The release was centred around the revenue boost resulting from the million dollar day in Japan, so the focus on that market is understandable. I interpreted the $2.2M estimate for the quarter as including any anticipated revenue arising over the next couple of weeks.
The point was made that these events cause the quarterly revenue pattern to be ‘lumpy’, as demonstrated by the first chart below. The second one displays revenues combined on a rolling four-quarter basis, which both gives a better impression of annualised Advangen sales growth and smooths out some of the fluctuations as well.
The terms of the 2 May 2018 agreement with Fukangren for China distribution included obtaining CFDA regulatory approval within 12 months, with it then committed to placing regular wholesale orders for pharmacies distribution following approval. The indication of this not commencing until 1Q20 might be conservative therefore. The use of the QVC channel for China projected in other releases might cause a few more lumps to appear later on though.
Most of this revenue should translate into cash received within the quarter, and together with other cash income from sources such as fees/royalties, midkine product sales, bank interest and the $808K R&D refund the normal expectation would be for a cash well positive result. This is unlikely to be achieved though if an Ikon settlement payment is recorded in the quarter. All will be revealed in the January 4C report.
The strategy described is consistent with the previous indication of month-on-month profitability being achieved commencing from this current one. The recording of profitability for a complete financial year though cannot be expected until FY2020.
This informative but unforced release suggests the intention to support the share price, which runs counter to some posters’ favourite conspiracy theory.
(P.S. Soud, ‘even’ can be interpreted as ‘smooth’ or ‘levelled’, as discussed above.)
CDY Price at posting:
30.5¢ Sentiment: Buy Disclosure: Held
