At times I think we're well served to look at what I'll call the worst case scenario, the dilution of shares to the maximum authorized, 500 million. Let's say it's necessary to fund substantial trials to actually gain FDA approval for the MM and perhaps other drugs.
The key is that some, not necessarily all, of the products being developed reach market. Not each marketed product will probably be a drug, some will be considered nutraceuticals or cosmetics. The key is that they will bring in revenue to OWCP.
OWCP has told us they don't plan to manufacture, distribute and sell themselves, so we need to assume that they'll be getting royalties on sales for doing little more than developing the drugs, while other do the work that requires major investments in personnel and equipment to manufacture, distribute and sell all the products.
I know of many tiny biotechs who've taken in hundreds of millions of dollars in up front and milestone payments to get royalties running from mid single digit to low teens. I believe that OWCP could essentially do the same, but for simplicity let's say we get nothing up front, nothing in milestones, but just 10% royalties. How much money could we be talking about.
I certainly believe with the growth of legalized cannabis growing to the majority of the world, sales of our products will be into the billions for each product. Let's say in 5 years the summary sales of all our products reaches $10 billion. With 10% royalties we earn $1 billion. Even if our dilution goes to the maximum 500 million, that's $2 a share in earnings. The worse P/E I'd consider is 10, giving a $20 share price, the more likely P/E is probably closer to 30, making it $60 a share.
Of course it could be dramatically better, we could get billions overall in upfront payments and milestones, we may not need 500 million shares outstanding, perhaps 250 million will be more than adequate. The point is a case could easily be made for a share price in excess of $100 in the next 5 years, or less. My point is that while we may not be able to influence what the company does, if we give it enough time, we can truly enjoy it.
Gary
