Ann: Starpharma and Medicxi Partnership Petalion Therapeutics, page-55

I don't know how people can see this as a negative.

Starpharma is just using LEVERAGE to further develop its technology.

The concept and basic structure of the deal sounds completely fine to me as it means one more DEP drug (to start with) will now enter development and A$38 million dollars of equity is about to be spent on the process. There is then scope for more DEP drugs to be developed through the same structure in the future.

The significant experience, credentials and size (deep pockets) of our partner is very positive and the appointed CEO looks well-qualified and experienced to be able to make it all happen.

Starpharma will also get paid for any work they do in the partnership by Petalion on a fee-for-service basis.

The only thing that should be a topic of argument / discussion is whether they struck a good deal. (ie. is the percentage of equity they get in the company in return for providing the IP a good deal). It sounds about right to me but I am not an expert on such deals.

I agree with Sarge that it is worth asking what the plan is for the future? Do they plan to tip in some equity in the future to maintain, or improve upon, the 22.5% equity? I guess that is something they can decide upon/negotiate at the time. This deal allows a new DEP Drug to enter development without Starpharma spending any money. It also lowers risk exposure to Starpharma for that novel drug, in case things don't go as well as expected. But it also potentially leaves the door open for Starpharma to tip more equity into the venture in the future (when Starpharma has more equity that it can contribute).

Everything else Sarge has said (plus some other negative comments by others), however, is rubbish!

This deal is completely consistent with Starpharma's stated business model regarding DEP which is to:

1. Demonstrate proof-of-concept for the DEP platform:

Starpharma has recently successfully (resoundingly) demonstrated proof-of-concept for the DEP platform, in the clinic, through its three phase 2 internal candidates.

This proof-of-concept results of the DEP Platform will not have gone un-noticed by current and potential future partners. Medicxi certainly noticed and have decided to approach Starpharma to form a partnership.

2. Advance internal candidates through to the clinic, with a view to generally licence these assets after they complete a successful phase 2 trial:
(This strategy could change, of course, or have exceptions)

We have 2 assets ready for licencing (DEP Docetaxel and DEP Cabazitaxel) and one almost ready for licencing (DEP Irinotecan).

I am looking forward to the licencing deals being announced. I am confident they will successfully be licenced as the trial results were impressive. (The DEP irinotecan interim results, in particular, were outstanding and the figures can only improve further, the longer the final patients stayed on treatment with controlled disease). Licencing deals will provide a cash injection for Starpharma.

3. Leverage the DEP technology by entering into partnership agreements:

The DEP platform is a platform technology which could, potentially, be applied to MANY, MANY drugs:
- improving existing drugs, making them more effective and safe and adding new value (new IP means a fresh patent); and
- improving the attributes and, therefore, the chance of success, of novel drugs under development.

Improving old (existing) drugs, creating new IP, is a lower risk 'no-brainer' simple strategy for Starpharma (and any partners who want to do this, as well).
There are MANY, MANY potential candidates, just waiting to be developed as a DEP version, especially in the oncology field.

Improving novel (new) drugs under development is an exciting, but higher risk, venture. High risk, but potentially high reward. For the drug developer, utilising the DEP platform actually lowers their risk for developing that particular novel drug candidate, because of improvements in safety, efficacy, etc. For Starpharma, it makes sense for partners to shoulder the majority of the risk and provide most of the equity for many of these novel-drug DEP projects (at least at this stage of Starpharma's development). The partner obviously, also, brings their novel drug and expertise (their IP) to the table.

Not every novel DEP drug will succeed. Partnering up to as many partners as possible for developing novel DEP drugs makes sense for Starpharma to 'increase shots on goal' and increase their chance of success.

Starpharma cannot possibly develop the DEP technology platform to its full potential, and in a timely fashion, on its own!

Starpharma must LEVERAGE the equity, IP (drug candidates, expertise) and physical assets (research personnel and physical research/development assets) of partners to be able to even partly realise the very significant potential of the DEP platform.

The DEP platform could POTENTIALLY be used to improve TENS (OR EVEN HUNDREDS!) OF DRUGS over coming years/decades, if everything plays out well. There is no way that Starpharma could possibly realise even part of the DEP platform's potential without partnering up.

So, we now have another partnership and yet another DEP drug now under development, with more DEP drugs likely to follow with this partner. This can only be a good thing!

IF the DEP platform is as good as I believe it to be, expect more new partnerships to come!
And/or, expect further expansion of our existing partnerships!

Regards

Gumnut