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Avid Radiopharmaceuticals Case Study Summary

In November of 2008 Dan Skovronsky, founder and CEO of the biotech start-up Avid Radiopharmaceuticals, had a very important decision to make regarding the future of his company. One option was for Dan to run the trials for both AV-45 and AV-133, commit to the Easton real estate space, take on $7.5 million venture debt, and start raising money. This option could potentially allow for the company to experience rapid growth and capture a competitive advantage in molecular imaging for Alzheimer’s and Parkinson’s. The other alternative for Dr. Skovronsky was a “Hibernation” strategy where the company would take on no venture debt at all. Trials for AV-133 would pause; and only AV-45 would
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In late 2005, Avid received funding from pharmaceutical heavyweights Eli Lilly and Pfizer of $8.9 million in Series B financing. Also, in 2007 Avid received $26 million of Series C financing in early 2007.
By early 2008. Avid’s A-45 was showing great progress in late trials and also were beginning Phase I trials on a Parkinson’s compound (AV-133). This would allow Avid to be more than just a one-trick pony and be a viable candidate as a stand-alone company. Also, that summer investment banks started visiting Avid’s offices in Philadelphia hoping to lead the IPO, which was scheduled for late 2009, subject to market conditions. Bankers suggested that a $25 million D round in early 2009 might be priced at $200 million post-money, followed closely by an IPO. That, however, was before the destruction of more than 25% of the world’s wealth. With an aggressive growth plan in mind, Avid’s management team began to execute on its growth strategy in early 2008. Priorities were the next round f clinical trials with AV-133 and Av-45. A venture debt loan could support the company of necessary finances (Easton Technology Properties) as the company began fund-raising for a pre-IPO round. Dr. Skrovonskey worried about the timing of the Venture debt loans. He stated that by the time Avid actually needed the cash they would have already paid part of the loan back plus interest. However, Avid investors looked at the Venture debt loans as a cushion that would allow Avid time to
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