Purinex, Inc.

I. CASE FACTS Purinex was a drug-discovery and -development company based in Syracuse, New York, that sought to commercialize therapeutic compounds based on its purine drug-development platform. Purine was a naturally occurring molecule that played an important role in numerous biochemical processes. Purinex had developed a process for creating small molecules that acted as selected agonists (activators) or antagonists (blockers) for specific purine receptors in the cell membrane. Purinex’s goal was to develop products that evoked a receptor-specific pharmacodynamic effect without producing undesirable outcomes that could result from interactions with other receptors. The company had 14 employees and maintained a chemistry laboratory a few miles from its main office. Purinex’s intellectual-property portfolio consisted of more than 35 patents pending or issued in the purine field. The company planned to take its new receptor-selected drugs into clinical trials to address a broad range of potential indications. In June 2004, the company with several clinically and commercially promising drugs in development had reached a turning point. Sometime in the next four to twelve months, the company stood an excellent chance of establishing a partnership with a major pharmaceutical company. That partnership would enable Purinex to develop one of its leading compounds into a drug for the treatment of the world’s deadliest and most widespread diseases.
Gilad Harpaz, Purinex’s chief financial officer believed that if a partnership deal came through, the company would be in an excellent position to carry out its mission. Moreover, securing a deal was practically a prerequisite for any eventual initial public offering, which was an attractive exit strategy for many of the company’s investors. Harpaz also believed that the company could either attempt to secure financing now or wait until it struck a partnership deal. He has three options to consider for the company which he