Great question and logic. The research I came across seemed to...

Great question and logic. The research I came across seemed to indicate China likes to do more backend rather than upfront (stop sniggering you lot) deals.

Here’s some info that popped up, but I’ve not had time to cross reference everything and check all sources.

“A conservative A$10M upfront for a China region licensing deal—despite strong sales potential—can be justified by several strategic and market-specific factors:

1. Market Access & Regulatory Uncertainty

• China’s NMPA (regulatory agency) approval timelines and pathway for FSGS drugs can be unpredictable.
• Local clinical trials may be required even after global Phase 3 success.
• A conservative upfront reflects this higher regulatory risk.

2. Deal Timing & Structure

• If the deal is done before Phase 3 results, the risk is higher for the licensee, leading to:
  
  • Lower upfronts
  • Heavier backend-loaded milestones and royalties

3. Local Partner Leverage

• Many Chinese pharmaceutical companies prefer back-ended deals with minimal upfront exposure.
• They may demand regional trial rights, co-development control, or pricing input, reducing initial cash outlay.

4. Government Pricing Pressure

• China’s volume-based procurement (VBP) and centralised pricing can compress margins, impacting forecasted net sales.
• Licensees may discount the market potential for rare diseases like FSGS vs high-volume indications.

5. Dimerix’s Negotiating Power

• Compared to companies with multiple approved drugs or prior China presence, DXB is still in development.
• Without local data or market exposure, it may lack leverage to demand a larger upfront.

Summary:

The A$10M upfront figure likely reflects a cautious approach—accounting for market, regulatory, and commercial uncertainties. However, if Phase 3 results are strong or DXB partners with a top-tier local firm (e.g. Hengrui, Simcere), the upfront could push well above A$20M.