Biopharmaceutical industry has been regarded as a highly risky business because of the characteristics such as high capital investment, long developing time, and low success rates. During the developing process, however, managers have the flexibility to adjust the investment project. For example, the R&D project can be abandoned or sold to other companies. The managerial flexibilities can contribute to the project value. Traditional valuation methods are unable to fully capture the value created by the biopharmaceutical R&D project because they ignore these opportunities. Therefore, we apply the compound real option concept and present the binomial lattice model with options to abandon and sell, so as to evaluate the R&D project value.