Well I think we're all agreed and frustrated that RDHL is a company with great products, great pipeline but has been fantastically stupid with the HCR agreement.
I mean talk about shooting yourself in the foot. They knew the terms of the agreement and they knew what might happen if they didn't fullt comply. Now RDHL was usually later than the norm on they quarterly report publishing, so perhaps they felt a bit longer than their normal would be ok, but clearly HCR watching the general downturn in markets during covid and current inflationary situation, saw that they could just cut macro-economic level losses and get their moolah back pronto.
- Talicia, best product for H.Pylori
- Aemcolo, great option for TD
Both recognised as important therapies and for their contribution to reducing anti-biotic resistance (a huge and growing problem) with QIDP designation and years of exclusivities
Pipeline of effective Covid products as well as Crohn's new MAO treatment and potentially first real NTM treatment.
To be sitting at 17 million is a joke no matter how you slice it.
So what's the prognosis people?
Do we think HCR takes Movantik, slices off the debt?
Do we think the extra 8 million just a little boost to put them in better position when they are on the negotiating table for "Discussions regarding out-licensing of RedHill's products in multiple territories", which I assume mainly relates to Talicia?
Let's just note that in Q3,
- R&D was 1.6 million
- SG&A was 13 million (divided over mostly Movantik and Talicia I would assume)
- Net revenues was 17 million
- Operating loss was 7 million.
- Cost of revenue about 9 million
So just making assumptions here. We assume HCR takes over Movantik around year-end/ early Jan.
Then SG&A, might be reduce to 7 million with key focus on Talicia and some focus on Aemcolo?
R&D would still be about the 1.6 million mark
Cost of revenue also reduced without Movantik to about 5 million
Net Revenue: From my prior Q1 Calculations, I assumed about 4.5 million per quarter on Talicia. So perhaps with another few quarters later we might be on about 6-7 million per quarter sales now? Aemcolo has only been able to bring in US revenues relatively recently so we can't really speculate too much on that, but let's say a low 1 million per quarter. If so then Net Revenue might be about 5-6 million per quarter on Talicia and Aemcolo.
So looking at about 13 million out and 6 million in. So an operating quarterly loss still of about 7 million? In normal circumstance, it's not great but not terrible either. And operating loss should improve about 1-2 million over the next 1-2 quarters with greater Talicia and Aemcolo Rx?
I think this unclear future on the HCR debt and if HCR will accept Movantik in exchange for clearing debts is hanging over the SP. As for example HCR could not accept Movantik but require the full funds to be paid back now in cash. In the short-term disastrous as there isn't the money to pay it back, in the region of about 90 million I think. But if we can get news that HCR accepts Movantik, then while of course that is a blow to lose the main revenue generator, it will at least clear all debts and we know where we stand.
Regards this recent 8 million dilution, if the current thought was that HCR would not take Movantik, then the 8million would do little to pay back the debt. So perhaps this means HCR is generally on the track of taking Movantik?
Just blurbing thoughts out there as it's been awhile since I chimed in.
Great products, stupid management on putting themselves in this situation. Messing up your books so that you miss an important deadline causing this mess. Very disappointed in Micha which is where I feel the buck stops on the accounting books. Get paid handsomely, get the job done right and on time. 99% of every other company can do it.
Thoughts on the above in general?
