Specifically, Abgenix had to choose among three salient alternatives for the route to market of ABX-EGF. These were: 1. Entering into a licensing agreement with “Big Pharma” Pharmacol, yielding a series of development fees as well as royalties of Pharmacol’s ABX-EGF sales. 2. Forming a joint venture with the biotech firm Biopart, equally sharing all future costs and profits. 3. Pursuing a “go-it-alone” strategy through the end of phase II …show more content…
The “Go-It Alone” strategy
The marketing and sales barriers to entry not being scalable, Abgenix would be forced, at one point or another, to either partner or sell its rights on ABX-EGF. However, the company did have the in-house capabilities of taking the drug through the second phase of clinical testing. If the drug successfully made it beyond this point, then Abgenix would be in possession of a much stronger product, as the biggest chunk of uncertainty around drug innovation would have been left behind. This would entitle the company with a much higher bargaining power when entering the negotiations to choose a partner. On the other hand, testing costs ($28 million) would fall entirely upon Abgenix. Would renegotiation allow for the company to compensate that “extra” investment?
Financial assessment -NPV & Risk
From the NPV calculations (Anex III)