final presentation€¦ · •we provided analysis of market access as well as valuation for...
TRANSCRIPT
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Final Presentation May 14th 2014
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• Project Scope
• Executive Summary
• Market Access
• Valuation
• Deal Structures
• Final Recommendations
Agenda
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Project Scope
Come up with strategies to take anti-CTLA4 through FDA approval
Sell or License Market Access Valuation
• Unmet needs • Driver and barriers for
breast cancer biological therapy
• Oncologists survey
• Identify big Pharma companies to sell or license the new therapy
• Identify an optimal deal structure
• Determine risk adjusted net present value
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• We provided analysis of market access as well as valuation for anti-CTLA4, and recommended strategies to finance the cost to FDA approval.
• Methods of analysis include literature review, primary research, economic modeling and identification of deal structures using business databases.
• Our research have shown that
1. there are significant unmet needs in metastatic breast cancer.
2. once in the market anti-CTLA4 could have a maximum annual revenue of $1.9B.
3. The best deal structures for Premier Biomedical are a) venture capital funding followed by selling to a big pharmaceutical company b) out-licensing.
Executive Summary
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Market Access Unmet needs, drivers and barriers for adoption of biological therapy for breast cancer
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Market Access- guidelines for breast cancer therapy
Mode of therapy Unmet needs
Hormone Receptor Positive
Primary therapy - hormonal therapy (HT) • Additional line of HT until refractory
Efficacy, 50 % refraction, resistance
Secondary therapy - chemotherapy • Visceral metastasis • Refractory to HT
Efficacy, toxicity, resistance
Hormone Receptor Negative
Her2 positive – chemotherapy plus monoclonal antibody for Her2
Side effects, very high cost
Her2 negative- chemotherapy (combination or sequential single-agent)
Efficacy, toxicity
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Oncologist Survey Challenges of existing drugs: 1. What are the biggest challenges oncologists face when treating breast cancer? – In what ways can the drug industry help to alleviate this issue? 2. What instances or subclasses of breast cancer are most lacking effective treatment strategies? – What obstacles do you foresee for novel therapeutics to address these concerns? Potential of new therapy: 3. What if any concerns do you have about biologics-based therapies? – What existing biologics do you currently prescribe regularly? – What types of complications have you run into with these biologics – Do you have any insights into cause (e.g. target-specific reaction or immune reaction to biologic agent)? – In what ways are biologics an improvement over alternative therapies? – In what ways are they still inferior? 4. What information is critical to convince you of the safety and efficacy of a new breast cancer drug? – How are you informed of a novel therapy? – What details go into your decision to adopt its use? – How does your previous criteria change, if at all, when the therapy is a biologic?
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Unmet needs and market access for breast cancer therapy
• Early prediction • Survival vs. Tumor
Stage/Grade
Drug resistance • Triple-negative
• Adaptation to single-target Rx
Metastatic disease • Bone, brain, liver, lung
• Leptomeningeal disease
Cancer recurrence • Rate: disease type, treatment
type
• Treatment: location, profile of recurrence
Therapeutic side effects • Quality of life
• Cost of treatment
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Drivers for anti-CTLA4 success
1. Ipilimumab (anti-CTLA4) precedent in metastatic melanoma.
2. Shows potential against triple negative and metastatic disease.
3. Potential combination therapy with current standard therapy.
4. Clinician’s openness to biologics.
• Ease of patient enrollment
• Notification of new trials
5. Crossing the blood-brain barrier with T-cell targeted biologics.
6. Less likelihood of immunosuppression and alopecia.
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Barriers for adopting anti-CTLA4
• Higher costs of development.
• Limited Bioavailability.
• Government regulations (current and projected).
• Evaluating products that don’t have enough precedent in the system.
• Could be required to demonstrate cost-effectiveness measured in cost per
quality adjusted life year.
• Immune reactions.
• Skin rashes, stomatitis, diarrhea.
• Cardiac Toxicity (trastuzumab/Herceptin).
• HER2 dimerization inhibitors (Pertuzumab).
• Competition: anti-proliferative biologics in clinical trial for metastatic breast
cancer in combination with aromatase inhibitors.
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Valuation Valuation of a novel biological therapy for breast cancer
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Valuation: Risk adjusted Discounted Cash Flows
DCF have to be corrected to take into account the probabilities of success in each stage:
𝑟𝑁𝑃𝑉 = 𝐶𝐹𝑖(1 + 𝑟)𝑖
𝑅0𝑅𝑖 ,
𝑖
• 𝐶𝐹𝑖 is the CF at time 𝑖.
