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Optimer Pharmaceuticals, AŞ Message Board

  • beameup_999 beameup_999 Dec 14, 2011 10:27 AM Flag

    A Few Facts Re: Earnings

    In an effort to understand the future earnings power of Optimer I reviewed the last quarters earnings report which covered the period thru September 30, 2011. I used the information contained in that report to project what the fourth quarters report may show. Here is my analysis.

    In the 3rd.Q SG&A expenses were $27 million, service fees were $2.9 million and R&D was $10.4 million, for a total of $40.3 million. It is not unreasonable to assume that 4th Q. expenses will be similar since the agreement with Astellas states that Astellas is responsible for all the costs of marketing the drug in their covered territory, with no SG&A cost to be borne by Optimer.

    On the income side, the product revenue in the 3rd Q. was $11 million but this was for only August and September. A full 3 month Q. would yield $16.4 million if Optimer sold the same number of scripts as the 3rd. Q. The scripts will only increase but I will simply use the earlier totals to be conservative. Their interest income for the 4th. Q. I will assume to be the same as the 3rd Q. total of $100,000.

    Also, with the approval of Dificid in Europe, Optimer received $68 million from Astellas.

    Therefore, based on the above, the 4th Q. income would be 68 million plus $16.4 million plus $0.1 million for a total of $84.5 million. The expenses would be $27 million plus $2.9 million plus $10.4 million, for a total of $40.3 million.

    The net income is therefore projected to be $44.2 million or $0.95/share versus a loss of $0.57/share in the 3rd Q.

    The company's net cash and cash equivalents as of the end of the 3rd. Q. was $129.4 million. The upfront cash payment of $68 million by Astellas increases that figure minus the amount spent by Optimer from Sept. 30 to early Dec.

    Bottom line, in my opinion, is the earnings picture is very good and will only get better as more scripts are sold and the European royalties kick in, not to mention the other milestone payments from Astellas. There is absolutely no reason for this stock to be lanquishing like it is. The fundamentals say otherwise.

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    • Few fundamental flaws with your logic:
      (1) Asrellas is co-promoting with OPTR not taking over promotions. Instead of 1 sales rep now there will be 2 sales rep detailing the same doctor. Therefore, OPTR cost for promotion still stays the same.
      (2)Revenue is the highest when stocking the shelves with inventory, subsequnt re-stocking of the shelves will be determined by actual demand. Therefore don't assume revenue will jump dramatically.
      (3)The consequence with recieving milestone paymant from Astellas is erosion of future revenues as Astellas gains marketing exclusivity in various parts of Europe. To balance the $68MM in payment you need to substract lost income to Astellas. Astellas do not give free money to OPTR.
      (4)OPtr sacraficed future income for upfront Astellas payment. Also, cash burn is at a greater rate since the sales force is consuming more cash than Fidax is brining in.

      For reasons above, that is why your calculations is waaaaay overly optismistic and well beyond any analyst expectations. I hope you did not invest your life savings based on your assumptions. Good luck....I like your optimism and nice story....

    • mikeadd Dec 14, 2011 6:47 PM Flag

      I think you add some more in cut expenses because they stopped the program on the "travelers diarrhea" drug, which I think was an IV-administered antibiotic. memory fails but I am sure they the next-in-pipeline development, which would add to total of balance sheet.

    • <<In the 3rd.Q SG&A expenses were $27 million, service fees were $2.9 million and R&D was $10.4 million, for a total of $40.3 million. It is not unreasonable to assume that 4th Q. expenses will be similar>>

      You will be in for a BIG suprise.....

    • Although you could be right, and I would most certainly hope that you are, I would put earnings at about 1/3 of what you're projecting. Which is okay because at this stage it is about revenue growth and NOT profits or losses.

      All of the above, just one man's opinion.