Larka

Biotech Valuation

Customer Experience - Biotech company requested Larka to perform a valuation of its company in view of an upcoming second fund-raising round.

 
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Price Is What You Pay...

Context

Biotech Co. which successfully closed a series B financing round and also concluded a strategic alliance with a big pharma requested Larka to perform a valuation of its company - under a very challenging timeframe - in view of an upcoming second fund-raising round.

Company Profile

  • UK biotech company
  • 5 preclinical stage products
  • 4 clinical stage products
  • Over 60 employees

Larka's Scope Of Intervention

Larka assisted the management team with the following:

  • Data Collection and Analytical review of the company
    • Product/Technology
      • Pre-clinical & clinical studies historical performance (i.e. success rates)
      • Pipeline products
      • Stage of development and development timelines of each product
      • Level and rate of expenditures required for R&D: current burn rate calculation and survival rate estimate
    • Market
      • Market assessment for each indication - market size, competitors, pressure from substitute product in development and/or commercialized, forecasts
      • Market strategy: estimated time to market and financial projection
      • Changes in health care and regulatory policies risk assessment
    • Strategic
      • Management - experience, incentive structure, composition and involvement of boards
      • Patent & Intellectual Property situation
      • Company’s past & current alliance or grant: attractiveness and ability to have access to capital
      • Dependencies on suppliers and partners - R&D, manufacturing, commercial…
      • Balance sheet analysis
  • One day on-site workshop with our experts
    • Questions and answers round
    • Discussion of the essential elements related to the valuation
    • Introduction to Larka’s valuation methodology
  • Running of several valuation models
    • DCF - considered here as irrelevant by common consent with the management
    • Risk adjusted Net Present Value
    • Venture capital method
    • Multiple Transactions and Partnerships Analysis
    • Comparable Listed and Non-Listed Companies Analysis
    • Larka proprietary model: combination of different methods weighting all crucial factor analysed in part 1&2
  • Data consolidation and final report drafting including
    • Mission overview
    • All internal and external data considered
    • Description of the methodology used and intermediate stages
    • Valuation of the company per method
    • Larka range of valuation and final recommendation

Conclusion

Within a 6-weeks’ timeframe, Larka undertook an in-depth assessment of Biotech Co.'s landscape and investigated its pipeline's potential. To maximise efficiency and reliability of its analysis, Larka worked closely with Biotech Co.'s management.

An important modelling effort was then carried out followed by a critical selection of the relevant benchmark deals to derive a realistic valuation range.

The fund-raising round was successfully closed - for an EV comprised in the valuation range recommended per Larka – and left Biotech Co. in a strong position to prepare efficiently its next development milestones.