Spotlight on Biotechnology: From a Technological Breakthrough to Valuation Challenges. A Case Study on Crispr Therapeutics and Crispr/Cas 9 Revolution.

40 Pages Posted: 4 Dec 2020 Last revised: 5 Dec 2020

See all articles by Emanuele Fino

Emanuele Fino

University of Pavia - Department of Economics and Management

Dennis Marco Montagna

University of Pavia - Department of Economics and Management

Giovanni Nocera

University of Pavia - Department of Economics and Management

Antonio Amendola

affiliation not provided to SSRN; AcomeA SGR

Date Written: June 11, 2020

Abstract

High volatility, no predictable cash flows and technological uncertainties make BiotechHealthcare companies’ valuation a challenging task for analysts and investors. Translating clinical promises into economic value represents a rough obstacle to be attractive business, especially in measuring the potential implications that scientific breakthroughs can bring to society and the size of the financial markets’ reaction to such events. The aim of this work is to provide a deeper understanding of dynamics behind biotech companies analysis, moving from traditional valuation models to a risk-adjusted framework, including the technological and regulatory issues approval process. We provide a full immersion in a biological and clinical context that is far and beyond the common practice proper of the financial valuation field. We focus on one of the potential technological disruptors within the clinical and healthcare framework: the CRISPR/Cas 9 system. These revolutionary “molecular scissors” are capable of editing genes by cutting out/repairing disease-causing DNA segment and inserting corrected ones, representing a potential “one-shot” cure for many diseases currently unmet by existing treatments. The potential of CRISPR/Cas9 companies inevitably pours over the financial markets and, in this work, we focus our analysis on CRISPR Therapeutics, the most advanced in clinical trials and the most complete in terms of pipeline products. This represents the perfect example of no-revenues company with an incredible technology breakthrough that could become a profitable investment opportunity. The analysis conducted has been the object of a University of Pavia master’s degree thesis. The following slides are related to the final dissertation held in June 2020 and can be considered as an anticipation of a research paper soon to be published.

Keywords: Valuation, Real Options, Biotechnology, CRSPR

JEL Classification: G10, G11, C81

Suggested Citation

Fino, Emanuele and Montagna, Dennis Marco and Nocera, Giovanni and Amendola, Antonio and Amendola, Antonio, Spotlight on Biotechnology: From a Technological Breakthrough to Valuation Challenges. A Case Study on Crispr Therapeutics and Crispr/Cas 9 Revolution. (June 11, 2020). Available at SSRN: https://ssrn.com/abstract=3709239 or http://dx.doi.org/10.2139/ssrn.3709239

Emanuele Fino

University of Pavia - Department of Economics and Management ( email )

Strada Nuova, 65
Pavia, 27100
Italy

Dennis Marco Montagna (Contact Author)

University of Pavia - Department of Economics and Management ( email )

Corso Strada Nuova, 65
Pavia, +39 0382 984402 27100
Italy

Giovanni Nocera

University of Pavia - Department of Economics and Management ( email )

Strada Nuova, 65
Pavia, 27100
Italy

Antonio Amendola

affiliation not provided to SSRN

AcomeA SGR ( email )

Largo Donegani
milano, 20121
Italy

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