26. Assume you are an employee of a venture bank and asked to decide if XYZ Pharma is a good investment. Based on the data below, state whether or not you would (1) recommend making a venture loan or (2) not; and briefly describe why. (Hint: The 5 Cs, venture bank strategies). (40 pts.) Answer: The company is XYZ Pharma. It has one product, the drug BPX. BPX has recently obtained FDA approval and XYZ Pharma began very limited sales based on limited production by a contract manufacturer. With a very small sales force, it has been selling what it has produced. XYZ Pharma spent a large portion of its cash reserves getting FDA approval for BPX, BPX is a blood pressure therapeutic with claims it treats blood pressure better than existing products in certain scenarios. Since this is a market space with many competitors, there is no guarantee that BPX will obtain enough market share to be profitable. However, you have consulted with multiple pharmacy researchers employed in your firm and they believe that BPX has real potential. Your firm has strong expertise and experience in pharmaceutical investments. XYZ Pharma is not profitable, but their pro forma projections are that will be profitable in 38 months. Based upon your market research and the opinions of the pharmacy experts you consulted with, you believe the pro forma figures are attainable and profits will meet your firm requirements. XYZ Pharma is looking to raise $6.9 million for a 40% interest in the company. The company is currently run by the founders. The founders are brilliant scientists who invented BPX, but they have no marketing or manufacturing experience or expertise. The founders will own 30% of the company after the $2.9 million investment. An assortment of investors with small shares make up the remaining 30%. There is a six-person board. The founders want to remain in the company and have their life savings tied up in it. They will continue to have value to the company due to their technical expertise. However, they overrate their value to the firm. Additional funding is needed now