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. Proprietary Technology

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

    Investigative activities that a business chooses to conduct with ...
  4. Development Stage

    A company that is in a preliminary or early state of its corporate ...
  5. Financing

    The act of providing funds for business activities, making purchases ...
  6. Institutional Investor

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