Letter to Shareholders - An Investor's Comments...
From...
sedarfiles.stockwatch.com
Comments In Bold...
"At the beginning of fiscal 2004—following the Canadian launch of Pennsaid — Dimethaid looked forward to returning to its R&D roots. Our intended focus was the product pipeline under development since the mid nineties. Yet, as a continuing reminder of our emerging pharma status, management’s attention was drawn repeatedly to the everyday necessity of generating revenue [ Oh, yeah... we have no money, and what we can get is at worse than credit-card rates ] As it turned out, much of the year’s events centred around the financial, promotional and partnering initiatives that go hand-in-hand with building commercial success. Italchimici, our Italian marketing and distribution partner, set the tone by launching Pennsaid in June 2003. This expansion foreshadowed additional regulatory approvals in Europe, the re-launch of Pennsaid in the U.K.[ wink,wink! ], additional regulatory filings in the Caribbean, a co-funding agreement [ cost of sales, please! ] brokered by In2Focus our U.K. contract sales organization, and the signing of new marketing and distribution partners Jaba Farmacêutica SA in Portugal and Vianex SA in Greece.
In February 2004, in what was possibly the company’s most significant news of the year, Dimethaid announced a Pennsaid co-promotion agreement with Solvay Pharma Inc., effectively doubling the Canadian sales force and marketing budget.[ After the emergence of the MMC, "Go it alone" didn't look so good, any more... ]
The Solvay deal, which started evolving soon after our Canadian launch, highlighted a cornerstone [ ..."newly-laid" cornerstone! ] of Dimethaid’s business model. While the company set out from the beginning to acquire the skills expected in a fully integrated pharma company, our pride in this accomplishment was occasionally mistaken for a view that independence and cooperation are somehow mutually exclusive. Pennsaid gave us in-house research, regulatory, manufacturing and marketing expertise. At the same time, our interest in working with other organizations led to the acquisition [ but inability to pay for, and inability to fund ] of Oxo Chemie and the immune regulation platform — as well as the creation of an international distribution network — embedding a cooperative spirit that will likely become the predominant pattern for ongoing product development.
On the financial front, Dimethaid completed a $9.9 million private placement deal in October 2003, and to continue supporting Pennsaid commercialization, completed a second $2.7 million private placement of special warrants in June 2004.[..Which placements needlessly enriched many PIPE financiers on the backs of investors..] Financial matters also prompted concerns [ Naaaah! You kidding? Concerns? ]among shareholders after a U.K. arbitrator ruled against the company at a cost of $2.1 million, plus interest and expenses. Fortunately, although we had fully expected a favourable decision,[ Ah, yes! The "opinion" of management! ] our contingency plans did allow for other outcomes, and the company successfully negotiated a payment schedule [ ...Possibly the most outrageous piece of spin-doctoring ever seen in Canada - interpreting the payment schedule for an absolute disaster as "success" ] that called for reasonable spending restraint [ Reasonable? Read: we don't have enough money... ] without posing a major obstacle to growth.[ For major trials, or marketing - thus accounting for our WONDERFUL sales, and my paltry raise! ]
Pennsaid promotion stepped up throughout the year, spurred by such events as the presentation of oral equivalence results at the European Congress of Rheumatology in June 2003, along with medical advisory conferences reinforced by advertising and public relations campaigns.
And with growing awareness came increased sales—enough to put Pennsaid comfortably within the list of top ten drugs released in Canada during 2003.
At fiscal year-end, having brought in some $4.5 million in revenue, Pennsaid was still near the beginning of its sales cycle. Even with a third-quarter downturn in overall NSAID demand — and despite the extra educational effort needed to encourage use of a novel topical treatment — Pennsaid continued to win an enthusiastic following among medical practitioners, pharmacists and patients. In the interest of growing the business, [ AKA belated and underfunded R&D ] Dimethaid also began two postmarketing clinical studies aimed at making the product available to an even wider range of patients.
