Marketing analysis:
How to determine the value of an asset in the
market place
Olivier Lesueur, Managing Director at Bionest Partners
December 2016
= Global Actionable Strategies for Life Sciences
Global reach
Pharma and Dx
Offices across North
America, Europe, Asia and
activities across all 5
continents
Leading expertise in
diagnostics and
personalized medicine
Actionable Strategies
Emphasis on helping decision making through crossfunctional collaborative approaches and
“Implementation Ready” strategies
Marketing analysis: How to determine the value of an asset in the market place – Slide 2
How to Determine the Value of an Asset in the Market Place?
Key Asset Valuation Approaches:
DCF/eNPV
Comparable
Transactions
History
Note: See Nov. 2016 presentation “Early Stage Biotech Finance and
Valuation” by Sam Hall
Key Assumptions
-> Result from asset (brand) strategy
-> Defined during strategic marketing consultation process
Marketing analysis: How to determine the value of an asset in the market place – Slide 3
Topics for Today’s Discussion
 Introduction to the concept of strategic marketing
 What do you need to know when
 Checklist for Phase 1 investment decisions
 Framework to describe early discovery/development
projects
 Q&A
Marketing analysis: How to determine the value of an asset in the market place – Slide 4
Introduction to the Concept of Strategic Marketing
Strategic marketing involves:
 Succession of business questions/choices
-> Market opportunity to target
-> Competitive differentiation
-> Required body of evidence
-> Commercialization strategy
-> Financial outcome
 Iterative process refining the strategy as asset matures
 A forum bringing together cross-functional representations
Marketing analysis: How to determine the value of an asset in the market place – Slide 5
Succession of Key Business Questions/Choices
Core business questions
Description
What market
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•
•
•
opportunity to Target
and why?
Disease prevalence/patient journey
Key stakeholder insight
Current and future competitive landscape
Market access and reimbursement landscape by
geography
• Standard of care and unmet need
differentiation and
•
•
•
•
•
Biology/science of asset
Product claims and differentiation drivers
Importance of key claims for customer segments
Initial concept label
CDX/Personalized Medicine (PM) strategy
How to prove it?
•
•
•
•
Clinical development plan and data status
Payer evidence plan and value proposition
Key Risk Management plan
Regulatory strategy
How to succeed?
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•
•
•
•
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SWOT and Success Factors
Brand vision and Positioning
Market entry strategy
P&MA strategy
Communications strategy
MOA and PM strategy
What financial return?
• Pro-forma P&L forecast (Global)
• Scenario-based modeling (including decision trees)
• NPV, IRR
How to build
address the opportunity?
Prioritized
Market
Segments
Prioritized Value
Drivers -> TPP1
Data
Imperatives
Positioning and
Communication
Revenue and
Strategic
Investments
1: TPP=Target Product Profile
Marketing analysis: How to determine the value of an asset in the market place – Slide 6
Iterative Process as Asset Matures
Phase 1 ID1
Phase 1 ID1
Phase 2/2b ID
Phase 2/2b ID
Phase 3 ID
Phase 3 ID
differentiation and
Early TPP and
understanding of
value/differentiation/risk
Detailed characterization
of claims, differentiation,
and market perceptions
Draft label with valued
TPP scenarios and plan for
risk mitigation
How to prove it?
Guidance on evidence that
will be needed to convince
stakeholders
Detailed evidence plan
including target claims &
how existing data support
claims
Updated evidence plan
based on new data and
how it supports key claims
and Go/No Go criteria
How to succeed?
Initial views on go-tomarket hurdles, strategy,
and success factors
Preliminary commercial
messages and go-tomarket strategy
Go-to-market strategy
and market access plan
Pro-forma scenario based
P&L
Detailed pro-forma P&L,
revenue, sales and
marketing costs for key
regions, value trade –offs
per key scenarios
What market
opportunity to Target
and why?
How to build
address the opportunity?
What financial
return?
Detailed disease
understanding, patient
types, and unmet needs
Initial assumptions and
ranged top-line forecasts
Synthesis and
refinement of market
opportunity
Synthesis and
refinement of market
opportunity
 Level of rigor for each key question/choice varies over the course of asset (brand) development
-> Depth and nature of questions to answer
-> Level of granularity of analysis / acceptable uncertainty
-> Approach to insight generation (secondary, qualitative/quantitative research)
1: ID=Investment Decision
Marketing analysis: How to determine the value of an asset in the market place – Slide 7
Checklist for Phase 1 Investment Decision
A Lot of (Key) Questions to Answer…
What market
opportunity to
Target and why?
Topics
Key questions
Disease profile and
treatment
paradigm
•
•
Unmet needs
Market dynamics
How to build
differentiation
and address the
opportunity?
How to prove it?
Sources of
differentiation
Personalized
Medicine (PM)
approach
What financial
return?
•
•
•
•
How important is the product in treating the disease?
What indication should we aim for?
What is/are the pre-clinical evidence(s) that support the differentiation?
Would a PM approach add medical value to this product in this disease? Will it be valued by the market? Do
we have any biomarker candidates?
•
•
What endpoints (primary and secondary) could support a differentiated product profile?
What is the directional development framework/path?
- go/no-go criteria at each stage
- Risk mitigation strategy
- plan to characterization of the dose response?
- Existing regulatory landscape for the targeted indication?
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•
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What is the product vision and how will it be positioned in the market?
What is the expected source of business?
What are the pricing assumptions and key rationales?
- Expected price variation per region?
- Plan to link expected asset value with targeted price range?
What indication sequencing globally and for main markets/regions
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•
•
•
What is the high-level revenue estimate at peak and why? How does this vary per scenario?
What are the estimated investment to get there for each scenario and probability of success?
What is the resulting high-level risk-adjusted NPV?
Would there be revenue potential from other indications? What would be their magnitude?
Required evidence
Positioning
How to succeed?
•
•
•
•
•
Go-to-market
strategy
Expected revenue
And investments
What is the burden of the disease?
Who are the key patient types and why (e.g., based on biology, medical/clinical, clinical, physician behavior
considerations)
What is the existing treatment paradigm and what emerging trends?
Who are the key stakeholders and what are their unmet needs
What are the key emerging trends vis a vis stakeholder needs and behaviors
What is the current and future competitive landscape (product marketed and in development)?
What are the key market drivers and trends (e.g. payers, political, regulatory, legal, tech, ethical, social)?
Marketing analysis: How to determine the value of an asset in the market place – Slide 8
Why All These Questions…
Example: Key Value Drivers for Asset with Personalized Medicine Strategy
Quality and
timing of
the test
Test Access
CDx Selling
and Marketing
Costs
CDx Access
Costs
Penetration of
Diagnostic
Testing
Market
Development
Cost
CDx
Economics
Biomarker
Positive
Fraction of
Tested
Patients
Treatment
Rate
Therapeutic
Class
(Subgroup)
Share
No. of Patients
Receiving
Drug Therapy
Product
Share within
Class
No. of Patients
Treated by
Product's Class
Net Price per
Patient per
Unit Time
No. of Patients
Treated by
Product
Selling and
Marketing
Costs
Duration of
Therapy
Commercial
Cost
Revenue
Commercial
Value Given
Success
Commercial
Milestones or
Royalties to CDx
Scenario
NPVs
(Including
eNPV)
Prevalent
Patients
Length of
Market
Exclusivity
Development
Cost and Time
(by Phase)
Trial Duration
Study Cost
per Patient
Potentially
influenced by PM
Unique to PM
Probability of
Success
(by Phase)
Number of
Patients in
Study
Cost and Time
of CDx
Development
CDx Clinical and
Regulatory
Risks
PM=Personalized Medicine
Marketing analysis: How to determine the value of an asset in the market place – Slide 9
Trial Attributes
and Clarity
Peak Commercial
Potential
Opportunity Targets
Example – Early development asset in Multiple Sclerosis (1/2)
Factor
Assumption
Addressable
Patients
xxxK (WW)
Treated Patients
xxxK
Market Share ^
xx-xx%
Price
~$xx-xxK /
year
Duration
>xx years
 Trial duration expected to be xxx given need
to demonstrate xxx
Enrollment &
Accrual Ease
>xxK
 Enrollment expected to be on par with other
MS trials
 Accrual is anticipated to be moderately easy
Cost Per Patient
High
 Assumes biologic therapy and frequent MRIs
Unclear
 No agent has tried to demonstrate xxx
 Only one xxx agent, anti-xx, is in early phase
trials
Clarity of Reg.
Pathway
Description
 Potential for use in xxx MS patients
 Number of treated patients across segments
(assumes equivalent treatment rate xx%)
 Assumes competition among xx therapies
 Price premium possible if able to demonstrate
xxx potential
Xxx data would translate
into an extremely high
commercial opportunity
However, regulatory
pathway is very unclear;
endpoints are not known
and no late stage trials
are on-going
Marketing analysis: How to determine the value of an asset in the market place – Slide 10
Opportunity Targets
Example 1 – Early development asset in Multiple Sclerosis (1/2)
MS Market Opportunity Targets

