Pharmacyclics (NASDAQ: PCYC), a pharmaceutical company that manufactures products that will improve existing therapeutic treatments for cancer, atherosclerosis, and retinal disease, is considering $ 60 million private placement in February 2000. The company was more money than ever before, but the projections of R & D and marketing expenses were unprecedented. Most promising oncology drug PCYC, radiation enhancer called Xcytrin, was in the third phase of clinical trials - the final stage before a rigorous FDA approval for commercialization. Analysts gave the drug a little better than 50% chance of success. This case focuses on the financing of the stage and a simple solution of the tree assessment. Students have the opportunity to consider the impact of past decisions on funding raised by the ownership structure of the company and to assess the current market price of the shares in the light of the analyst's cash flow forecasts and the probability of success for each drug. These two analyzes help inform decisions of private placement. "Hide
by Richard S. Ruback, Malcolm P. Baker, Aldo Sesia Source: Harvard Business School 14 pages. Publication Date: 08 January 2001. Prod. #: 201056-PDF-ENG
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