We are targeted to have positive cash flow in 1999, that's why I'm also still a buyer of PARS shares. Last block bought yesterday.
In the US market alone, if we get a small 6% market share for Alrex and Lotemax (versus the 15% to 20% mentioned in most forecasts), we will already be funding the company's yearly cash burn from internal means. At 10%, yearly US revenues for the two drugs of $10.2 million and the fact that we have a bundle of tax loss carryforwards means we would make a net profit. To this will eventually be added the beginning of revenue contributions from European markets for Alrex/Lotemax, which are equal in size to their US counterpart. And, lest we forget, LE-T, the third drug in the Lotemax family, is in the wings waiting to add an additional $7 million to $10 million in annualized sales.
All this for a mere $2 5/16 per share.
Obviously, the HU-211 family of drugs is not even counted in this price. There we also have the best of biotech conditions -- that we find a single item, in this case dexanabinol, and then develop a family of drugs which can be used for several conditions. So we have the current advanced dexanabinol trials for brain trauma, and the possibility for additional trials on areas where the drug is showing preclinical potential, i.e., as a neuroprotectant against glaucoma, Parkinson's and Alzheimers diseases. Plus the recent findings which have been presented about its potential for treatment of inflammatory bowel disease (ulcerative colitis and Crohn's Disease and AIDS wasting syndrome), not to mention the US Army's suggestion that dexanabinol may be effective in protecting the brain against damage caused by nerve gas exposure.
Unless something really crazy happened in the HU-211 Phase II trials -- like only the placebo worked -- it seems very probable to me that we're going onto Phase III trials. Those will be done with a big partner and we will get progress payments for the research. Not only will cash flow be further enhanced, but those other applications for HU-211 currently waiting in the wings will take on more prominence and promise.
So, what's a worst case scenario? That Alrex/Lotemax never get much more than the 5% market penetration, that LE-T never makes it to market and that HU-211 brain trauma trials stop. In this case we'd be left with a company that has only eye drugs that bring in around $10 million a year from the US and Europe and must use those inflows to pay for $6 million a year in expenses.
At that point, helped by tax loss carryforwards, we're doing about 10 cents a year in share profits. Guess those leftovers could be used to buy some new promising drugs from starving scientists or buy back shares.
On the other hand, if we get to $25 million in yearly revenues from the first two eye drugs, we're doing upwards of 50 cents a share in yearly profits. And if HU-211 does well and LE-T makes it to market, what will eps be then?
See what I mean? That's why I keep buying shares.
--Ariella
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