Sembiosys Genetics Inc. SBIYF

RE: RE: Consistent Volume=New Life

[Biotech777]

Not quite sure what to make of this one just yet. Despite all the hype, China is NOT a huge market yet. In fact it is a quite small market in the world of pharma right now. Having said that, it has very strong growth rates, which if continue, will make it a solid #3 or 4 market in the world in 10 years. The net profit interest is really hard to put a value around. If this is a typical research JV, it may not be set up to make any profit. It may bring in revenue, but it also may invest in multiple R&D projects and not generate any profit. This makes it tough to put a value on SBS shares today. Also while China's SFDA is a bit easier than the US FDA, it will still be a few years before any plant based insulin or apo product is approved. The PR seems a bit awkward as it specifically mentions the insulin program but does not mention apo. Could be oversight, but seems they would highlight this product potential if it were included in the deal.I am interested in whether their is a time component to the cost sharing piece and whether Sembiosys will get a cash infusion to retain staff and facilities. The JV mentions 100% of R&D costs funded but doesn't mention G&A costs. No upfront milestone is probably the most telling about this deal.All in all, a deal like this is probably the best that can be expected as these guys would have had a very hard time raising any additional capital with the current debt structure.