NUCLEON, INC.

Submitted By:
Aryan Singh Chouhan (PGP01013)
Paresh Rajput (PGP01033)
Priyanshu Nagar (PGP01038)

INTRODUCTION
Leader in cell regulating Factor
CRP-1 (Cell regulating protein -1), its first potential product
Have no manufacturing facilities which met FDA requirements
Was among 200 firms to develop pharmaceutical technologies
Highly competitive environment
Enormous cost of developing and commercializing a new drug
Was able to raise $6 million in VC and received Research grant totaling

$600,000

NUCLEONS DRUG
DEVELOPMENT PROCESS
Divided into several distinct phases
1.
2.
3.
4.

Research
Cloning and purification
Pre-Clinical Research
Human Clinical Trials

Three phases of Clinical Trials

1.
2.
3.

Phase I :Drug Testing on healthy volunteers (6-12 months)

Phase II : Drug testing on small group of patients having the disease (Requires
1-2 years)
Phase III : Testing on relatively large number of patients ( Requires 2-5 Years)
Total cost at this phase would be somewhere around $30-$100 million

CHALLENGES
Potential Investors wants to see proprietary position before they commit

capital
It was extremely difficult to patent the process technology
United States Patent office might take several years to process an

application
Other competitors were developing drugs using almost similar technology
Couldnt afford to market the product on its own
By the mid- to late- 1980s VC became more selective
Potential corporate partners unwilling to fund early stage products

OPTIONS AVAILABLE FOR

NUCLEON
Phase I/II

Phase III

Option 1

Pilot Plant

Commercial Manufacturing

Option 2

Pilot Plant

Licensing manufacturing and

Marketing

Option 3

Contract Manufacturing

Commercial Manufacturing

Option 4

Contract Manufacturing

Licensing Manufacturing and

Marketing

Option 5

Licensing the product altogether to another company

OPTIONS AVAILABLE FOR

NUCLEON
The New Pilot Plant
1.
2.
3.
4.

Develop future large scale in house manufacturing facility

Will have to recruit people with appropriate skills
Risk of failure is there, the investment, in that case, will be sunk cost
Process uncertainty is yet another risk

Contract Manufacturing
1.
2.
3.
4.
5.

It required no major capital investments

If CRP-1 failed, the contract could be easily terminated
Few companies were capable/willing to contract manufacture pharmaceuticals from
bacteria
Another risk is confidential information disclosure
Risk to commit to large quantity of material. What happens if the product fails ?

OPTIONS AVAILABLE FOR

NUCLEON
Licensing the product to another company
1.
2.
3.
4.
5.

Partner will make all the requisite expenditure

Partner will have the right to market CRP -1 to treat burn wounds
Nucleon will retain the rights for other therapeutic applications
Nucleon would receive royalties as a percentage of sales
$3 million plus 5% of gross sales

Commercial Manufacturing (Phase III)

1.
2.

Estimated cost of $20 million and another $1 million in development resources

$5 million payment plus the royalties equals to 40% of gross sales

Licensing out Manufacturing (Phase III)

1.

$7 Million plus the royalties equals to 10% of gross sales

RECOMMENDATION
Go for Licensing

Not the highest NPV.

The option with the highest NPV might lose double than the investment if the
patent is not granted.
Best even if the patent is not granted
Inflow of $3 mn cash upfront
Flexibility to work on other research projects like mammalian cells and new cell
regulating projects
Can focus on their core competency - R&D