Although there is no doubting (in my mind) the potential of AVH, this shareholder update was not encouraging for a number of reasons:
* FDA approval is taking longer than expected. With only 75% enrolled, what chance do they have of actually completing by end CY2012 and getting approval by mid 2013...?
* Sales are "only" up 88% on Recell, which by itself if a great sounding number, but in $ terms it's only around $500,000. That's pretty darn small given the transitional medicine this is supposed to represent.
* China, large market, still has to set pricing, so commercial sales still a while off.
* Operating loss was $5.2m, meaning costs are increasing dramatically, as they also pointed out, but with revenue at around $5.2m and losses of $5m then overheads are running at around $10.2m, which is a lot for the current scale. Guess you have to gear-up to get the growth, but they could run out of cash a lot sooner than one would hope, unless they see even more significant increase in sales. Note: I calculate they'll need around 100% year-on-year for the next two years or they run out of cash in 2014. It could be tighter than some think.
* The numbers look good, but when putting them through a spreadsheet it wasn't easy to correlate the $ and % figures. I get the feeling there's a fair bit of 'generalisation' going on with these accounts. Hard to know, but makes me a little uncomfortable.
All in all, as much as I don't want it to be so I get the feeling this could take quite some time to take off and I don't think we're out of the woods yet. Still, long-term... happy days !!??
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