A note to those who are fretting about the average daily order rate "declining".
I've already gone through the math that showed why the 300ct bottles have lead to a drop in the rate. We all knew this was coming when the company decided to make this move. Now here are some key questions.
1) Taking the average of the average daily order rate (of 200ct bottles) from Dec 2012, Jan 2013, and Feb 2013, what level of 300ct orders can we expect (as a minimum) down the road?
Answer: Averaging the Dec - Feb 200ct data, we get 462.3 orders per day. Translating that quantity of pills into 300ct bottles, we get an average of 308.2 orders per day. Yet we currently stand at 344.3 orders per day, which is a 11.7% increase. Thus, based on the apples-to-apples comparison of pills bought, there is no doubt whatsoever that demand for Abloc continues to increase.
2) Everything else being equal, when would the average daily order rate based on 300ct bottles bottom out?
Answer: Let's assume that people started transferring to 300ct bottles on 1 March. Let's also assume that the average Abloc user has 2 months of supply on hand. Then 1/2 of the users will transfer during March and the other half will transfer during April. Thus, by 1 May, everyone will be using 300ct bottles, which provides 50 days of usage (at 6 per day). The March transfers will reorder in late May to early June; the April transfers in late June to early July. Thus, everything else being equal, the bottoming of the avg daily rate will occur during the late May to early July time frame. BUT we all know that new users are being added to the mix on a daily basis, thus it is my opinion that we will see ups and downs in the average daily rate over the next 4 months, with the underlying trend being to the upside. Picture an oscillating sine wave with a period of about 50 days, with decreasing crest -- trough wave heights, until the wave decreases to a inclined straight line. (Continued)
3) What is the impact on revenue of this change to 300ct bottles?
Answer: As with the daily average order rates, the daily average revenues will decline as well. Everything else being equal, this dip in revenues will occur right along with the corresponding dip in the order rates. However, given that we have seen that overall Abloc use is rising, the impact on revenues will be LESS than what might have been expected with a straight 2-for-3 bottle substitution ratio. Therefore, it is my opinion that revenues will bottom out SOONER than the average daily order rates will bottom out. All it is ... is just more new users!
4) When do things settle down so we don't have to do math anymore?
Answer: Around Sept - Oct time frame, at which point we can compute comparable month-to-month avg daily order rate increases, without the head scratching.
5) Finally, what will really help propel sales of Abloc? The release and publication of the thyroiditis research papers, at which point the medical industry will come on board, leading to healthy increases in Abloc users. I will repeat my underlying thesis for being invested in STSI: testimonials are great, but the science seals the deal. Have a good weekend one and all.
Chipper, while all of this is true, one should consider the Abloc cream will certainly offset some of the loss of revenue from the move to the 300 pill Abloc. Adding new products to the lineup always helps revenue.