A leading Australian law firm engaged Chrysalis Managing Partner Nick Northcott under legal professional privilege to act as an independent expert to quantify the commercial loss incurred by a leading health startup concerning allegations their contract research partner failed to undertake, in particular the contracted clinical research as per the study protocol, prejudicing the results and impacting the commercialisation pathway of the company.

In early 2021, Nick undertook an extensive review of the company’s strategy and business plan, product and service offerings, financials, revenue projections and investment readiness, as well as a broader review of the overall industry and market. Nick reviewed the clinic’s financial model and assessed the commercial risks associated with the stage of the clinic’s development. The research undertaken by Nick allowed him to provide a comprehensive independent expert report to express an opinion with regards to the commercial loss suffered by the company.

The expert opinion provided a risk weighted scenario analysis taking into account the various factors that would influence the quantification of the commercial loss. The discounted cash flow (DCF) methodology was selected as the most appropriate for this situation and a DCF model was created to quantify the potential commercial loss associated. The DCF model forecasted the potential future value of the company based upon a series of scenarios utilising a probability weighted and risk adjusted scenario analysis.

Using this DCF model, Nick provided in his report a scenario weighted expected return model which quantified the loss incurred by the clinic to support resolution of the commercial dispute.