Some good points mate. And I agree the colour of your holding will have influence on your sentiment. So too the dilution will take time to churn. However, I still think there is lots of upside for ZLD even with the potential dilution.
To start.
We effectively paid $aud 70 million for Hope™ 1 and 2. I assume this because thats what the ZLD market cap was at the time of the merger when the share price was circa 7c. So $aud 35 million for each formulation, and thats effectively accounting for full dilution, give or take. Thats a pretty good price for a formulation that would seem to treat the symptions of Autism kindly and effectively. The available market is huge, and sales in PA show it has lots of potential. So now its finally starting to be rolled out, it should pay for itself in a short to mid term.
Add to that Insomnia, oral health, and the Parkinson formulation that are to hit the market before the end of the year and I think the road to revenue generation has commenced. I fact its a lot of IP ownership and product in market for a $aud 86 million company. A market cap of up to $aud 200 million shouldnt be too much of an ask for the amount of product in early market space. This, to me at least, shows we could absorb the dilution and still have a bit of room for share price group even at this early stage of revenue generation.
The pipeline.
The ZLD pipeline is very robust and still growing. It reaches all marjor uses of the plant, and is protected with IP ownership. There is still cancer work being pre-clinical, and pain phase 1 and phase 2 to commence. So enough to keep generating growth and eventually more revenue.
ZLD also owns a lot of data, about patient interaction with formulations. This also has value.
While laws re cannabis medicine continue to relax, and whole of plant formulations become. more main stream, the pipeline, IP and data must make ZLD of interest to more established big pharma.
The dilution.
The biggest part of future dilution is performance triggered. And then only from sales from within the USA. All revenue outside of the States is non dilutive, so to speak.
This is incentive to the US part of management to get deals done. And i believe they are working towards this. It has been a challenging year though. It has also been suggested that the deals may involve more than just one product at a time.
So for dilution to be realized, we need to hit $1 million in sales, and the $2.5 million in sales in the USA ex PA. Hope sales in PA would suggest this should be easily achievable if the deals can be made. And remember this dilution is basically payment for the Hope formulation. So if those targets were hit today, at the same share price we would be worth $172 million. That doesnt seem too extreme for a company with a couple of million in sales in the USA, plus extra revenue in Australia and with 5 products commercialised and in market by EOY 2020. Share price would then grow in proportion of revenue and new product discovery.
You are right when you say other companies may outperform ZLD in the short to mis term. Some will, other wont. The joy of the share market. But, if the US managers pull off a few deals in a several states, ZLD may finally transition from penny share to mid cap company.
To decide what is right thing to do is a very personel thing. But it is important to act on your beliefs, and not those from hidden posters on HC. I am sure you have done exactly the right thing for maze. And thats whats really important.
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