Looks like they will be cash flow positive by next quarter and are starting to get better traction on selling the drug.
The drug patent is for dosing as the chemical composition expires in a couple years. How would you value this company and would you rate it a buy hold or sell.
Even after the buyback the company will have $100M. It has a nice sales base but needs to develop new products (or buy them) to make sure growth can be maintained when the patent falls off. Getting to be cash flow positive would be very helpful to appease investors. Generally, pharmas are valued on a price/sales and price/earnings basis. Companies can go for very high multiples of sales, IF there is longterm foreseeable growth. With its balance sheet and $300M in sales (forecast 2025) one can certainly argue the stock is cheap. The lack of sale 'probably' was a disagreement on price. Many companies are trading at 7X sales and buying one at 2-3X (current valuation) is often a non-brainer. But maybe the company wanted 5X. Based on what we see, the sell off is likely overdone. Still, with layoffs and with the company never being profitable (yet), and considering its small size and negative momentum, it is hard to get too excited here in the short term. We would see it more as HOLD than a BUY.