The reality is we are all guessing here (me included). There’s...

The reality is we are all guessing here (me included). There’s no harm in that, and it’s certainly entertaining, but I sense there may be a significant gap between the likely outcome and the expectations of some posters on this forum.

What we’ve observed so far (small share purchase, $1m premium in exchange for exclusivity period) doesn’t align to what I would expect from a large Pharma. This doesn’t mean NEU isn’t getting the best deal, just that the partner does not need to be a large Pharma in order for NEU to extract full value.

I expect the best way to achieve maximum value for NEU and it’s shareholders is to structure a deal with a smaller upfront payment (sufficient to cover the cost of phase 3) and retain a larger percentage of future revenues. A deal of this nature does not require the copious amounts of capital that some larger Pharma’s currently have available to them, it only requires sufficient cash to fund the necessary phase 3 trials, production set-up, and initial distribution costs. This opens up the field to a number of potential partners at the lower end of the market (US$1b-US$10b market cap).

I’m sure we’re all looking forward to the announcement to find out who the partner is and how the deal is structured. We will then also know which posters are exhibiting irrational exuberance or being unnecessarily pessimistic. I hope my view is realistic, but we’ll soon find out… if I’m wrong I’ll take it on the chin and work out how to improve my analysis for the next time!

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