Forum Archive Index - July 2001

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Gerry,

> 
> 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.
>
>
I didn't mean to suggest there wasn't.  But from then on there will 
be more tests if they want to sell in the USA, and more money to set 
up and train a sales team.   And no sales income is possible until 
this is done, and it all costs.
>
> 
> 
> 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!  
> 
>
>
Whether MMD issue more shares, or sell licences to get development 
money up front the net effect is the same as I see it.  In either 
case a large chunk of the future profit goes elsewhere and not to the 
current MMD shareholders.  Mind you, I would suggest that licensing 
is probably a smart way for MMD to go.
>
>
>
> 
> 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 ) 
>
>
>
Certainly if I had bought into MMD at around 50c, and had made a 40% 
profit in just a few months I'd be locking in some profits myself. 
>
>
> 
> 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. 
>
>
It wasn't clear to me from the MMD Annual Report what percentage of 
the R&D expenditure was related to the e-health division.  So I'm not 
clear on the e-health division's profitability as a theoretical stand 
alone unit.   It isn't clear to me if they are burning cash on the 
heart project (which you would expect at this projects stage of 
development) only, or on the e-health division too.  How close to the 
top of the tech boom was that ABN-AMRO valuation of the e-health 
division done?   
>
> 
> MMD 's success depends on the outcome of the trial 
>
>
The trial is only a first hurdle.   Successs in a trial will be 
positive and may stimulate interest for further funding.   There are 
many more hurdles to go before MMD becomes a successful 
sustainable business.   And, dare I suggest it, during the 
future trial and marketing wobbles, many opportunities to buy into 
this company in the future at a cheaper price than what you pay 
today? SNOOPY





 
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