Submitted by: Submitted by Cicciox
Views: 285
Words: 918
Pages: 4
Category: Business and Industry
Date Submitted: 01/20/2012 03:17 PM
[Type the company name] |
Theracor Case
|
|
January 18, 2012 |
Opportunity
Theracor presents more than one opportunity and should be evaluated accordingly– (see different lines of business valuation in attachment)
* Generic Drug – this is the less “unsure” of the 3 paths, there are many companies working on this field. It’s more a problem of risk than of complete uncertainty (e.g. you know the success rate, the investments needed, …)
* Controlled Release – even if more unsure than the previous due to more innovation it’s still a quite safe bet
* Radiopharmaceutical – this is the real “entrepreneurial” idea that the company is developing. Here is much more difficult to make good forecast: the market is huge but development costs and uncertainty are also very big
Context
* Good reason why Theracor could invest in 3 new opportunities that it faced
* New technology development (UPenn medical discoveries) for Alzheimer Disease
* Partial changes in the regulatory system (generics)
* Taiwan (new regulations and Country interest)
* Alzheimer is considered a serious problem and involves a big number of people and consequently a huge spending
* The “windows” will remain open till someone else fill the gap but the number of real competitors with similar competencies and licenses looks small
Theracor value and business plan
* Through DCF, the company is valued at slightly under $50 million. This is based on a terminal value of 5*pretax profits, as suggested possible in the case, and a cost of capital of 60%, in recognition of the early stage of the company. Opening cash is assumed to be equal to pre-cash in capital of $1.7 million, net of 2002 costs (-$800,000). 57% of the current value of revenue is attributed to Radiopharma, with 23% attributed to ANDA and the balance to NDA CR. (see calculation in appendix for details)
* Even if complex technology is complex, the plan is far to be well...