This is a complex, real situation. In this assignment, we will focus on understanding Marnac’s perspective. Your report should describe the problem landscape, and weave answers to the following two s
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This is a complex, real situation. In this assignment, we will focus on understanding Marnac’s perspective.
Your report should describe the problem landscape, and weave answers to the following two sets of questions:
1. First cut analysis: This is a “back of envelope” analysis that one may be tempted to do as a starting point. Please use the information on page 108 left side, in the paragraph “Based on prior experience…” to create a decision tree. Subsequently, please answer the following questions:
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Order Paper Nowa) Which drug should Marnac pursue? Why? Please weigh both expected return and risk to inform your choice. (The tree you build will provide you the expected return. As for risk, this refers to the various benchmark criteria presented in section 13.2.1.)
b) Is the expected return highly sensitive to any inputs?
2. Detailed analysis of Pirfenidone: Decision trees are a powerful tool in providing a more nuanced analysis that takes into account the contingency nature of costs and revenues. Please use the data in the section titled “Drug Development Process and the FDA Approval Process” to:
(a) Create a decision tree to determine the value of the drug. Use $74.25 and $48.15 as the costs for IND and NDA approvals, respectively (see if you can figure out how to deduce these numbers from the other information).
(b) What is the expected value of the drug in this analysis? Is it different from First Cut Analysis? (It should be). Why?
(c) Identify two or three inputs to which the expected value is most sensitive.
Hint: It may be helpful to start the tree for Q2 with a decision node for developing Pirfenidone or not. (though it isn’t necessaruy to do this)
Please submit a 3-5 page report plus analysis, with a total page limit of 8-9 pages (this includes trees and data). Please be complete and concise. I have seen great reports that are 4-5 pages in total.
This is a complex, real situation. In this assignment, we will focus on understanding Marnac’s perspective. Your report should describe the problem landscape, and weave answers to the following two s
Pirfenidone Valuation Pirfenidone Valuation Criteria Ratings Pts This criterion is linked to a Learning Outcome Q1: Decision Tree Clear labels, correct values, proper use of min/max payoff, proper use of nodes 6 pts Full Marks 4 pts Good The tree is mostly correct 3 pts Fair Some of the tree is correct 0 pts No submission 6 pts This criterion is linked to a Learning Outcome Q1a: Optimal Decision Which drug should Marnac pursue? Why? 4 pts Full Marks Decision based on both expected return and risk 3 pts Incorrect Decision w/Support The decision ignores or incorrectly considers risk 2 pts No Support for Decision Whether right or wrong 0 pts No Submission 4 pts This criterion is linked to a Learning Outcome Q1b: Sensitivity Analysis Based solely on expected return, how sensitive is the result? To which factors? 3 pts Full Marks 2 pts Good Mostly correct 1 pts Fair partially correct 0 pts No Submission 3 pts This criterion is linked to a Learning Outcome Q2a: Decision Tree Clear labels, correct values, proper use of min/max payoff, proper use of nodes 6 pts Full Marks 4 pts Good The tree is mostly correct 3 pts Fair Some of the tree is correct 0 pts No submission 6 pts This criterion is linked to a Learning Outcome Q2b: EV Comparison What is the expected value of the drug in this analysis, and why does it differ from that of Q1a? 3 pts Full Marks 2 pts Good Explanation is partially correct 1 pts Fair Incorrect answer & explanation 0 pts No Submission 3 pts This criterion is linked to a Learning Outcome Q2c: Sensitivity Analysis Identify two or three factors to which this value is most sensitive 2 pts Full Marks Factors correctly identified and supported 1 pts Good Partially correct 0 pts No Submission 2 pts This criterion is linked to a Learning Outcome Paper Spelling, grammar, page length 1 pts Full Marks 0 pts Fair Some issues 1 pts Total Points: 25
