AND why I belive it is taking a while to build a base. Hopefully this week will reveal more or at AGM Friday...
"Solagran essentially had two alternative strategies available with which to move forward with Ropren starting with a base in Russia.
The first involved a strategic partnership with Menarini or an equivalent company with good representation in Russia and the CIS countries, as well as in other countries around the world. This would have ceded a significant proportion of the Ropren revenue stream to the partner as part of an exclusive distribution agreement. But it would also have provided an opportunity to build a distribution relationship that would have proven very useful once production volumes were sufficient to supply Ropren beyond Russia. The second alternative was to retain the vast majority of the revenues within Solagran by establishing our own team for the Russian market, and deferring the establishment of any strategic partnership with a pharmaceutical company until we had sufficient production volumes to supply countries outside Russia.
Both strategies have similar intrinsic values or net present values (NPVs). But if executed well, the second alternative generates the greatest short term cash flow - particularly over the next two years while Solagran remains supply constrained.
In view of the economic logic presented above, Solagran has signalled to the Menarini Group that it now has no interest in a commercial relationship with them. We have also made an offer to Dr Gorbacheva to lead Solagran's new team for the Russian market and that offer has been accepted. Dr Gorbacheva has already expressed publicly her view that Ropren is a potential blockbuster on the basis of its efficacy in the liver disease segment alone. She is very much looking forward to helping Solagran achieve rapid penetration in the Russian market by promoting its use for a wide range of indications.
In adopting this strategy, Solagran and its manufacturing partner Galenopharm will now capture approximately 70 percent of the end consumer price for Ropren, rather than around 45 percent under the proposal developed with Dr Gorbacheva when she was representing Menarini. While the associated incremental revenues are not material in terms of long term expectations in relation to revenues from Ropren and other Bioeffectives, they are significant at this stage of the company's development.
The Board wishes to make it clear that Solagran has been approached by other pharmaceutical companies interested in working with us to distribute Ropren outside Russia and the CIS countries, and the Board will consider these proposals in due course.
At this stage, the main priority for the company is to ensure that it has sufficient capacity to satisfy demand in Russia".
SLA Price at posting:
18.0¢ Sentiment: Buy Disclosure: Held
