Purinex Analysis

PURINEX INC. COMPANY ANALYSIS

Date: November 14, 2013

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Subject: “Purinex Inc. Valuation”

Purinex Inc. is a pharmaceutical drug discovery and development company that participates in the entirety of the drug approval process. Purinex’s basis for operations is developing products that evoke a receptor-specific pharmacodynamic effect without producing undesirable outcomes that could result from interactions with other receptors. As a heavily R&D focused company,Purinex seeks to commercialize its therapeutic compounds based on its purine-development platform by selling its developments to larger Biotechnology companies and save and improve patients lives. In partnering with these Biotechnology companies Purinex could utilize a large infrastructure for the sale and the distribution of its products and also gain funding for R&D to furtherdevelop its leading compounds. Purinex would develop one of its leading compounds, Purine, into a drug for treatment of the diseasesdiabetes and sepsis. Another interest that Purinex has shown is for an IPO, which would provide an attractive exit strategy for the company’s investors.

The problem is that Purinex only has enough capital to last about 11 more months with its $700,000 cash at a $60,000 per month burn rate. This not only limits the future of its R&D but also may end the company. Our recommendation to solve the company’s capital problem is to secure financing through angel investors given the appropriate risk-return trade-off.

Purinex derives its value from the expected future sales of all of the products in its pipeline. These products get their value from patented technologies, research and development, and uniqueness to fill a void in an untapped market. Furthermore, the likelihood of success depends on the stage in which a product is in; the farther along a product is in the pipeline, the higher its value. A farther along product would typically have...