I am not the only one concerned about the Neuramedy deal. The market didn't like it, either, so let's take a look at this.
Bioasis deals that we know about have not been all that good. Others have no reportable material value, at least not yet. So far Bioasis has all the appearance of a company that needs the money so badly that it's willing to do any deal to keep the lights on. The deals also suggest that potential partners may not be willing to pay very much, possibly because xB3's capabilities still haven't been proven. Basically, partners and licensees may not be willing to pay for work that should have been done long ago by Bioasis. We may not see good deals until it's proven that xB3 has the chops to at least achieve IND status, which is the approval for human clinical trials.
But there is something going on that is good. More companies are currently involved with Bioasis than at any time in the past. Despite everything, licensees and partners are taking the time and money to test xB3. This wouldn't be happening if they didn't think xB3 has potential. But It's also getting to be time that we saw some progress with these collaborations, at least with Chiesi. I worry about the lack of reported progress from Chiesi. On June 29 it will be two years since that deal was announced. Crickets...!
Roadshows - Q&A Time for DrDR
I think the upcoming roadshows are coming at an good time. Shareholders need to start thinking about the direction they want Bioasis to take. (AGM, voting, etc.) I think there are some questions that need to be asked of DrDR.
Agreed upon milestone payments are good indicators of the anticipated value of xB3. If xB3 doesn't work, or doesn't work well, then the pharmas aren't at much risk because they won't have to make milestone payments, no matter how large or small they are. If xB3 does work but the payload doesn't work, then it's the same situation. But if xB3 and the payload work, and the partner wants to advance the drug, then milestone payments are good investments for the pharma and the payments should reflect the value of the opportunity.
So, why can't Bioasis negotiate good milestone payments? Should shareholders accept Bioasis management's opinions of the value of xB3 as it is indicated by the low value of milestones the company has negotiated? Is this all that management thinks that xB3 is worth?
And about Bioasis finances, if the deals, including the Neuramedy deal, have low value because Bioasis badly needs the money and isn't in a position to negotiate from strength, does this mean that Bioasis no longer has access to the
Lind funding?
But if Bioasis still has the same access to the Lind funding as originally announced, and if Bioasis is financially strong enough to negotiate from strength, then why does the Neuramedy deal have such low milestone payments for Parkinson's Disease, a disease that has huge potential commercial value? If Neuramedy turns out to have a capable PD drug, then what's the risk to them to pay a good price for the opportunity to advance the drug? If the answer is that Neuramedy can't afford proper milestone payments then Neuramedy is in the wrong business.
The Argument
Milestone payments should reflect the potential commercial value of the drug and xB3's part in making the drug possible. As such, the value of future milestone payments to Bioasis should reflect the future value of Bioasis in a proportion to the value of Denali. A drug put in a human brain by xB3 should have comparable value to a drug put into the human brain by Denali. There is little risk of such valuations to Bioasis partners because the payments aren't made unless xB3 performs as well as, or better than, Denali's technology, a comparison that have heard from Bioasis many times..
I think Bioasis shareholders should demand accountability for these low-value deals, and should expect better in the future. I don't think there's much middle ground for xB3. It either doesn't work and is worth nothing, or it works and is worth a hell of a lot more that Bioasis is getting.
jd