Aqua Bounty: Case Analysis
Aqua Bounty Case Analysis Aqua Bounty, a US-based biotechnology company that has been dedicating itself to commercialization of genetically modified salmons, is right standing at the cross of its future paths. This analysis would utilize financial models to help value the firm ahead of its IPO, in consideration of given senarios and a series of market assumptions.
Situation Sketch
By the moment when it was spun off its parent company into an independent entity in March 2000, Aqua Bounty had invested about US$ 4 million in developing new technology in aquaculture. Although it made progress in entering Chilean market in that year, this firm soon became controversial because of the property of genetically modification. This technique had not been embraced in animal cultivation by mainstream ideas, despite of its amazing efficacy in raising production of commercial fish. The pivotal approval by FDA was expected to come for another 18 month, with a lot of uncertainty, hence an additional try on shrimps. Hard work pays off. Solutions (Shrimp IMS and anti-virus drug VPX) were developed to prevent commercial-farmed shrimps from bacterias and a specific kind of virus. This pipeline of Shrimp IMS was built by Aqua Bounty in 2005 and then contributed to all of its revenue in 2005.
The core business that has huge potential application prospect once commercialized, is still delayed due to regulatory, so does positive net income. The company also needs additional capital for further investments over the coming years. The actual time of approval for genetically modified product lines is yet still uncertain. In order to maintain its operation and to fund its investments, Aqua Bounty made the right decision to IPO, rather than raise fund among small private placements.
Merits
The genetically modified (GM) fish could reach marketable size in about half the time of standard fish, which allows farmers to double production without increasing the size of farm or capital investment.
Situation Sketch
By the moment when it was spun off its parent company into an independent entity in March 2000, Aqua Bounty had invested about US$ 4 million in developing new technology in aquaculture. Although it made progress in entering Chilean market in that year, this firm soon became controversial because of the property of genetically modification. This technique had not been embraced in animal cultivation by mainstream ideas, despite of its amazing efficacy in raising production of commercial fish. The pivotal approval by FDA was expected to come for another 18 month, with a lot of uncertainty, hence an additional try on shrimps. Hard work pays off. Solutions (Shrimp IMS and anti-virus drug VPX) were developed to prevent commercial-farmed shrimps from bacterias and a specific kind of virus. This pipeline of Shrimp IMS was built by Aqua Bounty in 2005 and then contributed to all of its revenue in 2005.
The core business that has huge potential application prospect once commercialized, is still delayed due to regulatory, so does positive net income. The company also needs additional capital for further investments over the coming years. The actual time of approval for genetically modified product lines is yet still uncertain. In order to maintain its operation and to fund its investments, Aqua Bounty made the right decision to IPO, rather than raise fund among small private placements.
Merits
The genetically modified (GM) fish could reach marketable size in about half the time of standard fish, which allows farmers to double production without increasing the size of farm or capital investment.