Joe,
I'll take a shot at confusing the situation.
I agree with John's point that if we were to go to the
market now it could imply that the UK is not as close as
Dimethaid suggested. While there would be a certain
consistency there, I believe we are in the final stages.
As was discussed with Wilyolvet on SH, the cash should be
running out around February, and DMX would then be relying
on those OXO notes, and/or deals, and perhaps revenue.
If OXO is having trouble raising the cash it needs to
complete the WF10 trials in AIDS, cancer, and I believe
hepatitis C, that would have a direct cash timing effect by
not allowing us to redeem the notes in time, and perhaps
create a need to help fund OXO further.
A second possible issue is the need to ramp-up the Canadian
market direct effort. This should really start months prior
to actually getting approval since it involves marketing and
sales detailed strategies, hiring, development of training
and literature materials, physical office space, furniture,
contact research, advertising, etc, etc, to various degrees
to "hit the ground running".
It's also possible the manufacturing is costing more than
my estimates and/or that Dimethaid could be gearing up for
either something new, or to submit Pennsaid to other
countries (Japan for instance).
Additionaly the JNJ/FDA situation really should be winding
to some conclusion. If a deal is reached, the dollars
involved would be at the very least in the $10 million plus
US range.
Finally a wild card is the fungal product negotiations which
would involve some cash payment to Dimethaid.
Even though the UK partner is being chosen partly apparently
for their speed to market, after a first larger shipment I
would think it will take some months for revenue to move
from a trickle to a stream capable of providing sufficient
flow to overcome the current expense base.
This deficit I estimate currently at $2.5 million a quarter
which would increase with increased sales due to higher
costs of sales.
So sales to partner must exceed a $10 million Cdn pace to
begin adding to the treasury. That's roughly 23 million
pounds in sales by the UK partner in a market estimated at
something above 300 million pounds.
The bottom line then is for the forseeable future if you
don't include JNJ or a fungal deal, we would only have
the UK cash to do anything with.
I've done some further thinking on that and if we use the
same ratio (roughly $20 million US in a market est by DMX
at 5 billion - call the standstill 10%), thats .4%.
If a ratio like that holds we may get only 1.5 million
pounds or slightly over $3 million as cash up front for UK.
The key to success in Europe is that France, Germany, Italy,
etc. each add cash to treasury directly, since even a
somewhat expanding expense base can roughly be covered by
UK sales (projected around 8% of the arthritis market).
That includes another partner at least and more cash but
in the $3 million Cdn or so range.
In conclusion, even a timely UK approval and deal will not
be sufficient for Dimethaid to do anything extra for many
months unless the JNJ money finally falls.
While there may be numerous things they want to get started,
I can think of two that are more probable.
If they want to start getting ready for Canada even six
months from now they will need more cash. And if OXO needs
help, we will need more cash. Fungus should be a cash
generator; but, any other testing will also need to be
funded such as for future potential products.
Wolf |
