Calculating Proof of Value

Estimating Net Present Value

These different requirements are integrated through repeated estimation of the expected net present value (eNPV) using financial modeling. Net present value (NPV) compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account. If the NPV of a prospective project is positive, it should be accepted. However, if NPV is negative, the project should probably be rejected because cash flows will also be negative.

The studies in the Proof of Value stage are designed to appropriately estimate and reduce uncertainty surrounding each key parameter that drives the estimated final value of the investigational product. These parameters may be based on healthcare practitioner patterns, patient experience, payer knowledge or primary and secondary research.

Proof of Value Planning

Each PoV plan is individually tailored to the therapeutic indication. This may include the identified properties of the specific drug entity, such as its metabolic profile or QTc propensity. We examine the opportunity and recommend targets needed to create a successful product in the market, taking into account external dynamics such as recent regulatory actions or competitive moves in a therapeutic category.

These targets depend critically on what is needed to create a therapeutic opportunity given available therapies (if any), and their efficacy, safety, and utility. Our approach is equally applicable to other potential therapeutic entities such as novel formulations or the use of biomarkers for selection of patient treatment groups.

More Systematic Decision-making

As study results become available and/or if the external environment changes beyond baseline assumptions, the decision to continue development is repeatedly examined throughout the PoV process. Should the desired value targets be met, eNPV increases after each study, enabling objective, transparent and dynamic decision-making.

Should the therapeutic entity not meet the desired value targets, eNPV will decline. The eNPV is used as the key parameter, but not the sole determinant. Some deficits may be improved through changes such as drug regimen or reformulation. However, if the value proposition is focused and clear, the SingEval PoV approach facilitates the drug development for the specific indication/population being terminated without hesitation.

In these circumstances, PoV may still usefully indicate the target(s) for second-generation therapies. Our well-planned sequence of studies in PoV generally tests the most significant value drivers as early as possible, so that decisions are made with minimum expenditure. As the knowledge base grows for a particular candidate, its associated development risks (the unknowns) tend to shrink in most cases.

A successful PoV is achieved when eNPV targets are adequately met. An optimal PoV achieves this with a high ratio of increase in eNPV (ΔeNPV) to cost of the PoV program, representing a substantial increase in the value of the therapeutic entity. Final success of a therapeutic entity is never certain until the outcome is confirmed in large-scale regulatory-driven studies and seen in the marketplace. The PoV process aims to find predictors of this success, if they are there.