pologies for the ambiguous heading but I said to myself, I'll...

pologies for the ambiguous heading but I said to myself, I'll flip a coin for tonight's topic, if it's Tails it will be science related, Heads it's financial.


So what did I flip....



Remember, we are a speculative stock, none of us know how this will turn out, time is running out and funds are running out quicker than time!This is not an investment for the faint hearted, this is not an investment for someone in a hurry. I still believe, even at this juncture that we will not only make it by hook or by crook, but we will thrive. My only realignment is that I've added a few extra months to the tail end as most likey this is a 12 month trial now and there are other components to it it potentially. What I mean by that is Confirmatory and Retreatment studies. Maybe these can be done in parallel.

Tonight, let's talk a little more about Funding and what are some of the considerations and we wait patiently (again!) for PAR to submit her IND, well, a revision of the IND.

Do enjoy!




VC


What is VC?

Less this....


^{Victoria Cross -The highest military decorations in the British System}



More this...



Venture Capital (VC) is an interesting twist on how to potentially fund a company not unlike us. To me there seems to be two main ways to fund us potentially, one would be a deal of some description, the other is VC type funding. I reckon we have a chance at either, maybe both. See also the Mozz scenario section below for more thoughts on this.


"Venture capital is a form of private financing traditionally provided by investors to startups and early stage businesses with long-term growth potential. VC investing plays a critical role in the biotech industry, providing the necessary funding and strategic guidance that biotech startups often need to bring their ideas to market".¹



But VC funding is more than just the essential provisioning of capital. There can be some good guidance there too, some advice, some knowledge transfer. There can be the all important vested interest built in. A Mozz example of this is to think of just a Bank lender, lending PAR some cash and it's all pretty arms length and well, clinical.


MOZZ SCENARIO

Look I've said it in a few posts over the last few years, I'm not hermit, I'm not a Zen like Monk....



_{Not Mozz (but cool party trick yeah?)}


I have patience , prob more so than average, but hey, I've been sitting on this Egg for like 8 years now...not only has my investment NOT gone up.....it's gone down...like way down. Am i sleeping at night?

Well yeah.

Am I immune to all things negative? No...they concern me, I wish we had meaningful commercial strength at the moment. I wish we had funds for more staff. I wish we had the ability to continue the MPS program...all this has to wait. How good would it be if we just had a decent amount in the bank at the moment? We'd be coming in from such a stronger position. Our drug works, I have scoured a lot of papers and competition, nothing holds a candle to us. Nothing acts so safely and so broadly, we don't have one bow and one arrow, we have many arrows on target.



^Shoot!


So I present some possible Mozz scenarios....


1) What if we get a small deal first....now wouldn't this be nice, it wouldn't matter if it's a bit more trivial in terms of the three components....what are the three components, so glad you asked, I'll tackle them later, below. A small deal, a small region would be so good from a validation point of view. It would serve as a viable and real world testing ground for us, some sorta real world sign that someone wants to deal with us and is willing to take an early stage punt.

That's what it would be, but it would be learning's for us all. For PAR, how to distribute, what's the details, what are the forecasts and how does it pan out. This would be the ultimate dress rehearsal before the main show.


_{Dress rehearsal? This is the time we iron out all the last minute problems before the main show!}



What's the main show? Well USA....China...Europe!


2) What if, instead, we get a funding deal via some Bio Fund out there. Now this also presents a good situation for us. It gives us the cash we need to keep the lights on, to start the trials, to plough through the last phase and to deliver us the all important read out! In some ways, this is better than a deal.

How? Because it is early. What do I mean by that?

I mean that potentially we are still some years away before that day we get to post pictures of the R*ckets all over the place...in case you didn't know, three HC posters formed a pact and this became a governing rule, no pics of these projectile-like-devices until one of these get triggered:

1. Our SP hits $50 plus
2. We get a material Distribution Deal with a large Pharma
3. Or we pass Phase 3

_{Pool_Global_Head, nothing to see here, no violations committed!}


I don't know if there is space for a 4th R___t trigger, a funding regime that allows us to finish the P3? Maybe not...but it would be a great day if that were to happen all the same.

In a way I prefer this to a deal for the moment. Don't get me wrong, a deal here would be very big news, but with some time left to go, wouldn't a deal after funding be even more magnificent? Of course both would be super great but maybe we gotta temper ourselves?

A deal today is worth X certainly.

X might be how the market reacts, X might be the dollars involved, X could be the sentiment of others and the validation it provides to them....but certainly a deal at a later stage will be worth 2 X....maybe 3...maybe more?

Again, remember the Buddhist monk which I am not....but I do see the merit of getting funding done first and then a deal....we could still get a small deal first and then do the major markets a little later on? I want bang for me buck, but also I am wary of how long do we wait for? I don't want to even cut even the toenails off the Golden Goose....but she's got lay something soon!




_{Don't touch this goose....yet!}


3) Another scenario which I'm hoping and praying on is TGA. This will be an early gateway for us, revenue maybe even by the end of next year? To have the ability to derive meaningly revenue locally, in Australia would be a huge boon for us. It's not impossible...we could hear about this in a matter of weeks. But maybe it comes after the FDA get back to us on the IND?




WHAT DO I SEE IN YOU?

All very pleasant Mozz, but what can a company like PAR do to increase her chances of such deals and financing? What do VC's for example, look for?

A. Market Opportunity

Any potential partner wants there to be a decent runway. They want potential sales measured in the hundreds of millions, the bigger the better! If you can enter a market that doesn't have a lot of competition, well, so much the better!


