OK Jef: I've got too much time on my hands! Look, I am happy to be in DMX. I have the patience to ride out the gyrations of the market. Bidding on Bay Street referred me to the stock a good while back, so I have had to develope strong hands. I don't wish to pick only a few negatives, and ignore the positives, but I'd like to see this discussion of business strategy continued.
Let's summarize the riskier cash-burning decisions:
1. to keep control, we have selected a relatively small fry distributor in the UK. Cash flow (ie cash profit) from sales here will be slow, for a while yet. I grew up in Europe and I stay pretty informed about the pharma industry there. I still do fully not understand why we picked Provalis. Doctors and patients in Britian and Ireland tend to not rush into new drugs and medications. Big name products which are well established and which have well funded advertising campaigns do well and are hard to dislodge. It is a fact that it will be 2003 before we see any significant cash profits coming from the UK and Ireland. Incidentally, why do we not have approval in Ireland yet, if Provalis has the distribution deal there, it should have happened by now?
2. The EU, I am very happy with the governmental approvals we have. I appreciate the socialized/pricing medicine issues which are affecting the approvals in Germany and France, means it will take some time to get to the point where we are selling there. We don't have a distributor(s), yet. I don't want to second guess this one - but let me say, based on what REK has said so far, I expect that it will be a network of relatively small distributors. So, here too we can expect that cash profits will be slower than if we pick a large, international distributor.
Now to the meat of it - can anyone tell me, will signing up a network of small distributors provide us with more or less cash profits, than signing up with one EU major distributor? The large one will want better margins (meaning lower margins to DMX). BUT, this decision would very likely result in a major ramp-up of sales effort, as that is what we are paying for with a lower margin deal. The point: is not 85% of a sure thing better than 100% of a maybe thing, where the 'maybe' is in further into the future cash flows? Is time not running against us? Do we not have to expect that
(i) there may be a competitor product already in the works at a major pharma ( or a small one willing to partner with a major pharma/distributor)? This is the trend I am seeing more and more of. and
(ii) do we not have a patent time clock running?
So, to my addled way of thinking, our strategy should NOT be one of trading away the time it will take up to get to the river of Pennsaids cash, in exchange for having a larger bucket to use at the river. We may just arrive at the Pennsaids river and find ourselves with a shorter time to use our bigger bucket. (excuse me, let me go refill my Guinness).
Canada: represents a clear set of choices. Engage a distributor, probably at a small margin cost, or enter into another area of business that we are unproven at. Again we trade away time for prospective margin. Actually, this is where I started this whole thought process at. We are trading away EQUITY to go this route. Just how much margin would we have to give to a Canadian distributor? The cash we are spending and which Joe figures we will need more of very soon now, is being spent on Canadian distribution ramp-up.
USA: we certainly do not seem to be making much progress with our blushing bride (aka J&J). We have a product which Wolf has pointed out is an 'old' medicinal compound and we have merely a new method of delivery.
I cannot say what is going on behind the scenes, but it does seem that J&J are not producing much by the way of results.
Finally, REK's baby, my hoped for and many of your hoped for too 'blockbuster drug' - WF-10.
altho' a male pattern baldness topical runs a close second :)
Yes! we have a super deal about to happen, full kudos to REK and however she does it , to pick up 80% without a cash outlay, is awesome.
Now, what is our strategy here? We may have an amazing drug to add to our pipeline, good for the health of the HIV world and good for us too. But, the strategy we are following is to defer the profits from our only drug on the market (Pennsaids), becasue we want to make lots money off it later rather than less profit sooner. Less profits but sooner profits would give us the financial independence to strike a very aggressive deal for ourselves with a major pharma to partner the development and marketing of WF-10. But it is provisional only if we can show that we are cash flow independent.
If our operations show that we do not have cash flows coming for a while out, we will be in a weaker bargaining position.
At the risk of repeating myself, I question our strategy for generating the profits from our first product-to-market. That strategy is to generate more profits less quickly that we could, if we were prepared to allow a small percentage to go to various distributors - with the big picture being that it is critical that we be fiscally secure enough to go partner a WF-10 deal. There is such a thing as being too smart for ourselves and not leaving something on the table for the players in the industry. Fox. |
