From Page 78 of their annual report in PDF format, you can see how they spent $70M and were only able to increase revenue to about $15M. Their goal was to increase Moxatag sales, which got FDA approval, which is the medicine I used and it worked for me last year. There is some R&D that was lumped into SG&A, but it was less than $5M if I remember correctly.
From this alone, it seems they spent $45M over the prior year and revenues did not rise significantly enough to justify this expenditure. It would seem to me that it's not worth very much at all because the marketing needed to push this is way too much.
In addition, they don't have any way to make very large margins on the Moxatag product. Moxatag is sold with a "$20 maximum copayment" where you can buy it for $20 or less without insurance or anything. Moxatag is basically amoxicillin except it has less active ingredients and you only need to take 1 pill every day rather than multiple doses of amoxicillin daily. (This is how I understand it so far anyway) I bought it with this $20 maximum copay and I didn't use my insurance, so all generated in revenue from me was $20. This was at the retail level too, so what they saw would be even less. Basically, in order to actually sell the product, they're already required to sell it for a low price because of competition from generics that are IP-free.
Here's the question - how much is a buyer willing to pay for their FDA-approved drugs? Are they worth *anything*? Maybe the large marketing push last year has created a market that will generate $5-10M in revenue and $3-8M in gross profit by simply distributing it and not furthering marketing or anything related?
They owe money to many people, contractual obligations alone are $14M, and we don't have financials yet after December 2009.
I know I haven't quantified just how far away commons are from being in the money, but I think the first goal is to find a value for the things they have left. If someone can buy their portfolio and create a business that can capture the $3-8M in margins annually and be profitable, there might be value here. On the high side, let's say they make $8M in gross margin, $2M down to net income (insurance, taxes, accounting, legal fees, administrative, list goes on) and an 8x P/E ratio because of the risk involved with pharmaceuticals, etc., that's only $16M of potential for the sale of some assets (intangibles). I could see value from an established marketer selling this along with other products (if a salesman is already out selling, he might be able to present a portfolio of drugs rather than just 1) or value in the other unapproved drugs that I haven't researched and they halted R&D for. If there was value in a drug they halted development for, we would have seen interseted buyers already emerge though.
I've come to a halt on this and so if someone else sees why this is worth more, do post back. They have 2 other drugs in development, but at least 1 of them had research halted and the company took an impairment loss against it, so I'd say if they were willing to kill their income statement with that, there won't realistically be any value left.
I want to think there is value because in December, a major holder bought about 2 million shares at 42 cents each. It came from a sophisticated buyer and they had to have seen this coming...
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