Ann: Janssen Collaboration Expanded , page-10

My friends, there are a few inescapable truths:

- Pharma does not (often) buy "ideas", "frameworks" or "technologies". They buy revenue streams.

- From a Pharma perspective, buying a small Australian biotech costs - the (insignificant) purchase price, covering the risk of the key principles departing, linking into the research management structure, reputational risk, etc.

Phylogica is a discovery focused biotech with a platform technology. Pharma have them exactly where they want them:

Starved for capital (which is cheap for Pharma)

At their beck and call - Pharma has no problems getting the research initiatives they want for chump change.

Why would Pharma change this situation?

From a PYC holder's perspective:

- The current shareprice heavily discounts due to the uncertainties and does not adequately reflect the value of the framework.

- More money will need to be spent to fully develop the framework. We are a long way from significant drug royalties.

However, if they can reasonably achieve cash flow self-sustainability - this will be a fantastic company to hold.