Pharmaceutical Patent Valuation Mandate in a Fundraising Context

Mandate Description

The objective of the mandate was 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 valuation was conducted to support negotiations on the issue price of new shares as part of a fundraising process.

The assignment took place in a demanding environment combining scientific, financial and regulatory considerations, where the valuation needed to reflect both the intrinsic potential of the patent portfolio and the probability of success of future clinical trials.

The engagement required close collaboration with the finance, R&D and management control teams in order to establish consistent, documented and verifiable assumptions regarding commercialisation prospects.

Key Issues

The main challenges of the mandate were to assess the value of an intangible asset characterised by high technological risk and significant commercial potential.

A key objective was to integrate the probabilities of obtaining regulatory approvals into the financial model in a rigorous and transparent manner.

The valuation also had to remain consistent with the company’s projected financing plan while ensuring methodological clarity vis-à-vis investors and the group’s auditor.

Approach and Results

The valuation relied on a strictly financial and structured framework in line with market practices.

• An income-based approach using discounted cash flow modelling was applied, incorporating commercialisation scenarios that reflected clinical success probabilities, estimated royalty rates and market projections.
• A royalty-free approach was also implemented, including sensitivity analyses on regulatory success rates and target market penetration assumptions.
• A cost-based approach was used to value historical and projected research and development expenditures, restated to neutralise the impact of public subsidies received.

Finally, a market approach was applied based on multiples observed in comparable licensing transactions for molecules at a similar development stage.

The analysis resulted in a conservative yet well-reasoned valuation range, recognised by investors as an objective reference point.

The conclusions strengthened the company’s financial credibility in the context of the fundraising process, while ensuring consistency between the valuation of the patent portfolio and the valuation of the company as a whole.