Case Study Summary
Avid Radiopharmaceuticals Case Study Summary
In November of 2008 Dan Skovronsky, founder and CEO of the biotech start-up Avid Radiopharmaceuticals, had a very important decision to make regarding the future of his company. One option was for Dan to run the trials for both AV-45 and AV-133, commit to the Easton real estate space, take on $7.5 million venture debt, and start raising money. This option could potentially allow for the company to experience rapid growth and capture a competitive advantage in molecular imaging for Alzheimer’s and Parkinson’s. The other alternative for Dr. Skovronsky was a “Hibernation” strategy where the company would take on no venture debt at all. Trials for AV-133 would pause; and only AV-45 would continue. Dr. Skovronsky could decline the Easton lease and avoid taking venture debt. The money that Avid had in the bank would take this version of the company at least into 2012. However, Avid could lose its competitive edge in the market and suffer a major lost opportunity to capitalize in the Alzheimer and Parkinson’s market. Also, this option could potentially have a negative effect on the Avid employee culture and take away the possible life-saving diagnosis of thousands of people.
In 2008, medical imaging was the fastest growing segment of the healthcare market. Alzheimer’s images were expected to be a big part of the growth of emerging radiopharmaceutical annual sales of compound growth rate of 14% from $1.5 billion in 2007 to $3.8 billion in 2014. Avid’s lead compound, AV-45 imaged the pathology of Alzheimer’s disease and was involved in some of the most promising Alzheimer’s therapy trials. The market for Alzheimer’s scans was estimated to reach over $1.5 billion per year by 2017. Avid's, major competitor, P2C, a multi-national conglomerate, had licensed to a compound that also imaged Alzheimer’s. With its financial strength and host of personnel, P2C seemed likely to bring its compound to market before Avid could do so.
In November of 2008 Dan Skovronsky, founder and CEO of the biotech start-up Avid Radiopharmaceuticals, had a very important decision to make regarding the future of his company. One option was for Dan to run the trials for both AV-45 and AV-133, commit to the Easton real estate space, take on $7.5 million venture debt, and start raising money. This option could potentially allow for the company to experience rapid growth and capture a competitive advantage in molecular imaging for Alzheimer’s and Parkinson’s. The other alternative for Dr. Skovronsky was a “Hibernation” strategy where the company would take on no venture debt at all. Trials for AV-133 would pause; and only AV-45 would continue. Dr. Skovronsky could decline the Easton lease and avoid taking venture debt. The money that Avid had in the bank would take this version of the company at least into 2012. However, Avid could lose its competitive edge in the market and suffer a major lost opportunity to capitalize in the Alzheimer and Parkinson’s market. Also, this option could potentially have a negative effect on the Avid employee culture and take away the possible life-saving diagnosis of thousands of people.
In 2008, medical imaging was the fastest growing segment of the healthcare market. Alzheimer’s images were expected to be a big part of the growth of emerging radiopharmaceutical annual sales of compound growth rate of 14% from $1.5 billion in 2007 to $3.8 billion in 2014. Avid’s lead compound, AV-45 imaged the pathology of Alzheimer’s disease and was involved in some of the most promising Alzheimer’s therapy trials. The market for Alzheimer’s scans was estimated to reach over $1.5 billion per year by 2017. Avid's, major competitor, P2C, a multi-national conglomerate, had licensed to a compound that also imaged Alzheimer’s. With its financial strength and host of personnel, P2C seemed likely to bring its compound to market before Avid could do so.