One Hand-Typed Number Made My Drug Valuation 4.5x Too High
My drug valuation desk said a Phase 2 cancer drug was worth $1.29 billion. After two small fixes, the same drug with the same sales forecast was worth $283.5 million. Neither bug crashed anything. The screen looked great the whole time. That is the kind of bug this post is about. The setup The desk is called Somota. My company Codebat finished the first version in March 2025, under the name…
A single, hand-typed number caused the valuation of a Phase 2 cancer drug to be four and a half times too high. The drug valuation tool, called Somota, determined the drug's value based on risk-adjusted net present value (rNPV). The model calculated cash flows and weighted them by the likelihood the drug would reach the market. The probability of success for the cancer asset was typed in manually, without any source to back it up.
The drug's success rate should have been about 10.8%, but the desk had the incorrect value of 30%. This error led to a significant difference in the drug's valuation, which went from $1.29 billion to $283.5 million.
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