• 𝑟 is the cost of capital.
• 𝑅0 is the likelihood that the drug gets to the market.
• 𝑅𝑖 is the probability after 𝑖 years being successful.
• 𝑅0/𝑅𝑖 is the likelihood of the cash flow actually materializing.
[1] Stewart JJ, Allison PN, Johnson RS. Putting a price on biotechnology. Nature Biotechonology 2001; 19. [2] Bogdan B, Villiger R. Valuation in Life Sciences. Springer-Verlag 2008.
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Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Preclinical
Clinical I
Clinical II
Clnical III
FDA Review
Revenues
IND Submission NDA Filing
Patent
Expires
Timeline
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Failure rate Likelihood of reaching
revenue
Preclinical Passed 18%
Clinical I 13% 18%
Clinical II 60% 21%
Clinical III 43% 51%
Filing 10% 90%
Projected failure rates for developing anti-CTLA4
[1] Monoclonal Antibodies Market in Breast Cancer to 2019, GBI market research report. [2] Oncology Clinical trials: Drug Development Resources and Case Studies. Cutting edge reports.
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Phase I Phase II Phase II
Cost per patient $45200 $69700 $74800
Number of Patients
75 155 1300
Overhead 500k 1M 1.5M
Total 3.89M 11.8 M 97.2M
Cost of clinical trial
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Name of the drug Price Description
Herceptin $7430 Very expensive
Avastin $8333 Little not worthy
Kadcyla $2954 Expensive
Perjeta $4337 HER2 receptor antagonists
Xgeva $1793 Also used for giant cell tumor of
bone
Range: $1793~$8333
Revenue: Pricing
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Low High
Patient Distribution Range 150,000 160,000
Monthly Drug Price Range $1,793 $8,333 Expected Treatment Range
(months) 12 12
Market Share Range (%) 5 35
Revenue: $1,886,851,945
Revenue: Monte Carlo Simulation
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-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
550,000
600,000
0 2 4 6 8 10 12
rNp
v($
1,0
00
s)
Year
Start of Phase III
Start of Phase II
Summary: rNPV
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Deal Structures Trends in M&A and Alliances Deals and Proposed Exit Strategy
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Deals and strategic alliances in oncology
Thomson Reuters Therapeutic Area Insights – Oncology Deal Making & Development Trends, 2008 – 2012
• Oncology is one of the largest and fastest growing therapeutic areas in terms of drug development activity
• 131 oncology M&A transactions worth a total disclosed value of $92 billion
• 569 oncology license and joint venture deals worth a total of $44.7 billion
• Phase II oncology assets earned the largest step-up in committed cash for license and joint venture deals: Phase II assets earned a median upfront fee of $31.5 million for Sellers, a 142% jump from the $13 million paid for Phase I assets. Thomson Reuter’s data suggested that no other stage confers a comparable premium.
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Oncology remains to be the perennial licensing favorite
Strategic Transactions; Data set includes all deals by major acquirers (large pharma and biotech companies with marketed products)
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There are two main strategic options to keep in mind
Venture capital
funding and acquisition
Out-licensing
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Venture Capital How venture capitals have adopted to newer trends
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Venture Capital flow of money is disconnected
Quaker Partners
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How VCs decide on picking a portfolio to invest
Quaker Partners
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Venture fund investment criteria “Operate according to the Rule of Threes: Invest in Phase III drugs and target a 3x return in three years”
- Jim Healy, General Partner of Sofinnova Ventures -
Superior Technology • Breakthrough technology, product or services
• Solid intellectual property
Large Market(s) or Clearly Defined Specialty Market • Attractive to wide range of potential co-development and marketing partners
• Attractive to multiple acquirers
• Clear strategy of product and company development
Capital Efficient • Clear development and regulatory milestones
• Reasonable clinical trial and manufacturing costs
Financially Attractive • Appropriate valuation
• Ability to form strong investment syndicate
• Multiple exit possibilities
Quaker Partners
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Venture capitals are hanging on longer until the trade sale
HBM Pharma, Biotech M&A Report
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Avalon Ventures: Discovery-Deal-as-Exit
• Afraxis Pharmaceuticals (January 2013) • Alliance with Genentech – undisclosed upfront plus up to $187.5 million in
milestones for kinase-inhibitor discovery program
• Zacharon Pharmaceuticals (January 2013) • $10 million plus undisclosed earn-outs to buy glycosylation technology
biotech
• RQx Pharmaceuticals (February 2013) • Alliance with Genentech to discover novel antibiotics
• Undisclosed upfront plus $111 million in potential milestones
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Avalon/GSK: scaling the model
• Pharma needs innovative pipeline candidates. VCs need faster, cheaper and easier exits.
