ALZA and Bio-Electro Systems (A): Technological and Financial Innovation (293-124)

Lerner, Josh and Tufano, Peter (1993) ALZA and Bio-Electro Systems (A): Technological and Financial Innovation (293-124). [Case]

Abstract

To develop the next generation of risky products, ALZA, a mature and profitable biotechnology firm specializing in drug delivery systems, must raise $40 million. Organizational constraints and competitive concerns demand that the work be done inside the firm. However, accounting considerations and concerns about shareholders' reactions to the introduction of new risks to the firm lead the CEO to consider off-balance-sheet means to finance the new venture. To finance the new venture, the firm creates a new financing vehicle: a unit consisting of callable common stock plus warrants. This case examines the CEO's decision leading up to the issue of the units and the establishment of a new research and development subsidiary.

Item Type: Case
Keywords: finance, accounting, decision making
Subject(s): Finance
Date Deposited: 01 Apr 2016 12:50
Last Modified: 01 Apr 2016 15:42
Funders: n/a
URI: http://eureka.sbs.ox.ac.uk/id/eprint/6053

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