Licensing Fee Template by ual34760

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									                       Valuation Model for Tech Transfer Licensing
                              Martha Luehrmann, 2/20/2000

    cost of cap= 10%
       roy rate= 23.0%
       min roy=         500,000                                                               costs per day
    Lic Iss Fee=      4,000,000

end phase 1 date    31-Dec-01               est R&D costs during phase 1           500,000             -144
end phase 2 date    31-Dec-04               est R&D costs during phase 2        10,000,000            9,124
end phase 3 date    31-Dec-09               est R&D costs during phase 3        50,000,000           27,382
   FDA approval     19-Dec-10            est R&D costs in approval period        2,000,000            5,666
                                         ongoing R&D as percent of sales                5%
                                            (all above not counting roy fees)
                                                        phase 1,2,&3 SG&A                 5% of R&D costs
                                        SG&A Rollout (6 mos before sales)                 5% of full penetration sales
                                       Ongoing SG&A as a percent of sales                 5% of sales

                                                            estimated COG             $0.33
                                                     estimated selling price         $20.00
                                                                                               Probability,
                                                 total yearly mkt (in doses)    50,000,000     if approved
                      penetration of mkt if not as effective as competition            10%              33%
                    penetration of mkt if about as effective as competition            30%              33%
                       penetration of mkt if much better than competition              80%              33%

           Today          6/28/2011

 yrs for ramp up             3 years                       ramp up of sales      1st yr           2nd yr
date fully ramped         19-Dec-13                        % of penetration       33%              66%



Valuate
Valuate is a Microsoft Excel™ spreadsheet template for establishing a reasonable royalty rate and license issue
fee in licensing arrangements. The template was developed in 1993 and last modified Feb, 2000 by Martha
Luehrmann for the University of California. This spreadsheet template may be used and duplicated by anyone
as long as (1) this entire paragraph is appended to all copies of this spreadsheet template and (2) the similar
paragraph found at the beginning of the accompanying Valuate documentation remains attached to any copy of the
documentation. The template is provided “as is” and neither Martha Luehrmann nor the Regents of the
University of California are responsible for any errors, omissions, or any consequences thereof. The Regents of the
University of California gives no warranty of merchantability or of fitness for a particular purpose, and The
Regents has no obligation to provide any support for this product. If you add an improvement or encounter a
problem, or would just like to comment, I would appreciate hearing about it. Please contact Martha Luehrmann,
1466 Grizzly Peak Blvd., Berkeley, CA 94708-2202, tel. 510-548-7239, email MarthaL@california.com
                                                                               risk rate
                                                                                  per yr




                             prob of success of phase 1             50%          -7.6%
                   prob of success of 2, if 1 is a success          60%          15.6%
            prob of success of 3 if 1 and 2 are successes           70%           6.9%
                        prob of approval is 3 is success            90%          10.3%




 full penetration sales




                   Projected     Projected     Projected
                    Rev/Yr        COG/Yr        Net/Yr
                   100,000,000     1,650,000             Expected Rev/Yr
                                                98,350,000                  396,000,000
                   300,000,000     4,950,000            Expected COG/Yr
                                               295,050,000                    6,534,000
                   800,000,000    13,200,000             E
                                               786,800,000 xpected Net/Yr   389,466,000




                    3rd yr
                    100%




nd license issue

 ed by anyone

 to any copy of the

The Regents of the


ha Luehrmann,
    test           date                  risk
                            prob of success rate per yr
phase 1 trials   12/31/2001       50.0%         -7.6%
phase 2 trials   12/31/2004       60.0%        15.6%
phase 3 trials   12/31/2009       70.0%          6.9%
FDA approval     12/19/2010       90.0%        10.3%


                                joint        NPV               NPV
                 probability probability   company           university    % to Univ
      lose 1           50%           50%     #N/A              #N/A             #N/A
      lose 2           40%           20%     #N/A              #N/A             #N/A
      lose 3           30%            9%     #N/A              #N/A             #N/A
        win            70%           21% ###########         579,641,319         26%
     exp val                      exp val    #N/A              #N/A          #N/A


