BNO - Strong Cup & Handle buy alert, page-44

Hi Risiko,

At the risk of sounding patronising I did not mean to sound patronising. I have been investing in biotech for a long time too and have my share of frustration and disappointments. I have at times felt frustrated by the slowness of progress with BNO too. However, over the years I have come to realise that the this space is far riskier than most Australian investors appreciate, that we Aussies pay higher prices than we should and we really have no real understanding of either the time-frames or the costs of taking a drug from discovery to market.

In relation to BNC 210 I understand that the company went with Ironwood because they had a lot of money in the bank and they only had one other drug to focus on. As it turned out they mismanaged their finances and blew up after spending a lot of money on BNC 210 and increasing the Data file on the compound. BNO went with Ironwood to avoid the drug getting lost in a Big Pharma and losing the licensees attention because they get distracted with some new compound.

The fact that BNO got the drug back speaks volumes about how the deal was originally structured to require Ironwood to fund various trials in order to retain ownership. When they failed to fund it fully, BNO regained ownership - or at least that is how I understand what happened.

There were no trial results that indicated that BNC 210 was a dud or that it failed because of toxicity or lack of early stage efficacy indications. And that is why BNO are still spending money on it - they believe that it is pretty special.

Anyway, I have had to bite my tongue, trust the Board and management and be patient because these people know a lot more about drug discovery and commercialisation than me.

In relation to milestones, a company will only cough up when they are convinced that something is worth taking uruther. Th e fact that Merck has two programmes with BNO and has "refreshed" one in the last six months speaks volumes - they must have enough confidence that they see something of value to keep paying BNO to do more work. As these programmes advance, they get closer to getting a milestone. The CEO has to believe that they will get there because Merck are still sending her cheques!

So I think we are all on the same page in thinking /hoping/praying that all the years of hard work will result in a substantial payoff. Fingers crossed that we get a downpayment and partial reward for our patience tin 2016..........