Publications
Publications
- April 1993 (Revised October 1995)
- HBS Case Collection
ALZA and Bio-Electro Systems (A): Technological and Financial Innovation
By: Josh Lerner and Peter Tufano
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.
Keywords
Risk and Uncertainty; Technological Innovation; Business Subsidiaries; Decision Choices and Conditions; Corporate Finance; Biotechnology Industry; Medical Devices and Supplies Industry
Citation
Lerner, Josh, and Peter Tufano. "ALZA and Bio-Electro Systems (A): Technological and Financial Innovation." Harvard Business School Case 293-124, April 1993. (Revised October 1995.)
About The Authors
