re: Ann: Axiron net sales, quarter to 31 Marc... I'm surprised...

re: Ann: Axiron net sales, quarter to 31 Marc... I'm surprised that the SP has only increased 20%.

55% sales revenue growth over 1 quarter, and the previous quarter was 47%. Market size grew 35% over 2012. Rebates reducing throughout this year is probably responsible for part of the revenue increase. I would expect Axiron is stealing market share as well. Seems much easier to me than creams etc for getting a dosage right.

So this fast growth is getting Axiron closer to a big number and a big percentage of the market. Lets say that the sales will double every year until Axiron gets a decent part of the market.

So 4 times 37.1 is greater than $100m - so $25m in the bag within 3 months most likely. EL sold $16.3m, 23.9, 37.1m in Sep, Dec and March quarters. Needs 22.7 this current quarter to hit the target for $25m. The other $50m and $120m will be pulled forward if there is no change in sales trajectory obviously. That will be an unfranked div of 15 cps.

Also royalties are on a tiered structure increasing as sales increase. $AU4.4m on $US40.2m suggests a royalty of about 12% of sales approx with messy currency (and I'm not sure if the revenue is received with a lag). So this last quarter the royalty might be $AU4.2m. Annualised without any growth (unlikely) and you have $16.8m already (and the $25m). Double this income and next year it is $33m at the same tier. Double again in early 2015, and royalty income is $66m pre tax. Doubt income can keep doubling for too long, but it would seem that Axiron is looking at getting to a significant % of a growing market quickly. And then we have the rest of the world market coming along.

If Axiron gets to $2.2b per annum of US sales in five years time (maybe $8.8b total US market), that might be worth $440m per annum in royalties at 20% (no idea what the tiers are). That would be 25% of the market (we are already at 14.6% of prescriptions). Seems eminently achievable to me. $4b of market cap possibly just for one drug in one country at that stage seems reasonable.

GLTA - nobody knows what will eventuate - but looks good to me at this stage with this growth.