A Journey Into the Biotechnology Industry: Valuation of Early-Stage Companies. Allakos’ Case Study and the Monoclonal Antibody Therapy

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

See all articles by Giovanni Nocera

Giovanni Nocera

University of Pavia - Department of Economics and Management

Dennis Marco Montagna

University of Pavia - Department of Economics and Management

Emanuele Fino

University of Pavia - Department of Economics and Management

Antonio Amendola

affiliation not provided to SSRN; AcomeA SGR

Date Written: June 1, 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 of this 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 related to approval process. The efforts made have required a full immersion in a biological and clinical context. Our work was focused on Allakos, Inc., a clinical-stage biotechnology company developing therapeutic monoclonal antibody for the treatment of various mast cells and eosinophilic related disease. Allakos lead drug candidate is antolimab (AK002), an investigational humanized monoclonal antibody that targets an inhibitory receptor selectively expressed on the surface of immune effector cells, mast cells and eosinophils. 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

JEL Classification: G10, G11, C81

Suggested Citation

Nocera, Giovanni and Montagna, Dennis Marco and Fino, Emanuele and Amendola, Antonio and Amendola, Antonio, A Journey Into the Biotechnology Industry: Valuation of Early-Stage Companies. Allakos’ Case Study and the Monoclonal Antibody Therapy (June 1, 2020). Available at SSRN: https://ssrn.com/abstract=3709335 or http://dx.doi.org/10.2139/ssrn.3709335

Giovanni Nocera

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

Emanuele Fino

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

Strada Nuova, 65
Pavia, 27100
Italy

Antonio Amendola

AcomeA SGR ( email )

Largo Donegani
milano, 20121
Italy

affiliation not provided to SSRN

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