Founded in February 2003, PluroGen Therapeutics is a start-up pharmaceutical firm that is in the process of developing a topical antimicrobial gel (TAG) to prevent and treat burn and skin-ulcer infections. In contrast to most new pharmaceutical compounds that have no clinical history, TAG has been used by thousands of patients at a large university hospital over the past 10 years. Based on the favorable clinical response, the two founding doctors want to start a company and make the drug available to the greater medical community. Although the doctors are recognized authorities in the field of wound care and holders of several patents, neither has extensive business experience. PluroGen is currently seeking $1.5 million in financing from angel investors to initiate the drug-approval process and subsequently plans to seek $6.5 million in funding from a strategic partner to complete Phase III trials and gain final approval from the U.S. Food and Drug Administration. Students are asked to evaluate whether TAG is attractive enough to be of interest to experienced investors and, if so, what percentage of equity investors would demand in return for the $1.5 million. Because of the presumed future funding by a strategic partner, the angel investors must carefully weigh the effects of the next round of financing on the terms they are demanding now.