SWORD-financing


SWORD-financing

SWORD-financing (Stock and Warrant Off-Balance Sheet Research & Development) is a special form of financing invented to help young biotech companies access capital to finance their R&D via establishing SPE (special purpose entity).

Innovation is vital to biotech firms. However, uncertainty of the commercial viability and regulatory approval of new products and technologies makes innovation a very risky undertaking. Conventional internal financing of innovation is generally not possible because biotech firms tend to be small with meager profits and few cash resources. SWORD financing is used to encourage innovation by diversifying risk across wide financial markets. SWORD provides investors an opportunity to identify and finance underfunded, yet attractive projects. An SPE acts as an intermediary between the parent company and the investors, separating the project from the existing liabilities of the parent company. To provide flexibility and liquidity for all the parties, an SPE issues special securities (units) and raises finance via public or private offerings. In essence, one unit is a portfolio consisting of one share of SPE’s equity, one warrant to purchase a share of the parent firms' common stock, and a call option for the parent firm to buy back shares of SPE.

ee also

*Hybrid security
*Seniority (finance)
*Venture lending

External links

* [http://www.investopedia.com/terms/s/sword.asp Investopedia.com]
* [http://www.highbeam.com/doc/1G1-14444761.html SWORD financing of innovation in the biotechnology industry]
* [http://www.fma.org/SLC/DSS/Theodossiou_doctoral.pdf Reasons for Financing R&D using the SWORD structure by Alexandra K. Theodossiou]
* [http://www.jstor.org/pss/3665868 Michael E. Solt. SWORD Financing of Innovation in the Biotechnology Industry]


Wikimedia Foundation. 2010.

Look at other dictionaries:

  • Stock And Warrant Off-Balance Sheet R&D - SWORD — A financing option developed to help biotechnology companies access capital that could be used to finance new or ongoing research and development projects by establishing a separate entity. The financing received through outside investors… …   Investment dictionary

  • Swords (disambiguation) — A sword is a cutting/thrusting weapon made of metal. Swords may also refer to:* Swords, County Dublin, Ireland * Suit of swords, a suit in Latin suited playing cards and Tarot decks * SWORDS, a ground based military robot * Swords (band), an… …   Wikipedia

  • Biotechnology — is technology based on biology, especially when used in agriculture, food science, and medicine. The United Nations Convention on Biological Diversity defines biotechnology as: [ [http://www.biodiv.org/convention/convention.shtml The Convention… …   Wikipedia

  • Hybrid security — Hybrid securities , often referred as hybrids , are a broad group of securities that combine the elements of the two broader groups of securities Debt and Equity.Hybrid securities pay a predictable (fixed or floating) rate of return or dividend… …   Wikipedia

  • Abu Sayyaf — Sword of God redirects here. For the 7th century Arab Muslim military commander known as the Sword of God , see Khalid ibn al Walid. For the album by Quasi, see The Sword of God Infobox War Faction name=Abu Sayyaf Group. war=the Islamic… …   Wikipedia

  • Germany — /jerr meuh nee/, n. a republic in central Europe: after World War II divided into four zones, British, French, U.S., and Soviet, and in 1949 into East Germany and West Germany; East and West Germany were reunited in 1990. 84,068,216; 137,852 sq.… …   Universalium

  • United States — a republic in the N Western Hemisphere comprising 48 conterminous states, the District of Columbia, and Alaska in North America, and Hawaii in the N Pacific. 267,954,767; conterminous United States, 3,022,387 sq. mi. (7,827,982 sq. km); with… …   Universalium

  • Independent film — An independent film, or indie film, is a professional film production resulting in a feature film that is produced mostly or completely outside of the major film studio system. In addition to being produced and distributed by independent… …   Wikipedia

  • United Kingdom — a kingdom in NW Europe, consisting of Great Britain and Northern Ireland: formerly comprising Great Britain and Ireland 1801 1922. 58,610,182; 94,242 sq. mi. (244,100 sq. km). Cap.: London. Abbr.: U.K. Official name, United Kingdom of Great… …   Universalium

  • Yaiba — Infobox animanga/Header name = Yaiba caption = Yaiba volume 1 ja name = 剣勇伝説YAIBA ja name trans = Legend of the Swordmaster Yaiba genre = ComedyInfobox animanga/Manga title = author = Gosho Aoyama publisher = flagicon|Japan Shogakukan… …   Wikipedia