The analysis of this case addressing the future of ABX-EGF leads me to recommend that Abgenix should sign a deal with Biopart and be involved in the entire process of bringing ABX-EGF to the market profitably. Seven years of hard work and a $40 million dollars investment was what led to the creation of XenoMouse. With a brilliant line up of pharmaceutical and biotechnology companies for the license of XenoMouse and a total market capitalization of up to $3 billion dollars, Abgenix seems to be on a steady path to realize them into a FIBCO, a claim only elite few can make. [1: Robert Dolan. Abgenix and the XenoMouse : Meet XenoMouse, Harvard Business School. January 9,2001. Page 1.]
The Business Model
Abgenix has four development programs in its pipeline which were in various stages of clinical trials. The usual business strategy is to develop the product until step 3 in the product development value chain, and then to licence it to a pharmaceutical company for further development and marketing.
With one product in Phase 3 clinical trials (ABX-CBL), another in phase 2 (ABX-IL8) and ABX-EGF in phase 1 of the clinical trials, Abgenix has covered quite a ground in terms of portfolio enhancement. Since they have a market capitalization of $ 3 billion and substantial liquidity to invest in a project, it will be in the best interest of Abgenix to partner with Biopart. This deal may help Abgenix to take a massive step forward towards becoming a FIBCO.
According to the value by stage diagram, Phase 2 trials are the inflection points. If Abgenix proceeds to phase 2 of the clinical trials, the value of the drug rises and hence they will secure a pioneering position for getting a higher value for their drug. A deal with...