The risk-adjusted or expected net present value (rNPV or eNPV) method combining decision-tree and discounted cash flow analysis is most frequently used for valuing pharma R&D projects and licensing deals. However, the Real Options method based on financial option pricing theory has gained growing academic and industry attention with NPV-based valuations having two major shortcomings. Consequently, real options models generally produce higher values than NPV models for projects with modest sales potential.