expectations Over the last six months, the new IR people have realized and conveyed the need for an organized and conservative financial model for Prometic. The fact is, the traits that give this company its unique diversification also make it relatively difficult to understand, predict and model. The absense of a dependable model and reliable guidance have crippled us in terms of our existing analyst coverage and the resulting weak institutional support.
I am comforted by the new IR team (and managements) new appreciation of the importance of focussing on this aspect of the business. I expect we will a relatively detailed model presented as part of the 2005 guidance on the back of the 04 financial results I see this as a considerable inflection point for this company because it probably will loosly coincide with long awaited cash flow and earnings neutrality.
If you look at 2004 burn rate of approximately 1.3mm / month. And you look at 2004 revenue of approximately $9-$10mm.... Its not rocket science to predict a cash flow breakeven revenue number of approximately $14mm. I would not be surprised at all to see 2005 revenue guidance in the range of $15-$18mm... ( probably with the hope of doing $20mm or more ) This likely wont include ANY provision for any potential 1402 deal.
The fact is, I think we are FINALLY at the stage where people can stop the incessant focus on month to month cash flow and actually start looking at TOP and BOTTOM line revenue growth and applying appropriate multiples. The key is that the company properly explains the real underlying growth potential that exists as a result of these "annuity based " royalty deals AND then overlays the potential windfalls from the Therapeutic division for drugs like 1402. I think that this might fundamentally be the point where institutions and analysts truly take notice of this company's potential and proper valuation .