There were probably 20 people at the briefing.
Paul spoke first in 'dumbing' down the science and did a very good job IMO.
PYC talking to a couple of pharma in regards to Phenomica who like the phenotypic (direct) screening.
They have spent $2m on patent portfolio to protect this as they have had a company approach them asking to send their screening libraries which they do not do for 3rd parties, this company came back a year later after being unable to replicate what Phylogica do.
Nick was great too, in giving the nitty gritty on the financials.
They are investing in in-house programs where they see value as many pharmas come to them with areas they are interested in eg brain/liver etc.
The deal with Roche was frustrating as they delivered in Feb 2011, Roche came back in May 2011 to extend option, however the area that was meant to conduct experiments in Switzerland was dissolved due to restructure. Genentech is now conducting experiments in San Francisco. Their exclusive right expired in Jan but they are still evaluating.
A shareholder asked why not go to someone else. Paul answered that Roche are the biggest in this space but they have back up pharmas for this area.
Many of the existing pharmas are talking about 2nd deals with bigger financials and equity components as well.
Nick mentioned:
FY 2010 - revenues minimal
FY 2011 - $2.5m
FY 2012 - $4-6m
FY 2013 - $5-10m
2nd half is where revenues will increase (1st half 2012 revenue of $1.4m).
Already invoiced Janssen $500k, operating costs currently $7m, small loss forecast for 2012, profitable 2013.
Net cash of $3.9m shouldn't change in next 6 months.
2 new deals in next 4 months, next deal before 2012 EOFY.
Receiving unsolicited approaches from 2nd tier pharma as well.
In terms of deal details, Nick said for example:
Pre-clinical studies $2m
Investigation of New Drug $5m
Phase II $10m
Phase III $20m
royalties 3% < $500m
royalties 5% between $500m - $1b
The deal before June, Phylogica will retain the right to co-invest downstream in regards to clinical trials, so they should profit more.
They are aware of a company infringing their patents but it may currently not be worth fighting over, however they mentioned that if cost is not restrictive, they will defend.
Their patents last for 20 years but some were filed late 90's early 2000's so half life gone. They are going to 'evergreen' them to extend patent life. Also they filed IP for Phenomica a couple of weeks ago.
They try to make sure with deals they sign that they receive money (couple of mil) in early stages ie. discovery/pre-clinical milestones.
With Janssen, they were ready to sign in July/Aug 2011 but in Sept, Janssen wanted to renegotiate an equity component. The due diligence by their J&J investment arm couldn't get done by the end of the year (senior guy retired) so they scrapped that part.
The Janssen deal can be expanded 3 fold to over $1b in potential value with the minimum 18 months of research funding perhaps being extended to 5 years.
They are talking to 5 big pharmas corporate venture arms who are looking to take equity stakes in Phylogica. They are excited about this as they believe the market will re-rate them based on pharma validating their technology.
They also want more than one pharma taking a stake so as to create a possible bidding war due to pharmas eliminating downstream obligations by taking over company. This is the normal way of acquiring a library company compared to hiring an investment bank to set up due diligence for potential parties.
Also believe Phylogica to be a possible 100 bagger from here when asked by a shareholder.
Someone asked about PYC35 to treat burns. Paul answered that it treats not only thermal but UV burns as well. They have not spent money on this as it is expensive and only about 1 in 9 make it through clinical process. They are however speaking to a cosmeceutical company to build PYC35 into cosmetics to reduce sunburn.
Please DYOR as there may be errors in this post, hopefully others that were there may be able to elaborate more.
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