Ann: Starpharma and Medicxi Partnership Petalion Therapeutics, page-73

Starpharma receive no licence fee, no milestone payments and no royalties yet under this model. Just a minority stake in a private entity controlled by other people.

Let’s say Medicxi tip in $2m as the initial tranche for early research funding. On day one, Starpharma hypothetically own a 22.5% share worth $450k. Subsequent traches will progressively be tipped in to cover R&D and potentially clinical trial costs in a few years time.

This is important:
In a normal licence model Starpharma would benefit from a licence fee, and then bank progressively larger milestone payments as trials progress. If a partnered drug program gets terminated (as the 3 AstraZeneca partnered programs were) Starpharma have still had the benefit of receiving cash over the journey.

However in this model, if the drug development is terminated at any stage, the value of the private entity will be slaughtered, Starpharma own 22.5% of nothing and have never received a single cent in licence fees or milestone payments.

This is the risk with this model as I see it and the lack of disclosure of this model and partnership in the formal ASX is concerning.