Arnie,
I don't know why you are so disappointed with BOL's sales. Their sales growth is moving according to schedule, and nobody expected much more. PARS and BOL's target was and is to get a 12% - 15% stake of the market (this should happen 12 - 18 months from launch).
Currently, BOL has about 5% stake, and growing. There is no reason to believe this stake won't continue to grow in the coming months.
True, we still didn't see huge sales yet. However, BOL is still building its market share, and we still didn't see numbers from the allergy season. And, don't forget, that we should have LE-T join the other two drugs next year, and LE-T will probably take a bigger stake of its market.
So, how do I reach $0.25 per share in 2001 ? Here's how :
US market :
Lotemax - $100 M, BOL's sales $12.5M
Alrex - $200M, BOL's sales $28 M
LE-T - $90M, BOL's sales $15 M
European market and ROW :
BOL's sales of all three products - $25M - $30M
BOL's total sales : $80.5M - $85.5
PARS' share : ~20% of sales = $16M - $17M
PARS operating expenses = $7 M
PARS net income : $9M - $10M
Shares outstanding : 45 million
EPS : $0.20 - $0.22
With these estimates, we get EPS of about $0.20. Here, I estimated BOL would reach sales of about $80 million, but I understand BOL believes it can reach sales of $100 million. If BOL can increase sales to $100 million (we'll have to wait and see if they can), PARS' EPS will be a few cents higher.
The above numbers and market penetration estimates, are just my opinion (my educated guesses, if you may).
You should also remember, that by 2001 PARS will retain co-marketing rights, which could help as well. PARS might find another company to market the products in certain markets, and of those sales PARS' share will be quite high. So, that's another upside.
In any event, my point here, isn't that PARS will make $0.25 or $0.23
in 2001. My point is, that PARS has this product line to fall back on, in case things go wrong with its R&D program. This is a safety net, very few biotechs have. Many biotechs have more cash than PARS, and call that a safety net. I don't think more cash is a safety net, it's just borrowed time (as we all know, biotechs have a tendency to burn cash quite fast).
Here we have a company, that will stop burning cash this year, and will start generating cash next year. Regardless, of what happens with its R&D program.
I believe that HU211 will become a big success, but biotech is a risky business. With PARS at $1 1/4, I know that even if HU211 fails PIII, I have something to fall back on, and it doesn't matter if its earnings of $0.25, $0.20 or $0.17, as long as it's positive earnings which could always support a $1 - $2 stock.
Arnie, it's just like a mountain climber. You go for the peak, but on the way you secure your rope every several feet, as precaution. If you don't do so, you might reach the peak sooner, but if something goes wrong (cross winds, icy conditions etc.), than you're dead.
At PARS, if HU211 fails (which I don't think will happen), the company is not dead. It will be generating cash, which will be able to support its R&D efforts with other compounds, like the tamoxifen derivatives or other projects that today are still at discovery stages (and believe me, PARS has a lot of very interesting things at the discovery stage... which is where ENMD was 12 months ago, btw).
Take care,
Omer |
