Oncolytics Biotech Inc T.ONC

RE:RE:RE:RE:RE:RE:New shareholder

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• Equity: It’s becoming increasingly popular for biotech partnership deals to include equity in the startup as a portion of the upfront fee. This strategy can benefit the biopharma company’s accounting — equity typically isn’t included in profit and loss (P&L) reporting like a cash payment is, but it still gives the startup an infusion of cash and a big, splashy upfront number. It also creates aligned incentives, because the biopharma company has a financial stake in not only their own success, but also that of their startup partner. Finally, an equity stake in the startup can be an asset for the biopharma company when considering potential mergers and acquisitions down the road.But these types of equity arrangements aren’t always desirable for the startup. Equity isn’t non-dilutive cash; like venture funding, it comes in exchange for a percentage of your company. Therefore, equity dollars and cash payments shouldn’t be viewed as equivalent — a $50M all-cash upfront fee is different from $50M up front that includes $20M in equity.Carefully consider whether you’re able to command the same level of upfront without equity, and whether you’re willing to take more dilution now or be committed to giving the biopharma company a predetermined portion of your next fundraise. Regardless, reserve the equity card as a negotiation tactic to use later in the game, rather than an option to put on the table on day one
• Anatomy of a Biotech Business Development Deal | Andreessen Horowitz (a16z.com)