prophase financials, page-43

Dhukka

My answer is it depends on what they're trying to achieve, and trying to envisage that is my basic problem.

We are told POH hopes to be cash positive within 12 months and that appears to be on the back of of Elixia. With basic running costs say $9m a year, that suggests profits from Elixia in excess of that by that time. Much earlier than that in practice, as the cash at 31/12 would be used up by about end April at historic rates of cash burn, and the $7m would last a few months only, how few depending on the cash consumption of the launch.

Tangentland makes a good case that the Australasian rollout will be via agencies/concessions, ie., an expansion of the Phusion experiment, refined by the experience gained. Very sensible,suited to the two person marketing/sales team (have they appointed the Asia salesman yet, I can't recall?) and low key marketing support reflecting cash constraints.

The trouble on this scenario is establishing brand awareness in a crowded market. At best, even assuming the distributors stick with it (and their window tends to be very brief if the launch isn't heavily backed), getting up steam would almost certainly be very slow. To get to the sales necessary to generate this level of net cash seems a very long shot.

A budget of $3 or 4 million (even that seems wildly implausible given cash resources) would not get much, particularly given the area to be covered.

So what do the Board have in mind, given it seems they aimed for a specifically low cash uptake? My mind says it must be down to developments elsewhere, but given the emphasis on Elixia I'm forced to dwell on that scenario & my problem is I simply can't see it.