Aquab

The Aqua Bounty was a young biotechnology company in a quickly growing aquaculture industry. In 2006 its CEO, Elliot Entis, had to deal with the evaluation of the company for its initial public offering (IPO) since the company was in need for capital and one way to get it was on the equity markets. This decision to price the firm was an effort because of the many risks the company was facing since the beginning.

Because of the nature of the product, Aqua Bounty company had to prove and demonstrate its safety (AquaAdvantage fish) and therefor chose to pursue New Animal Drug Application (NADA) process of FDA (Food and Drug Administration). But FDA approval required a long time and even after the company had already provided studies and conducted tests in order to show that genetically modified fish were essentially the same with farmed varieties, FDA was still seeking more data on environmental risks and safety of the product. The company was unsure and hoping to receive FDA approval within 18 months. So the company was facing the risk of losing time in an uncertain market. As Aqua Bounty tried to bring the fish to the market, faced besides the long wait for regulatory approval for the product, the uncertainty of consumer’s demand. In the market were not much competitor but the company Devgen was strong enough. They were running the risk of not selling the product even after investing in showing that genetically modified fish are safe for human consumption, because they were not sure how consumers would react to the

fish/product. This uncertainty led them to search new market segments for the Aqua genetic products and to expand its product line. This came with the risk of extra considerable commercialization costs, general and administrative expenses. The company was facing a huge in operating loss, bad debts expenses, interest expenses. Therefor it was difficult to calculate the company’s value since it was in great losses and was generating negative Cash...