Purinex, Inc

Abstract

In June 2004 Purinex, Inc., a pharmaceutical company with several clinically and commercially promising drugs in development, expected to secure a partnership with a major pharmaceutical company sometime in the next four to 12 months. That partnership, if secured, would enable Purinex to develop one of its leading compounds as a drug. The company, however, had no sales or earnings and only 11 months of cash on hand. The student must assess whether the company should attempt to secure financing now or wait until it consummated a partnership deal. The tasks for the student include evaluating the probabilities that collaboration with a pharmaceutical company would actually happen; determining whether the company stay above water until such occurred; and analyzing the other risks to the company under these circumstances.

Excerpt

UVA-F-1491

Version 4.2

PURINEX, INC.

To lead the world in discovering, developing & commercializing novel therapeutic compounds acting on the purine receptors in order to save and improve patients' lives.

—Company mission statement

In June 2004, Purinex, Inc., a pharmaceutical company with several clinically and commercially promising drugs in development, had reached a turning point. Sometime in the next four to 12 months, the company stood an excellent chance of securing a partnership with a major pharmaceutical company. That partnership, if secured, would enable Purinex to develop one of its leading compounds into a drug for the treatment of one of the world's deadliest and most widespread diseases. The company had no sales or earnings, however, and there was only enough cash on hand to last 11 months.

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Keywords: investment analysis, capital budgeting, financing investment analysis venture capital, early-stage financing