty / Revenue ($M)  
   Risk-Adjusted Revenue ($M)  
   Total Milestones  
   Total Milestones risk-adjusted  
   Total Royalty / Revenue  
   Total Risk-Adjusted Revenue  
   Total Revenue w/Milestones  
   Risk-Adjusted EBT w/Milestones  
   Figures in thousands, unless otherwise stated                            
                                   
   RISK-ADJUSTED DCF ANALYSIS  
   Year 1  
   Risk-Adjusted EBT  
   Less:  Taxes  
   Tax Rate (%)  
   Expenses 1 (% of Risk-Adjusted EBT)  
   Expenses 2 (% growth year-over-year)  
   Expenses 3 (manual adjustment)  
   Risk-Adjusted EAT and Expenses  
   Discount Period  
   Discount Factor  
   NPV of Cash Flows  
  DCF VALUATION   VALUATION METRICS                
   Terminal Growth Rate    Select Starting Year                
   Terminal Value    # of Years to Calculate NPV                
   Discount Rate    Monetary Scale (MS) ($)
               
   NPV of FCF    Tax Rate                
   NPV of Terminal Value    Expenses 1 (% of Risk-Adjusted EBT)
 (e.g. COGS) 		               
   Total NPV                  
   TV as % of total    Expenses 2 (% growth year-over-year)
 (e.g. R&D, SG&A) 		               
   Net Cash/(Debt)                  
   Equity Value                            
   $ / Share                  
   Shares outstanding                  
                                   
   
  PhRMA (2003) 0.0% 0.0% 0.0% 15.0% 30.0% 60.0% 90.0% 100.0%  
  DiMasi (2010) 0.0% 0.0% 0.0% 13.3% 21.1% 55.5% 91.0% 100.0%  
  Keegan (2008) 0.0% 0.0% 0.0% 15.0% 25.0% 60.0% 90.0% 100.0%  
  Stewart (2002) 0.0% 0.0% 0.0% 20.0% 30.0% 67.0% 80.0% 100.0%  
  Grabowski (1991) 0.0% 0.0% 0.0% 23.0% 31.0% 64.0% 64.0% 100.0%  
  Kaitin (1995) 0.0% 0.0% 0.0% 20.0% 30.0% 62.0% 75.0% 100.0%  
  BIO (2016) 0.0% 0.0% 0.0% 11.5% 17.4% 50.6% 88.4% 100.0%  
  Windeye Partners (2018) 0.0% 0.0% 0.0% 19.0% 26.8% 59.5% 93.0% 100.0%  
  Struck (1994) 0.0% 11.0% 11.0% 25.0% 33.0% 66.0% 100.0% 100.0%  
  Myers and Howe (1997) 0.0% 12.9% 21.5% 23.9% 31.9% 63.7% 75.0% 100.0%  
  Lehman Brothers (1997) 0.0% 4.0% 4.0% 10.0% 30.0% 63.0% 90.0% 100.0%  
  DillonCapital (2015) 0.0% 11.0% 11.0% 18.7% 35.9% 63.0% 90.0% 100.0%  
  0.0% 3.2% 4.0% 17.9% 28.5% 61.2% 85.5% 100.0%  
  Custom  
                     
  Discount Rate Guide from Avance Study   rNPV Discount Rate Table (Avance Study)      
  Company Development Stage
  DR Type Early-Stage Mid-Stage Late-Stage      
  Type of Discount Rate: 1 (Low) - 9 (High)
  1 (Low) 12.00% 10.00% 9.00%      
  Suggested Discount Rate   2 14.00% 11.50% 10.38%      
          3 16.00% 13.00% 11.75%      
  Early-Stage:  Preclinical - PreIND   4 18.00% 14.50% 13.13%      
  Mid-Stage:  Phase 1 - Phase 2   5 (Medium) 20.00% 16.00% 14.50%      
  Late-Stage:  Phase 3 - Approval   6 22.00% 17.50% 15.88%      
          7 24.00% 19.00% 17.25%      
  Discount rates in drug development, Biostrat & Avance, Villiger & Nielsen (2013)   8 26.00% 20.50% 18.63%      
  NPV vs. rNPV, Avance (Feb. 2011)   9 (High) 28.00% 22.00% 20.00%      
  Discount Rates for Biotech Companies, Avance (Jan. 2008)