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

To: Montana Wildhack who wrote (10518)	8/10/2002 6:21:53 AM
From: Mark Bartlett	Respond to of 14101

Wolf, <<I personally like the concept of partnering early for WF10 with someone like a larger pharma with a broad range of experience.>> I do too. I think it would get us the quickest and most extensive overall penetration and exposure. As importantly it would do the most good for the most people in the quickest way. MB

To: Montana Wildhack who wrote (10518)	8/11/2002 1:58:24 AM
From: Montana Wildhack	Respond to of 14101

At this pivotal time I see it as especially useful to spend effort sizing the implications of success to assist in making better investment decisions about the future in DMX (equally I have no elaborate plans for failure). Many investors will be watching any runup very closely with an eye to some selling, others are mainly here for the WF10 story, in my case I am here to reap JNJ's efforts with Pennsaid in the US. So its important for me to form as clear a picture as I can of what can be expected with a reasonably high degree of confidence. The low extent of success necessary was always one of the drawing cards for me. Because of the approach many people complain about my conservative numbers. I point to the probability of satisfying my needs. To each their own. I see a spike on success above $8.50 as highly likely. Keeping the stock after the announcements means the success of JNJ in the US has a large affect on your price and that's what I meant earlier by sizing the implications of success. It seems responsible taking some time out to consider what that means working with whatever information is available. And some is. The Market: We hear the US market is currently $8 billion US. We see the statistics about growth in the 15% range for the forseeable future. We hear COX2's are having some problems. Safety is a big issue. Topical will meet resistance. Some percent cannot take pills and have had COX problems. The Product: Pennsaid costs about $1 to make in full production (not substaniated but 10yrs in the industry and some digging cause me to use $1.50) The Company: Expenses are currently in the $3.5 million a quarter range. There are about 50 million shares outstanding. Revenue sharing should be in the 20-25+% range (not substaniated - as a ready to market product there will be a solid premium above the average. I use 25%) Expenses will climb as activity increases. Share placements in the US and OXO shares issued are likely. The Partner: Knows the patent life and will act accordingly. Would not proceed without a viable business plan. Incurs extensive costs in revenue sharing, upfront amortization, advertising, staffing, and logistics. Will undergo a period of growth to a mature penetration level (I have used 2 1/2 years). Chart summary and explanation: This is an exercise incorporating the above with the following assumptions - JNJ's efforts will peak at 3 1/2% of the US market some 2 1/2 years out. Nothing is considered but US based revenue versus 1.50 per unit of direct cost, and an outstanding share base of 55 million against the current expense base projected. The chart smooths out the 2 1/2 years into quarters. Most numbers are in millions. Note the currency. ............. Personal summary - I believe JNJ's efforts will be to claim 5% of the market in 2 years. I think the silence when the patent expires will be deafening because the niche is small enough and I hear the recipe may be harder to recreate than Col. Saunders. These are very conservative numbers I believe. I also believe this level of detail is minimal to make the statement that we have considered expectations and their implications. Approval of Pennsaid by the FDA is only the gate to this event. Good luck, Wolf Q from launch 1 2 3 4 5 6 7 8 9 10 Cal period Feb 03 May 03 Aug 03 Nov 03 Feb 04 May 04 Aug 04 Nov 04 Feb 05 May 05 Cum period 3 6 9 12 15 18 21 24 27 30 JNJ sales 1 3 6 12 22 34 49 65 78 88 Increase/Q 2 3 6 10 12 15 16 13 10 Increase % 200 100 100 83 55 44 33 20 12 Annualized 4 12 24 48 88 136 196 260 312 350 DMX in US 0.25 0.75 1.50 3.00 5.50 8.50 12.25 16.25 19.50 21.88 DMX -Cdn 0.38 1.13 2.25 4.50 8.25 12.75 18.38 24.38 29.25 32.81 Cst of Sales (0.04) (0.11) (0.23) (0.45) (0.83) (1.28) (1.84) (2.44) (2.93) (3.28) Gross Profit 0.34 1.01 2.03 4.05 7.43 11.48 16.54 21.94 26.33 29.53 Expenses (3.60) (3.71) (3.82) (3.93) (4.05) (4.17) (4.30) (4.43) (4.56) (4.70) Net Pr BTax (3.26) (2.70) (1.79) 0.12 3.37 7.30 12.24 17.51 21.76 24.83 Per Share (0.24) (0.20) (0.13) 0.01 0.25 0.53 0.89 1.27 1.58 1.81 Q over Q % 116.5 67.6 43.1 24.3 14.1 Price at 20x (4.75) (3.92) (2.61) 0.17 4.91 10.62 17.80 25.47 31.66 36.12 Production 25000 75000 150000 300000 550000 850000 1.225 1.625 1.950 2.188 Per Month 8333 25000 50000 100000 183333 283333 408333 541667 650000 729167