Forum Archive Index - July 2001

["G Stolwyk" <stolwyk@wave.co.nz>]

Snoopy,

 

I am pleased that you had a look at the MMD report!

 

1. You were referring to the cash reserves, MMD had. As more work gets done they need more cash. As envisaged, they did raise more cash @ 78 cents a share. That cash is sufficient to last beyond the stage of the human trial in the Alfred hospital in Melbourne.

 

During that trial, instrument companies will be carefully assessing progress. We already know that there is virtually no destruction of blood platelets ( unlike in other known devices.) That is a big plus!

 

If signs indicate that there is a good probability of success, companies will tend to move in. And they certainly will, if there is some progress made with the substitution of plastic! ( At that point, MMD will not only have the best but also one of the cheapest " Artificial Hearts " in the world ).

 

If you were versed in matters of licensing, you will know that normally a fee upfront is paid in these matters. 

 

An agreement will allow, say, an American company to  produce and market the product; it is possible that MMD will have a share of this as well.

 

The cost of human trials will also have to be expensed. The American firm may only get a license to sell within the US. MMD may make arrangements with other countries as well. In all cases, MMD will also be entitled to royalties.

 

So your reference to " MMD needing to issue huge numbers of new shares to keep the project viable ", is not exactly correct!  

 

Yes, there could be a share issue after a successful human trial and I will be happy to pay $A 3 or whatever, considering that the present price is 78 cents!  

 

2. Then you say " But if things don't pan out with MMD, that same investor might  be down for the count. And when you have nothing left, there is no getting up off the canvas".

 

In my opinion, that is emotive language as the investor has been told time and time again to spread his risks. You must be aware of this!

 

I already stated that if he/she can afford it, it should only be a small sum as the risks are high! I am not able to stop an investor  from getting his hand into the biscuit tin, if he wants to! He/she is not told to invest in MMD!

 

Turning to my: " WORKING AT THE COALFACE - Investment results ( 8 ) of 13 July, 2001, item 4, you will find that if this MMD trial was unsuccessful, there will be hardly any impact on the overall result!

 

( Actually, it will be wise to halve the investment in MMD - With ref. to item 3, please note that  the return should read 22.5% instead of 20% )

 

ABM - AMRO has valued the e-Health division @ $ 25 mill. or say 20 cents a share. If the " Heart " trial fails, then the investor loses 58 cents a share based on the current price of 78 cents. 

 

Two years ago, AIRVA shares were $ 2.60 and are now $ 1.10, a loss of $ 1.50! Mind you, as a percentage, MMD's loss would be greater!

 

3. You mention that " MMD does not have a sustainable business plan and Air NZ does! ".

 

I would say that both companies do not have a sustainable business plan - MMD 's success depends on the outcome of the trial while AIR NZ did have one but is now traversing across the orbits of several interested parties. Its longer term future is not known! Its profits or losses will be difficult to estimate.

 

I think that on balance there will be many investors who don't want shares in both companies even if the risk of holding AIR NZ shares is less than holding MMD at this stage!

 

Gerry 

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Disclaimer: Readers are not asked to buy, hold or sell stock in MMD or AIR NZ. To do so will be entirely at their own risk.