sorry - was busy trying to buy some TIS earlier so couldnt detail my post.
A number of people on many a forums have asked for details of the agreement. I am of the opinion - its best kept a secret. I have some very compelling reasons for it.
The most important reason is that of a takeover threat - This is not something that too many retail investors are worried about because a lot of retail investors will be happy to walk off with $1.20 if an offer comes by. Most long term investors, large holders and even senior management would even shudder at that thought. I do too. I dont want TIS to be sold below double digits (before the decimal point i.e.).
Did you know - The next 10 months will bring generic versions of seven of the world's 20 bestselling drugs. The magnitude of this wave of expiring drugs patents is unprecedented. Between now and 2016, blockbusters with about $255 billion in global annual sales will go off patent ??
Did you also know - Most large Pharma's are stacked with Cash !!
Did you also know - Most Large Pharma's dont give birth to their next best selling drug - These are concepualised and brought to life by companies like TIS. And then Big Pharma's partner or take over these companies and make their ownselves bigger. Thats the standard growth plan in the Biotech industry. Its either buy out a company with a new formulation and get a patent or wait for the patent to expire and come up with a generic.
How does this stack up as far as TIS is concerned - I am actually quite worried about a takeover - and the management think the same.
Take this "over simplified" scenario (for those wanting micro details of the deal) - The Management gives full details and says something like - We expect to achieve $1B market share within 4 years. We expect expenses of about 40% and the balance shared between partners. So TIS gets about 30%. We also expect to go Cashflow positive in Q2 2013.
Guess what - The above details have given enough information to small retail investors (even holding a few hundred thousand shares is small) .. they can go to bed happy after the SP jumps 30%. But the company itself has just become a large red dot (TARGET) for most Pharma companies who are either in the wound care segment or wish to enter it.
The Big Pharma's would look at it and say partnering with Quintiles .. the numbers or timeline couldnt be way off .. Quintiles are BIG and Credible and have a reputation to protect than escalate numbers to unrealistic points. And then the Big Pharma CEO would say "Crikey .. ThIS is VERY VERY VERY cheap" .. We can get it for $150m now and recover all of that by max 2014.
Anyone who has been a part of the Cochlear growth story would know how secretive they were and kept pretty much all information very close to just senior management. There was a reason. When you have a game changer in the industry - you'd want to realise an optimum potential before being steam rolled by a takeover.
I believe Dr Mercer and team have done well to keep us under the radar as well as give pessimistic numbers when questioned - like a "few hundred thousand revenues in 2012" ..
Bottomline - You need to do your own research on the wound care market - put VitroGro into perspective - Read Trial results - Hear what Prof Harding has to say - if you have friends in the medical world (I have tons) .. get them to read and give you an opinion on the product and only then invest. If you are investing for a quick buck - Biotech should not be your industry.
If we want any more details from Senior Management - We probably dont have enough experience in how business is conducted in this world. Think about it - They bleed with SP falling as much as we do - and they wouldnt do it on purpose unless its for a larger good or they are seriously incompetent. Having met most of the senior management of TIS .. I can say with certainty they are nowhere close to the word incompetence.
Some of us here would be happy to double up on a coal stock (I bought one yesterday .. lol) which comes up with a JORC of a few billion tons - knowing well that a mine will not be built for next 5 years and viable recoverable coal will be much less ... and they probably wont even mine coal ever .. just waiting to sell off or get taken over.
I am happy TIS is quite the opposite. Enough said !!
The above is my opinion only - DYOR - No advice given or intended.
TIS Price at posting:
42.0¢ Sentiment: Buy Disclosure: Held
