Replies to post #136860 on Biotech Values

[biomaven0]

I think a 10X multiple is significantly too high.

This article by Royalty Pharma (who know more about this sort of valuation than anyone) is informative:

http://www.royaltypharma.com/images/stories/Evaluation_of_Company_Owned_Royalties.pdf

One quote:

The chart below shows the projected curves with the pre-tax and after-tax return profiles for a purchaser of a specific royalty we have analyzed, assuming it is acquired at a price based on a 10%
discount rate. We have chosen a 10% discount rate not because we believe royalties should be valued at a 10% discount rate, but rather to illustrate the inappropriateness of such a low rate.

Peter