Purinex Corp.

5147 Words21 Pages
Case Study: Purinex, Inc.

Introduction

The case asks for evaluation of different financing options. Gilad Harpaz is Purinex’s CFO and he needs to determine which one from the three options provides lowest risk, highest company value, and short term cash for operations. Purinex is a biotechnological company that has 35 patents pending in pharmaceutical field. It is one of the raising stars that may develop new drug for specific use in diabetes and sepsis. Company has 14 employees. Monthly burden is $60000; company has available cash of $700000 which will last up to 12 months.

Solution

Company should proceed with two options at the same time, of course, if this is possible. Those are pursuing the partnership with a “Big Pharma” company
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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...

Analysis of alternatives

1. Venture Capital

If Purinex decided to raise a one time round of financing from a venture capital firm there would be a significant amount of restrictions. There would be preferences for things like board appointments, anti-dilution rights, liquidity, participation, and positive
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