Date of Graduation

5-2025

Document Type

Thesis

Degree Name

Bachelor of Science in Business Administration

Degree Level

Undergraduate

Department

Finance

Advisor/Mentor

Santamaria, Sergio

Abstract

Oncology-focused biotechnology firms present unique valuation challenges due to high R&D costs, long development timelines, and uncertain clinical outcomes. This thesis addresses such challenges by integrating the clinical development lifecycle with financial valuation models to provide predictive insights into company value. A structured framework is developed that primarily focuses on stage-specific probabilities of success (PoS) for drug candidates and their impact on firm valuation, embedded in techniques such sum-of-the-parts (SOTP) analysis. By quantitatively linking clinical trial phases and likelihoods of approval to cash flow projections, the model enables a more realistic, risk-adjusted estimation of a biotech firm's worth. Through lifecycle analysis of oncology drug pipelines, the research demonstrates how incorporating clinical milestones and attrition rates can refine valuation accuracy. The approach, viewed from a junior associate’s perspective, emphasizes practical application—bridging scientific progress and financial modeling. Ultimately, this integrated methodology yields more nuanced valuations and aids stakeholders in assessing investment attractiveness, aligning a firm’s developmental progress with its economic valuation.

Keywords

Financial Valuation; Biotech Finance; Clinical Trials; Drug Development; Financial Modeling

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