Lot's of activity on the Yahoo SRDX board today with another earnings conference call just completed. Again I am impressed with how much I trust management's representations of the situation and reticence to predict earnings until they actually can do so with some ability to control the outcome.
I understand these guys.
The big surprise is that Cordis royalty payments are being recorded already since the company had expected reports to be delayed enough that a quarter delay would be necessary. I believe the PR announcement said that something over half of the total revenue for the 3rd quarter came from Cypher royalties. Or estimating that at $7mm of the $12.8 mm total income and further assuming that to be 1% of total Cypher sales, total sales recorded to June 30 would be $700mm. At $3200 per each, that would be about 22,000 units. Though I don't have good numbers, I believe they sold more like 40,000 by that date and I now believe the 1 to 2% royalty rate I heard mentioned is on the high side.
There is a lot of guess work in the above calculation. I am thinking the initial reaction to $.26 a share rather than the $.10 to $.15 expected (which includes an after hours jump of $4+ per share) is somewhat overdone. This was a good report, but not hugely positive. Still, I am glad to own a part of this company and wish I could have bought more below $33 or so.
I now have two companies from which the chairman speaks with a Scandanavian accent and orientation. They are my favorites.
Best regards, Lance
PS. Late edit; I went back to the press release and picked out the section which led me to use $7mm for Cypher related royalties. It now looks like that was too high from the cut and paragraph indicating that at least $1mm came from another source.
"...The CYPHER Stent, which received U.S. Food and Drug Administration approval on April 24, 2003, incorporates SurModics' patented drug-eluting coating. Current quarter results include royalties earned on CYPHER Stents sold in the U.S. and abroad during the quarter ended June 30, 2003.
The early success of the CYPHER Stent launch contributed significantly to the $7.4 million of coatings royalty revenue, a 226% increase over the third quarter of fiscal 2002. In addition, coatings royalties benefited from an approximate $1.0 million in back royalties due on product sales by one of our 56 licensed customers.
Third quarter results also include a $500,000 milestone license fee from Amersham Biosciences for a product that was recently introduced to the market. Added Olseth, "While it's too early to determine the future financial impact of this new product, we think it's a good indication of Amersham's commitment to the genomics market."..."
What I don't know is whether the stents which were in stock and sold had fallen under the earlier minimum royalty agreement and so did not generate a royalty in the 2nd quarter. Cordis, I believe, had to discard a certain part of its prepared inventory when the FDA insisted that anything more than 6months old was not salable. L. |
