Stock And Warrant Off-Balance Sheet R&D - SWORD


DEFINITION of '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 gives the biotechnology company the needed capital in exchange for giving the investors partial rights to the outcomes of the R&D projects they are funding.

BREAKING DOWN 'Stock And Warrant Off-Balance Sheet R&D - SWORD'

The SWORD is a separate entity that is connected to the outside investors and the biotech company through several legal obligations. Investors are usually institutional investors or wealthy individuals looking to capitalize on the latest technology. The investors are hoping to benefit from the warrants on the common stock of the biotech company and partial rights to the technology developed from the project.

Biotech companies benefit from a SWORD by being able to develop projects they would otherwise be unable to afford. Also, being able to use outside investors reduces the risk put on current shareholders. Using SWORDs allows companies to minimize the effects of R&D spending on the firm's bottom line.

  1. Venture Capitalist

    An investor who either provides capital to startup ventures or ...
  2. Development Stage

    A company that is in a preliminary or early state of its corporate ...
  3. Proprietary Technology

    A process, tool, system or similar item that is the property ...
  4. Research And Development - R&D

    Investigative activities that a business chooses to conduct with ...
  5. Institutional Investor

    A non-bank person or organization that trades securities in large ...
  6. Financing

    The act of providing funds for business activities, making purchases ...
Related Articles
  1. Investing

    Using DCF In Biotech Valuation

    Valuing firms in this sector can seem like a black art, but there is a systematic way to pin a price on potential.
  2. Markets

    Buying Into Corporate Research & Development (R&D)

    Investors take note: companies that cut research and development are in danger of saving today but losing big tomorrow.
  3. Investing

    The Ins and Outs Of In-Process R&D Expenses

    Are these charge-offs fair accounting or earnings manipulation? Learn more here.
  4. Investing Basics

    The Economics Behind Marathons

    Marathons are growing in popularity at a record pace. Entry into these events commands a hefty price, but it's nothing compared to the organizational costs.
  5. Stock Analysis

    How Expensive Is Whole Foods, Really?

    Learn about Whole Foods Market, Inc., and discover how Whole Foods pricing actually compares to that of other grocery store operations.
  6. Budgeting

    The Hard Way We Pay For Convenience

    Convenience is a luxury. However, any cost-conscious individual should be aware of these ridiculous ways we pay for convenience and how to avoid them.
  7. Mutual Funds & ETFs

    Top 3 Consumer Cyclical Mutual Funds

    Obtain information on, and analysis of, some of the best performing mutual funds that offer exposure to the consumer cyclicals sector.
  8. Stock Analysis

    Top 3 Stocks for the Coming Holiday Season

    If you want to buck the bear market trend by going long on consumer stocks, these three might be your best bets.
  9. Investing News

    This is the Fastest-Growing Consumer Complaint

    There’s no way to guarantee that your Social Security number won’t fall into the wrong hands. Here are some ways to make yourself less of a target.
  10. Investing Basics

    Tiny House Movement: Making Market Opportunities

    The tiny house movement throws all assumptions about household budgeting and mortgage management out the window, and creates new market segments too.
  1. Is Japan an emerging market economy?

    Japan is not an emerging market economy. Emerging market economies are characterized by low per capita incomes, poor infrastructure ... Read Full Answer >>
  2. Are Social Security payments included in the US GDP calculation?

    Social Security payments are not included in the U.S. definition of the gross domestic product (GDP). Transfer Payments For ... Read Full Answer >>
  3. What economic indicators are important to consider when investing in the retail sector?

    The unemployment rate and Consumer Confidence Index (CCI) rank as two of the most important economic indicators to consider ... Read Full Answer >>
  4. How do changes in interest rates affect the spending habits in the economy?

    Changes in interest rates can have different effects on consumer spending habits depending on a number of factors, including ... Read Full Answer >>
  5. What is the difference between an OEM (original equipment manufacturer) and a VAR ...

    An original equipment manufacturer (OEM) is a company that manufactures a basic product or a component product, such as a ... Read Full Answer >>
  6. How much does seasonality affect the net sales figures of companies, such as retailers?

    Seasonality affects both sales and net sales figures of companies in different ways. For some companies, seasonality has ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Real Estate Investment Trust - REIT

    A REIT is a type of security that invests in real estate through property or mortgages and often trades on major exchanges ...
  2. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  3. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  4. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  5. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  6. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!