Haha Micko, just as limited as Lex:
Your view that 5% of the company in incentive shares is excessive, it's important to recognise the unique challenges and time frames that characterise the biotech sector.
These shares serve as a vital component of a remuneration package designed to retain and motivate key leaders whose efforts could significantly influence the company’s trajectory.
A company's "burn rate" is expected to exceed its revenue in the early stages, particularly in biotech where long-term R&D investments precede profitability.
The comparison of the burn rate to gross revenue doesn't take into account the potential value of the research outcomes which could far exceed current expenditures once the product reaches the market.
Additionally, the duration from announcing to starting a trial reflects the meticulous preparation required for clinical studies, which must meet stringent regulatory standards to ensure safety and efficacy.
The 18-month timeline, while seemingly long, is actually quite standard for the industry and demonstrates careful planning and regulatory navigation rather than inefficiency.
Furthermore, the generous salary often cited is competitive within the industry and aims to attract and maintain the high calibre talent necessary for innovative breakthroughs.
When combined with incentive shares, it aligns the interests of the management with those of the shareholders, as the realisation of these incentives is contingent upon the company's success, which includes managing the burn rate effectively and meeting the set milestones.
Therefore, the incentive shares are not simply a reward; they represent a strategic decision by the company to ensure that its leaders are invested in the long-term success of the company, sharing both the risks and potential rewards with the shareholders.
(20min delay)