Novion Therapeutics

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.

• Which options could provide meaningful liquidity in the short term?

  Divestitures or asset sales offer immediate liquidity; equity issuance is slower and dilutive, while debt increases leverage and may be constrained by rating pressure.

• How would investors perceive different financing routes?

  Selling a non-core asset signals discipline and focus; equity issuance may raise concerns about dilution; new debt could trigger worries over balance-sheet risk.

• What characteristics make a business easy or difficult to divest?

  Selling a non-core asset signals discipline and focus; equity issuance may raise concerns about dilution; new debt could trigger worries over balance-sheet risk.

• How does the decision align with Novion’s mission and investor expectations?

  Divesting AgriBio refocuses Novion on human-health innovation and demonstrates decisive capital discipline which is fully aligned with investor calls for strategic clarity.

• What factors could affect the valuation multiple?

  Growth prospects, margin profile, competitive dynamics, and sector sentiment drive multiples; timing in the cycle and buyer synergies also matter.

• What timing or regulatory risks might delay capital availability?

  Antitrust approvals, buyer-side due diligence, and carve-out complexity could extend timelines beyond the intended quarter.

• Which combination maximizes total NPV within the budget?
  Funding the oncology acquisition, digitalization, and mRNA platform yields 22 B USD NPV for 14 B USD investment: that's the best value within the 18 B USD cap.
• How would your answer change if capital were unlimited?
  All six projects would be funded, maximizing portfolio NPV to roughly 40 B USD.
• What qualitative factors might influence the final choice?
  Strategic fit, implementation risk, integration complexity, and time to value realization could tilt priorities despite purely financial rankings.