DSCO can sell Afectair in the US.
February 08, 2012
– Comments (3)
Afectair is a system of aerosolized drug delivery. It got approved for marketing for use within the US this last week, and DSCO stock has risen about 20% since the approval.
At first, I was thinking that it wasn't that much of a deal as this is not their major drug, but just a medical device. But, if the predicted revenue from the device is correct it is a very helpful thing for DSCO. DSCO could start to moderate its losses, and the necessity for more share dilution is now actually quite reduced. If DSCO has $50 million in revenues from Afectair (which is what has been thrown about in the news releases - but I would like to see what the reality is for annual revenues, is there really a demand for such a device, etc) - and makes a 30% margin on the sales (it is a medical device, probably not overly hard to manufacture, medical has high yields because companies can charge a lot after facing such hard approvals from FDA). That would mean it would be making $16 million in profit from the device. That would almost balance their losses yearly (~22 million/year), and this should give the company a new lease on life.
The last time I felt a similar situation was when I was an investor of SIRI when it was $.13/share. Liberty swept in, provided a lifeline for the company to finance its debt, and a year later SIRI was over $1/share. (Its over $2/share now, but I missed most of the rally and took profits near $.75/share).
Go DSCO! Hopefully they will now get approved on their peptide surfactant, then maybe I'll be doing alright! I'm actually thinking about increasing my holdings in DSCO at this point, since the risk I think has fallen quite much.
-Rof
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