• Avalon Ventures spends up to $30mm and GSK up to $465mm to fund up to 10 single-asset biotech companies.
• GSK can exercise an option to acquire each company at IND stage.
• Each acquisition would return 3-4x to Avalon, and earn-outs could take returns to 14x.
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Most active life science venture capital firms in 2013 • Domain Associates
• HealthCare Ventures
• Polaris Venture Partners
• MPM Capital
• Alta Partners
• ARCH Venture Partners
• Flagship Ventures
• SV Life Sciences Advisers
• Sanderling Ventures
• Kleiner Perkins Caufield & Byers
• InterWest Partners
• Sofinnova Ventures
• Burrill & Company
• New Enterprise Associates
• OrbiMed Advisors
• Quaker BioVentures
• Venrock Associates*
National Venture Capital Association, FierceBiotech
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Corporate Venture Capital The investment of corporate funds directly in external start-up companies
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The Impact of CVC on the Atlas Venture Portfolio
Bruce Booth, Atlas Venture; Blue in pie chart represents percentage of portfolio companies with corporate venture investors.
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CVC may be an another option
Impact on acquisition prices • Building relationships, accessing technology early • Filling the void left by traditional VC
START-UP, October 2012; Acquisitions of VC-backed biotechs from Jan 2006-Aug 2012
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Pharma As Strategic LP
Lilly Mirror Portfolio Merck Research Venture Fund
venBIo Index Life IV
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Previous Alliances and Acquisition Transactions
Date Big Pharma Revenue
(million $) Startup
(location) Stage of the
product Product name, lab code
or generic name Deal Value
Upfront (million)
Details on the deal
Mar012010 Novartis $58,831.00mm Institut Merieux Phase II TG4010; MVAMUC1IL2 $10.00mm $10.00mm Total Milestones (pre and postsales): $955.90mm
Jul012011 Roche $52,531.70mm mtm Laboratories AG $265.00mm $180.00mm
Dec012011 Amgen Inc. $18,676,000,000 Watson Pharmaceuticals Inc. N/A Biosimilars to Herceptin, Avastin, Rituxan, and Erbitux 400,000,000 N/A
Apr012012 Celgene Corp. $6,493,900,000 Epizyme Inc. Pre-Clinical DOT1L HMT Inhibitor 90,000,000 90,000,000
Development Milestones = $25,000,000; Milestones = $160,000,000
Jul012012 Eisai Co. Ltd. $8,035,180,000 Verastem Inc. Pre-Clinical Salinomycin (VS507) N/A N/A
Verastem owns the analogs generated in the 12-month collaboration. Eisai receives royalties on commerical sales of identified products. During the term of the agreement, Eisai has a right of first negotiation for products that are created through the collaboration.
Jun012013 Amgen Inc. $18,676,000,000 Onyx Pharmaceuticals Inc. Phase III Nexavar (sorafenib) 9,167,350,000 9,167,350,000
Jun012013 Johnson & Johnson $71,312,00mm Arnolherapeutlcs Inc.
