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  • value_huntin value_huntin May 10, 2006 4:02 PM Flag

    10Q came out

    Looks like they made 6 cents. Sure beats a loss of 10 cents that was the estimate. They have $89 million in cash. Need to take a closer look. Think they put it out early to stop this madness.

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    • Coyote, You make a good point. QSC is currently selling at over 8X bk and over 6X sales and is getting some respect and had moved up nicely nearterm (although it too has had a correction with the mkt), while SVNT is currently selling at only 1.7 X bk and 3.5 X sales and recently moved down quite abruptly. Valuation alone is not enough. A poor to weak perception of mgt must be a major cause for this anomaly.'s not too late. Execute WISELY -not quickly or foolishly like in the Euflexxa deal- going forward and all will be well. That is, the stock moves up to 6+-7 land and the risk of a hostile bid becomes less likely and-more importantly (to you that is)- you get to keep your job and perks.

    • Justaguy has been advocating dumping Clement and putting him out to pasture for as long as I can remember now. And his reasons are always backed up with facts; to hire a new CEO with proven skills in management to straighten and turn this thing back to respectability before, God forbid, its too late. Although, this ever happening is highly unlikely, and this is really very sad, because he just can't cut the mustard!

      On this subject, I happen to have a decent position in another Pharmaceutical Company that did hire a new CEO on February, 2005. This new guy is transforming what was once a beaten down dog, going no where fast, back to some respectability, in a relatively short time span, that had been lost.

      The share price when James L. Fares, 43, came on board was $0.46 or so, and pretty much mired in the bowels of a sewer. Last friday it closed at $1.63, having been knocked down, at least in part, by market conditions, when it peaked out at $2.64, just recently. There is much more to be said here by Fares and Questcor Pharmaceuticals, Inc. (QSC), and how he is going about accomplishing what he said he was going to do when he was hired.

      The only reason I am bringing this up, is to get this point across. With any good sound management team at the helm, like Fares has created with QSC, along with some key new hires, many good things can and will happen.

      On a personal note, my shares have gone from a loss, to a decent profit.

      If Questcor can do it, then surely, SVNT can too.


    • Mcj96,

      I agree .. Clement needs to lead and have Horowitz, Yachmetz, Fink and any other senior VP's buy in the open market. But particularly those who just received the lucrative stock options and restricted stock grants. I'm a big believer that if you believe Puricase is a slam dunk then show it by a meaningful purchase.

    • Justaguy, If Clement buys less than 20K shares in the open mkt I will be very PO. Also, if he is unable to convince several other senior officers to purchase shares in the open mkt along side him, that AGAIN will reinforce the notion or belief by many that Clement has no leadership skills or influence on his "team". Actions speak louder than words. If Clement is the ONLY purchaser of shares nearterm, that- for me- should trigger a sale resolution from large shareholders. Enough is enough. Manage and lead the co correctly and by example or allow someone else the privilege and opportunity to do so. It's put up or shut up time.

    • < The fact remains that we went down .99 in a week and the co has record cash levels, lower G&A expenses, is generating earnings, will commence P3 in a few weeks and is planning to repurchase a significant # of shares either before or after monetizing RSMT. Why can't the co buy-in around 5M shares-right now-with existing cash ? We can later buy-in another 10-15M or so shares with RSMT cash. How about it Clement and Citi ? Buy low, sell high. >

      G&A was almost 50% of sales .. over $8.7 million and I believe the HIGHEST it's ever been. The only reason we have higher cash levels is the last payment from Ferring, payment for Delatestryl, higher interest income and payments from Abbott plus earlier litigation payments. Thye are not growing revenues and no analyst or institutional investor will be impressed with higher cash levels that are a result of the above IMO. And without all of the above they'd have lost almost 6 cents/share on operations .. it was in the PR and Clement verbally stated it also. In fact he pointed out the one time events would not be recurring. Ferring (payments) are now history. Same with payments from litigation, Abbott, Indevus has paid for all but a small amount of inventory.

