Scribd
Upload
126 views4 pages

Group 10 - Nucleon Assignment 1

Robert Moore, CEO of Nucleon Inc., must decide how to produce and distribute their new drug CRP-1. They have three main options: building an in-house pilot plant, contracting with another manufacturer, or licensing the drug to another company. An in-house plant would allow control but is too small for late-stage trials and commercialization. Contracting avoids costs but loses control and confidentiality. Licensing gains upfront payments but forgoes larger profits. Given Nucleon's need for speed and limited funding, the recommendation is to contract manufacturing for early trials and license for late-stage development and marketing.

Uploaded by

Mukul Khurana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
126 views4 pages

Group 10 - Nucleon Assignment 1

Robert Moore, CEO of Nucleon Inc., must decide how to produce and distribute their new drug CRP-1. They have three main options: building an in-house pilot plant, contracting with another manufacturer, or licensing the drug to another company. An in-house plant would allow control but is too small for late-stage trials and commercialization. Contracting avoids costs but loses control and confidentiality. Licensing gains upfront payments but forgoes larger profits. Given Nucleon's need for speed and limited funding, the recommendation is to contract manufacturing for early trials and license for late-stage development and marketing.

Uploaded by

Mukul Khurana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 4

Case Study: Nucleon Inc.

By

Group 10

PGP/25/023 Gahana Agarwal


PGP/25/031 Karthikeyan N
PGP/25/037 Mukul Khurana
PGP/25/054 Shubham Agarwal
PGP/25/165 Rahul Arora
1. Identify options available for Robert Moore and Nucloen

Option1:
In-house pilot plant
- Enable firm to develop nucleus of a future large-scale in-house manufacturing capability, upskill
current employees, mostly comprising PhD scientists. lay foundation for future large scale in-house
manufacturing
- Keep control over process
- Planned capacity would meet Nucleon’s requirement for Phase 1 and 2 clinical trials only, Cannot
be used for phase-3 trials, Nucleon does not have the budget that meets FDA requirements for
phase-3
- Total Cost $ 7,394,000

Option2:
Contract Manufacturing
- No major capital investment and contract could be easily terminated with small termination
penalties
- Very few companies that did contract manufacturing; contracts were expensive
- Biggest risk was confidential information disclosure
- Negotiation + Technology transfer takes months

Option3:
License Manufacturing
- Could license the product immediately in exchange of Fixed payments and future royalties
- Right to develop CRP-1 for other applications
- No capital investment at the cost of low profit opportunity

Options for Phase III/ Commercialization and Distribution


Option1: In-house
- Construction USD 21 mn to build a commercial plant and it would be a sole supplier of CRP 1 to its
marketing partner.
- Or could negotiate a supply contract and receive a USD 5 Million payment upon FDA approval and
40% of sales. Sell CRP-1 to marketing partner at cost.

Option2: Licensing
- No construction, and partner would be responsible for phase 3 and commercial manufacturing
- receive a USD 7 Million payment upon FDA approval and 10% of sales

2. Evaluate all the options

New Pilot Plant


Advantages
• Enable firm to develop nucleus of a future large-scale in-house manufacturing capability,
upskill current employees, mostly comprising PhD scientists.
• Phase 1 and 2 trials experience would allow to accumulate experience on dealing with
complicated technical and regulatory issues.
• Generate basic manufacturing skills in-house, total control over the process and quality.
• Easy scaling-up in future for later phase and commercial product development

Disadvantages/ Risks
• Enough for phase I and II but not for phase III trials supply of products
• Less but chances of CRP-1 failing in clinical trial leaving the pilot plant idle
• Process uncertainty as the plant is to be set up for bacterial cells which might need
significant changes when working with mammalian cells
• Investors’ concern over distribution of resources for manufacturing that would otherwise
have been used for R&D that they are more familiar with and manufacturing might distract
them from their main goal
• Most drugs in clinical trials don’t succeed in market
• If burn treatment fails, can adopt kidney failure but that will take time
• Product differentiation concerns as there are many competitors that can clone genes

Contract Manufacturing

Advantages

• No major capital investment from Nucleon


• Contract can be terminated at any point and easily if CRP-1 failed in clinical trials with small
termination penalties
• Contract providers would have enough facilities and personnel to handle the logistics
• Easy scaling-up in future for later phase and commercial product development

Disadvantages/ Risks

• Few capable and willing contractors


• Loss of confidentiality and painstaking time and cost estimation due to the complexity of the
process
• Technology transfer and scale-up might take many months after contract signing which itself
can take a long-time (total time ~ pilot plant set-up time)
• No clarity on the quantity for agreement as large quantity of material might not be required
if product specifications change or the product fails in early stage in trial and small quantity
would mean higher price to offset fixed costs of scale-up and batch set-ups

Licensing the Product to another company

Advantages

• Could get fixed payments and future royalties; reduces the uncertainty of future cash flow
and transfer the risk to the other party
• Licensed partner would be responsible for all the requisite expenditures
• Nucleon would still retain the right to develop CRP1 for other therapeutic process
• Can avoid making large capital investment

Disadvantage/ Risks

• If product turned out to be successful, the benefits derived from it will be very meagre
• It could affect the viewpoint of the employees and investors; where the company is not
ready to take risk in the product which has been modelled by the competent team
3. What should be the recommendation of Robert Moore?

Factors considered before taking the decision

 Timing was of essence – Establishing a strong patent position was very important for
Nucleon. It had to develop a strong proprietary position in the market to survive and further
devise therapeutic application for CRP-1 for acute kidney failure. Market first
 Availability of capital – The investors and venture capitalists were not happy with their
previous investments in the biotechnology space and were unwilling to fund early-stage
projects. This posed serious problems to Nucleon in raising funds.
 Risks associated –
1) Operating in niche segments – Environmental Uncertainty
2) Scalability of the CRP-1 processes
3) Stringent regulatory environment – Change in manufacturing processes added to costs
significantly, absolute requirement to run the process exactly as specified

Given the above factors, Robert Moore should select the option of Contract Manufacturing for Phase
1 & 2 trials and license our manufacturing and marketing rights at phase 3.

Also, after analysing the options at investment and revenue front taking into consideration all the
risks involved, we have identified that complete in house pilot plant will be more beneficial but it
comes with a huge risk which can affect the business. At the same time contracting is a safe option
as it would benefit business in the long run. We have attached an excel sheet with rough estimations
of investment and revenue.

Refer the excel for calculation:

Nucleon%20calculati
on.xlsx

You might also like