Research, Preclinical
Onapristone N/A N/A
Jun012013 Johnson & Johnson $71,312,00mm Aragon Pharmaceutlcals Inc. Phase II ARN509 $1,000.00mm $650mm
Aug012013 Bayer HealthCare LLC $10,143.50mm Compugen Ltd. Research; Preclinical N/A, "Immune checkpoint inhibitor" $40.00mm $10.00mm
Total Milestones (pre and postsales): $500.00mm
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Date Big Pharma Revenue
(million $) Startup
(location) Stage of the
product Product name, lab code
or generic name Deal Value
Upfront (million)
Details on the deal
Sep012013 Novartis $58,831.00mm Regenerex LLC Research; Discovery Facilitating Cell Therapy N/A N/A
Sep012013 Roche $52,531.70mm Heidelberg Pharma GMBH Research; Preclinical ADC technology N/A N/A
Sep012013 Teva Pharmaceutical Industries Ltd. $20,314.00mm
Cancer Research UK’s Cancer Research Technology Ltd. (CRT)
Research Discovery N/A N/A N/A
Oct012013 AstraZeneca $25,711.00mm Taris Biomedical Inc. Clinical Taris N/A N/A
Oct012013 Johnson & Johnson $71,312,00mm DCPrime BV Pre-Clinical DCOne N/A N/A
Nov012013 Clovis Oncology 0 EOS SPA Phase II Lucitanib 420,510,000 200,500,000
Dec012013 Takeda $18,338.30mm Natrogen Phase II Naturaalpha N/A N/A
Dec012013 Johnson&Johnson $71,312,00mm CSL Ltd. Clinical Development Phase I CSL362 N/A N/A
Jan012014 AriadPharmaceuticalsInc. $45.56mm
Specialised Therapeutics Australia Pty. Ltd. marketed Ponatinib N/A N/A
Jan012014 Johnson & Johnson $71,312,00mm Scholar Rock Inc. Research; Discovery N/A, autoimmune disease and cancer immunotherapies N/A N/A
Jan012014 Johnson & Johnson $71,312,00mm Adaptive Biotechnologies Corp. Research; Preclinical immunoSEQ; The Drug: N/A, for Cancer Immune Disorders N/A N/A
Jan012014 Johnson & Johnson $71,312,00mm BiocerOX Products BV Research; Discovery N/A, for Tumor, Solidtype N/A N/A
Jan012014 AstraZeneca PLC $25,711.00mm Probiodrug AG Research; Preclinical N/A, for Cancer Inflammation N/A N/A
Jan012014 Novartis AG $58,831.00mm Eureka Therapeutics Inc. Research; Discovery N/A, ESK antibodies for all indications N/A N/A
Jan012014 AstraZeneca PLC $25,711.00mm Flanders Institute for Biotechnology Research; Preclinical
N/A, small molecule MALT1 protease inhibitors N/A N/A
Jan012014 Johnson & Johnson $71,312,00mm Nodality Research; Discovery SCNP N/A N/A
Feb012014 Novartis $58,831.00mm CoStim Phamaceuticals Inc N/A, drugs for Cancer Immune Disorders
100% Equity purchase N/A
Feb012014 Pfizer $51,584.00mm Ichor Medical Systems Inc. Research; Preclinical TriGrid intramuscular electroporation technology N/A N/A
Mar012014 Johnson & Johnson $71,312,00mm Genmab AS Phase I Daratumumab $135.03mm $135.03mm Total Milestones (pre and postsales): $1,100.00mm
Mar012014 BristolMyers Squibb Co. $16,385.00mm Five Prime Therapeutics Inc. Research; Discovery N/A, for cancer immunotherapeutics $50.50mm $41.00mm
Total Milestones (pre and postsales): $300.00mm
Apr012014 Roche $52,531.70mm Oryzon Genomics SA Phase II ORY1001 $21.00mm N/A Total Milestones (pre and postsales): $500.00mm
Apr012014 Celgene Corp. $6,493.90mm Forma Therapeutics Holdings LLC Research; Discovery N/A, for cancer $225.00mm $225.00mm
Total Milestones (pre and postsales): $375.00mm
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Celgene Corporation An example of an active big pharma in the alliances deals
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Celgene deal making strategies
• Shaping of its future pipeline by signing early-stage deals with a variety of innovative biotechnology companies. This is backed by billions of dollars off lenalidomide (Revlimid) for multiple myeloma and its capability to run late-stage clinical trials.
• Structural flexibility by molding a specific deal, in a specific way, for a specific company
“Celgene stands out in my mind as being very willing to say ‘Ok, how do you approach drug discover? Ok, we buy into that. We do it a little bit differently, but let’s let you try your approach”
- Steven Tregay, CEO of Forma Therapeutics -
• Hands-off method by allowing its partners to manage and operate.
