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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (82955)	8/15/2000 8:10:12 AM
From: JHP	Read Replies (1) \| Respond to of 132070

re:DRMD- could you please comment on this, thank you john By Pharkon on Monday, August 14, 2000 - 05:30 pm: I haven't looked at DRMD for about 3 months. I would suggest that anyone going in to the stock make sure they understand the earnings projections and the split of revenues between DRMD and Solvay. DRMD entered into an agreement with Solvay that gave Solvay certain rights for the sale of Censtin in return for reimbursement of past and ongoing marketing costs. The deal allowed DRMD to accelerate its crossover to positive earnings at the expense of giving away much of the upside of Cenestin's future sales. I traded DRMD up from $5 to $16 in early 1999 and then again from $9 to the low teens in the first quarter of 2000. DRMD is currently trading in $5's. I stopped tracking DRMD because of my lack of confidence in management. I felt betrayed by management that clearly hyped the stock and clearly didn't understand what they didn't know. They had a great drug, Cenestin, that could have been exploited to provide great gains. Unfortunately, DRMD did not have the clout necessary to get Cenestin through the FDA (as a generic) and once they did the get the drug approved in a less favorable form, the company completely botched the roll out. All the while, they promised they were on top of things. For a brief overview, Duramed manufactures generic drugs. In the late 90's, DRMD developed Cenestin, a plant derived estrogen that was designed to be a generic replacement for Primarin. Primarin is an estrogen drug that is sold by American Home Products for women in menopause. Primarin represents a huge unchallenged market. If Cenestin had been approved as a generic version of Primarin, DRMD would have had a great chance at become a major player in the estrogen market. One of the benefits of Cenestin is that it is a plant derived estrogen as opposed to Primarin which is a derivative of horse urine. DRMD planned to exploit this difference in its marketing campaign. Unfortunately for DRMD, Cenestin was not approved as a generic for Primarin (it is alleged that this was due to AHP's influence on the FDA). As such, DRMD re-submitted the drug for approval on its own merits. DRMD finally received FDA approval in 1999 for Cenestin as a new drug. The approval was for limited dosages making it less than a perfect substitute for Primarin. DRMD still had a chance at turning Cenestin into a block buster drug. Unfortunately, DRMD knew nothing about what it took to market and distribute a new drug, as opposed to a generic drug. DRMD initially hired a small time partner to support its marketing effort. DRMD's CEO Thomas Arrington continually made huge claims regarding projected sales and earnings. Quarter after quarter, Arrington's claims continued to prove false as Cenestin's sales failed to grow as projected. Finally in the 2nd quarter of 2000, realizing that they were in way over their heads, DRMD entered into an agreement with Solvay. The agreement gave solvay certain rights to the sale of the drug in return for reimbursement of marketing costs. In my opinion, the agreement gave away much of the upside of Cenestin. While DRMD has some strengths going for it, I lost all faith in management. I don't mind when someone doesn't have all the answers as long as they know what they don't know. If you know what you don't know, you can bring someone in who does. Unfortunately, DRMD didn't do that and they totally destroyed the value Cenestin. If DRMD has a new drug in the pipeline, it may warrant a new look. It is conceivable that management learned something from the Cenestin debacle. This is just my opinion. I figured I would at least give others the benefit of my prior research. Do your own due diligence. Pharkon