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The Palisade Risk Management Roadshow: Boston
Featuring Pharmaceutical and Other Business Applications
Abstracts

How to Value Pre-commercial Assets:
What is Your Biotech Worth?

Bob Ameo,
Market Modelers

The basics of high-stakes biotech investing are the subject of this presentation. Whether you’re a developer, buyer, investor, or seller, you have to know at what value a particular investment is a good bet.

The language of gambling is probability, the quantification of uncertainty; how we describe precisely what we don’t know and use that uncertainty to optimize the profit from our ventures.

okkeeping arithmetic is not the right tool to calculate and evaluate high stakes gambles. Point estimates are one-dimensional views of a very large multidimensional situation. There are few simple investment bets in the biotech/pharma business.

Bob will describe and demonstrate why simulation forecasting is superior to scenario modeling for valuation. It is the only current technology that allows the robust quantification of technical, operational, and commercial uncertainty, and can use that uncertainty to determine a maximum appropriate investment in potential success.

The derivation of key gambling metrics—chances of winning, value of winning, cost of a loss and “the odds”—will be presented along with the appropriate language and graphics to present and discuss the findings. Implications for portfolio planning and decision-making will be discussed.

In his presentation, Dr. Ameo describes how to use the simple, straightforward language of wagering to effectively communicate the relative risks and opportunities presented by any biotech investment. He also discusses how value is in the eye of the beholder and the importance of calculating value from the proper perspective.

Bob Ameo
Principal
Market Modelers

Robert Ameo has over 20 years’ experience in health care management, marketing, and business development. Prior to founding Market Modelers, he served in the corporate development group at Johnson & Johnson. He is a recognized expert and innovator in the modeling and forecasting of new life sciences technology adoption and product market share. Robert has extensive experience evaluating investment opportunities and their portfolio impact for mergers and acquisitions, venture investing, research development, and marketing efforts.

Using his extensive industry experience and behavioral-research training, he designs and executes targeted market research to predict new technology and product adoption for biotechnologies, pharmaceuticals, and medical devices. Robert’s forecasts are used both by start-up ventures to create a vision of their potential worth and well-established biopharmaceutical and medical-device companies to understand the true economic value of their potential acquisitions and investments.

About Market Modelers, LLC
Market Modelers is a life sciences research, forecasting, and valuation consultancy. The group specializes in predicting and valuing future revenue and cash flow streams for strategic planning, project prioritization, and investment decisions. For more information, please visit www.marketmodelers.com

 

Product Launch, Cash Flow, and
Other Applications of the DecisionTools Suite

Thompson Terry,
Palisade Corporation

@RISK and the DecisionTools Suite are used in a wide range of applications.  Palisade Consultant Thompson Terry will review several examples of how the software can be used to make more informed decisions. Using spreadsheet models derived from real-world applications, Thompson will walk through how probabilistic analysis can benefit decision makers in pharmaceuticals, finance, insurance, and other industries.  Monte Carlo simulation with @RISK and decision trees using PrecisionTree will be presented.

Thompson Terry
Senior Training Consultant
Palisade Corporation

Thompson Terry is a veteran member of Palisade’s training and consulting staff. With sixteen years of experience at Palisade, including eight in technical support, he is recognized as an expert in all Palisade software products and their applications.

Thompson has led numerous regional training seminars on risk and decision analysis and provided customized onsite trainings in a variety of industries including insurance, consumer goods, manufacturing, pharmaceuticals, defense, and food safety. Clients trained by Thompson include: The Hartford, Unilever, Kimberly-Clark, Eastman Chemical, Merck, Bristol Myers Squibb, Canadian Food Inspection Agency, the USDA, the FDA, National Rail (UK), Shell, Anadarko, National Gas Company of Trinidad & Tobago, Boeing, and Northrop-Grumman.

Thompson has served as a director of a nationally recognized, natural foods cooperative and also on the board of a local credit union’s not-for-profit, community development investment fund. Thompson teaches business students at both Cornell University and Ithaca College. He holds a BSc in Agricultural Economics from Cornell University with specializations in economics, statistics, and finance. Further, Thompson has been trained in Financial Risk Management methods in accordance with the Global Association of Risk Professionals.

 

Selecting the Right Distribution in @RISK

Thompson Terry,
Palisade Corporation

This session covers the choice of the appropriate distribution in @RISK. A variety of approaches are presented and compared, including pragmatic, theoretical and data-driven methods. The use of distributions to treat a variety of risk modeling situations is discussed, and some new distributions and features in v5.7 are shown.

Thompson Terry
Senior Training Consultant
Palisade Corporation

Thompson Terry is a veteran member of Palisade’s training and consulting staff. With sixteen years of experience at Palisade, including eight in technical support, he is recognized as an expert in all Palisade software products and their applications.

Thompson has led numerous regional training seminars on risk and decision analysis and provided customized onsite trainings in a variety of industries including insurance, consumer goods, manufacturing, pharmaceuticals, defense, and food safety. Clients trained by Thompson include: The Hartford, Unilever, Kimberly-Clark, Eastman Chemical, Merck, Bristol Myers Squibb, Canadian Food Inspection Agency, the USDA, the FDA, National Rail (UK), Shell, Anadarko, National Gas Company of Trinidad & Tobago, Boeing, and Northrop-Grumman.

Thompson has served as a director of a nationally recognized, natural foods cooperative and also on the board of a local credit union’s not-for-profit, community development investment fund. Thompson teaches business students at both Cornell University and Ithaca College. He holds a BSc in Agricultural Economics from Cornell University with specializations in economics, statistics, and finance. Further, Thompson has been trained in Financial Risk Management methods in accordance with the Global Association of Risk Professionals.

