If a drug is partnered: - Cash inflow in the form of milestone payments contingent upon successful trial results, marketing authorisation and sales milestones. Potentially higher share price due to this inflow of cash and removal of risk. - Less risk for the company as the partner is funding all future development. Allows the company to use the income received to develop other areas of their pipeline. - The company is giving away a large percentage of future possible revenue by partnering. Depending how advanced the trials are have a large impact on the revenue percentage they get. The more far along the trials are, the more revenue share they are likely to get. - The company doesn't need to deal with regulatory bodies who inherently have some bias. A US based company will likely deal with the FDA in a smoother manner. - The company also doesn't need to increase its head count as they don't need to take the drug to market, and therefore have sales staff etc. - Probably.a quicker path to market if the partner is big. They could potentially open more sites, recruit patients quicker, complete the trial quicker.
If the drug goes all the way to Phase 3: - The company assumes all the risk - But they get all the reward in regards to revenue. - Potentially lower share price for a longer period while the Phase 3 is conducted. This would be a function of cap raises causing dilution, investors becoming inpatient in regard to waiting and re-enter the company when the trial result looms. The opportunity cost for an investor holding a biotech for years while the Phase 3 runs its course must be considered. Those funds could be put to use elsewhere for returns.
There's more to it but thats the crux of it.
SNT Price at posting:
7.9¢ Sentiment: Buy Disclosure: Held
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