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Gold/Mining/Energy : Nuvo Research Inc -- Ignore unavailable to you. Want to Upgrade?

To: twentyfirstcenturyfox who wrote (7820)	10/8/2001 7:46:18 PM
From: Montana Wildhack	Read Replies (2) \| Respond to of 14101

Is this objective? Summary evaluation for investors: 1. Management issues - The length of time taken to bring the lead drug to the major markets targeted years ago. Most of those markets have not been achieved to date. Inexperience is witnessed by the second phase III. IR is a low priority. There are no major bio players involved. In house product has been brought to market. Long term institutional investments have relatively low turnover. Apparent ability to generate interest is low. 2. Financial - The company is at the start of a revenue stream for Pennsaid in markets secured of 1 billion US; but, may be numerous months from entering 2/3 of those markets. Cash appears minimal with approximately 45 million available in a dilutive agreement to place shares. There is no debt. Tangible assets are a manufacturing/research facility in Varennes and 2.4 million in notes receivable from a private company. There is a 20% interest in a private Swiss company valued several years ago at $150M and a recently announced letter of intent to acquire the remaining 80% for an undisclosed sum. 3. Properties Patent for DMSO deliver system involving topical application with increased penetration properties. Pennsaid approval or initial approval in Britain, the Carribean, Italy, Austria, Finland, and Luxemburg. Requests for approval in process in Canada and the US, and outstanding MRA approvals in Germany, France, and 7 other EU countries. A 20% interest in WF10, a potentially multi-application drug for treatment of AIDS, cancer, hepatitis C, and other auto-immune indications. The AIDS application has completed phase III. Cancer and HepC are in clinical trials. A study for a fungal application for DMSO was successful in penetrating the 3 components of the human nail. Ownership of mature state Dioptic Labs generating declining revenue of approximately $900,000 annually. License to sell WF10 in the Canadian market. 4. Outlook Potential markets - Each product application mentioned targets a multi billion dollar market. The lead product Pennsaid market is estimated to be growing in low double digits. Recently introduced competition to Pennsaid is undergoing regulatory scrutiny for safety reasons. Further approvals in the EU can be expected. The company stated publicly it expects Canadian and US approvals for Pennsaid. WF10 for AIDS may have a fast track FDA profile. Revenue timing - British market launch is 7 months old and estimated at $560 million Cdn. Penetration should mature over the next 12 months; however, market revenue and DMX revenue cannot be forecast at this time. Dioptic Labs revenue is in slow decline. Upfront payment can be expected from EU distribution partners for approved members reasonably estimated in the low millions. Cash managment - best estimates are minimal cash reserves. Net cash needs are approximately 3 million quarterly equating to approximately $18M in sales annually estimated at a 66% GM. Estimates are uncertain but cash coverage would occur at 45 million market sales based on a 40/60 revenue split - this is approximately 8% of the British market for sizing purposes. Cash can reasonably be expected from distribution partners prior to launch the timing of which is uncertain, but, may be expected in the 2002 fiscal year (May 31). An agreement with Acqua Wellington for 8% discounted shares extends until January 2002 with approximately 44 million remaining. The exercise of this agreement has a dilutive effect; but is a secure source of cash. The intent to purchase OXO can be valued in the 120 million Cdn range based on the cash paid for 20%. Current valuation is not possible. No details are available as to expected financing. Risk assessement - royalty reward is higher than average due to the go-it-alone strategy. Delays have been incurred apparently due to inexperience and possibly the absence of a partner with experience. Sufficient market has been secured to reasonably expect a higher shareprice due to retained earnings based on single digit market penetration in a normal biotech timeline. Potential buyout valuations can reasonably be expected to be above current market price (4.10) based on product/market portfolio. Management milestones have been slow versus average timelines; but, have now resulted in the first billion of servicable market. As a result near term risk is focused on interim cash management until those markets mature. Canada approval is anticipated to the extent that infrastructure investments are being made to service directly creating further near term drain on cash. Production expansion is concurrently being undertaken in anticipation of US approval creating an additional drain on near term cash. Overall assessement - cash is available to fund objectives not related to OXO and weather the near term prior to sufficient market revenue growth. This has a material impact on interim shareprice but guarantees an ongoing state until the 6 current markets mature and reveal the revenue obtained. Penetration necessary is roughly estimated at $1 shareprice per % achieved. Additional approvals are estimated to be highly probable. Securing the US market would have a profound impact on the stock as would strong WF10 phase III results but they cannot be quantified.