 

Using the DecisionTools Suite to Perform
Multi-criteria Decision Analysis to Identify
Sustainable Environmental Alternatives

Timothy J. Havranek,
Cardno ENTRIX

The United Nation’s Brundtland Commission’s definition of sustainability is often cited: “meeting the needs of the present without compromising the ability of future generations to meet their needs” (Brundtland Commission, Our Common Future, Oxford University Press 1987). Interest in sustainability is steadily increasing as individuals, corporations and governments consider issues such as global warming, the collapse of financial markets, and urban sprawl.

Sustainability concepts have now become part of managing cleanups (i.e. remediation) at hazardous waste sites. In April 2008, the United States Environmental Protection Agency (USEPA) published its Green Remediation Technology Primer thereby launching its green remediation initiative. The primary goal of green remediation is to integrate sustainable practices into decision making, thereby increasing the environmental, social, and economic benefits of cleanup.

This presentation demonstrates an approach for analyzing the overall sustainability of hazardous waste site clean-up alternatives using multi-criteria decision analysis (MCDA) as supported by Palisade DecisionTools. MCDA provides a transparent, systematic process for evaluating alternative strategies that have multiple costs and benefits (environmental, economic, and social). The presentation includes the application of the MCDA process to a fictitious site that includes many of the issues and complexities associated with a hazardous waste cleanup project. The techniques presented can be used to evaluate the sustainability of any business decision.

Timothy J. Havranek, MBA, PMP
Vice President of Business Solutions and Risk Management
Cardno ENTRIX

Mr. Havranek is a Vice President of Business Solutions and Risk Management with Cardno ENTRIX with over 25 combined years' experience in the environmental remediation and the oil and gas production industries. Mr. Havranek has managed numerous large-scale environmental projects throughout industry, working with multiple site owners, regulatory agencies, and other stakeholders in the development of strategic and sustainable business liability and asset management solutions to minimize environmental and social risk. He is highly skilled in the application of quantitative decision analysis and probabilistic modeling to facilitate strategic planning for environmental projects, having developed a wide range of successful decision analysis models for more than 400 sites. Mr. Havranek holds MBA degree from Carnegie Mellon University and a Bachelors Degree in Petroleum Engineering from Marietta College. He is a Certified Project Management Professional (PMP) and author of the book Modern Project Management Techniques for the Environmental Remediation Industry.

 

An Optimal Wagering Strategy:
Using Palisade Software to Maximize the
Expected Return and Minimize the Risk of Ruin

Dr. William Strauss
FutureMetrics, LLC

There are a number of papers and books on optimal wagering strategies if the probability of winning is understood.  In general terms, the stochastic properties of the outcomes are recognized in the equations that describe the theorems.  However, simulations that apply Monte Carlo methods, particularly at the granular level of each game over a series of baseball games, do not appear in the literature.

This presentation will determine the optimal wagering strategy using a sports model for baseball that determines the expected run production by the two teams in a given game. The baseball run production model has been presented at previous Palisade conferences by Clayton Graham and it also uses Palisade software. Over the 2009 season the model was about 58% correct in determining the winning team. The results in the 2010 season have been better (58.5%). However each individual game has individual risk and return characteristics described by a probability distribution. Therefore, the amount to place at risk in any given game may be a function of the risk/return characteristics of each game.

This analysis will investigate different decision rules and will demonstrate an optimal set of rules that will maximize return and minimize the risk of ruin over a series of games from the 2010 season.

Dr. William Strauss
President, FutureMetrics, LLC
Managing Partner, FutureEnergy Partners, LLC

Dr. William Strauss is the President and founder of FutureMetrics, LLC, a financial and economic forecasting consultancy that specializes in the renewable energy sector. He is the Managing Partner of FutureEnergy Partners, LLC. FutureEnergy specializes in enabling inventors of cutting edge technology in the energy sector move from idea to commercial product. He is also a Director of Maine Energy Systems, a renewable energy firm.

Bill Strauss has more than thirty-five years of strategic and policy planning, project management, data analysis, and modeling experience. He has an MBA (specializing in Finance) and a PhD (Economics, Earth Systems Science).

Bill is also the chief economist for the Biomass Thermal Energy Council (Washington, DC). Bill served as the chief economist on the Maine Governor’s Wood-to-Energy Task force in 2008.

Bill takes some time in the fall and spring to teach a few business and economics classes at the White Mountains College in northern NH. Bill loves to ski and he has logged nearly one million vertical feet heli-skiing.

 

Using Monte Carlo Simulation & Behavioral Research Methods to Improve Your Odds of Success for Hospital Line of Service Expansion

Dr. Stephen Kutner
Market Innovations Inc.

TBD


Dr. Stephen Kutner

President, Market Innovations Inc.

Stephen Kutner is President and Founding Partner of Market Innovations, Inc., and has 25 years of management consulting and industry experience with a focus on the application of econometrics, decision science, and behavioral economics. He is a leading expert in helping clients reduce the risk of uncertainty associated with assessing the commercial viability of innovative ideas by leveraging rigorous analytic, optimization, and predictive techniques. Prior to founding Market Innovations Inc., Steve was a senior partner at Corporate Value Associates and Mercer Management Consulting. Before this he acted as a director of the Strategic Marketing Center for Monitor Company. Earlier in his career he was an assistant professor of economics at the Boston University School of Management. He has advised clients, both domestically and internationally, across a wide range of industries, including financial services, telecommunications, consumer durables and package goods, health care, transportation, and nonprofit.

Steve holds a Ph.D. in economics from Stanford University and an MS in urban economics from the University of Wisconsin

 

 


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