Nucleon Case Essay

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In this case, our group analyzed five options for Nucleon Inc. regarding the Phase I/II production and Phase III production for “cell regulating protein-1” to treat burn wounds. The five options analyzed were: Nucleon-Nucleon, Nucleon-Licensee, Contractor-Nucleon, Contractor-Licensee, and Licensee-Licensee. We found that each of these scenarios when analyzed with special attention paid to several key internal and external issues. One of the key issues identified by our group was the return for our venture capital investors in the form of the NPV of costs and revenues (See Tables). This is an important issue due to the fact that biotechnology is heavily affected by capital availability and recently, venture capitalists were reluctant to fund biotechnology firms. As Jeff Hirst said, “When it comes to raising capital today, it’s a buyers’ market.” Therefore, producing returns for our current investors and producing high returns for potential buyers was a key focus. A second key issue was the probability of successfully completing each phase of testing. For both Phase I/II and Phase III, if the phase was not completed, there would be zero sales and all capital expenditures would be rendered useless. Phase I/II seemed relatively routine; however, Phase III was much more complex and presented a much bigger risk of preventing FDA approval and eliminating all future sales. A third key issue was sustaining a long-term competitive advantage. Nucleon, since its inception had been exclusively an R&D firm. Nucleon management saw cell regulating proteins as an attractive niche, in which there were few competitors. However, there was also a potential for company growth through entrance into the manufacturing of the products developed by Nucleon’s R&D. Therefore, it was imperative that the implications on long-term competitive advantage be considered when deciding

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