Notes from Conference Call 7/18/11
Tommy Johnson host.
Gave Brief Update on Company
Importance of being in Wilson, NC
• Necessary to have own free-standing facility for FDA approval.
• List of many other large pharma companies in area make a big base of knowledgeable people and cooperation from city itself is very good.
• Still moving pieces of equipment in.
• Have temporary lab up and running.
• New lab is in final stages and should begin construction soon.
• Last phase of approval on designs for manufacturing area.
• Current facility provides the ability to add another 63k sq ft of working space
• Will be adding another 5k sq ft very soon
Equipment and Facilities Update
• Currently equipment is capable of producing product, but only at a lower rate.
• Will need to scale up and install larger equipment during the next 6 months.
• Product will then need to sit for 3 months for stability testing
Claims Testing
• The product needs NO FDA testing or anything to bring to market, nothing to hinder it from being produced.
• Mr. Phykitt believes that this product is faster in blood stream and safer and more therapeutic than anything else in the market. He does not just want to claim that, but desires for it to be tested and proven.
• Must go to 3rd party testing lab and they will write the claims and do all and verify actual claims (more for FCC regulations in advertising rather than FDA)
• Howards phrase, “This will rock the industry”
New Product Lines
• Children/Teens – 81 mg everyday product (this is the biggest selling item in the aspirin market today)
• Daily regimen for adults
• Rye syndrome warning, has been toned down lately. Initially did not want to bring this to market yet, but feels now it is very important product to wait.
• This product alone will double any projected amount expected from the pain reliever market.
• New products will be coming out shortly after Aquaprin hits the market.
• New patents for Instaprin (includes the water) and device used. It has an immediate effect within 2 minutes. Hospitals and medical staff understand that aspirin takes 20 to 40 minutes to get effect from heart attack or stroke
• Instaprin will be available to consumers as well
• No samples of any product can be sent now. All production must be in working order to send out samples.
Marketing Plan
• When production begins, they are capable of manufacturing $40M product each year; but the marketing dollars will inhibit that amount of sales.
• The marketing division of Pharmstars will be actual employees and their own division.
• Currently Mr. Phykitt is making presentations to staff, doctors, meetings around country
• Just the internet sales alone to NH, doctors, nursing, hospitals – will surpass projections.
• Will market in local areas like Miami (Phoenix, Tuscon, Indiana, Ohio [NOTE INSERTED: GO BUCKEYES!])
• Through success in those local markets, large retailers like WalMart will be asking Pharmstar for their product instead of the opposite way around.
• The next step will most likely be regional sales, not necessarily national sales.
• CVS is very open to new products. They require new products to be completely paid for their first turn on the shelf. Howard said that is not a problem for Pharmstar. However, the company has to pay for all the adverstising that CVS does, so they are not prepared for this yet.
• Mr. Phykitt has done business with Walmart before - $60M a year with Walmart, Eckert (now Rite Aid), CVS.
• Product is still on track to bring revenues by the end of 2nd quarter of 2012.
Licensing Agreement
• An asian pharma company has shown interest in Aquaprin. They would want to have Pharmstar produce it and package it for them.
• Major pharmaceutical companies recently do more marketing rather than actual production of drugs.
• Has not concentrated on the international market right now. Don’t see the product being made overseas right now because of the strict conditions of production facilities.
• Eventually is open to a licensing agreement overseas to work with other manufacturing/pharma companies.
Submitted Questions:
How did come up with idea?
Soluble aspirins are known in world & major pharmas have worked hard, none stable, none taste good, none totally dissolve. In 1984 he was a COO in a company and someone brought the idea of that product. There was no required monograph or testing needed but the product could not stay stable.
Stability is a very great problem
He continued to work on concept and in the early 90’s approached by Dr. that had an idea for improving product. He still could not make that product stable, either, and it did not taste good and was not completely soluble. He continued to work on it over the years.
The true success is to make it consumer friendly in US
History of Granutech?
Granutech was not a public company at all, 100% privately owned by him.
Currently he has no financial interest in Granutech at all. Sold in 88 and then stayed till 91
Difference between Goodies Powder?
That is just aspirin powder, still an acid, acetasilic (sp?) acid doesn’t hydrolize completely, only 40-50% max, and also upsets stomach. Aquaprin is non-acidic, it is actually mingled with an antacid.
What are you doing to get the share price up within 6 months?
• There will not be any authorized shares to dilute into the market. Their plan is to NEVER do it. The reason is that the company raises money through Preferred Class D shares and with 1B shares, they have as many Preferred Shares to raise funding for all they need.
• Currently there are probably around 15-18M shares in the effective float, although the float is properly listed at 92M.
• As things are moving forward, no increase to authorized shares.
• The slide of share price is noticed by the company, although they have not been overly concerned with that slide.
• Pharmstar has begun to address that issue and will continue to address it over the next 6 weeks. Although they are still 12 months from market, their intent is to raise company awareness in an effort to keep shareholders investments strong.
• Cannot address shorting, probably not actually true, anyway.
• There are currenly 4,000 shareholders of PHAR. 20 of those have over 1M shares. 85-90 more shareholders per week are being added.
• As far as accumulation, the top 50 shareholders keep buying shares while the ‘bottom tier’ are usually selling.
• Goal right now is to get more eyes on the company – long term interest in company.
Presentations around country?
• Currently setting up meetings with Dr groups with the goal of getting them to promote product when they see the value of it. Then, the medical profession will be squarely behind the product and verbal about how much better it is than any other OTC pain reliever.
• End August – large group of pain doctors in a convention (could not understand where). When pain management physicians start prescribing it, sales will be big. Then people will want to and buy it for themselves.
• Also, introducing this product to doctors brings in an entirely new class of investors. These professionals will be very willing to invest in the long term, not days or months.
If Pharmstar Were Bigger?
• If a big company, would take years and years to get it to market. But right now, they are just starting to look at Pharmstar and its product.
• Howard Phykitt has experience in doing what he is currently involved, taking a company from the ground floor and getting it up and running in 6 months. Now, with FDA regulations, you have to add another 6 months to the process. This is extremely fast for any pharma company.
Do you want to get to the OTC Board?
• Yes!
• Process requires 2 years of audited financials. Their plan is to begin around 4th quarter this year, this way they will have 1 year of private financials and 1 year of public financials.
• Mr. Phykitt is already interviewing auditing firms and it is vital to employ the correct one. It should have a familiarity with the market segment and understand the process by which the company became public.
• After the independent audit, then the application process will begin. The auditing firm will probably be decided by the end of the 4th Quarter or 1st of next year and then it will require 2-3 months to actually conduct the audit.
• It will probably take 6-9 months before Pharmstar is qualified to go to another board. But anyone can see the manner in which the company has presented their financials in a transparent and timely manner – usually early rather than even on time.
• The regulations have become very difficult and now very tight on companies, which they should be, but it creates more of a challenge to produce every document in the manner in which they require.
Can one buy shares directly from the company?
• No. Only a broker.
• Preferred D shares is only thing you can purchase from the company and these have a 1-year limit before they can enter the market.
Assorted Remarks:
All believe that Howard himself should be making presentations. He is the man who has this vision and is now taking it public. He also would be most qualified to answer the questions that the medical community would have.
New staff has been hired: a manufacturing VP (someone he has worked with before and had a good relationship since 1978) from Glaxis/Smith/Kline (sp?) and 1 individual for R&D as well.
Also the VP of Administration has worked with Mr. Phykitt a long time.
At first, Howard will need to be involved in the production process to ensure it is absolutely correct. However, the staff will get to a point that operations can continue without Howard being actually there.
Pharmstar is not only going to be an Aquaprin company
They are now working on a sports drink, where the cap has the product in it. They look to release this in 14 months and are working with a company in NY in a joint venture, this will be a big product as there is a large market for this.
The company has engaged Steve Martin as an investment consultant and plans to be working with him for a long time.
Mr. Johnson noticed on IHub that there is now a PHARmily, so, to all the PHARmily, good luck and thanks for investing.
AI
