When interest rates are rising many small caps tend to be less attractive due to borrowing at a higher cost. Supg is a small company with cash on hand, royalties that will last for many years to come, and a high possibility that a wannabee drug may soon shows its face this year.
Excellent point. The key to any real growth will be the continued pipeline. Momtigen acquistion gave SUPG that door and hopefully they walk through it. SUPG pointed out at there last analyst meeting that they felt that they could introduce a new drug each year for several years. I believe Montigen purchase will reap benefits. Hopefully July 27th we hear more about MP-470, MP-529, MP-371. Mogn news will probably hurt SUPG today unless the numbers on Dacogen were enough to give investors hope of future growth. Looked like a good start of 5.2M in just a few weeks. I believe that was for JUNE only. Reorders already coming in. Needs to beat the 25M for 2006 sales projection and additional phase 2 & 3 need to show that additional uses for drug. If all this happens the shorters need to grab their shorts and wash them. Cash is king and sale of Nipent and other assets has a reason.....expect to hear why.
Cash burn should be very minimal. I would expect to see some profitable quarters ahead. Once Dacogen hits $25m/qtr in sales (2007), SUPG should reach consistent profitability.
With the RIF's in Sales/Marketing depts, the SG&A should be in the $3-4m range. R&D was $3m last quarter. Total operating expenses shoud be $6-7m going forward.
- Dacogen royalties - $2-3m (Q3/Q4) --> $3-4m (Q1/Q1) - Interest Income should be in the $1m/qtr range. - Mayne Pharma milestones - avg $1m/qtr - J&J/Cilag Dacogen milestones - avg $4m/qtr $23.8m divided by 6 quarters dev/reg timeframe
On average, SUPG should be generating revs of roughly $8-9m over the next year. Beyond that, revs could accelerate dramatically due to not only higher Dacogen sales by MGI, but also approval in the EU. Further, as sales stack up, the royalties received also go up from 20% to 30%, up 2.5% for every $50m in sales.
Lastly, the cash on hand should be helped by another announcement soon that Mayne will aquire the ex-USA Nipent rights. This was announced by SUPG as in negotiations at the time of the original Nipent deal. Should bring in additional cash upfront and a similar multi-year milestone based agreement.