RE:Cost Cutting on the WayI think I did the same look through the financials last night. Your conclusion is definitely the risk averse one. Hunker down, lick your wounds and live to fight another day. This is the only option if there isn't a compelling opportunity in the 12 month time horizon. However judging by the pivot in messaging from management and the Nash forward report from the Cantor analyst, this is what I see as a likely path forward.
Expenses will be managed, but not to the degree you eluded to. Runway guidance will stretch to 18-24 months. Management is going to roadshow the Nash program heavily and sign a partnership they will say is very favorable (but we know is likely something that was put in front of them 12 months ago that they rejected or sat on as they wanted to raise cash on strong oncology results to go it alone). This partnership will give them the cash, breathing room, and legitimacy to drive ahead in one program.
Or someone with stronger hands sees value in this and puts of us out of our misery with a buy out. It won't be at the starry eyed prices we had been dreaming about, but a high single digit share price.
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.