Novion Therapeutics

Hypothesis: Given the urgency and scale of funding required, Novion Therapeutics should raise capital by divesting a non-core, low-growth business. This would free several billion dollars to reinvest in high-return, human-health–aligned projects and demonstrate decisive action to investors.

Sample Framework

1. Assess Capital Need and Context

Show that normal operational levers are insufficient.

• Scale of need: planned projects require several billions; internal savings too small.
• Timing: investors expect a visible move within one quarter; speed is critical.
• Market conditions: assess equity and debt markets, cost of capital, and stock pressure.
• Strategic constraint: preserve focus on Novion’s human-health mission and investor confidence.

2. Identify Possible Sources of Capital

Evaluate the main options on speed, magnitude, and optics.

• Issue equity: raises large sums but dilutes shareholders and signals weakness.
• Raise debt: quick to execute but increases leverage and risk.
• Divest a non-core business: non-dilutive, improves strategic focus, sends a strong investor signal, though execution carries some risk.
• Internal reprioritization: cheap but insufficient in scale and too slow.

Expected insight: Given the urgency and investor scrutiny, divestiture is the most appropriate path.

3. Evaluate Divestiture Candidates

• Test each segment for strategic alignment with Novion’s core mission.
• Focus on growth profile to identify low-growth units suitable for sale.
• Check ease of separation and existence of potential buyers.
• Consider valuation multiple and impact on remaining operations.

Next step cue: “I’d like to see Novion’s portfolio by segment to identify which business best fits these criteria."

4. Plan Capital Deployment

Once cash is raised, decide where to deploy it for maximum value creation.

• Evaluate each project’s NPV, capital requirement, and payback.
• Rank projects by NPV-to-investment ratio (Profitability index) --> Profitability Index (PI = NPV ÷ Investment)
• Select the best combination within the capital constraint.
• Decide on the use of any excess cash (buyback, dividend, buffer)

Example of a strong verbal answer

“The CFO’s main issue is liquidity, not profitability. My hypothesis is that Novion should sell a non-core, slow-growth unit to fund high-return projects and demonstrate decisive action. I’d approach this in four parts: first, size and time the capital need; second, evaluate capital sources such as equity, debt, divestiture, and internal reallocation; third, identify divestiture options by fit, growth, and saleability; and finally, prioritize reinvestment by profitability index once the cash is raised. To start, I’d like to review Novion’s business-segment breakdown.”

Common Mistakes

Candidates may jump to generic growth strategies, such as entering a new market or pursuing an acquisition, without recognizing that the prompt explicitly highlights financial constraints. Under such conditions, the focus should be on freeing or reallocating capital, not expanding spending.

Goal: Identify which business segment to divest. Hence, we are looking for a business segment that is non-core + low growth + feasible sale with large proceeds.

Filtering logic sample structure

1. Strategic fit

   Logic: Novion’s mission = human health (oncology, immunology, gene therapy).

   Outcome: AgriBio Solutions focuses on animal & agricultural biotech → non-core.

2. Growth 

   Logic: Focus on accelerating value creation

   Outcome: AgriBio Solutions= 0% CAGR (lowest among the business segments). By contrast, the human-health divisions such as OncoThera and CellThera grow at 9–13 %, reflecting their strategic relevance.

3. Ease of sale & financial impact

   Logic: Prioritize businesses that operate independently, with clear external buyers and potential for meaningful proceeds.

   Outcome: AgriBio Solutions is an autonomous unit with its own operations and an obvious buyer universe in the agribusiness and animal-health sectors. With 4.5 B USD in annual sales, it is large enough to raise substantial capital while remaining separable from the human-health core.

Expected answer: Divest AgriBio Solutions. It is non-core, flat growth, and easily saleable to agribusiness or animal-health buyers.