                          NPV Return and Probability


    1,800,000,000

    1,600,000,000

    1,400,000,000

    1,200,000,000

    1,000,000,000
                                                                           Company
                                                                           Univ
      800,000,000

      600,000,000

      400,000,000

      200,000,000

                 0
                       lose 1   lose 2     lose 3
                                         Probability   win    exp val
                               Sensitivity Tables
Royalty Rate             23%
Lic Iss Fee        4,000,000
Cost of Capital          10%

Effect on % to Univ. and 16th year cum. of varying roy                                   Cum NPV
                                   Univ            Co.           % Univ      IRR          to Univ
                   Roy Rate        share          share          share      to Co.        by yr 16
as above               23.0% 1,394,155,288 ############              26%    #DIV/0!     579,641,319
plus 20%               27.6% 1,672,186,345 ############              31%    #DIV/0!     694,842,309
plus 10%               25.3% 1,533,170,816 ############              29%    #DIV/0!     637,241,814
minus 10%              20.7% 1,255,139,759 ############              24%    #DIV/0!     522,040,823
minus 20%              18.4% 1,116,124,230 ############              21%    #DIV/0!     464,440,328
        0.0%            0.0%     12,625,000 ############               0%   #DIV/0!       7,733,295
for NPV = 0            74.6% 4,510,385,429     814,760,560           85%    #DIV/0!    ###########

Effect on % to Univ. and 16th year cum. of varying lic iss fee                          Cum NPV
                                   Univ            Co.           % Univ      IRR         to Univ
                  Lic Iss Fee      share          share          share      to Co.       by yr 16
as above           4,000,000 1,394,155,288 ############              26%    #DIV/0!    579,641,319
plus 20%           4,800,000 1,394,955,288 ############              26%    #DIV/0!    580,368,591
plus 10%           4,400,000 1,395,435,288 ############              26%    #DIV/0!    580,804,955
minus 10%          3,600,000 1,394,907,288 ############              26%    #DIV/0!    580,324,955
minus 20%          3,200,000 1,393,956,888 ############              26%    #DIV/0!    579,460,955
           0               0 1,390,155,288 ############              26%    #DIV/0!    576,004,955
for NPV = 0     115,696,447 1,505,851,735 ############               28%        265%   681,183,543

Effect on % to Univ. and 16th year cum. of varying cost of cap disc. rate                Cum NPV
                                   Univ            Co.          % Univ       IRR          to Univ
                Cost of Cap        share          share         share       to Co.        by yr 16
as above               10.0% 1,394,155,288 ############               26%   #DIV/0!     579,641,319
plus 100%              20.0% 1,394,155,288 ############               26%   #DIV/0!     303,952,355
plus 50%               15.0% 1,394,155,288 ############               26%   #DIV/0!     410,485,540
minus 25%               7.5% 1,394,155,288 ############               26%   #DIV/0!     702,376,954
minus 50%               5.0% 1,394,155,288 ############               26%   #DIV/0!     863,635,170
        0.0%            0.0% 1,394,155,288 ############               26%   #DIV/0!    ###########
for NPV = 0 ############# 1,394,155,288 ############                  26%   #DIV/0!                0
  cum NPV                   effect on
    to Co.      % Univ      cum NPV
   by yr 16     share        to Co.
###########           26%
###########           31%         -7%
###########           28%         -4%
###########           23%          4%
###########           21%          7%
###########            0%         35%
 343,238,007          84%        -80%

  cum NPV                   effect on
    to Co.      % Univ      cum NPV
   by yr 16     share        to Co.
###########           26%
###########           26%          0%
###########           26%          0%
###########           26%          0%
###########           26%          0%
###########           25%          0%
###########           30%         -6%

  cum NPV                   effect on
    to Co.      % Univ      cum NPV
   by yr 16     share        to Co.
###########           26%
 897,091,792          25%        -47%
###########           25%        -29%
###########           26%         21%
###########           26%         48%
###########           26%        134%
            0          6%       -100%
Cash Flows to Company

