Beruflich Dokumente
Kultur Dokumente
Depression
Davanrik
Weight
Loss
Depression
&
Weight
Loss
5
Merck
Discovers
Develops
Manufactures
Markets
Broad
range
human
and
animal
health
products
Directly
Through
joint
ventures
Providing
pharmaceu9cal
benet
management
services
(PBM)
through
Merck-Medco
Managed
care
6
Design
Marke<ng
Administer
Role
of
licensee
Manufacturing
Fund
the
clinical
tes<ng
of
the
compound
7
Lab
Davanrik
Ini9al
fee
Responsible
for
the
approval
of
Davanrik,
its
manufacture,
and
its
marke9ng
Royalty
on
all
sales
Merck
Compound Success
Rates by Stage
5,000-10,000
screened
Discovery
(2-10 Years)
250
enter preclinical testing
Preclinical Testing
Laboratory and animal testing
5
enter clinical testing
Phase I
20-80 healthy volunteers used to
determine safety and dosage
Phase II
100-300 patient volunteers used
to look for efficacy and side effects
Phase III
1,000-5,000 patient volunteers used to monitor
adverse reactions to long-term use .
FDA Review/
Approval
Additional
Post-marketing Testing
10
12
14
16
Years
Phase I
Phase
II
(clinical
tes<ng)
Phase III
Tested on
1000-5000
of
pa<ents
Tested for
Safety
Eec<veness
Poten<al
side
eect
Time taken
2 years
2 years
3 years
Cost
$30 million
$40 million
Depression:
200
mn
Weight
loss:
$150
mn
Both:
$500
mn
Ini<al
fee
/
Milestone
fee
to
LAB
$5 million
$2.5 million
Depression:
20
mn
Weight
loss:
$10
mn
Both:
$40
mn
10
Probability
of
Success
Phase
I
Chance of success
60%
Phase
II
(clinical
tes<ng)
Phase III
Depression:
10%
Weight
loss:
15%
Both:
5%
Depression:
85%
Weight
loss:
75%
Both:
70%
Depression:
15%
Weight
loss:
5%
Both:
10%
Cash
Flows
Depression
only
Both
Cost to launch
$250 million
$100 million
$400 million
Commercializa<on
present
value
$1.2 billion
$345 million
$2.25 billion
All cash flows are expressed as after-tax present values discounted to time zero, including capital
expenditures
Present value is calculated as the after-tax present value of 10 years worth of cash flows from the
drug discounted back to today
It was believed that after 10 years, the drug had very little value to the company since it would be off
11
its patent by then (and thus a terminal value of zero was used in the calculations)
12
Possible
Outcome
Phase
II
Depression
Phase
I
Success
Phase
II
Weight
Loss
In-License
Phase
III
Success
Phase
III
Failure
Phase
III
Success
Phase
III
Failure
Phase
III
Success
Both
Davanrik
Phase I Failure
Phase II Both
Do
not
License
Phase
II
Failure
Phase
III
Success
Depression
Phase
III
Success
Weight
Loss
Phase
III
Failure
13
Probability
Phase
II
Depression
10%
Phase
I
Success
60%
Phase
II
Weight
Loss
15%
In-License
Phase
I
Failure
40%
Davanrik
Phase
II
Both
5%
Do
not
License
Phase
II
Failure
70%
15
Cash
Ou_low
Phase
II
Depression
10%
-$
200
mn
Phase
I
Success
60%
-40
mn
In-License
-$30
mn
Phase
I
Failure
40%
-$0
Davanrik
Do
not
License
-$0
Phase
II
Failure
70%
-$0
17
Commercial
Value
Phase
II
Depression
10%
-$
200
mn
Phase
I
Success
60%
-40
mn
In-License
-$30
mn
Phase
I
Failure
40%
-$0
Davanrik
Phase
II
Both
5%
-$500
mn
Do
not
License
-$0
Phase
II
