47m 15c options august 2011: in the money, page-14

i'm not sure about a take-over from Roche at this point, but then again anything is possible. Really we all know very little about what is actually happening at this stage as all the partnerships remain under strict confidentiality agreements. Roche even more so as the partnership was taken under a different agreement than the other two & potential milestones remain withheld (although already agreed upon behind closed doors).

I'm thinking more along the lines of a much more lucrative second stage of the partnership should the work have met its objectives ?

Aileron is actually quite a good example to bring forward at this point. They where thrown $40m by a consortium of the major pharmaceutical companies in 2008 inc. GlaaxoSmithKline, El Lily & Roche to fund testing of stapled peptides. 14 months later Roche jumped ahead of their competitors and reached the agreement with potentially $1.2B in milestones based on 5 key targets.

Obviously whichever path it takes from here will have been heavily worked over by Roche in terms of value to them & competitive position. Large pharmaceutical companies are not thinking just this year or next year, the forward plan will be structured on value over much larger time frames. As soon as any royalties that may fall due appear to be far exceeding the cost to aquire the company, or a competitor aims to take control of a new frontier they will step forward.

The only things we know at present are -

** Phylogica have delivered a number of peptides, some of which have never been discovered before.

** Phylogica have had atleast 1 employee working with Roche in assessing this (as per the quarterly)

** Roche has been testing these through there own systems to see how they can be more widely applied.

** Phylogica managment are happy with how ongoing dialouge is progressing