B.Cutting-Edge Research, Products, & Services

Well this means the novel product. It should do something, offer something better than anyone else. Why else would you spend money on a product, to get some benefit from it. Can you do something that no one else can, that no one else has seen before.

Offering a viable pain relief solution is certainly a great thing if you can do it safely, no other drug to date can do even this. Now add a little bonus of being able to regress the disease in some cases, rescind the unwanted structural deformities, and even provide some promise of reversal of disease, well you are stepping into unchartered territories here.


C.Proof of concept

You are always going to improve your chance if you can demonstrate the benefit. Not just peddling your wares but actually demonstrating the efficacy, case examples will always help but clinical data from well controlled trials are going to assist greatly towards your case.


D.Growth
.
When I personally invest I'm happy if the product or service is good, but my mind wanders out to the future. Yes I can see the next few investment cycles being good, but what happens after that? Is this company going to layer for me? I like the base of addressing pain and OA. But the Mozz mind looks a bit further than that...I look at:

• Heart
• Diabetes
• Lung Indications
• Skin Treatments
• Gum Disease
• Indications for the Brain (Parkinson's, Alzheimer's, MS)...the big ones.

Sure these could be a while, a decade away....but show the market we are serious and the market will one day, reward us, potentially.



TWO WAY STREET

We need cash for our Phase 3. It really can't be just a commitment for a part of it, we need the full amount. We don't need it all at the start, it can be milestoned and we get it in instalments as long as we continue positively progressing.


The investor gets a decent return on their money. It could be a straight interest payment, it could be a factor (multiple) return on their funds via a slice of future revenue, but it could also be partly comprised of equity too. This can be also good for the investee. The fund may bring new parties to us. The fund having a vested interest is also aligned to our goals and they can be very supportive. They could offer us advice, contacts, even access to certain harder to get resources like better quality CRO's or access to KOL's we haven't had before, maybe it's easier for other parties they have relationships with to initiate coverage for example.

My youngest son went to a really good school. Yes the teaching style was good, yes the teachers were of high calibre. The facilities were great and the experiences broad. But one of the natural benefits were the contacts he made. It's the exact same with PAR, get ourselves cozy with a good partner or a great funder and many doors can open. It could well just be the higher calibre of investor that decides to also invest in us. Longer term convinced parties are always going to be a welcomed holder for us.



THE THREE COMPONENTS

Well there could be a few more components but the major ones are:

1) Upfront Payment

Think of this as an initial amount transferred from the investor. In our case it could help to get the ball rolling.


2) Milestone Payments

Achieve a given milestone and then next payment would be forthcoming. Examples might include successful IND, first patient dosing, a good 'Please continue' report from the Data Safety Monitoring Board of the FDA, Successful readout, the granting of a full licence and even revenue targets like first time revenue, first $100 million of sales etc.


3) Royalty Percentage of Revenue

Ahh this is where it can get interesting, a lower up-front or milestone may be compensated from a greater Royalty. Usually the royalty is a cut of revenue. Often times it is stepped up, an example could be 12 % for the first 300 million in sales, anything greater goes to 15 %. Maybe this sound slow, maybe it IS low...but multiply it all out by the sheer volumes....don't forget, there will definitely be a heavy material Off Labelling component. This will only multiply out our future revenue streams!

Obviously it can get a fair bit more complex than just the above. To add more complexity there could be different deals for different regions, there can be a whole host of incentives.



EXAMPLE TIME

Mozz, can we have a practical example of what a VC funding package might look like?

Actually can it be a recent example?

Well sorry, one more request, can we have a really recent example that's also kinda local, ie Aussie!



Sure, you don't ask for much, let's do it:


Mesoblast (ASX MSB) just announced (about a week ago!) they are issuing convertible notes up to the value of $50 million.




The convertible notes are issued at the discretion of MSB in tranches of $10 Mil. They convert at the equivalent of $1.32 per MSB share and are issued with a coupon rate of 5%. However, they are conditional upon FDA approval of their drug called RYONCIL.

The maturity date of the notes is 4 years after the first issuance of the notes. See also reference 2 below for further details.

What did it do for their share price? Take a look:





That's about a 25% increase from around $1.20, and certainly much more from the recent lows of about 90 cents - Not bad.

It's an interesting raise for them. There are many alternatives and combinations that can help companies like us to progress. We too could form some milestone based funding. This would of course add dilution however, if our share price rises the dilution will be less and less and at the end of the day, it's certainly a better alternative to outright on-market raising, specially at the levels we are at the moment!

Of course the ideal situation is that we get some sort of mix, a deal combined with funding would be a huge win for us and could indeed start a number of subsequent positive triggers.

No doubt the next few months are going to be very interesting and potentially very pivotal (I hope in a Positive, UPWARDS kinda way).Most on here have waited a long time for the business end of this story to begin. Indeed passing successfully though the last chapter of FDA feedback was a long one but a very good one. Par at least, on that regard, are in a very much stronger position now. Like many have commented on here recently, it is now the commercial side, the funding side that needs to come to the party. We still need to sell this to a party that will believe in us, believe in the product and indeed also see a rosy future.




I know I still do.








DYOR is prudent




REFERENCES

1] https://www.excedr.com/blog/top-vc-firms-for-biotech
2] https://investorsmedia.mesoblast.com/static-files/f8e49e29-123c-4c22-a0bc-82fae503eb8e