@Slogger
1) the Axiron stuff is fully paid for by Eli Lilly. Clinical trials, TV ads, sales marketing, regulatory submissions and legal appeals. 2 years ago Eli Lilly spent $150m on TV ads for instance.
2) I assume they won't win on appeal but I had an expert look at it and says it has a strong chance.
3) ironically they are doing other drugs as generics in the pipeline and the CEO has good experience here from Mayne Pharma
4) I think they will have to fund this legal work but I don't think it gets meaty on costs for another 2-4 years until there is a court hearing and you have to pay for experts etc.
5) Dividend cut to zero was dumb and means certain investors have to exit. They could afford $3m a year on dividend even if its token.
6) They have plenty of extra cash as when the decision to cut the dividend last year was made they have since had full freight of another $30m of cash flow. I am thinking going forward this will be only $5-10m in Axiron royalties.
7) Cost of pipeline R&D is $10-15m / year. They have at least 3 years of cash on this rough basis.
8) If they win the appeal it is party time because Eli Lilly will get a fully loaded account of profits but doesn't need to spend on marketing etc. Could be a $50m cash windfall for ACR
9) The pipeline of generics looks better than Mayne Pharma and its market cap is $1bn. This could be the upside for ACR in 3 years.
10) For these reasons I bought back in at $0.31
ACR Price at posting:
27.0¢ Sentiment: Buy Disclosure: Held
