Ann: Deferral of FDA consideration of enforcement discretion, page-100

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jossette

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10/08/22

12:26

Post #: 63031402
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Originally posted by werdplaya58: ↑

Thanks, very useful article for getting a read on the situation. Few interesting quotes that give some credibility to your interpretation.

As you stated correctly, the A2 committed 1M tins towards this:

"The a2 Milk Company stands ready to aid U.S. families and their babies during this critical shortage of products with high-quality infant formula both in the short and long term,” says Blake Waltrip, U.S. CEO for The a2 Milk Company. “We have 1 million tins (approximately 27 million 8-oz. servings) committed through the end of the November discretionary period and one of the largest capacities to provide long-term benefit.”

And it is dubious whether some of the other approved suppliers can deliver the quantities they promised:

"U.K.-based Global Kosher was supposed to be more than a quarter of FDA’s 18.4 million can total. Just last week the agency suspended Global Kosher’s enforcement discretion saying it had submitted altered paperwork."

"Now that Global Kosher 4.8 million cans have been suspended, Care A2+ has the remaining single largest quantity promised, also at 4.875 million cans. It’s an opportunity potentially worth millions of dollars in U.S. sales. However, according to IRI, the 2021 startup sold slightly more than $164,000 worth of product (retail value sales) in the 12 months ending June 2022 to Australian grocery and pharmacies. The prior year to it was $31,450 in retail sales values. It’s a fraction of the volume promised to the U.S. market."

So, I don't think your interpretation is crazy at all. However, it has to be squared with the fact that the shortages appear to have eased at least somewhat, and that A2M CEO has come out and expressed disappointment about the deferral (which suggests they are not confident either). It's clear to me the FDA is a total shambles, so anything is possible at this point.

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hI Werds,

the current short term FDA opportunity is worth circa NZD$25- 27 million in sales (1 million tins) and $5-6 million in profit( less any extra over overheads). Not a game changer by any means.

the big kicker is if FDA grants permanent access and A2 would be able to sell IF ongoing, you could see this growing to 5 million tins a year business i.e NZD$125-150 million sales and $25-30 million in profit.

A2M Price at posting: $4.69 Sentiment: Buy Disclosure: Held
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