Electronic Resource
Oxford, UK and Boston, USA
:
Blackwell Publishers Ltd
R & D management
31 (2001), S. 0
ISSN:
1467-9310
Source:
Blackwell Publishing Journal Backfiles 1879-2005
Topics:
Economics
Notes:
We provide a Poisson real option model of a gene-to-drug venture. First we describe a general new drug discovery programme as well as a specific secretory protein research programme. Then we model both the candidate secretory gene and the ‘hot’ gene discoveries as Poisson processes. Gene deal value sizes are modeled as lognormal distributions. Then we calculate the expected R&D value (EV) of the Poisson discoveries times the value distributions, for both stages. Finally, for generic collaborating-funding arrangements, we show the Merton (1976) standard mixed diffusion-jump option value, compared to a risk neutral ‘intrinsic’ value. Under simple assumptions, the real option value is substantial, even if there is no intrinsic value.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1111/1467-9310.00210
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