Hi, fox -
"I hope that these thoughts will generate an open discussion of my concerns. Fox."
I think that this thread is exemplary; all the more so because investors like you are willing to post negative views, in the expectation of fair debate.
By that, I mean that when one's opponent on a question states something that has undeniable weight, that scores heavily against one's argument - it is expected that one will concede the point: or, at the very least, acknowledge it, and try to explain it.
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In replying to your post, I'd like to preface my comments with this.
DMX, the investment, is a Contrarian Exercise. By definition, there are aspects of the investment that do not meet the approval of the majority of investors.
DMX, the company (and the business), is presently in a transitional state: from strictly R+D to manufacturing, marketing, and distribution. That is, 2 major drugs have completed P3s. One (obviously, Pennsaid) has received "some" regulatory approval. More awaits (we hope). WF10, the other, is still assembling data: the submission to FDA (and presumably others, eventually) is some time in the near future.
I think the important thing to note about this "transitional" state is that it it's incomplete, and the "edges" are a little fuzzy.
Freedom35 stated it well:
"IMO, Dimethaid is a young pharm, and as such, will
experience many growing pains with respect to regulatory
approvals and agencies. This is to be expected."
Cal Gary took a different view of the matter:
"The company that made a mistake is Provalis. They obviously won the distributorship, perhaps with a good presentation, promises, good knowledge of NICE (missed by a few months on that one but hey..) I would offer that many companies and individual enter into agreements that they do not Completely understand (or think they do). If they did so, then they would have modify/optimize their operations in order to full fill contractual obligations.
For example, many oil company's drill 'dud' wells or perimeter test wells (spend much money) that have no chance of proving up anything economic. They do these silly things not to confound the masses, stakeholders nor their competitors, but to comply with lease agreements and gain extensions, etc.
Much have been said that "UK sales" is bad. Yes, but I think the better way to view this is Provalis did not buy enough Pennsaid by March 31 to full fill its quota established in the distributor agreement.
It is too bad that UK sales are 'bad'. The fact is their 42 sales people and management did not get it done by selling Pennsaid from their inventory (not DMX's inventory) that they are obligated to buy from DMX.
Provalis had a great opportunity."
I took the view that, while we didn't know the reasons Provalis had been chosen, yes, it appeared to be a mistake, but a non-critical one. I also repeatedly cautioned that everyone - everyone, Company and investor alike - had seriously underestimated the difficulties in penetrating both UK and EU markets with a new topical for OA. That initial estimates by everyone had been far too optimistic.
I want to repeat that, because despite Provalis' evident failure, we don't want to revert to our previous over-optimism when a new distributor arrives.
It's still not going to be easy. EU and UK are tough nuts to crack for a new OA topical.
Maybe at some point I will repost the research that proves this is the case. Let me know if you consider this "not easy" statement unproven, or if you have done the research.
Finally, let's not forget that the UK/EU approval/distribution effort was begun in parallel to HC/FDA approval and subsequent distribution.
In other words, DMX attempted (but has not yet succeeded) to get sales going in other jurisdictions, while waiting out the lengthy FDA/HC process.
So, no matter what one's judgement about the success, it's clear to me that DMX was trying, in every way, to get sales going. That is, we can't fault the effort.
My personal view of DMX's position was stated perfectly by freedom35, so I won't repeat it.
I'll summarize my thoughts about your post by saying that the concerns you express have occurred to every intelligent DMX investor. They have weight, and they are worthy of consideration, not only for their specific importance, but also for more general considerations about management's conduct of DMX's business.
Every now and then, I stop and take two steps back: I look at the oft-posted industry-standard timelines to approval (from beginning to end) - and I see that DMX is still well within those norms. I look at what's been done, and I see considerable evidence of a commitment to success.
And finally, I view the question of the eventual outcome of these manufacturing/marketing/distribution arrangements as still unclear: what we saw a year ago will probably be vastly different in 2 more years.
I still don't believe that a pessimistic view is necessarily correct. I agree with you that some warning flags have gone up, but the transition phase is still far from complete.
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Fox, if you don't mind, just some more "general" thoughts on DMX.
It ain't easy. I have voiced, here, and "there" concerns that echo yours in different ways.
DMX is not a "perfect" company, and there are areas where the investor is exposed to considerable risk, and considerable doubt.
I view the investment as the sum of the probabilities: not just the drugs, not just the management, not just the markets, not just the mistakes, and not just the progress, not just the deviations, and not just the norms.
There is always the danger (for instance) that in judging the company as a "still-young" pharma, that we will forgive too much. That one will have just a little too much faith, and not view critically enough what one sees.
In so many areas, as investors, with precious little help from the company, we have to evaluate properly what is arguably the greatest Contrarian Investment in Canada.
Like everyone else, I have my bad days, when I look at the investment with a very negative, and jaundiced view.
But our responsibility, to each other and to ourselves, is to (again) "get it right" - not be too positive, not be too negative. To be well-informed. To always be open to sincere opposition, and to consider it carefully.
For that last reason, I want to thank you for bringing up the many questions in your post. I/we only responded to the Provalis/UK question; there were many more left unanswered.
To effectively discuss and answer each of them, in the fabric of wider considerations, would take a book. On the balance of probabilities, I still consider DMX a very good investment.
Your questions covered a wide range, on a comapny that is still in transition, whose drugs are still largely unapproved, and whose story is yet untold.
There are many possible negatives to DMX that are not yet proven.
There are many possible positives to DMX that are not yet proven.
It's just too early to tell: that's the risk, the danger, and the potential.
What you see is what you do: buy, sell, or hold.
Regards,
Jim |
