Not sure that you understand how the royalties model works here for ACR - fees are paid on % of net sales with Lilly taking the risk on margins. Yes - rebates paid will impact the net sales figure but that is trending down (my understanding anyway).
ACR's margins are a function of management overhead and research costs and a Monash royalty (3.5% of product revenues, expiring 2017) relative to the % of net sales and milestone payments.
My point is if you take a view on net sales - that drives the milestones and royalty payments. IF net sales grow strongly - then ACR starts to generate a significant amount of cashflow... as costs are not driven by sales!!!!
IF we get net sales growth, ACR margins will increase NOT decrease. Yes competition impacts the Net sales figures but that is all.
Take a look at the market share figures - going for 0 share to 14% in the space of a couple of years is hardly a disaster IMO!! most companies would kill for that sort of penetration!
As for the shorters - buyers and sellers make the market... we will see who is correct when the latest market share figures are released.
ACR Price at posting:
$2.64 Sentiment: LT Buy Disclosure: Held
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