Patent evaluation mandate as part of an institutional fundraiser
Patent valuation mandate carried out on behalf of a Swiss biotechnology company, as part of an institutional fund raising from a consortium of European investors specialized in health capital.
Mandate description
The mission aimed to determine the fair economic value of a pharmaceutical patent portfolio relating to a therapeutic molecule in the pre-clinical phase, intended for the treatment of chronic inflammatory diseases.
The evaluation was to serve as basis for negotiation for fixing the issue price of new shares issued at the time of fundraising.
The mandate was part of a demanding context, combining scientific, financial and regulatory issues, where valorization should reflect both the potential of the patent and the probability of success of future trials.
The intervention required close collaboration with the departments finance, R&D and management control, in order to establish consistent and verifiable hypotheses about marketing prospects.
Key issues
The main challenges consisted of:
- assess the value of an intangible asset with high technological risk and strong commercial potential;
- integrating the probabilities of obtaining regulatory approvals into the business model;
- ensure consistency between the valuation of the patent and the provisional financing plan;
- and ensure methodological transparency with respect to investors and the group's auditor.
Approach and results
The evaluation mobilized an approach strictly financial and structured, in accordance with market practices:
- income-based approach (updated flow method) —modeling of marketing scenarios integrating the probabilities of success of the clinical phases, estimated royalty rates and market projections;
- royalty-free approach, integrating sensitivity analysis on regulatory success rates and target market penetration rates;
- cost approach, consisting in valuing historical and projected research and development expenses, restated to neutralize the public subsidies received;
- Market approach, based on the multiples observed in comparable license transactions for molecules in a similar phase.
The study made it possible to establish a conservative but well-reasoned value interval, recognized by investors as an objective reference base.
The conclusions contributed to strengthening the financial credibility of the company in the context of fundraising, while ensuring consistency between the valuation of the patent and that of the company as a whole.
The transactions shown include those completed by, or with the involvement of, Hectelion team members in current or previous professional roles. They are presented for illustrative purposes only and do not imply exclusive responsibility by Hectelion.
Discover our TRACK RECORD
The transactions presented were carried out by, with the contribution of, or with the participation of members of the Hectelion team in the context of functions performed currently or previously.