Biolyses is a biotech division of Alphacon Pharmaceuticals. In its eight years of existence, Biolyses has had only one drug make it into clinical…

Biolyses is a biotech division of Alphacon Pharmaceuticals. In its eight years of existence, Biolyses has had only one drug make it into clinical trials. That drug is nearly through clinical trials, and is expected to produce an acceptable return on the investments that have been and will still need to be made in it. Alas, those profits will not be large enough to outweigh the years of negative profits that Biolyses has delivered to Alphacon over the past eight years. Some of Alphacon’s executives argue that now is a good opportunity to close the Biolyses division. In the words of one of the executives, “Sunk costs don’t matter. Alphacon should not keep Biolyses open in the vain attempt to try to gain back some of the previous losses. We shouldn’t keep throwing good money after bad.” Is the executive right? Do you think this is the right time to close Biolyses?