Neo, Matt and Resourced,One thing is clear, none of you actually...

Neo, Matt and Resourced,

One thing is clear, none of you actually have much idea of where this Company thinks it is going! One thinks the charts show projected gross sales, another thinks it's net revenue and the third just throws up his hands and says we get no useful information. I rather agree with you, Resourced.

If we infer, from the Company's enthusiastic claims, that they're waiting impatiently for this product in the UK and Europe, then sales should take off like hot cakes. We can infer, from their sales spiel in the CEO's presentation, that some 50 -60% of the market (probably more) each year will be new patients presenting for treatment. These people will be able to use the TIS product as a first choice, as opposed to completing treatment with an existing remedy that they have already begun. Some of those may well change over if the existing treatment is proving ineffective. Therefor, the majority of the Market is, or will become, available to TIS during the financial year to 30th June 2014 - which looks like being it's first full year of trading, we hope!

Why the Company chooses to present projections on a calendar year basis, when its accounts are presented on a financial year basis and the Stock Market will judge it on the back of those accounts, I don't know. It looks designed to obfuscate.

Next, if the projections are actually gross sales then they are pathetic. By 30th June 2014 they should have reached at least a 10% equivalent penetration of the UK/European market, an annualised gross sales figure of $360M which ought then to be exceeded in the following financial year to June 2015. As I pointed out in my earlier posting, this figure is not reached in their projections until calendar 2017, and then only on a world wide sales basis. Clearly they aren't going to be asking much from Quintiles et al if that is the proposed lethargic progress of the sales drive.

If, on the other hand, the projections are for net revenue accruing to TIS - then things look more realistic.

Here's how we get to net revenue, the numbers are pure fantasy, but are to help in understanding:

Gross Sales $100,000 100%
Deduct: Eurogentec, cost of product
Catalent, fill finish, release
Movianto,logistics and admin.
Quintiles, sales
Qld Uni. of Tech., royalty TOTAL 85,000 85%

Net revenue available to TIS 15,000 15%


If the TIS projections are for net revenue, as illustrated above, then they are targeting the 10% equivalent penetration of the UK/European market by (say) mid 2014 - as I believe they should. Much better penetration then follows.

I use these numbers to illustrate because one TDA, some time ago, estimated a net return to TIS of 15% of gross sales. If he reads this it would be good if he could remind us how he arrived at this figure.

However, if these net revenue projections are to be achieved, finance will be required. We need the Company to show either that projected cash flow will provide the funds or that they have an alternative source lined up. Working Capital is required. Without this they will be unable to expand quickly to meet demand.

Finally, if the TIS projections are not for net revenue but for gross sales - then, in my view, they are heading for trouble. They are already going to be short of funds in 2014 and (I believe)will be out of funds by the end of the year. There will be very little in the way of cash generation from such a low gross sales forecast, if that is to be all that they can achieve. Additional capital raising will be essential and the share price will be very low. Returns on investment for those of us who hold shares will not only be diminished but will also be pushed far out into the distant future.

The CEO's presentation may have been adequate for a Marketing Manager, but it was totally inadequate for a CEO's presentation to shareholders interested in the Company's future and very unclear as to the nature of the revenue projections. Are they gross sales or are they net revenue?

Your thoughts, Gentlemen?