Great story, huge potential, gigantic market place, “Ten bagger”…
As matter of fact, the same story as 2 years ago… but with an extended range of possible products and a better commercial position. Management made a great job (less with the stock price), while SBM remains a “development company” with the associated risks.
The timing of the “event” that will start to “harmonize” the stock price to the company potential is not known… Attila refers to “within 1 year” (and not “within this year”), but I suppose his statements had to be “conservative”.
The deals (with possible confidential clauses in PR, while communicated) should be based of important financial milestones (of growing amounts), before royalties would be generated. The timeframe to generate those royalties in China’s market has been considered as between 4 to 5 years (note this statement has been provided as an example only, for a “special” country, and there are no indications that this timeframe is also applicable for the other applications / countries).
Meanwhile, the stock price will wander with each PR pointing towards to the good direction (with some foreseeable setbacks) and the implied volatility (+ the usual conversation on this board).
I admit however my partial disappointment with the “existing deals” (considered, up to recently, as the company’s flagships):
Wanbang
Product launch scheduled in 2023 only (
Corporate Presentation – Page 35 – “Competitive Lifecycle”) - no revenue stream, except milestones up to this date. A deal for the “rest of the world” may require a similar time to market (but milestones will be installed).
Obagi
We have been recently informed that the skin lightener will not be “over-the-counter”, (like initially mentioned, amongst other possible outcomes) but addressed to the (reduced) “physician dispensed channel in the US” (while Japan only represents 50% of the Skin Lightener market). But we have yet to be informed is this product will be considered as a “cosmetics” (no FDA approval – short time to market) or as a “medicine” (FDA or assimilated approval – long time to market).
This "product" has not been the subject of any company’s update (while the subject have been addressed on this board) or about the “delayed market launched” (since it was initially expected for Q4-2014, if I remember well, and postponed later – undefined date). SBM remains silent so far.
However, some clues were already provided in the
Financial Statements for the three months ended January 31, 2015 – 10. DEFERRED REVENUE – Pages 23-24 (and point b), about the laboratory production of 500 gr. of the compound (please refer to
Manufacturing Scale-Up of Skin Lightening Agent).
More recently, additional information has been provided in the
Corporate Presentation – Page 14 – New Skin Lightener “Scale-up and manufacturing would be straightforward”, what has not been mentioned for Obagi’s TFC-849.
I’m not convinced that this “Manufacturing Scale-Up” has been (entirely) completed to date, since Attila seemed to mention that the tech. transfer (including the “Scale-up”, production of the 500 gr. of compound) was still ongoing. But I may be proven wrong!
Obviously, the Management gained experienced and now tends to be more pragmatic (less optimistic) with estimated market launch (but compensates with the argument of expected high up-front payment).
Now, back listening to Attila’s comments, I wonder if Obagi’s interest to launch this product remains a priority (if any), taking into account the following comparison: