Pinned straw:
I’m No Longer Sweating Over This One
Pharmaceutical company $BOT reported their 4C today, having now had their sole anti-Auxiliary Hyper-Hidrosis product on the US market for 11 months.
While I exited $BOT last year after their last 4C at $0.165, my exits are as often poor decisions as my buys, so I attended this morning’s call, and have also poured over the results. I thought it worthwhile writing up, as I observe that there are several long-suffering StrawPeople still holding on, who might therefore presumably be interested in the result and what I think about it.
First to their summary.
Their Highlights
• Total prescriptions shipped grew 24% for the quarter from 20,418 in Q1 FY26 to 25,351 in Q2 FY26
• Sofdra net revenue (unaudited) increased from $7.1 million in Q1 FY26 to $9.1 million in Q2 FY26, representing an increase of 28%
• Operating cash outflow increased from $13.1 million in Q1 FY26 to $17.2 million in Q2 FY26, primarily due to the addition of 23 sales professionals and associated one-time start-up costs
• Cash position of $31.5 million on 31 December 2025 and undrawn debt facility of $14.9 million
• New market research showed strong acceptance for Sofdra and SendRx by healthcare professionals, with 90% expecting to increase Sofdra prescribing volume in the next six months
• 50 sales professionals are currently active; new hires and existing sales professionals are highly productive and performing as expected
My Assessment
In a word … underwhelming.
Total Scripts
While total TRx shipped in the quarter was up 24% (that’s a CAGR of +136%), as you can calculate from the graph below, the absolute increase in scripts shipped was +4.9k compared with +6.8k in the prior quarter. This, despite the quarter seeing benefit of the salesforce expansion from the initial 27 Reps, now up to 50 Reps. In fact, this final quarter had the benefit of the expanded workforce for the entire period – albeit, it takes some time for new Reps to get traction with their accounts.
What does this mean? Well, it means that in the 4th quarter in the market we are not in an accelerating growth phase, but at best a linear growth phase, and potentially a declining rate of growth phase. So I am at complete odds with management who use the language “Net Revenue is Accelerating”. I’ll come back to that later.
To give a flavour of how far TRx are falling below the model I updated after Q425, the actual TRx delivered have been 20.4k (Q1) and 25.3k(Q2), whereas my model has 26.6k(Q1) and 42.3k(Q3), so you can see a big gap opening up.
But why, I hear you say, should anyone care what my model says? Well, the reason I care is that it reflects a typical s-curve for a product that reaches peak sales in 3-4 years, shows some of the expected properties of penetrating the prescriber base, and scripts per prescriber and importantly, is the trajectory needed for $BOT to become reasonably profitable in FY27 and not to run out of cash! More on this last point later.
Management said lots of encouraging things on the call in terms of sales force performance, and prescriber intentions. However, prior information about the number of prescribers (from which we can calculated scripts per prescriber per month) have been removed from this report, which is a loss of transparency from my perspective.
(Now, I have to say that it is completely normal for management to not give the level of detail we were provided in the first few reports on an ongoing basis. But they were being given then so that they would establish trends of strong growth, and I believe we’ve now seen the removal of that level of detail because the positive signs have gone. That’s just my hunch, and I have no other reason to base it on.)
Bottom line: last Q I was open to the possibility that we could still be on an accelerating growth trajectory, and that I might have hit the "ejector seat" prematurely. Today’s result confirms my bearish perspective.
Revenue
Net Revenue grew 28% from the last Q, driven both by the increasing TRx and a modest increase in GTN from 23% to 24%. See graph below.
As I mentioned before, I don’t like the language of “Net revenue is accelerating”, because the increase in Net Revenue each quarter has followed the sequence: +$3.6m, +$2.8m, +$2.0m despite i) early prescribers gaining experience, ii) coverage of prescribers increasing and iii) the sales force almost doubling over the year.
I fear we will see the revenue growth curve starting to flatten long before the cost base is covered. I think this is the key risk that anyone holding onto this stock needs to assess and satisfy themselves about.
On GTN, management continue to aim to develop GTN to a range of 30-40%. Again, the GTN progression looks to be flattening off, and so I wonder if it can ever make 30%.
Costs
Turning now to costs, I want to examine these in the context of operating cash flows. The chart below, which I’ve pulled from today’s and historical 4C’s needs some explaining.
What I like about this picture is that it puts the revenue progression into the context of the relatively large cost base this business has. Any positive trend in OpCF in the last 4 quarters is weak, and there is a significant gap to close.
So with $31m cash remaining, management were asked in the Q&A if they have enough cash to get to cashflow breakeven. The CFO took on the question, and didn’t really answer it. The best I could pull from the rambling response, is that there is enough cash “for the short term”.
To be clear, with a cash burn in the Q of $18m, I’m pretty sure these guys are going to have to raise capital before the end of CY 2026. Why do I say that?
On cash receipts, you can see in the chart the trend (dark dotted line) in what I call “Receipts from Product Sales.” Looks pretty decent, doesn’t.
The problem, is you have to net off the light blue bars, which are essentially the CoPay made to customers (part of the why the GTN is so low).
This means that net receipts from product sales is shown by the light green bar, and the trend over the last 3 Q is shown by the light green dotted line. So, in the context of the operating cost base – the purple bars – this is pretty anaemic operating levage.
If – and it’s a big if – SOFDRA can maintain linear revenue growth for two more years, it is plausible that receipts might cover operating costs. I'm not sure they've got the cash to get there.
I was also bothered about the CFOs remarks about product manufacturing costs. Over the last two quarters, $BOT has had sufficiently inventory in place – not only of finished good, but importantly of the costly API (Active Pharmaceutical Ingredient), so that manufacturing costs have been artificially low. Management made clear that in the Q3 they will have to buy more API, so that will be a increase in cash outflows. But what bothered me was that the CFO then said that in following quarters these costs would return to more normal levels. Wow! As if buying API isn’t a core and ongoing part of manufacturing operations. (I nearly fell off my chair.)
I know I am sounding very negative here. It is possible that with good cost control and continuing increasing sales, that the picture above will evolve and improve significantly with each successive quarter, such that in 12 months’ time we could be looking at a much healthier picture. However, from where we stand today, given that the rate of sales growth may decline into Year 2, and with a relatively high operating cost base locked in, I believe there is a high likelihood that:
1) Capital will need to be raised in late calendar 2026 or early 2027 and
2) Profitability will not be achieved until FY27 at earliest, and could be significantly later.
Management Commentary
I’m not going to comment further on what management said, partly because the narrative isn’t really the story that I think the data tells. And frankly, I don’t have any more time to spend on this.
Overall, Vince and Howie seem to be putting a brave face on things, and telling as positive a story as they can without saying anything that is factually misleading. (That is my subjective opinion and impression, rather than something I can factually defend.)
Valuation
According to tradingview.com, analysts have valuations of $BOT with an average TP of $0.775 ($0.24, $2.00, n=4).
I fundamentally disagree. So, what’s my view?
That’s harder to call, and I can't put a number of this one.
As the need for dilution becomes clear, the SP can be expect to fall further. So there is a risk of an unknown level of dilution in the next 1-2 years, and a lot of uncertainty (in my view) as to when a profit might be achieved, if ever. And that’s because, despite impressive q-o-q growth, from my perspective, I can’t see the path to profitability with any confidence.
Why is this? From everything I can tell, $BOT are doing a good job on sales and marketing execution. It's just I am not sure the product is that great, given its cost which is significant. It is also unclear to me what the changes in the Afforable Care Act are going to have on persistency as well as new scripts. Some of the increases in insurance premiums being faced by middle income Americans are pretty scarey, and there are anedoctal reports in the press of people going uninsured. To the uninsured, middle income American, is Sofdra a treatment there are going to pay up for? Interestingly, this was not discussed on the call. Only one question on "impact of tarriffs" ... go figure.
Maybe all of this will change in the next couple of reports. Heaven knows I've been badly wrong on $BOT in that past. But for me, the sidelines is the place to be.
Disc: Not held
@mikebrisy excellent summary, I wondered if you were still watching this, it's like escaping a car that's gone over a cliff peering over to see if it stayed intact or burst into flames.
It blows my mind the % of net revenue being spend on COGS considering they said no more purchases, thinking back to comments made by management that the cogs should be very small. Net sales of like 6m and cogs excluding API purchases was still like 2mill.
And that Copay expense figure added under net revenue, if they didn't list that separately the revenue would look even worse as shown in your graph.
They can't access the second tranche of the debt because their market cap is too low so no doubt a raise is coming because adding net 2m a quarter gets them nowhere near cashflow positive..
I think the GTN is largely terrible this Q because of the new reps it's like a half repeat of the launch, lots of free units pushed to promote the product which tanks the GTN. That being said the Increase in GTN last Q underwhelmed me.
Only shining light and it's pretty dim is potential seasonality as seen in Japan so it might accelerate a bit end of Q1 / Q2 but I don't see it being anywhere near enough.
I was expecting a worse share price reaction today to be honest but I guess only the faithful remain and not much will shake them.
Disc, not held but still watching with interest whilst licking my wounds.
EDIT: some other comments, might be descending into a rant
interesting to see they don't list as under 2Quarters of funding remaining due to including the debt facility, they can't access the other 14.9m of finance due to market cap to debt ratio. They also have to start paying principal back on the first 30m in April but this can be extended so it is interest only for another 6-12 months.
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Another point is with the 50 strong team they have only been making a net increase of approx 620 users per month last Q to get that total script amount for the quarter. Fair enough some of them probably only kicked off Oct - Nov
Assuming they will burn another 12-20m next quarter once they resume API purchases but excluding API they did 25300 units for the quarter with a manufacturing cost of $2.7m -- or $100 AUD cost per unit to give net sales after deductions of $276 per unit.
This makes the COGS 36% of the net sales banked.. Excluding API.
They have spent a total over the last 6 Quarters of 34.7m on product manufacturing to ship 62500 units and they need more API? Apparently it costs $100 to assembly a unit given the figures reported last 2 Q exclude API..
So for 62500 units shipped, assembly costs are $6.2m which means they have spent $28.5m on components and somehow need more against net sales of 17m.
The graph in the webinar is misleading as it doesnt include the GTN deduction costs.. 21.m net revenue less 6m in GTN deduction costs, now I can see why they added that line in the last Q so the net revenue looks better, I wondered why we suddenly got to see that.
Net sales of $276 AUD per unit against forecast GTN of $400 - $450 USD.
The Rise of the AUD back to 70c won't help the cause either.
They will be under 2 Q of cash remaining next quarter unless they leave the inaccessible finance facilities in there, expect a raise of 15-20m between 6 and 8c I am guessing, you never know though.
Rant over think my numbers are mostly correct but can always make mistakes