Sentient beings the contradiction.
FDA approval means over $100 million in DMX sales.
In this third part I mean to address in detail the other
half of the story which is what does approval mean.
Along the way, the answer to the share dilution issue
including the one coming up will be answered. Some will
seem repetitive and has been kept brief but absolutely
must be included.
Every business deal everywhere has been done with
insufficient facts. I've spent my life around business
cases, proposals, marketing initiatives, joint ventures,
product launches, and advertising campaigns. There's
a lot of information available here. Examination of the
available facts and the formation of a critical viewpoint
isn't invalidated because of discomfort with uncertainty.
Just like the person who came up with the original
estimates for JNJ back in 1999, this all becomes abundantly
clear when you are the person being asked to prepare the
estimate now.
ASSESSEMENT OF PENNSAID IN THE US MARKET
This paper examines pertinent information surrounding
the introduction of Pennsaid to the US market and draws
conclusions from the perspective of potential investment
returns.
The Product
Pennsaid is a topical NSAID. Transdermal delivery is
new. It uses DMSO with Diclofenac. The profile is
safety. It features local versus systemic drug delivery.
Patent life is relatively short. It fits OTC. The
company is eligible to apply for extension. Its a liquid
applied in drops. Known side effects are itching skin
and rash. There are cases of a garlicly aftertaste.
Pennsaid has good numbers. It conducted a relatively large
open label several years ago in Canada with clean results.
All testing has been on the knee common in OA.
The Market
Introduction of COX2's expanded the market from $5 to
$8 billion based on superior safety. The OA market is
growing in double digits due to age demographics. These
drugs have come into considerable controversy recently
with several official parties questioning their safety.
Pennsaid's serviceable market has been estimated at 55%
deemed to be those suffering in one or two joints. There
is some 5% of the population that has trouble with pills.
There is a sports injury/overuse segue. This addition
to pure OA application is included in all estimates.
The topical application process is identified as an issue
of resistance. The current NSAID market is entirely pills.
The target market includes 1) a variety of heat inducing
and anti-inflammatory ointments and 2) a segment unwilling
or dis-advised to use current NSAID's.
Pennsaid will have no competition on entry within its
niche.
The Selling Opportunities
It is estimated Pennsaid will be heavily advertised above
the current expansion in US trend. Projection is for
direct comparatives capitalizing on the concentration
advantage of topical over systemic application. Secondary
strategy above influencing normal deciders is projected
to be reimbursement infrastructure deciders subject to
the quality of data and based on the comparably smaller
amounts of Pennsaid that disperses systemically.
A contingency on selling is that current production
capability is materially below estimated requirements.
Component Estimates Made
Market maturity curve is estimated at 24 +/- 6 months.
Sales at maturity estimated between $500M and $750M
equating to 5-7% of the estimated market.
Royalty/revenue estimated at 22.5% based on late stage
agreement.
Cost of sales estimated at $2 per unit in full production.
2002 2003 2004 2005 2005
8,000,000,000 9,200,000,000 10,580,000,000 12,167,000,000 13,992,050,000
0.03 240,000,000 276,000,000 317,400,000 365,010,000 419,761,500
JNJ 0.04 320,000,000 368,000,000 423,200,000 486,680,000 559,682,000
0.05 400,000,000 460,000,000 529,000,000 608,350,000 699,602,500
0.07 560,000,000 644,000,000 740,600,000 851,690,000 979,443,500
0.34875 83,700,000 96,255,000 110,693,250 127,297,238 146,391,823
DMX 0.34875 111,600,000 128,340,000 147,591,000 169,729,650 195,189,098
0.34875 139,500,000 160,425,000 184,488,750 212,162,063 243,986,372
0.34875 195,300,000 224,595,000 258,284,250 297,026,888 341,580,921
Units $40 8,000,000 9,200,000 10,580,000 12,167,000 13,992,050
COS $2 16,000,000 18,400,000 21,160,000 24,334,000 27,984,100
GM 95,600,000 109,940,000 126,431,000 145,395,650 167,204,998
Exps 24,000,000 27,600,000 31,740,000 36,501,000 41,976,150
NPBT 71,600,000 82,340,000 94,691,000 108,894,650 125,228,848
Tax 0 0 0 0 0
NP 71,600,000 82,340,000 94,691,000 108,894,650 125,228,848
EPS 50 1.43 1.65 1.89 2.18 2.50
55 1.30 1.50 1.72 1.98 2.28
60 1.19 1.37 1.58 1.81 2.09
65 1.10 1.27 1.46 1.68 1.93
70 1.02 1.18 1.35 1.56 1.79 |
