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Gold/Mining/Energy : Nuvo Research Inc

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To: Claude Cormier who wrote (8221)	12/15/2001 5:37:24 PM
From: Montana Wildhack	Read Replies (3) of 14101

Claude, You were asking about a realistic US market number regarding the 5%. I've attached a grid in Cdn funds based on the 6 billion US figure. The horizontal is the percentage market penetration, the vertical is the percentage we get from J&J, and the numbers are gross sales Cdn funds in millions. 1 2 3 4 5 7.5 10 15 15% 14 27 41 54 68 101 135 203 17.5% 16 32 47 63 79 118 158 236 20% 18 36 54 72 90 135 180 270 22.5% 20 41 61 81 101 152 203 304 25% 23 45 68 90 113 169 225 338 27.5% 25 50 74 99 124 186 248 371 30.0% 27 54 81 108 135 203 270 405 From this I'm using a 33.3% direct cost (so 60 million in gross sales creates 40 million in gross margin). The reason we have been discussing 5% is that in the absence of hard information the most prudent thing to do is plot out these types of scenarios and assess their effects. From the above a 5% market penetration with a 22.5% share from J&J should create about 50 million towards profit based on today's expense rate. (101-33-18=50) Since this translates into something in the neighbourhood of $1 per share net earnings and a $20 stock price plus or minus - its extraneous to use higher values in investing $4-5 without concrete information. In the absence of information the only value in a predictive model I can see personally is in providing an outcome array against which you plot minimum requirements and probability. I need 50 cents EPS plus to get a decent payoff of my $4 investment over my timeframe. That starts happening above the 22.5%/3% range. I assess the probability of getting FDA as very high, the probability of getting 22.5% from J&J as high, and the probability of getting more than 3% of the US market as very high. When I add in the double digit market growth over the patent life and the UK/Cdn/Italy markets - my decision is made. Just my opinions. Wolf BTW - risk on this investment dropped at least in half this week and cash will not be an issue before launch.

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