Valuation of Orphan Drugs In order to evaluate
Post# of 72440
Posted On: 11/24/2015 9:19:32 AM
Valuation of Orphan Drugs
In order to evaluate the extent to which the financial incentives provided by the Orphan Drug Act and the higher rates of approval described above are recognized by investors, we examined share price changes occurring after company announcements of orphan drug designations. The analysis shown in Figure 5 includes only companies with market capitalization <$10 billion. Three outlying microcap companies whose share prices rose by 3-fold or more were removed from the data set prior to analysis as outliers. In our analysis of the remaining 191 orphan drug designation announcement events, the associated geometrical mean increase in share price was about 4%.
In order to evaluate the extent to which the financial incentives provided by the Orphan Drug Act and the higher rates of approval described above are recognized by investors, we examined share price changes occurring after company announcements of orphan drug designations. The analysis shown in Figure 5 includes only companies with market capitalization <$10 billion. Three outlying microcap companies whose share prices rose by 3-fold or more were removed from the data set prior to analysis as outliers. In our analysis of the remaining 191 orphan drug designation announcement events, the associated geometrical mean increase in share price was about 4%.
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