• Approaches • Build-to-Buy: Upfront payment to collaborate on certain programs and gaining of the exclusive option to buy the
company down the road. (Quanticel Pharmaceuticals, VentiRx Pharmaceuticals)
• Large per-drug check tied to various milestones (Concert Pharmaceuticals)
• Extendable option to license and develop any of the pipeline drugs (Agios Pharmaceuticals)
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Celgene in preclinical testings
Company Location Date of Deal Scientific Niche Size of Upfront Payment
GlobeImmune Louisville, CO May, 2009 Cancer immunotherapy $40m
Agios Pharmaceuticals Cambridge, MA April, 2010 Cancer metabolism $130m
Foundation Medicine Cambridge, MA May, 2011 Cancer diagnostics, patient stratification Undisclosed
Acceleron Pharma Cambridge, MA August, 2011 Anemia drug development $25m
Quanticel Pharmaceuticals San Francisco, CA November, 2011 Identifies biomarkers for drug discovery $45m over three years
Epizyme Cambridge, MA April, 2012 Epigenetics $90m
AnaptysBio San Diego, CA April, 2012 Antibodies for cancer & inflammation Undisclosed
Inhibrx San Diego June, 2012 Undisclosed antibody drug candidate undisclosed
VentiRx Pharmaceuticals Seattle Oct., 2012 Immunotherapy $35m
PharmAria San Diego Oct., 2012 Small molecules for cancer, fibrotic disease undisclosed
Sutro Biopharma South San Francisco Dec., 2012 Antibody-drug conjugates, bispecific antibodies
undisclosed
Bluebird Bio Cambridge, MA Mar., 2013 Gene Therapy $75m
Presage Biosciences Seattle Mar., 2013 Cancer drug discovery technology $13m
Forma Therapeutics Watertown, MA April, 2013 Small-molecule drug discovery $200m (includes research payments)
Concert Pharmaceuticals Lexington, MA May, 2013 Deuterium-modified drug candidates undisclosed
Morphosys Germany June, 2013 Antibodies for myeloma, leukemia $92m
Tengion Winston-Salem, NC July, 2013 Regenerative medicine for kidney disease $15m equity investment
Acetylon Pharmaceuticals Boston July, 2013 Histone deacetylase inhibitors $100m
Array Biopharma Boulder, CO July, 2013 Inflammation drug discovery $11m
Source: Company reports, Celgene regulartory filings
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Recommendation Potential Exit Strategies
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Royalties Sales
Milestones (Go/No go) Phase III NDA Filing FDA Approval
Sold post-Phase II for >5x to Large Pharma
$ 16 M raised for Early Development Phase I and Phase II
Financing by Early Stage Venture Capital Firm
Royalties
Sales
Milestones (Go/No go)
Phase III NDA Filing FDA Approval
Financing by out-licensing
Strategy to take anti-CTLA4 to FDA approval
A B
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50,000
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0 2 4 6 8 10 12
rNp
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Venture Capital
Sell to Big Pharma
A. Strategy to take anti-CTLA4 to FDA approval
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550,000
600,000
0 2 4 6 8 10 12
rNp
v($
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Year
Start of Phase III
Start of Phase II
Outlicensing
B. Strategy to take anti-CTLA4 to FDA approval
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Recap
Come up with strategies to take anti-CTLA4 through FDA approval
Sell or License Market Access Valuation
• Huge unmet needs in metastatic breast cancer
• Venture capital entry followed by acquisition
• Out-licensing
• At the end of Phase II, anti-CTLA4 has a value of $400 M
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Acknowledgment
Director Bridgin Lee [email protected] Project Manager Mahlet Abera [email protected] Team Members Sean Arlauckas [email protected] Rong Guo [email protected] Han Hu [email protected] Don Lee [email protected] Hernan Piragua [email protected] Bihui Xu [email protected]
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1. Monoclonal Antibodies Market in Breast Cancer to 2019, GBI market research report 2. Bogdan B, Villiger R. Valuation in Life Sciences. Springer-Verlag 2008. 3. Drug prices: http://www.goodrx.com/breast-cancer/drugs 4. MBC statistics: http://mbcn.org/developing-awareness/ 5. MBC statistics: http://ww5.komen.org/BreastCancer/MetastaticBreastCancerHome.html 6. Metastatic Breast Cancer - Statistics, Diagnosis, Treatment Options:
http://breastcancer.about.com/od/types/a/mets_bc_gradish.htm 7. Valuation model uses the rNPV method developed by Jeffrey J. Stewart (J. Stewart. Biotechnology
Valuations for the 21st Century. Milken Institute Policy Brief 2002. In press; J. Stewart et al. Putting a Price on Biotechnology. Nature Biotechnology 2001. 19:813).
8. Strategic transaction database
Appendix