Purinex Case Solution
Executive Summary
Purinex is a drug discovery and development company based in Syracuse, New York. The company sought to commercialize therapeutic compounds based on Purine, which is useful in numerous biochemical processes and its intellectual portfolio of Purinex consists of more than 35 patents, pending and issued in the purine field. The company has a headcount of 14 and maintains a chemistry laboratory a few miles from its main office.
The company’s target is to develop products that act as activators or blockers to specific purine receptors without producing undesirable outcomes. It is on the verge of securing a partnership with a major pharmaceutical company in the next 4-12 months that could seal the fate for it to develop the treatments for the most deadly diseases.
Purinex has plans to take its receptor-selective drugs into clinical trials to address a broad range of potential indications, out of which the most promising were of treatment of Diabetes and Sepsis. As the company has limited funds available and doesn’t have any sales and earnings, Purinex’s CFO, Gilad Harpaz is deciding on two alternatives to keep the company afloat – to obtain financing now or wait until the partnership deal to get through. Brainstorming through pros and cons of each of the two alternatives with factors like current cash availability, clouding uncertainties on Sepsis and Diabetes partnerships, need for raising immediate money, giving up market rights, Harpaz considered following three options in order to maximize firm’s value and reduce financing risks: 1) Venture Capital Round: Secure $10 million in three months amidst various restrictions, 2) Wait six months: $25 million valuation but greater duress if the deal fails, and 3) Angel Round: Lower financing with greater valuation, without any overtly preferential demands.
Key Issues with Purinex
In order to evaluate each of the three options mentioned above, the following key issues need to be
Purinex is a drug discovery and development company based in Syracuse, New York. The company sought to commercialize therapeutic compounds based on Purine, which is useful in numerous biochemical processes and its intellectual portfolio of Purinex consists of more than 35 patents, pending and issued in the purine field. The company has a headcount of 14 and maintains a chemistry laboratory a few miles from its main office.
The company’s target is to develop products that act as activators or blockers to specific purine receptors without producing undesirable outcomes. It is on the verge of securing a partnership with a major pharmaceutical company in the next 4-12 months that could seal the fate for it to develop the treatments for the most deadly diseases.
Purinex has plans to take its receptor-selective drugs into clinical trials to address a broad range of potential indications, out of which the most promising were of treatment of Diabetes and Sepsis. As the company has limited funds available and doesn’t have any sales and earnings, Purinex’s CFO, Gilad Harpaz is deciding on two alternatives to keep the company afloat – to obtain financing now or wait until the partnership deal to get through. Brainstorming through pros and cons of each of the two alternatives with factors like current cash availability, clouding uncertainties on Sepsis and Diabetes partnerships, need for raising immediate money, giving up market rights, Harpaz considered following three options in order to maximize firm’s value and reduce financing risks: 1) Venture Capital Round: Secure $10 million in three months amidst various restrictions, 2) Wait six months: $25 million valuation but greater duress if the deal fails, and 3) Angel Round: Lower financing with greater valuation, without any overtly preferential demands.
Key Issues with Purinex
In order to evaluate each of the three options mentioned above, the following key issues need to be