9342-8530 Quebec Inc DGCRF

RE: Payments

[SurfForWealth]

HI Paul, The quote I used came directly from the Diagnocure News Release not a reporter. If there was an error, it would have been made by the IR person for CUR. It was either a mistake or the deal has been modified higher. In any event, I was thinking a bit more about this arrangement & the numbers. For FY2003 (Oct 31), of which Q4 is yet to be reported, the expenses are projected to be about $4M Cdn. During the recent CEO interview, he explained that the anticipated expenses for FY2004 would be about $3M Cdn. At that time I thought that seemed a bit optimistic but it has since occured to me that since Gen-Probe will be picking up further R&D cost for PCA3, then you could strip out that expense & get the $3M figure. So based on what we have been told, a fresh calculation for FY2004 would give us revenue of about $7.25M & Expenses of $3M for a net profit of $4.25M. The net margin on that is 58% & the P/E at today's share price would be $2.57/$4.25M/29M shares basic=17.5. If the CEO example of 50% global market share for the Prostate test were to be realized, then the total sale of the product would be $750M USD & the royalties to CUR would $116M USD. It was clearly stated that the royalties percentages apply to the end user price. The second generation PCA3 product is expected in about 2 1/2 years. Just for fun, we could use the diluted share count which I think is 31M, add a few in for various possibilities to get 35M shares. No one knows how long it might take to ramp up sales but using the $116M USD royalties with 35M shares, it would be $3.31 USD per share in royalties. Depending on what might be going on by then, the Net Margins could be anywhere from 40-80%. Let's use 60% to get EPS of $2.00 USD (actually $1.99). A modest multiple of 15 would give us a share price then of $30 USD. All these assumptions only deal with the one product, PCA3. The company is working on other types of early cancer detection products. Another consideration is that the market will likley grow due to demographics & they could potentially achieve more than a 50% market share for the product. The time period to get to that share price could be 4 years but that would be an increase of 15.56 times at the current currency exchange rate. Cheers!!!