Peak Commercial Potential ($M)
$2,000+
xxxn
xxx
$1,500
$1,000
xxxx
xxx
-
Would result in significant potential among
all MS patients.
-
However, commercial potential will depend
on price and market share, both of which
are still unclear today

Xxx represents significant commercial
potential, however clinical development may
be difficult / unfavorable

Significant opportunity remains in xxx,
despite relatively low market share, and
clinical development pathways are clear

Xx represents an interesting opportunity
given the lack of approved therapies and
high price potential
xxxx
$500
If successful, xxx therapy could become the
SOC for all MS patients
xxx
$0
Harder
Easier
Clinical Trial Ease and Clarity
Opportunities are not all mutually exclusive
Marketing analysis: How to determine the value of an asset in the market place – Slide 11
Cross-Functional Representations/Considerations
Marketing/Market
Research
 Market size and
attractiveness
 Future competition,
treatment landscape, and
patient journey
 Asset’s potential
Illustrative
-
Not Comprehensive
 Work with regulatory to
understand expected
label
Strategic
Marketing
Consultation
Market
Access/HEOR1
 Current/future payer
landscape in key markets
 Potential barriers to
asset’s price and access
 Market sequence
 Understanding of how
epi/disease burden may
evolve and value of asset
vs. competition
R&D
Medical
Finance/Regulatory
 Cost assumptions for
strategic investment
 Forecast/P&L
 Label opportunities/
limitations
 Disease and treatment
patterns and future
changes
 Medical and non-medical
unmet needs
 Ability of clinical strategy
to answer needs
1: HEOR=Health Economic and Outcome research
Marketing analysis: How to determine the value of an asset in the market place – Slide 12
AZ’s 5R Framework to Describe Early Discovery/Development
Projects
Lessons learned from the fate of AstraZeneca’s drug pipeline:
A five-dimensional framework
Source: David Cook et Al., Nature reviews, Volume 13 June 2014, pp 419-431
Marketing analysis: How to determine the value of an asset in the market place – Slide 13
Key Takeaways
When defining the value of an asset in its market:
 Think broadly about the different dimensions to consider
 Gather internal and external expertise to foster cross-functional
consultation
 Be pragmatic, acknowledge the uncertainty, and aim for the
adequate level of robustness / accuracy
 Reassess as your knowledge grows
Marketing analysis: How to determine the value of an asset in the market place – Slide 14
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