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Valuation MBA Spr20 - Shared screen with speaker view
Julian Stern
29:29
Because it could become a good project
Sami Husain Mohamed Husain Al Marzooqi
29:34
merger?
Sam Greene
29:42
+1 Julian i.e. biotech
Sam Greene
35:01
price of the option
Sergio Botero
35:07
buy or R&D
Sami Husain Mohamed Husain Al Marzooqi
35:08
Invent or acquire
Colin Bayer
35:09
Buy the rights from another company
Jessika K Larsson
35:09
Buy it
Sam Greene
35:36
go higher
Sam Greene
43:29
looks positive…
Sam Greene
45:56
the variance is driving the value of the optionality, right?
Sam Greene
46:28
do we need to adjust the variance over time? i.e as time passes should biogen get more information ?
Sami Husain Mohamed Husain Al Marzooqi
47:34
I still dont understand why would delaying producing a drug will gain you more money: Usually time is money and they should let it into the market asap
Sam Greene
47:43
because of variance
Sergio Botero
48:27
this is indirect but in this case would the development of the first drug not have some positive option value in both brand and capabilities increase? sort of opening an option to do more drugs cheaper
Sam Greene
49:35
interesting point, not sure how to bring that into the model @sergio, maybe reduce the delay?
Sam Greene
50:27
in the case with merck competing with another drug there may be some positive externalities from coming to market first but not sure how to think about that in terms of the model
Julian Stern
50:51
So that chart is essentially showing theta?
Sergio Botero
52:44
@sam agree, hard to include more indirect effects but at least conceptually decreasing delay benefit seems intuitive, just hard to define how big the reduction needs to be
Sam Greene
52:57
great questions for the professor
Sam Greene
53:33
so more competition is better for the consumer because it drives innovation which reduces the value of optionality in delaying coming to market?
Sergio Botero
56:17
that's the "real" risk
Jessika K Larsson
56:24
Bc it should reflect the guarantor’s ability to pay you so should be their risk
Sam Greene
56:33
default risk
Alex Soekinto
57:03
risk free
Sam Greene
57:05
government rate
Sam Greene
57:07
t-bond
jad830@nyu.edu
57:08
US risk free rate
Jessika K Larsson
57:42
Why pre-tax?
jad830@nyu.edu
01:16:07
Don’t you have the same issue of development lag with patent introduction/new product development? (i.e. time to test and perfect the product, during which time the market may have shifted etc.). Why do you have to make that a separate factor for natural resources, but not for patents?
Sam Greene
01:17:04
I think he is making a simplifying assumption that there is not a natural limit to development of pharmaceutical products
jad830@nyu.edu
01:18:01
cool, got it. thanks!
Sam Greene
01:18:13
that’s my interpretation, not sure if that’s his thinking
Jessika K Larsson
01:23:38
Store it in tanker ships
Chad Eatinger
01:23:47
it's also because the WTI contract requires physical settlement
Chad Eatinger
01:23:54
and not just cash settlement
Andres Marcos
01:24:00
store it in all the empty weworks
Keenan Stow Weaving
01:24:18
store it in Paulson
Sami Husain Mohamed Husain Al Marzooqi
01:24:49
@Keenan: LOL
Sam Greene
01:24:58
Yeah, how do we think about the change in variance over the life of the option? I think that’s an important question
Sam Greene
01:25:14
Thanks
Julian Stern
01:29:07
For those interested in modeling variance, Rob Engle teaches a 1.5 credit class on Volatility.
Andres Marcos
01:29:25
@julian taking that class now - highly recommend it
Sami Husain Mohamed Husain Al Marzooqi
01:30:15
@julianI guess it is too late for us MBA2s
Julian Stern
01:31:26
I vaguely remember something about alumni being allowed to audit. Worst case you can pull up a syllabus
Julian Stern
01:32:02
Yeah, class is listed as available for alumni audit this semester.
Julian Stern
01:32:03
https://www.stern.nyu.edu/portal-partners/alumni/alumni-resources-benefits/lifelong-learning/audit-class
Sam Greene
01:33:04
From what? I didn’t hear
Perry Singh
01:33:14
Nature
Benjamin Fortunato
01:33:15
nature
Sam Greene
01:33:17
Thank you
Perry Singh
01:40:27
become an amazon
Sam Greene
01:40:28
it copies every other tech company and uses it users...