      Re: buying back shares now ... I agree 100%. I've been saying they had the cash on hand since the Ferring deal to start the buyback. And now, with a 15% decline in the stock in the past week they have an "opportunity" to buy some back at a reasonable price. It'll be interesting to see if/when Clement buys in the open market as well as the company. And how much he (and SVNT) buys. They don't need Citi to tell them when to buy shares back IMO ... with $90 million they could easily buy back 10% (6.2 million)now for around $31 million ... leaving almost $60 million. And if Clement says they'll be cash flow neutral then he needs to put his money where his mouth is.

    • Value, I agree with you that our recent drop had little to do with G&A. Let's face it....we hit a closing high of 6.01 last week and then the mkt had a correction triggered by high oil,commodity prices and inflation fears. SVNT's beta by the way is close to 2, so we go up and down faster than the averages. Because SVNT's sales #s may have disappointed some holders, some sold or took profits. Also, some holders who may have started positions near the high in size or on margin, simply sold their entire position into the correction and into the earning's report. Who really knows? We went down I believe for many reasons other than G&A. The fact remains that we went down .99 in a week and the co has record cash levels, lower G&A expenses, is generating earnings, will commence P3 in a few weeks and is planning to repurchase a significant # of shares either before or after monetizing RSMT. Why can't the co buy-in around 5M shares-right now-with existing cash ? We can later buy-in another 10-15M or so shares with RSMT cash. How about it Clement and Citi ? Buy low, sell high.

    • It's a half price sale. I just don't think this drop was due to G&A. As far as what you consider slowing growth at Rosemont, 12% in local currency isn't bad. There was a much better conversion rate last year.

      I would expect Clemment ends up Chairman so as far as holding his feet to the fire on G&A would be difficult. He say that he had the necessary personnel to bring Puricase through. I am willing to take his word that G&A is going down as he points out.

      It is not an earnings play. It is an asset play still. Spun off I would expexct to see growing earnings from Rosemont. Rhematology would be valued for having Puricase in Phase III and thet would be about $300 - $400 million as they burned cash. Still beyond me why you hold this stock if you hate the management team so much.

    • On Thursday I wrote: "Mansouri said Puricase is currently getting a valuation of about $40 million (backing out other assets) and said many companies have a Phase 3 valued at 1 times expected sales. And that was BEFORE the stock sold off after the call. With the selloff we lost another $25-30 million in market cap yesterday."

      With the decline we had Friday, another $0.19 x 62 million shares we lost another $12 million in market cap. So from where we were trading at the start of the conference call to the close yesterday we lost about $40 mkillion in market cap ... which is the value Richard Mansouri said was being given to Puricase on the conference call. So based on his assessment and valuation Puricase is now (again) worth roughly $0.

      I continue to believe that the high G&A that Clement has allowed to INCREASE both dollarwaise, as well as a BIG increase as a percent of revenues, (while sales have DECREASED) is a BIG part of the decline we've seen in stock price. The analysts who have models can plug the G&A number into their models and see that reaching breakeven (cash flow neutral) will be hard to achieve as sales continue to decline due to slower Rosemont growth and a decline in Oxandrin prescriptions. Why the board of directors isn't holding Clement's feet to the fire to cut costs more is beyond me.

    • I have no desire to see these companies combined much longer. It is the ethical thing to do for existing shareholders. $150 million in market cap to each at the split and 30 million shares each. Give Rosemont $30 million of the cash. $60 million to SVNT.

      Form a management team within Rosemont personnel. Allow Rosemont to contract sevices from SVNT for the rest of the year with an option beyond. They should have positive cash flow and have the means to pick the services they want to contract and from where. Allow major shareholders prior to the split have a say about the BOD for Rosemont.

      The promise of Puricase will allow SVNT to issue another 3 million shares after the split at favorable prices if need be but based on cash burn and possible partnerships, this may not be needed. If an offering was done for SVNT after the split, the share count would be about 33 million shares. If they sold Rosemont and bought back shares today they would not come close to this low number of shares.

      There is no better way to take shares off the street for each company. There is no better way to grow Rosemont and if shareholders of Rosemont at a later date want a sale they can do it.

      If there was a split like this, I would hold onto my shares for both firms.

      It is UNETHICAL not to present this to current shareholders by the shareholders meeting.

    • Correction... Soltamox launch will occur early 3Q06, not this Q.

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