Big Pharma Deal, page-2

Im not well versed in this one but from what little I know in this area, the general gist is that a Big interested Phrama does a deal with a little (or another) Bio-phrama company such as PAR in order for a joint venture type set up.

The advantages to the company such as PAR is that we get the built in distribution channels and systems that the Big P. already has. We also get a good payment (like a deposit) up front and then typically milestone payments when we get the 3rd Phase Trial successfully out of the way and later along with sales as they ramp up. Kinda like incentives. Usually the up front cash helps with the payments of the Phase 3 trials but in our case we have this covered anyway. In theory we can command more cash if the Third phase is successful as we have a higher prospect of decent revenues, specially in this case as we are potentially dealing with not 1 but maybe multiple blockbusters.

The advantage to the Big P is of course they get revenues or a determined cut (%) of revenue and as they already have the sale distribution channels, there isnt too much expenses involved on their part, they help with the marketing, distribution and a whole heap of areas which would take PAR ages to set up and may not necessarily be easy for us to do. (eg employ sale people, marketing, channels and local offices). Yes we lose some revenue, we shouldnt really lose too much control over all but our profits get diluted BUT our time frame of profitability and time to revenue ramps is markedly decreased, a distinct advantage for us. If its not a compelling deal, we have decent management in place that will not go ahead and we will traverse through this path ourselves, it will take longer sure but we get to keep more (all) of the profits/revenues.

These are my thoughts, don't rely on it, do your own research...I think that's how it works. Each case is different and as mentioned we have done well to raise funds to progress without a deal. If we get a deal it will be huge news, and it would at least lift the SP by the amount of the deal.

EG we currently have a market cap of say $280 Mil, if we accept a deal of 2.8 Bil (AUD, making numbers easier to work out) that would be a 10 X theoretical increase in current SP. It may not necessarily translate to 10 X on Day 1...but you could prob bank on say 7 X over a number of months...there are examples of this that you can follow as previously mentioned by a number of others and research other bio's that have gone through this process.

Hope this helps. Feel free to correct me or add comments as required, anyone?