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

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Research And Development - R&D

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

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

    An investor who either provides capital to startup ventures or ...
  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. Economics

    What's Demand Elasticity?

    Demand elasticity is the measure of how demand changes as other factors change. Demand elasticity is often referred to as price elasticity of demand because price is most often the factor used ...
  5. Budgeting

    4 Secrets You Should Know When Buying Groceries

    With a little foresight, every consumer can find ways to eat healthier without spending much money.
  6. Savings

    This Mysterious Job Saves You Money On Groceries

    Mystery shoppers visit various establishments. Discover how their efforts will save you money in the long run.
  7. Investing Basics

    How a Stock Buyback Works: MasterCard

    Stock buyback refers to publicly traded companies buying back their shares from shareholders. This reduces the amount of outstanding shares in the market and typically, based on simple market ...
  8. Savings

    Visa vs. MasterCard: Is There a Difference?

    Visa and MasterCard are two of the most widely used credit card brands. But are the differences between the two significant enough to influence consumers?
  9. Savings

    Top Ten US Economic Indicators

    We explain the most important economic indicators for the US economy.
  10. Investing

    Corporate Governance

    Corporate governance refers to the formally established guidelines that determine how a company is run. The company’s board of directors approves and periodically reviews the guidelines, which ...

You May Also Like

Hot Definitions
  1. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  2. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  3. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  4. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  5. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  6. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
Trading Center