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
Date Written: June 1, 2020
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
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