Failure
70%
-$0
$1200 mn
$345 mn
$2250 mn
$1200 mn
$345 mn
Failure
Probability
Phase
II
Depression
10%
-$
200
mn
Phase
I
Success
60%
-40
mn
In-License
-$30
mn
Phase
I
Failure
40%
-$0
Davanrik
Do
not
License
-$0
0.90%
2.25%
40%
Phase
II
Failure
70%
-$0
42%
0.30%
Total: 85.45%
Success
Probability
6%
60%
Phase
I
Success
60%
-40
mn
Phase
II
Depression
10%
-$
200
mn
9%
Phase
II
Weight
Loss
15%
-$150
mn
In-License
-$30
mn
3%
Phase
I
Failure
40%
-$0
Davanrik
Phase
II
Both
5%
-$500
mn
Do
not
License
-$0
Phase
II
Failure
70%
-$0
5.10%
6.75%
2.10%
0.45%
0.15%
Total: 92.55%
Total
Possible
Probability
Phase
II
Depression
10%
-$
200
mn
Phase
I
Success
60%
-40
mn
In-License
-$30
mn
Phase
I
Failure
40%
-$0
Davanrik
Phase
II
Both
5%
-$500
mn
Do
not
License
-$0
40%
Phase
II
Failure
70%
-$0
42%
5.10%
0.90%
6.75%
2.25%
2.10%
0.45%
0.15%
0.30%
Total:
10%
Cash
Flow
Outcome
Phase
II
Depression
10%
-$
200
mn
Phase
I
Success
60%
-40
mn
In-License
-$30
mn
Phase
I
Failure
40%
-$0
Davanrik
Phase
II
Both
5%
-$500
mn
Do
not
License
-$0
-$30 mn
Phase
II
Failure
70%
-$0
-$70 mn
$680 mn
-$270 mn
$25 mn
-$220 mn
$1280 mn
$380 mn
-325 mn
-570 mn
In-License
-$30
mn
5.10%*$680 mn = $34.7 mn
0.90%*-$270 mn = -$2.4 mn
6.75%*$25 mn = $1.7 mn
2.25%*-$220 mn = -$5 mn
Phase
I
Failure
40%
-$0
Davanrik
Phase
II
Both
5%
-$500
mn
Do
not
License
-$0
Phase
II
Failure
70%
-$0
40%*-$30 mn = -$12 mn
42%*-$70 mn = -$29.4 mn
2.10%*$1280 mn = $26.90 mn
0.45%*$380 mn = $1.70 mn
0.15%*-$325 mn = -$0.5 mn
0.30%*-370 mn = -$ 1.7 mn
Total: $14 mn
Expected
Milestone
Payment
60%
*
$2.5
mn
=
$1.5
mn
100%
*
$5mn
=
$5mn
Phase
I
Success
60%
-40
mn
6%*
$20
mn
=
$1.2
mn
Phase
II
Depression
10%
-$
200
mn
9%
*
$10
mn
=
$0.9
mn
Phase
II
Weight
Loss
15%
-$150
mn
In-License
-$30
mn
3%
*
$40
mn
=
$1.2
mn
Phase
I
Failure
40%
-$0
Davanrik
Phase
II
Both
5%
-$500
mn
Do
not
License
-$0
Phase
II
Failure
70%
-$0
Total: $9.8 mn
Expected
Royalty
Payment
Phase
II
Depression
10%
-$
200
mn
Phase
I
Success
60%
-40
mn
In-License
-$30
mn
Phase
I
Failure
40%
-$0
Davanrik
Do
not
License
-$0
Phase
II
Failure
70%
-$0
Total: $7.25 mn
Phase
II
Depression
10%
-$
200
mn
Phase
I
Success
60%
-40
mn
In-License
-$30
mn
Phase
I
Failure
40%
-$0
Davanrik
Phase
II
Both
5%
-$500
mn
Do
not
License
-$0
-$30
mn
+$12
mn
=
-$18
mn
Phase
II
Failure
70%
-$0
-$70
mn
+$29.4
mn
=
-$40.6
mn
$680
mn
-
$34.7
mn
=
$645.3
mn
$1280
mn
-
$26.90
mn
=
$1253.1
mn
$380
mn
-
$1.70
mn
=
$378.3
mn
-$325
mn
+
$0.5
mn
=
-$324.5
mn
-370
mn
+$
1.7
mn
=
-$368.3
mn
Expected
value
of
perfect
informa9on
(EVPI)
=
measures
the
dierence,
or
the
gain
due
to
perfect
informa9on
EVPI
=
measures
the
dierence
between
certain
payo
that
could
be
realized
under
a
condi9on
of
certainty
and
the
expected
payo
under
a
condi9on
involving
risk
EVPI
=
EPC
EMV
26
EPC
=
expected
payo
under
certainty
27
PBP
ARR
NPV
CB Techniques
IRR
MIRR
PI
EA
Sensi<vity
analysis
Scenario
analysis
Certainty
equivalent
model
Risk
Based
Techniques
Non risk based techniques assumes that all projects were to be equally risky, acceptance of any project would
not alter the firms overall risk
28