NNVC's bottom line can vary wildly with different assumptions. The entire range of variance is between "in the red" and "deep in the red".
I'll admit that the revenue and cost numbers cited were totally made up without any basis...but the royalty charges and expense markups were not.
- I'm guessing that NNVC's drug production expenses compared to revenues will as high or higher than average in the industry, i.e., NNVC drug production will not be particularly cheap. But even if they're average for for a big pharma...
- If you take 6-8 of the top drug companies, average their revenues and COGS espense ratios, and add 30% to COGS (for markups) and then subtract 15% of revenues (for the royalty), you will get a VERY UGLY number on the bottom line. [I know, I've done it. I was all set up to explain at the last shareholder meeting, but was interrupted by misstatements (and untruths) from Diwan and Harry, his legal counsel.] As I recall, nearly half of the top, established drug companies go into the red (before taxes) just with the 15% royalty burden. They already have a fully established enterprise that they built w/o those burdens. NNVC does not.
- Unless our numbers are WILDLY GLORIOUS (or perhaps, even if), the company goes BK.
- And remember, Diwan is being paid by NNVC, but making decisions primarily in the best interest of TheraCour. Case in point, moving forward with VZV rather than HSV-1 and HSV-2. Delayed us a year and is going to cost us an additional $10 Mn plus in licensing expenses.
No two ways about it, NNVC shareholders are screwed. It's a matter of "when", not "if".
The deal is not necessarily catastrophic for NNVC. I disagree... |
