Quarterly Trends, page-83

Continuing to monitor the long-term financial progress of the Company, updates of the regular group of four quarterly charts are set out below for future reference.



Normal operating cash inflows were near record, with an obvious imbalance between different quarters due to the timing of ‘million dollar days’ in Japan. Inflows for this current quarter can be expected to achieve record levels as a result of the market growth indicated in the 4C together with the annual R&D refund and another ‘million dollar day’ in November. It quite likely could be a cashflow positive quarter.



Expenses have levelled off over the last four quarters, with the major component of working capital for September’s being used for inventory build-up to fuel market expansion. At the historical gross margin of 62% the $1.16M spent on inventory manufacture would translate into sales revenue of $3.05M.



Record levels of cash at hand clearly are sufficient to support expansion for some time to come, with what was available at end of June having been used to boost inventory. The partial paydown of debt is an indication of confidence, with the remainder to be repaid as the R&D refund becomes available in this current quarter. This does suggest that debt is not seen as being required going forward due to near-term profitability.



Projected timing of when the Company will become sustainably cashflow positive, based only on Advangen customer receipts, remains unchanged at around 12 months time. Average growth of inflows continues on track at 12.0% per quarter (57.2% annualised) with growth in cash expenses averaging less than half that rate.

Announcement of the new Texas collaboration on the midkine cancer program gives some encouragement that progress might be continuing in this area beyond snail’s pace, as well as towards orphan drug classification for the kidney disease project. Reference to the Physiology or Medicine Nobel Prize for immune checkpoint inhibitor drug research shows the relevance of the midkine program. Even more so in combination with the Prize for Chemistry being awarded for research into the directed evolution of antibodies. If nothing else, the Company has at least identified one of the hottest areas of the pharmaceutical industry.

Everything appears to be consistent with the earlier stated expectation that month-on-month profitability would commence in December.

T7