get ready for blastoff, page-12

Thanks guys.

ACR is an asset win a very rare sweet spot.

1) Sound technology;

2) Sensibly applied to a viable commercial opportunity;

3) Extremely strong and commercially relevant partner;

4) Very credible management;

5) A business model that is well suited to the underlying tax structure;

My view is that Axiron sales will surprise on the upside. Analysts price targets imply 30% penetration with 15% royalty; I think penetration will be more like 50%+. If this is indeed the case, then we are in for some considerable capital growth over the next year or so.

COH and RMD trade on roughly 22 - 25 x E. The ACR business model (for Axiron) is far less capital intensive but the growth opportunity is still there. We've paid for the development, now it is time to go into harvest mode.

Similarly (at least the way I understand it), ACR distributions and capital gains are tax-free - something that COH and RMD lack. Not sure how great an effect this will have on the yield, but it has to be a net-positive impact (i.e. lower yield / higher PE)?

I'm happy to wait.