With more familiarity, and a heightened understanding of the dangers linked to competing oral medication—plus expansion into new global markets and a fine-tuning of promotional strategy—we believe Pennsaid is well on the way to becoming a $100-million product and fulfilling its role as the financial driver for future Dimethaid research and development.[ $ 100 million? At this rate, WHEN? ]
The company’s R&D commitment includes a second transcellular product, Penecure, an antifungal that will combine the safety of existing topicals with the efficacy of pills. Both the FDA and Health Canada have approved a protocol for the first Phase I/II trial, and we hope to begin enrolling patients during fiscal 2005, as soon as financial resources allow. [ Small problem - we have no money, we can't get any, and we have enormous debts and obligations ] While we now have an FDA-reviewed R&D plan, it is still too early to draft a complete commercialization strategy, and the final product might very well come to market with help from a development partner [ No kidding... that's the only way it's gonna happen, because you ain't got a nickel to spend! ]—a possibility facilitated by the credibility Pennsaid brings to the concept of transcellular technology.
As for our other technology platform, although WF10 research appeared to slow down during fiscal 2004 [ Also 2001, 2002, 2003 ], Dimethaid continued moving ahead on a variety of immune regulation fronts, including a new scientific collaboration aimed at broadening the platform through parallel research in oncology [ Initiated by WHO? Conducted in WHAT COUNTRY? Begun before or after you terminated Dr. Kuhne? ] This opportunity, however, now needs to be re-evaluated in light of negative results [ ALL negative? NO positive? No positive news from secondary endpoints? ] from Oxo’s Phase III HIV/AIDS trial, announced in July, after the fiscal yearend.
Though disappointing, the latest trial results also drive home a reality of pharmaceutical development: drugs that make it from the laboratory to full-scale commercialization are rare commodities, indeed. [ Especially when the company that acquires them can't AFFORD to develop them! ] They are the exceptions, not the norm, in a business that demands a strategic direction capable of accommodating setbacks.[ Yes - like retaining good standing to obtain cost-effective financing, like planning properly for financial needs, like keeping a good relationship with the investment community on whom you depend, like not SWITCHING from partnerships to "go-it-alone" than BACK to partnerships when you're desperate ] We have that resilience. [ Some shareholder's don't. They're getting WHIPLASH from the change in directions ] WF10 may yet prove its potential, with or without an HIV/AIDS indication or more investment from Dimethaid. [ Oh great. We've paid tens of millions - will it be flogged to a "tire-kicker" for PENNIES on the dollar? Another great deal for investors? Like Solvay? ] Meanwhile, this company will continue to demonstrate its inherent depth by bringing along new products and at the same time, stepping up efforts in manufacturing and sales, improving domestic marketing programs, and aggressively pursuing additional overseas licensing agreements.[ With WHAT? A revolving door, and no money? ]
As demonstrated by this year’s events, pharmaceutical development can be a highly rewarding pursuit [ for management, if not shareholders ] but it can also be a poor fit for those in search of a risk-free future with immediate returns.[ True! Nothing "immediate" about Dimethaid! ] Building an organization that can deliver innovative health care calls for a long-term vision [ ...As opposed to crippling myopia ] combined with the flexibility to adapt to rapidly changing circumstances.[ Yeah. Like suddenly, "How are we gonna pay?" "Let's blame the MMC." "Let's blame HC". The consultants. ] Throughout fiscal 2004, those qualities were tested frequently, and to no one’s surprise, many Dimethaid shareholders and employees rose to the occasion. [ Except those MMC people - they just don't get it! We DESERVE their support - and they won't GIVE it to us!] Their resolve in the face of adversity has set an example for the industry while providing an invaluable benefit to the company, the medical community and the patients we serve."
[...Stirring music. Management stands, and applauds shareholders, wiping tears of joy and humility from their eyes. Across Canada, people jump to their feet, cheering the Dimethaid investor: destitute, but worthy.
In gratitude, management immediately pulls another 6 members through the revolving door, gives the Golden Handshake to the departing, and bestow upon themselves yet another raise. ]
Ya gotta love it. Get the shovel.
Jim |
