Dear Rick, I listened to and participated in today's conference call.
Bob Cook, CFO, and Gadi Riesenfeld, Pres. and COO, were the Pharmos representatives on the phone. Bob led the discussion with notes on R&D expenses, which are expected to rise in the second half of 1998, but generally had positive things to say about the effect of initial sales of Lotemax and Alrex on the company's financial position.
According to him, sales of both eye products are building "week by week" since their debut 9 weeks ago and Lotemax now holds a 2% share in the US and Alrex has a 4% share. (BOL has previously estimated the US market for Lotemax at $100 million and Alrex at $250 million. A 10% share for Alrex and a 5% share for Lotemax is sufficient to bring the company to breakeven.) Both drugs are available in all 50 states, and cleared for formularies in 42 states, with the last 8 expected shortly. So far, 1/4 of the opthamologists targeted to get news about Lotemax have been reached. Launching these types of eye products requires the use of samples, and PARS has been, says Cook, "aggressive with the use of samples." This means that actual sales will probably be lighter in the 3rd 1998 quarter than in the 2nd quarter, when the distribution channel was being filled, but the sampling strategy is better for future potential.
In the 3rd quarter, Lotemax will be launched in the UK; Alrex in the Netherlands. Other countries to follow.
PARS is hoping for sales of LE-T to contribute to year 2000 numbers.
As for HU-211, the company plans to unblind the 3- and 6-month groups in late September/early October and hopes to present papers on the results at one scientific conference in Seattle in October and another in LA in November. An additional 100 patients, including new placebo users, are to be enrolled soon.
This discussion was followed by a question/answer period. Evan Sturza's representative lead off with specific questions about cost-of-goods in quarter 2.
First Associates asked about the Alrex marketing partner. Bob Cook said again that "the ball is in their court," meaning BOL. He did not expect an agreement to lead to activity before Labor Day.
In answer to my question, Cook admitted that the company will not get most of this allergy season in the US for Alrex this year, but is hopeful currently building momentum will continue. He also told me that, except for 500 shares, NONE of the Preferred Series C has yet been converted. I asked how the company planned to finance operations after the first quarter of 1999 and he stressed the game plan of getting a partner for HU-211 and receiving progress payments from them. He also mentioned that though the company has written that cash is sufficient to take PARS through the first quarter of 1999, he thought as things stand now that the funds might be "stretched" a little longer.
Both men were straightforward in their answers, upfront, and my confidence level in them continues to be high. It would be nice to have higher numbers on Alrex and Lotemax, but their performance seems good in light of the short time they have been on the market. Unlike what others have reported on the threads -- that PARS continues to toy with the idea of going-it-alone on HU-211 -- I felt both men would consider that wishful thinking and that the expense of Phase III is sufficient that the company understands a partner is the only way to go.
Nor do I expect a big pop up in the stock price. The general market is in tatters at present, especially the small cap stocks, and the biotech niche is even weaker. Nothing in current events at PARS is dramatically better than it was several weeks ago -- we just have a little better idea of share figures for the eye drugs currently on the market. The unblinding of HU-211 results is taking on an especially important psychological meaning about future positive surprises, so I think a lot of investors will take a wait & see attitude until the fall.
Personally I am feeling good about the direction of the eye drugs and how little market share they really need to put the company at breakeven. I will exercise patience with my shares in the hopes of significant percentage reward a year from now. This is a stretched out scenario from 6 months ago, but the stories of many companies on the Street are similarly so. At least we're a biotech with 2 drugs already being sold. |
