Case | HBS Case Collection | February 2009

Avid Radiopharmaceuticals: The Venture Debt Question

by Matthew Rhodes-Kropf and Ann Leamon

Abstract

The CEO of a promising biotech company must decide how to respond to the macro-economic slump of late 2008. He had planned to pursue an aggressive schedule, moving the firm's Alzheimer's and Parkinson's disease imaging compounds through clinical trials and into the market. This involved expanding the firm's facilities and headcount, and he planned to fund this by taking venture debt. Although clinical trial data is extremely encouraging, questions about raising his next venture round and the overall environment has made him question the wisdom of this plan. This case provides students an opportunity to explore the true cost of venture debt and when it is best used to achieve the goals of all parties—venture capitalists, entrepreneurs, and venture lenders.

Keywords: Financial Crisis; Entrepreneurship; Borrowing and Debt; Venture Capital; Financial Management; Investment; Health Testing and Trials; Expansion; Biotechnology Industry; Pharmaceutical Industry;

Citation:

Rhodes-Kropf, Matthew, and Ann Leamon. "Avid Radiopharmaceuticals: The Venture Debt Question." Harvard Business School Case 809-086, February 2009.