RE:RE:Cost Cutting on the WayThe analysts say the company is planning to restart the trial in the first quarter. First, TH has to decide what they actually want to do in the new protocol,then the FDA has 30-60 days to decide if they are willing to endorse it. But like most things in the drug research space, it is not unusual for it to take longer than planned.
If they get started by the end of the first quarter, my guess is the very best case scenario would be some early data reports might be possible by the end of the third quarter. More likely, however would be early reports becoming available by the end of the or in the first quarter of 2024. TH should hope enrollment goes better because the investigators are buying into the trial protocol redesign so that they can get some earlier readouts. If good data can be achieved due to the new approach, and that is a bigger "if" than it was previously now, getting it out in the public and using any positive stock price reaction to boost cash levels is going to be pretty important. So, the company has a lot of incentive to get data at quickly to help address the cash situation. They also should want to access the third tranche of the Marathon loan facility of $15 million before the end of 2023 in order to extend the interest only repayment schedule until 2025 and extend the term of the loan to six years from five.
I am sure TH thought they would have good cancer results, be able to raise a lot of additional cash on the back of that via both Chinese and maybe other partnerships and thereby be able to continue to fund their still significant operational losses. Since that is no longer an option, they need to cut costs aggressively to reduce the cash burn (or come up w ith another source of cash) since they likely are down to $30 million or so in cash right now and face cash costs to reduce staff and $5-$6 million or so to finish off the convert repayment (the second tranche of the loan is only for $20 million and there is $25-$26 million still outstanding). Getting to cash flow breakeven fast is the company's most important priority right now as they need to buy as much time as they can from a cash perspective to give the revised cancer trial as much time as possible to report good results before they have to raise additional money. And if the trial does not achieve its objective of good results, then.they will need to be cash flow positive anyway in order to prepare for the time when the Marathon principal repayments start.
PWIB123 wrote: Is it possible they have a protocol amendment within days or weeks and continue as they have been, rather than slash and burn and rebuild? If it's month's out, then yes, by all means, slash and burn.
SPCEO1 wrote: THTX now needs to cut costs and do so quickly. How they do that, how quickly they do that and, most importantly, how they commuicate that to investors, will likely play a big role in how big of a bounce the stock has.
Let's say THTX achieved $80 million in sales in fiscal 2022 just completed. If the reenrgized sales force keeps the momentum going, maybe sales grow in the 15-18% range in 2023 to $92 to $95 million. That would be a really nice outcome except for the bloated cost situation they now face. Costs in the recently reported third quarter annualize to $120 million and operating cash flow was likely negative $14-$15 million in fiscal 2022. So, they need to find that much in savings ASAP to get to cash flow breakeven at a minimum. To get to breakeven on an earnings basis they need to cut costs by 20-25%.
It is a tall order and it is an ugly turn of events for so many employees at TH. But it has to be done.
If the revised approach to cancer yields better results, then can put back in place what they have to dismantle now as they will be able to raise money via a better priced equity offering.
Also, we better hope there is no new covid lockdowns this winter that would negatively impact sales as that would threaten the $75 million in trailing 12 month sales criteria for the second tranche of the loan meant to repay most of the remaining convertible still outstanding.
It would also be nice to get sales up to at least the $90 million level by the end of 2023 so the third tranche can be taken down which extends the interest only portion of the loan from 2024 to 2025 and the term of the loan to 6 years from 5. They also need to get an approval for the FB by the end of 2023 to qualify for the third tranche before the incentives on the interest only and term length expire.
But first, take a hatchet to costs.