This is a great low risk deal for a venture capital mob but a...

This is a great low risk deal for a venture capital mob but a poor deal for Starpharma IMO.

Starpharma appear to have given away the upside to venture capitalists for free, Starpharma are actually going to be doing a lot of the early R&D themselves, and Starpharma have taken on all the risk of the downside.

This webinar has confirmed my thoughts from an earlier thread:

In a normal licence model Starpharma would benefit from a licence fee, and then bank progressively larger milestone payments as trials progress, and if the drug program doesn’t progress as expected (gets terminated) Starpharma would still have had the benefit of receiving cash over the journey.

However in this venture capital model, if the drug development is terminated at any stage, the value of the private company (Petalion Therapeutics) will likely be slaughtered. Starpharma will then own 22.5% of nothing and have never received a single cent in licence fees or milestone payments. Venture Capitalists walk away and move on to the next scheme or opportunity.

Don’t be mistaken. IMO this deal is great for VC but not for Starpharma.