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Worksheet 3: Scenario Analysis

By Project team , on 1 June 2014

At the bottom of worksheet 2, there is a button that allows the user to conduct a scenario analysis to assess the impact of various scenarios on the project’s cash flow projections and valuation. To conduct the scenario analysis, the user is asked to set the parameters for this analysis in Box 6. In order to calculate best and worst case scenarios, the user can specify in Box 6 the variation from the base case in terms of the market penetration the project’s product is able to achieve once it hits the market, and the speed with which clinical trials are completed.

Once the user has set the parameters for the scenario analysis, and presses the button ‘run NPV scenario analysis’, the user is directed to Worksheet 3 where three scenarios are displayed as well as a figure with the NPVs associated with these scenarios:

– The base case scenario is a duplicate of the scenario presented in Worksheet 2

– The best-case scenario indicates the impact on the project’s cash flows and valuation if the market penetration of the cell therapy product is higher than in the base case scenario and clinical trials are completed speedier than in the base case scenario by amounts that the user specifies in Box 6.

– The worst-case scenario indicates the impact on the project’s cash flows and valuation if the market penetration of the cell therapy product is lower than in the base case scenario and clinical trials are completed at a slower pace than in the base case scenario by amounts that the user specifies in Box 6.