Suda - my take, page-4

Good ost jag

I have put my thoughts down - as you will see they are not a lot different to previous posts. 

H i all

After a 5 hour drive in an un-airconditioned car (ute) with the ambient temperature at 32 degrees, not a lot of fun but such is my dedication to Suda, I didn’t have the will to post last night.

But it was a Suda filled two days with the HQ tour where we had time with SC and DP then breky the following morning with 5 other HCites and MS then off to the AGM.

So what did I learn from all this.

Lets start with the tour.  The space they work in is tight and we have 6 Chemists under Carol Wood all busy doing what Chemists do.  Before we moved around the building we had about 30 minutes in the board room with SC and DP.  It was the first time I had met DP and what was clear pretty much from the outset is that he is not what I would call enthusiastic.... no David Phillips would best be described as passionate about Suda and the space we play in.

He explained during the AGM that very often people who come from big Pharma struggle in the Bio space adjusting to the size and resource differences.  He pointed out both he and Andrew Curtiss had experience in both these fields which was a requirement to be able to deliver on Suda's portfolio.

I found David to be politely direct and where Steve bogs himself down in the specifics David is possibly a bit easier to follow.

The breky.  I always enjoy Mikes direct approach to things, if he does not concur with your view he has a way of telling you so that it leaves you with a new level of understanding.

We spent just over an hour together with other HCites during which time he reinforced something I had long known ... and that is most shareholders have zero and I genuinely mean zero idea of the amount of knowledge, hours, terms and complicated issues that need to be delt with in order to get just one deal over the line.  Have gave us a few examples of the things that can derail or hold up deals. Seriously this is not an easy gig to complete.  He also reiterated he had not sold a share.

One of the HCites asked him directly if Steve was the man for the job.  He has an enormous respect for the breadth of knowledge that SC possesses along with his work ethic.  He explained the number of areas that Steve needs to be across in order to keep Suda moving forward and it is extensive and would in his view be extremely difficult to replicate.  Mike said he would be the first to admit that Steve himself is far from perfect but Steve has covered his weaknesses by surrounding himself with good people.  In short he can see no other person who could take us to the next step at this point and Steve has his full support.  Future succession is of course always under consideration and will be dealt with at the appropriate time.  Mike has had only a limited time in his capacity as an advisor with Andrew but was extremely impressed with him.

The BF issue was raised with a question about how could management had got it so wrong, this was in  reference to Steves comments that it should not marterially effect the Company.  Mike pointed out that at the time these comments where made, (which were made with the best legal advice available at the time) that was the case, but as we all know things evolve.  The facts were the situation had changed dramatically and despite having been kept in the back ground it had now morphed into an unforseen anchor on raising capital which had the potential to sink the Company.  This had to be resolved and quickly and was in the end handled very well by Mike and Steve in my view.  

 

Give me a management that moves and changes when the stuation demands it any day over one that refuses to admit a previous stance may longer be correct.  It is pointless referring back to the original statement made by SC as it had no relevance to the situation 4 years on.

So to the AGM.  Where there any fireworks - no.  Was there any super hard questions from the floor - no not really.  Was the vibe any different to previous AGM's - for me, not really.  Except it was different.  Clearly over the past 4 years we have had a major issue with closing deals and now we have employed two people (David and Andrew) who between them can find their way into the upper level of management of virtually all the major Pharma's in North America.  Gone are the Bio Conferences when you are meeting with 40 Pharma's but the you are in turn only one of 40 hopefulls on thier meeting list.  Now it is a targeted and honed campaign which will do two things.  One, get the ear of upper management and hopefully lead to deals or two, allow us to find out very quickly if we are not likely to do a deal with the target and avoid wasting 6 months and valuable resources getting to that point.

This is a fundamental change where we begin our negotiations two thirds of the way up the Corporate ladder rather than at the bottom third as was the case previously which SC has put in place with DP and AC.

So the vibe of the AGM was familar but the faces were different and with that change comes a promise of a new direction.  From David’s presentation and answers to questions I get the impression that the cancer drug is likely to be a very sort after and could be a game changer, Suda are not going to progress this till they have the formula pretty much ready and are busy on this as we speak and will hopefully be ready early next year.

 

I can say that more than one person I spoke with believes Suda will become the subject of some takeover attention as they continue to ink deals.

Suda are still proving their worth and the recent deal with Strides is an example in point.  You will notice that Suda had granted the first right of refusal on a number of other territories which was a requirement to get the deal over the line.  This is not ideal as it will deter other potential partners in these territories as they would be loathed to spend six months and the associated costs to look at a territory when they have no gurantee that they will not be guzumpted by Strides.  I believe as we move forward are bargining strength will grow.

Dedpite the fact we do not often agree Bucky you do often ask questions which are worthy of an answer.

In relation to Sumatriptan and why the nasel spray sold for 60 million and ours for the same territory sells for just 400 US up front plus a further 800 US in mile stones.  The answer is that the nasel spray was a finished product and ready to go and the 60 million did not even cover the total development costs.  Our product is in a far earlier stage of development.

Have you heard of the PREA Rule, I know I hadn't, this is where any new product before it goes to market has to be tested on children in two groups, young and teenangers and you can kiss good bye to 30 mill doing this I am told.  Suda applied for a waiver to this rule but were unsuccessful.  Had they got the waiver then the upfront would have been muliples of what we got.  This had been completed in the nasal spray.

So was the chart to which you have referred to relevant - perhaps not but that is now in the past.

The second thing I wanted to cover off for you was your comment about how people knew the figures behind the Strides deal and you did not, where did they get them from.

The answer is vert straight forward.  The Company within the confines of the deal done with Strides, free to talk about the specifics of the deal but can not write them down anywhere.

One phone call to the Company and you would have been given this information, so there is no insider trading here, in fact the more people you can tell the better for all concerned as in this case it is the only way they can get the info out.

Has Suda turned the corner, well if we haven't then we are slowing down with our indicaters on.

I think it’s time for everyone to stop criticising the Company, and if you have a genuine concern then talk to DP if SC is not your cup of tea.  Either way, try to be informed so that if your concern is warranted then management can respond accordingly.

Unfortunately much of what has been posted, whilst understandably born out of frustration is not a true reflection of what is happening or is from an uninformed stand point.

It only takes a phone call.

Clyde