Theracore

[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...