I view the Alfasigma (AS) deal differently than you do. I see it as a win/win as I look at it from both IPIX and AS viewpoints:
Alphasigma View:
I don’t agree that AS is paying money to “study” B-IBD UP/UPS. They are fully funding FDA trials to get B-IBD UP/UPS to market as soon as possible. They will have the first B-IBD instance to market. B-OM may get to market sooner with a different partner but they are contractually protected as Brilacidin is licensed by instance and by delivery mechanism. AS will recoup the FDA trial costs and whatever their initial payment was on the deal very quickly once they hit the market with B-UP/UPS. AS has little risk of the B pill form eating into their profits for the specific instances they are addressing and in a very worst case scenario they would be paying IPIX less in back end milestone royalties. (IPIX would be getting these royalties on a separate B-pill deal with AS or another BP on a separate IBD deal.) As stated in the PR “We will also closely follow Innovation’s progress in developing oral Brilacidin, as we remain highly interested in novel oral IBD treatments.” AS will have a slight advantage over other BPs with FRR but they realize they will have to significantly sweeten the pot to get exclusive rights on the B-IBD pill form that could grab a significant market of a soon to be $48B market. AS also has the advantage of being in a direct partnership with IPIX and will establish trust and relationships that will make doing a second deal more streamlined. As stated AS will be closely watching the B-pill development and my guess is they will initiate a second deal conversation to try to avoid a bidding war. AS has set up a license deal in the IBD space that is strategic to their focus in the IBD space with an inside track to secure an additional deal in a very strategic and lucrative IBD market.
IPIX View:
IMO Leo has determined that in order to maximize shareholder value that Brilacidin’s parts are greater than the whole. In other words there is more value in multiple partnerships for Brilacidin by both instance and delivery mechanism. The AS deal is the first of these with upcoming separate deals for B-OM, B pill form for Non UP/UPS for Colitis and Crohn’s which are huge markets and most likely a separate dermatitis partnership deal. The complexity of distinguishing license rights is IMO the reason the first deal took so long but long-term it is the most lucrative approach to monetizing Brilacidin. The separation by instance and delivery mechanism is spelled out in the AS deal “locally-administered Brilacidin (e.g., foam, enema, gel), on a worldwide basis, for the treatment of Ulcerative Proctitis/Ulcerative Proctosigmoiditis (UP/UPS).” The AS deal is a huge win for IPIX as they have full funding specific to B-IBD UP/UPS to get these instances and delivery mechanisms to market. IMO Leo has competing BP waiting in the wings once the B-pill formulation is complete. I believe he will give AS a legit shot at putting together a lucrative offer but will not hesitate to secure a maximum deal for pill form of B-IBD for Colititis and Crohn’s. IPIX can focus their efforts and resources on B-OM, B pill form, K pill form and B dermatitis. IPIX is positioning to have multiple license deals producing multiple revenue streams via royalties. IMO a few years from now when IPIX has 4 or 5 royalty deals in place along with multiple revenue streams the company will be sold in a SP well into 3 figures. The AS deal is the first of what I believe will be more to come shortly.
Alphasigma View:
I don’t agree that AS is paying money to “study” B-IBD UP/UPS. They are fully funding FDA trials to get B-IBD UP/UPS to market as soon as possible. They will have the first B-IBD instance to market. B-OM may get to market sooner with a different partner but they are contractually protected as Brilacidin is licensed by instance and by delivery mechanism. AS will recoup the FDA trial costs and whatever their initial payment was on the deal very quickly once they hit the market with B-UP/UPS. AS has little risk of the B pill form eating into their profits for the specific instances they are addressing and in a very worst case scenario they would be paying IPIX less in back end milestone royalties. (IPIX would be getting these royalties on a separate B-pill deal with AS or another BP on a separate IBD deal.) As stated in the PR “We will also closely follow Innovation’s progress in developing oral Brilacidin, as we remain highly interested in novel oral IBD treatments.” AS will have a slight advantage over other BPs with FRR but they realize they will have to significantly sweeten the pot to get exclusive rights on the B-IBD pill form that could grab a significant market of a soon to be $48B market. AS also has the advantage of being in a direct partnership with IPIX and will establish trust and relationships that will make doing a second deal more streamlined. As stated AS will be closely watching the B-pill development and my guess is they will initiate a second deal conversation to try to avoid a bidding war. AS has set up a license deal in the IBD space that is strategic to their focus in the IBD space with an inside track to secure an additional deal in a very strategic and lucrative IBD market.
IPIX View:
IMO Leo has determined that in order to maximize shareholder value that Brilacidin’s parts are greater than the whole. In other words there is more value in multiple partnerships for Brilacidin by both instance and delivery mechanism. The AS deal is the first of these with upcoming separate deals for B-OM, B pill form for Non UP/UPS for Colitis and Crohn’s which are huge markets and most likely a separate dermatitis partnership deal. The complexity of distinguishing license rights is IMO the reason the first deal took so long but long-term it is the most lucrative approach to monetizing Brilacidin. The separation by instance and delivery mechanism is spelled out in the AS deal “locally-administered Brilacidin (e.g., foam, enema, gel), on a worldwide basis, for the treatment of Ulcerative Proctitis/Ulcerative Proctosigmoiditis (UP/UPS).” The AS deal is a huge win for IPIX as they have full funding specific to B-IBD UP/UPS to get these instances and delivery mechanisms to market. IMO Leo has competing BP waiting in the wings once the B-pill formulation is complete. I believe he will give AS a legit shot at putting together a lucrative offer but will not hesitate to secure a maximum deal for pill form of B-IBD for Colititis and Crohn’s. IPIX can focus their efforts and resources on B-OM, B pill form, K pill form and B dermatitis. IPIX is positioning to have multiple license deals producing multiple revenue streams via royalties. IMO a few years from now when IPIX has 4 or 5 royalty deals in place along with multiple revenue streams the company will be sold in a SP well into 3 figures. The AS deal is the first of what I believe will be more to come shortly.
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