For biopharma co's advanced enough that you have built a revenue forecast, I'd like to make a case for 1) incorporating conservatism and / or 2) showing a few scenarios (downside, base, upside). Many co's put forth a very aggressive forecast b/c they assume (rightly)...1/7
...that investors will discount their projections somewhat. However, if the forecast far exceeds comps that ppl may reference, assumes a very optimistic penetration rate, or fails to account for things such as physician uptake, insurance coverage rate, or adherence, you run...2/7
...the risk of losing credibility. Inv's may simply disengage at that point. If instead you incorporate realistic assumptions, explain these assumptions, & provide a model that allows key inputs to be tweaked, you'll likely get more engagement. E.g., if you have to say...3/7
..."even if you take *10%* of our revenue projection, it's a meaningful drug!" then you've lost ppl. That just sounds like you're making things up and throwing out crazy numbers. Also, if you have a currently marketed comp, expect some ppl to want to anchor to that. You can...4/7
...provide a "Downside" forecast that anchors to (but can still be more optimistic than) your commercial comp's ramp. If the commercial comp is really miniscule, this isn't a good approach (you then have to explain why you'll be addressing a MUCH bigger portion of the pop,...5/7
...or be able to justify much higher pricing, etc.) But if the marketed comp could support a reasonable valuation for your co., then it's worth providing a scenario based on that. This might be a base case for some, or a downside case for others. But at least you get inv's...6/7
...to recognize that even in a minimal scenario, you can generate significant sales. What you don't want to do is show only a forecast that will be seen as crazy (not credible) or neglect the fact that inv's don't want to take unbounded downside risk (so bound the downside). 7/7
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