good news

Dr Reddy's sold $1.67mill worth of fonda for the week ending 4th of May (the most recent week for which data is available). This is Dr Reddy's highest sales figure since the launch of Fonda. The chart on the bloomberg screen looks bullish for Dr Reddy's (keep in mind that hospital sales are only just starting) and I anticipate $1.8mill of weekly sales within 4 or 5 weeks.

As previously stated, I anticipate ACL earning around US$28mill/year in profit from US fonda sales. When rest of world sales hit their peak next calendar year, I expect total ACL profit share to be in the region of A$35mill. All this is tax free until FY15.

Expect an annual dividend payment in the region of 8-10c beginning next FY (yes, buying at today's price, you are likely to recoup your entire investment in 4-5 years of dividend payments).

I think it could be argued that overall fonda sales over the next decade will be large enough to provide ACL with a very healthy income, but small enough to deter further generic competitors. Safety concerns with Pradaxa and other oral blood thinners, will also see Arixtra's market share maintained for many years.

Assuming benign macro economic conditions, I anticipate ACL oncology will list later this year with an initial market cap in the region of $50mill. The market is presently valuing ACL oncology at zero, so separation will likely immediately crystallise around 18c of upside for current holders.

I wouldn't be surprised if ACL also release some more positive interim data from the small cell lung cancer trial at around the time ACL oncology lists.

A positive phase III clinical trial result will see ACL oncology with a market cap in the hundreds of millions of dollars. A trade sale of ACL oncology on the back of positive phase III (colorectal) and phase IIb (small cell lung cancer) trial results is likely to be in excess of $1bill.

Bottom line: hold ACL for 24 months for a better than even chance of participating in a 1000% gain.