In this video, we explore why the principle “less is more” is critical when valuing early-stage biotech assets.

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High Uncertainty

One of the primary reasons for adopting this approach is the high degree of uncertainty in early-stage valuations. Whether working with a Phase 2 or Phase 3-ready asset, the absence of a stable operating history makes traditional valuation inputs—like projected revenues, peak market shares, margins, and growth rates—highly speculative.

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The Future as a Probability Distribution

Rather than relying on single-point estimates, which can be misleading, it’s essential to approach valuation as a probability distribution.

By accounting for various scenarios—success, failure, higher or lower probabilities of achieving peak sales—we can create a more comprehensive and realistic picture of potential outcomes.

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Focus on Key Value Drivers

Focus on the core variables that truly drive the valuation narrative.

• Investors often care most about exit deal values, probabilities of achieving those exits, and timelines for reaching critical milestones.
• Overloading the valuation with excessive details or metrics that don’t add strategic value can dilute the message and distract from what truly matters.

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