year             to 6/28/2012    to 6/28/2013   to 6/28/2014   to 6/28/2015   to 6/28/2016   to 6/28/2017
Cash Flows to Company
Net pre tax       66,800,732      97,485,978    143,916,978    258,786,000    258,731,753    258,786,000
   tax            26,720,293      38,994,391     57,566,791    103,514,400    103,492,701    103,514,400
Net inc           40,080,439      58,491,587     86,350,187    155,271,600    155,239,052    155,271,600
depr                   10,000         10,000         14,000        115,000        138,000        155,000
AR change                   0              0              0              0              0        (36,000)
Inventory Change            0              0              0              0              0              0
AP change                   0              0              0              0              0              0
net op cash       40,090,439      58,501,587     86,364,187    155,386,600    155,377,052    155,390,600
cap assets            (50,000)       (50,000)       (20,000)      (505,000)      (115,000)       (85,000)
cash incr         40,040,439      58,451,587     86,344,187    154,881,600    155,262,052    155,305,600
cash at start               0     40,040,439     98,492,026    184,836,213    339,717,813    494,979,865
cash at end       40,040,439      98,492,026    184,836,213    339,717,813    494,979,865    650,285,465
self funding       1,000,000       5,000,000      6,000,000      6,000,000     12,000,000     12,000,000
stock
cash incr         41,040,439      63,451,587     92,344,187    160,881,600    167,262,052    167,305,600
cash at start               0     41,040,439    104,492,026    196,836,213    357,717,813    524,979,865
cash at end       41,040,439     104,492,026    196,836,213    357,717,813    524,979,865    692,285,465
to 6/28/2018   to 6/28/2019   to 6/28/2020   to 6/28/2021   to 6/28/2022   to 6/28/2023   to 6/28/2024

258,786,000    258,786,000  258,731,753  258,786,000  258,786,000  258,786,000   258,731,753
103,514,400    103,514,400  103,492,701  103,514,400  103,514,400  103,514,400   103,492,701
155,271,600    155,271,600  155,239,052  155,271,600  155,271,600  155,271,600   155,239,052
    161,000        237,000      156,000      173,000      196,000       240,000      220,000
   (139,250)      (343,000)    (282,875)    (406,875)    (849,250)   (1,345,500)  (1,624,125)
          0              0            0     (284,624)    (585,831)     (333,372)  (1,234,610)
          0              0            0            0      100,000        50,000            0
155,293,350    155,165,600  155,112,177  154,753,101  154,132,519  153,882,728   152,600,317
    (80,000)      (400,000)    (100,000)    (200,000)    (200,000)     (300,000)    (300,000)
155,213,350    154,765,600  155,012,177  154,553,101  153,932,519  153,582,728   152,300,317
650,285,465    805,498,815  960,264,415 ############ ############ ############ ############
805,498,815    960,264,415 ############ ############ ############ ############ ############
 13,000,000    170,000,000  300,000,000

168,213,350  324,765,600  455,012,177  154,553,101  153,932,519  153,582,728  152,300,317
692,285,465  860,498,815 ############ ############ ############ ############ ############
860,498,815 ############ ############ ############ ############ ############ ############
  to 6/28/2025   to 6/28/2026   to 6/28/2027   to 6/28/2028

 258,786,000   258,786,000  258,786,000  258,731,753
 103,514,400   103,514,400  103,514,400  103,492,701
 155,271,600   155,271,600  155,271,600  155,239,052
      280,000      320,000      360,000      380,000
   (4,160,625)  (4,803,750)  (6,773,375)  (9,674,263)
   (2,517,839)  (3,249,594)  (4,747,654)  (7,080,346)
            0            0            0            0
 148,873,136   147,538,256  144,110,571  138,864,443
     (400,000)    (400,000)    (400,000)    (400,000)
 148,473,136   147,138,256  143,710,571  138,464,443
############ ############ ############ ############
############ ############ ############ ############


 148,473,136  147,138,256  143,710,571  138,464,443
############ ############ ############ ############
############ ############ ############ ############

								
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