Member Info for shandypants2

Thanks for all the number crunching Big Bite - much appreciated.

For me the prescription growth numbers seem quite reasonable going forward and i am reasonably confidence these will be hit, my concern is the net revenue received for each pack as this has remained stubbornly low.

Although i can see this increasing from now the rate of increase will be key - it is interesting that STX are saying they are hoping/expecting total revenues of c$120m in 2025, so based on 500k prescriptions that $240 per pack. Less than the $258 as per previous estimates in 2025, but still a little high IMHO.

Based on the $3.3m monthly cashburn and with a gross margin of 45% (this is the 45% to Viatris, 5% costs and 5% royalties) they need to be receiving in over $7m a month in total revenues.

Ignoring all the potential one off payments that are due (China payment was due about now and is now expected in 2025!) it shows how crucial the net prescription price is.

At $150 they need almost 50k per month and $200 it is closer to 35k.

The 35k monthly prescriptions will probably be obtained in Q4 2024 as per their cash breakeven target .

In terms of the Viatris payment once $100m annual revenues are reached is this measured as per calendar year or financial year, or is it just rolling?

Any thoughts on the loan repayment? My read is that whilst they are growing well and are EBITDA they are still struggling to generate cash.

The expensive loan taken out last year was not well received (c50% SP drop) and needs to be repaid May/June next year (plus the interest).

It appears the only way this will happen is via re-financing.

Until this is cleared up i think the SP will stagnate.

This is clearly key for STX.

Looking at the RNS and the presentation we are burning $3.3m per month and receive 45% of all US revenues, so to cover the outflow we need c$7.3m of revenues coming in.

Now a lot of this depends on the net prescription amount, which is currently only $119 and should be nearer $250.

If STX can get this up to $200 then they need 36,500 prescriptions per month. If it is nearer $150 then we need c500,000 prescription per month.

The 36,500 figure is interesting.

Assuming 20k prescriptions per month by Dec 2022 (currently about 12k for Sept i think) if this is to rise by only 5% by per month throughout 2024 (so 21k in Jan 2024 etc) i get c36,500 by Dec 2024. Incidentally this is c335k for the year and the presentation says they are targeting 350k, so this figure seems very achievable.

So the crux is whether the net prescription amount can be increased in the next year or so. It appears the supposedly experienced CEO is at fault here. It appears the insurance route can be quite complicated from a paperwork perspective so some doctors are just opting for the cheap $25 starter packs. These are meant only for those patients not covered by insurance. He says he will introduce a Field Access Team to ensure those covered by insurance are helped with the paperwork, and this is what he did at another company. If so why didn't he introduced this early and why was it such a surprise - hence the need for further fundraising. Having worked with salespeople their job is to sell, they are not bothered about prices and margins etc, it is purely a numbers game for them. If there is a cheap route available they will offer it.

Anyway, the company now has a clear path forward and it appears sufficient funding to get this company profitable.

However, I must say i am not warming to the CEO. Under his leadership the SP has dropped almost 90% and yet all we hear are how positive everything is. Even yesterday he mentioned the excellent performance in 2023 despite missing their own targets.

He rarely answers questions in the Q and A at the end, and when he does he clearly picks the easy ones - it is a 60 minute presentation and he cut it short at 45 min.

Plus all his massive salary and bonuses (he got a bonus for arranging the 6p fundarise last year!) free shares just for staying in his job and his lack of share purchases leaves a bad taste.

kc - this is now the 3rd fundraise that imho has been badly handled with retail investors again the losers. don't forget this first came to them market at 150p.

it doesn't appear any of our bod are participating, which if true is a disgrace.

anyway, as per the dec 2022 fundraise doc, 2023 total prescriptions estimates were 144k, 2024 were 395k and 2025 were 580k.

these are the company's own estimates, however, i appreciate these are an estimate and this is not an exact science.

we know 2023 will not be hit (i think convincing doctors/clinicians is taking longer than we would like and then when they do prescribe it in small number to see the results, which can take a further 3 months), however, based on my *** packet estimates 2024 and in particular 2025 look a little conservative, especially as repeat prescriptions should be really adding value by this point.

stx has repeatedly stated that 2025 total revenues could be $150m. based on there 580k prescriptions that works out at $258 per prescription. this is clearly assuming almost everyone is paying full price via insurance.

based on today's average prescription charge and the number of people covered by insurance (i think it said 130m - but there are over 600m people in the us) this seems a bit on the high side.

however, even at $200 in 2025 this would be a very profitable year for stx.

Now the dust is settling on a couple of strange days let's look at where we are.

Despite being told only 2 months ago there was sufficient cash to get us to break even it now appears this is not the case and an extra $20m is required. This is not the 1st time the company has failed to meet its own targets - don't expect an apology from the CEO BTW, he only does positives.

Anyway, prescriptions were c10.8k in Q1, 15.5k in Q2 and now c28.4k in Q3.

If we continue at 25% increase for each month in Q4 that's c55k , so about 110k in total for 2023 (for info i've assumed 11.7k in Sept, so 14.6k in Oct, 18.2 in Nov and 22.8k in Dec). Whilst this is within their new estimates for the year it is less than those previously published (i think this was c125k to 160k).

If 2024 increases by 'only' 10% each month (currently we are c26%) that would be 25k in Jan increasing to 71k by Dec 2024 and c500k prescriptions in total for 2024.

