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To: Claude Cormier who wrote (8221)	12/12/2001 5:34:48 PM
From: Mark Bartlett	Respond to of 14101

Claude, <<It seems to me that 5% is very low for what is supposed to be the best drug in its sector. What would be a more realistic target ? >> Many things have to be considered. Pennsaid will not be for everyone. There will be some who do not want the inconvenience of having to apply a lotion. Also, there are lots of indications, such as menstrual pain, multiple joint problems and pains in inaccessible areas where Pennsaid will not be the first choice. Then there will be the approved uses such as osteoarthritis in 1-2 joints. In this category there will be those who can not take other drugs (due to contraindications) and there will be some who would prefer taking something local (Pennsaid) vs systemic (pills). However, there will also be indications where although not approved for use (i.e., not osteoarthritis) physicians would consider prescribing it. For example a sprained ankle/knee/wrist, a sore shoulder/elbow due to overuse etc. Perhaps even pain due to something like Shingles -- my guess is Pennsaid would be good for something like that. So, keeping that all in mind, I would hope that with the right marketing/promotion and physician/consumer education, Pennsaid could get upwards of 10-15% of the market. If they could achieve that over a couple of years, they will be very wealthy. MB

To: Claude Cormier who wrote (8221)	12/15/2001 5:37:24 PM
From: Montana Wildhack	Read Replies (3) \| Respond to of 14101

Claude, You were asking about a realistic US market number regarding the 5%. I've attached a grid in Cdn funds based on the 6 billion US figure. The horizontal is the percentage market penetration, the vertical is the percentage we get from J&J, and the numbers are gross sales Cdn funds in millions. 1 2 3 4 5 7.5 10 15 15% 14 27 41 54 68 101 135 203 17.5% 16 32 47 63 79 118 158 236 20% 18 36 54 72 90 135 180 270 22.5% 20 41 61 81 101 152 203 304 25% 23 45 68 90 113 169 225 338 27.5% 25 50 74 99 124 186 248 371 30.0% 27 54 81 108 135 203 270 405 From this I'm using a 33.3% direct cost (so 60 million in gross sales creates 40 million in gross margin). The reason we have been discussing 5% is that in the absence of hard information the most prudent thing to do is plot out these types of scenarios and assess their effects. From the above a 5% market penetration with a 22.5% share from J&J should create about 50 million towards profit based on today's expense rate. (101-33-18=50) Since this translates into something in the neighbourhood of $1 per share net earnings and a $20 stock price plus or minus - its extraneous to use higher values in investing $4-5 without concrete information. In the absence of information the only value in a predictive model I can see personally is in providing an outcome array against which you plot minimum requirements and probability. I need 50 cents EPS plus to get a decent payoff of my $4 investment over my timeframe. That starts happening above the 22.5%/3% range. I assess the probability of getting FDA as very high, the probability of getting 22.5% from J&J as high, and the probability of getting more than 3% of the US market as very high. When I add in the double digit market growth over the patent life and the UK/Cdn/Italy markets - my decision is made. Just my opinions. Wolf BTW - risk on this investment dropped at least in half this week and cash will not be an issue before launch.