Pallas Pharma is a specialty pharma business operating in US. It closed last financial year at $60 M of annual recurring revenue, growing 41% year on year.
The company burns $13 M per year on a net basis and holds $20 M of cash. Gross margin is 72%, and net revenue retention sits at 113%.
The board has been approached by a growth fund offering $192 M at a $1152 M pre-money valuation. The CEO is torn: the round would fund an aggressive push into two adjacent markets, but the founders would take meaningful dilution, and one board member argues the company could reach breakeven on its existing cash instead.
The CFO wants a clear recommendation before the next board meeting.
Advise the board. Your answer should provide:
State any assumptions you make.
80 points, 60% to pass.
A strong answer works through, in order: