Genstrip itself is the security blanket. We know the demand is there and the selling of the product is what we can fall back onto. The strip itself can go into the tens of millions if not hundreds of millions in sales relatively quickly.
We make this assumption based off the conditional pre offers done two years ago in which demand for the genstrip far exceeded manufacturing capacity in a matter of weeks. And this was based off a much higher price. The new price will blow the door off sales, it will have enormous impact. Company projections were 1 percent of the market initially, but realistically over 10 percent is a good possibility.
So the product itself isn't the issue, that's potentially a golden parachute.
The real powerhouse and industry changing event is the intellectual property rights change that can happen as a result of the pending litigation outcome. That changes a 20 billion dollar market for everyone, not just jnj and decn. That shake up is the potential blockbuster company maker that most havn't factored into decn yet.
Two and a half years ago DECN was distributing over 30 million dollars worth of competitors product. The profit margin was about 8 percent at the time and the problem was the lenders overall interest to finance the distribution was close to 8 percent as well. The only way they could make it work was by doing alot more business, but in the end it was still favoring the finance company more then DECN who was doing the bulk of the effort. Now the answer to this was to find a product with bigger profit margins, but the ultimate answer would be an in house product utilizing the size of someone elses infrastructure. And this is where DECN stands today and it looks like they may have pulled it off. Depending on where consumers buy Genstrip, profit margins are several hundred percent higher then carrying someone elses product. Its a win for consumers and the company.
By bringing their own product to market, the pathway through litigation caused a destabilization of a 20 billion dollar infrastructure and caused several key points of law to come into question. These key points argued well by Pharmatechs and DECN's legal team were initially denied by their local courts, but subsequently overturned by the DC patent courts. This overturn is the basis for this massive power shift and is now the reason the whole market has potentially changed. The market is over 20 Billion and projected to be 50 percent more within 4 years. And thats just for the United States alone. The surprising thing is DECN and their sister Pharmatech is responsible for this paradigm shift. I personally have never seen a penny micro cap do this to a fortune 100 company.
Contrary to how the market looked, alot of large wealth was available and was waiting on the sidelines on how best to get into bed with decn. Im hoping decn jumped into bed with the right people with the best intentions for the overall business future, but many times if a decision is made with one firm it denies an opportunity for another firm. And if there were ten firms that wanted in the only way now is on the open market side. I have a feeling one jumped the gun that was denied earlier. The money flow has just started.
Leirum, you are an excellent chartist and explain things very eloquently, in the coming weeks and months i assume the daytraders will be here in droves and volatility will be the result. At that time your expert analysis would be most appreciated and i for one enjoy your technical analysis. I personally am a value investor, but am fascinated with how chartists utilize market psychology to guess the future.
There was a post earlier asking why jnj wouldnt drop the price of their product long enough to put decn out of business. That isnt an option, they wouldnt sacrifice 99 percent of their market in order to spite an up and comer. Also in that case a buyout would be a better alternative and finally once prices drop they cannot be raised again. Contrary to what many think, larger companies are under stronger fiduciary responsibilities and have larger boards to respond too and this is where being an oligopoly is like a double edge sword for them. The big 4 would have done that to each other long ago, but they cant and we all know why. This is also the reason why the intellectual uspto ruling for decn is so powerful, because they may have pulled the rug out from the whole industry.
To the question why a larger pharma wouldn't create a new value brand to put DECN out of business, the answer is they have done that years ago, and its called "One Touch Blue" , but they are still twice the price of Genstrip.
To the question why we are trading significantly higher then revenues, don't forget DECN exited their old business carrying competitors products to focus on their in house brand. The balance sheet was cleaned for this purpose. Don't forget in 1999 Yahoo was trading at 1200 times earnings. Today that stock price was still significantly undervalued based off todays valuation.
AI
