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Interviewer view · keep this screen to yourself

Keep the drug or license it out?

You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.

Case timer

00:00

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

A fictional biotech in Boston owns a drug about to enter Phase II. A large pharma company offers USD 50 million upfront now, plus USD 200 million if the drug is approved. The biotech estimates a 15 percent chance of approval from here, in line with the BIO data for drugs entering Phase II. If it keeps the drug, it must spend USD 120 million on trials, and if the drug is approved it expects it to be worth USD 1,000 million. Ignoring the time value of money, which option has the higher expected value?

2. Answers to clarifying questions

This case has no scripted clarifying answers. Answer from the prompt, and say "assume what you think is reasonable" if the prompt does not cover it.

3. A model structure

Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.

  • Expected value = probability x payoff, minus costs that are certain
    • License: upfront + probability x milestone
    • Keep: probability x value if approved, minus trial cost

4. The working, step by step

Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.

  1. Step 1: License

    What a strong candidate does: USD 50 million for sure, plus a 15 percent chance of USD 200 million.

    Expected value of licensing (USD millions): 50 + 0.15 × 200 = 80

  2. Step 2: Keep

    What a strong candidate does: A 15 percent chance of USD 1,000 million, minus USD 120 million of trials.

    Expected value of keeping (USD millions): 0.15 × 1,000 - 120 = 30

  3. Step 3: Difference

    What a strong candidate does: License minus keep.

    Advantage of licensing (USD millions): 80 - 30 = 50

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

The biotech should license the drug, because licensing has an expected value of USD 80 million against USD 30 million for keeping it, an advantage of USD 50 million. First, the USD 50 million upfront is certain, while keeping depends on a 15 percent chance of approval. Second, licensing removes the risk of spending USD 120 million on trials for a drug that fails, which matters for a small company with limited cash. The risk is that the 15 percent estimate is too low for this drug. As a next step, test the decision with discounted cash flows and a range of approval odds.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?

Structuring
1
No clear structure, or a memorized framework that does not fit the problem.
3
A sensible structure, but with some overlap, a gap, or no clear priority.
5
A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.
Math
1
Frequent errors, no units, or needed heavy help to finish.
3
Right answers but slow or messy working, or one error caught late.
5
Accurate and clearly narrated, with units, a sense check, and what the number means.
Exhibit reading
1
Read the chart aloud without finding the number that matters.
3
Found the key number but gave only part of the so-what.
5
Pulled the right number quickly and said what it means for the case.
Synthesis
1
Summarized what was done, with no clear answer.
3
Gave an answer, but with weak reasons or no next step.
5
Answer first, then two or three reasons with numbers, the main risk, and next steps.
Communication
1
Hard to follow: long silences, no signposting.
3
Clear most of the time, with some rambling.
5
Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.