As you can see from the case briefing I’m doubting which option to choose moving forward with ABX-EGF. This is not just a project decision. Instead, it’s a strategic decision that will impact the future of my company. So that’s why I need your help.

I need a thorough financial analysis on the three options going forward; “Hand-Off”, “Hand-In”, or “Do Phase II and then Decide”. What do I have to gain or lose with each option? But also, this partnering opportunity has strategic implications while it could represent a turning point for my company on its path from being an Idea Factory, licensing deals to Big Pharma, to becoming a fully integrated biotech company (FIBCO). Or, maybe the time is not right yet to do this move?
Please help me analysing my options and give me your preferred view. For your financial analyses we typically use 10% as the DCF while the project-specific risks are taken care of in the success probabilities we use in the evaluations.

Hand-off option
A Hand-off refers to the option of surrendering certain exclusive access rights to the use of a product for a specified purpose. An upfront payment is made as well and an agreement directing that further payments should be made if the product's success advances to certain levels. This agreement also stipulates that a certain percentage of royalties on sales should be paid out to the company selling the product.
In this case one of the options that Abgenix has is to hand-off the ABX-EGF product to Pharmacol. This is a an already established pharmaceutical company which, as far as Abgenix is concerned, has the necessary skills for guiding the product through the rest of phase I, phase I/II, phase II and Phase III.
A hand-off to Pharmacol whose marketing capability is firmly in place would enable Abgenix to evade the numerous expenses of introducing a new drug to the market. However, before Abgenix actually sells off its exclusive rights to Pharmacol investigations have to be...