Other options such as Wellvion or Nutrivion were reviewed but are too small (3.0 B USD and 2.1 B USD in sales, respectively) to materially fund the company’s capital needs. LegacyCare, though mature and slower-growing (1 % CAGR), is deeply integrated into Novion’s commercial network and provides stable cash flows that support R&D, making its divestiture strategically unattractive.

Valuation steps

• Sales = $ 4.5 B
• Multiple = 4 × sales
• Enterprise value = $ 4.5 B x 4 = $ 18 B
• Assume tax-free transaction → full $ 18 B proceeds.

Business implications

• Scale → enough liquidity to fund multiple large projects.
• Speed → sale executable within 3–6 months.
• Optics → visible shift back to human-health core.
   

Each initiative has an expected NPV and required capital investment as shown in Exhibit 2. To maximize value creation under the budget constraint, Novion should invest where each dollar generates the highest return, measured by the Profitability Index (PI = NPV ÷ Investment).

The profitability indices are as follows:

1. License autoimmune gene-therapy platform: PI ≈ 1.11 (10 ÷ 9)
2. Acquire approved cell therapy for oncology: PI ≈ 1.67 (10 ÷ 6)
3. Develop next-gen mRNA delivery platform: PI ≈ 1.40 (7 ÷ 5)
4. Expand viral-vector manufacturing facility: PI ≈ 1.25 (5 ÷ 4)
5. Digitalize production and logistics: PI ≈ 1.67 (5 ÷ 3)
6. Commercial-model restructuring: PI = 1.00 (3 ÷ 3)

Ranking the projects by PI from highest to lowest gives:

1. P2: Acquire approved cell therapy for oncology (1.67)
2. P5: Digitalize production and logistics (1.67)
3. P3: Develop next-gen mRNA delivery platform (1.40)
4. Expand viral-vector manufacturing facility (1.25)
5. License autoimmune gene-therapy platform (1.11)
6. Commercial-model restructuring (1.00)

Strategic judgment overlay

• P2 and P3 deepen Novion’s leadership in oncology and mRNA.
• P5 delivers rapid efficiency and margin expansion.
• Together, these signal both innovation and discipline.

With only $18 billion to invest, Novion should begin with the highest-PI projects until the budget is exhausted. Funding the oncology acquisition (6 billion), digitalization (3 billion), and mRNA delivery (5 billion) totals 14 billion USD of investment and yields 22 billion USD in NPV. This combination leaves a 4 billion USD buffer that could be used for smaller initiatives, share buybacks, or retained liquidity.

If capital were unlimited, Novion could also fund the gene-therapy licensing and manufacturing expansion, reaching the full pipeline potential of 40 billion NPV for 30 billion investment. However, under current constraints, the selected bundle maximizes value creation while preserving financial discipline.

Qualitative factors could also influence the final choice, for example, strategic fit with Novion’s immunology focus, integration risk of the oncology acquisition, or timing of cash inflows.

Novion should divest AgriBio Solutions for approximately $ 18 billion and reinvest in three initiatives:
Acquire approved cell therapy for oncology, Develop next-gen mRNA delivery platform, and Digitalize production and logistics. These projects require $ 14 billion and generate $ 22 billion in NPV, while the remaining $ 4 billion can serve as a liquidity buffer or be returned to shareholders. The plan refocuses Novion on human-health innovation and demonstrates decisive capital reallocation to investors.

Why this works

• Non-dilutive financing; visible portfolio reshaping.
• Strong financial impact (+ $ 22 B NPV).
• Reinforces mission and strategic clarity.
   

Risks and mitigations

There is a buyer and timing risk for the divestiture, which can be mitigated by running a competitive multi-bidder process and preparing regulatory filings early. Execution capacity could become a constraint; the CFO should stagger major projects and establish a central PMO to monitor delivery. Integration risk in the oncology acquisition can be reduced by retaining key scientific talent, aligning incentives, and planning manufacturing integration from the start. Finally, potential market volatility can be managed by keeping part of the proceeds as a liquidity reserve rather than fully deploying the $18 billion immediately.