The big disappointment in today's announcement is the net prescription received. It has dropped to $119 whereas the target is $220 to $240. Whilst the net price is $250 per prescription for those not covered by insurance it is sold at near cost so the clinician can at least test the effectiveness of the product on their patient(s). This should be a short term option only before moving to full costing and should not impact all customers. Something is clearly not working here.

Anyway, let's assume the 2024 average price is $150 per prescription (hopefully it will be nearer $200) - on 500k that's total revenues for accufer of $75m. Assume STX get 50% of this plus other revenues we should get a minimum of $40m for the year. Current costs are c$35m a year so assuming these don't increase it's a small profit and the end of the cash burn - yippee!!.

This is the tipping point for the company. If by end of Dec 2024 monthly prescriptions are c70k per month then 2025 should see c1m for the year.

At say $200 per prescription that's over $100m rev for STX.

Good update? They missed their own 2023 targets by quite a margin and revenues will be much lower as the price per prescription has actually reduced rather than increased. The latter is very concerning IMHO.

Now more as their own breakeven target is clearly not achievable.

Other than that it's great

****nal - if sales re lower than expected then it will be a distressed sale so can't see how this is a positive.

similarly, why would viatris be interested in a purchase if sales are not good?

essentially they've already got 45% for a £5m upfront fee. not sure they would bother increasing this unless the price was right. if the price is right, it won't benefit shareholders.

Things must be looking positive here if our old mucker is coming on here , in addition to his usual ADVFN posts, and trying to post a few negatives.

Good job i didn't take his TLY advice.

Just watched the Investor Meets presentation.

Slightly underwhelming as per the results and even the CEO looked a bit bored.

They did answer the questions in some detail though which was nice to see (and hear).

Hopefully H2 will get us to a small profit for the year.

Barn - they will not be profitable in 2024 IMHO, although i expect the loss to be massively reduced.

In H1 accounts marketing costs increased form £1.8m to £2.5m - almost a 40% increase.

Why do you think marketing costs will not increase further based on previous numbers?

If the products are so good why are the marketing costs over 50% of total revenues?

This is a bizarre business strategy

What safety net? If sales revenue does not grow as per the companies (new) predictions, which have been wrong many times before, then they will run out of cash. Surely it's that simple.

The Viatris deal seems to be much better for them than us. They get a large % of revenue for next to no upfront costs.

If sales are lower than we would help, Viatris still get their %.

Cash down and balance sheet weakened?? Not sure what you guys are looking at. Cash flow statement shows that the business generated over £200m in H1. However, investing activities shows they put £110m of this into a term deposit.

So £110m out of cash and into trade receivables (money they are owed).

Overall Net assets have increased from £573m to £709m and perhaps the better measure is net current assets (including cash) which have increased to £648m from £524m.

These are fantastic numbers IMHO.

Very underwhelming update IMHO.

Similar to last year in terms of loss in H1 which will hopefully be reversed in H2, and growth in Germany has been offset by a reduction in the UK.

Still very lowly valued so happy to sit and wait.

Last year we had a trading update in Sept and final results in October for YE 30/6, so we are overdue an update.

Back it June when the disposal was announced we were told

"the Group has continued to trade well and we have had a strong second half to the year which ends in June 2023 and we expect to report overall trading comfortably ahead of last year".

Hopefully the one off disposal costs (legal fees etc) will not be excessive.

For comparison H1 last year was £2.4m revs and a £300k loss. So £3m rev would be a 25% uplift.

Just getting to breakeven would also be a decent outcome as H2 is always the larger weighting.

IMHO anything above £3m and a small profit would be an exceptional performance.

Don't forget the train strikes will still be having an impact.

Barn - what's the saying an out revenue being vanity and profit being sanity. That sort of sums up BRSD.

Yes revenues are growing but the marketing costs are excessive and are still increasing - over £2.5m p.a from £1.8m last year. A silly amount when total revenues are only c£4m, hence the massive losses and the regular fundraises - despite what the BOD have previous said.

Based on current spending i don't think the current placing will be enough to get to breakeven as surely no one will buy via the open offer at over 5p when you can buy in the market today at 3p.

Maybe WeShop will come good, but i've been waiting for a few years on that one.

Strange timing - why not wait until 7am tomorrow.

revenue growth and gross profit increase looks good, but still making excessive losses (over £2m for this 6 months) and marketing spend is now £2.5m, almost as much as the gross profit.

Cash burn is reducing but with £1.3m cash in bank and there are a lot of trade payables on the accounts so i'm not sure there is sufficient cash to get it to cash positive.

Yes, very disappointing. I thought Cyprus was very copper heavy and once the JV was agreed i thought it was nailed on.

Clearly not.

HC - nothing wrong with selling, but we already knew the results (trading update on 26/7) and they were very good, so when these were formally announced it was pretty obvious they would be well received.

It was implied yesterday that the results may not be that good - clearly unfounded speculation, as has been proved.

Surely, if you are selling you want to do so at the highest price possible. Waiting 24 hours could have got you an extra 6 to 7%.

Well the deferred payment for the disposal hasn't gone down well, despite the excellent price - a £7m business elling 1/3 of its EBITDA foe £7m looks excellent business IMHO.

So what will get this moving?

- Good H1 numbers (with limited one off disposal/consultancy costs) and a healthy cash balance will be a good start

- use this money to make one or two decent acquisitions to complement the core business

- receive the 1st payment 9 months after disposal (so end of March 2024)

- get the £1.3m paid in July 2024