We are a Life Science Venture Capital with a passion for investing in drug development, both because it is extremely exciting but also because we contribute to moving new therapies closer to patients with severe, untreated diseases – we matter! – we make a tangible difference!
While this may be obvious because we finance the drug development process, the nature of venture capital is that we sell these investments before the potential new therapies are approved or have realized a benefit for patients.
So! How tangible is the difference actually and how can we communicate more specifically our contribution? This has recently been an ongoing topic of debate at Sunstone, and we would like to share some of our thoughts for your consideration!
Conceptually, the challenge has already been solved by financial valuations. Most of us are familiar with the risk adjusted net present value – rNPV, where future terminal financial value is discounted by the risk of failure and the cost of getting to that terminal value. The concept allows you to attribute increased value to progress, provided you decrease the risk of failure and increase the likelihood of achieving the terminal value.
If we can estimate the potential number of life years a novel therapy can save – and if we can estimate the increased likelihood of approval through the drug development progress that we finance, then we should be able to estimate our contribution of life years saved by the therapy. Risk Adjusted Life Years Saved – or RALYS for short.
Conceptually, we are claiming that an approved therapy is the result of many R&D projects, and the lifetime benefit of that final therapy can be redistributed to all the projects needed for that one success – and that the redistribution can be calculated from the typical clinical attrition rates for that specific therapy area. As you progress through clinical development you can calculate and report a specific RALYS contribution for each project.
Simple and tangible!…or is it!?
We will be sharing more thoughts and calculations of RALYS – but until then feel free to let us know what you think of RALYS.
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