Admedus Immunotherapy Deal, page-48

Far out you're conflating so many issues. Not sure why people keep raising the crypto junk red herring. People win Oz Lotto too. Anyhoo, if you've been a long term holder of Admedus, the years have not been kind. However, that does not rule out potential value on offer looking forward.

Admedus has two business units yeah.

One is profitable, with scope for more out-performance over time. We are distributors so its low margin stuff. Nothing spectacular but solid.

The second business unit is Cardiocel. Significantly unprofitable at this point in time. A reflection on the product, the business model or the nature of the market/industry? Let's try to use benchmarks to evaluate.

6 years to date, cardiocel sales have been modest. Based on the December 2017 Quarter, we have annualised sales of $8 million p.a. If WP's forecasts hold true, 7 years to break-even. For those 7 years, we were generating organic sales of mostly commoditized (i.e. excluding Cardiocel 3D) products that had substantial competition and significantly better resourced competitors.

How does 7 years stack up? Let's look at Lemaitre's (a vascular competitor) performance as a benchmark. It took Lemaitre 10 years to achieve an operating profit. They achieved this using 60 sales reps and 10 business acquisitions along the way. Strip away those acquisitions for an apples vs apples comparison, Lemaitre's gross sales took 7 years to go from zero to $10 million annually.

My conclusion. Admedus is tracking slightly behind Lemaitre at same stage of evolution however it should be noted Lemaitre had 60 sales reps in their 7th year of sales. I'm sure we have half that number.

Blue-sky?

Let's get real now. Admedus has a market cap of $61 million. Let's just say that nothing is baked into that market cap - $20 million operating profit in 2020 not going to happen, TAVR not going to be out-licensed to Medronic or St Jude, infusion business goes nowhere and Admedus Immunotherapies finds no partner. Yup, a whopping inflated $61 million market cap considering some ASX companies command inflated market caps on derisory revenue, or promises of deals (Neuren Pharma) or binary clinical trials (CYP, MSB) or significant capital cost required (FAR).

Lemaitre's market cap went nowhere for years and then boom, that hockey-stick comes in and a $20 million operating profit (an operating profit WP is forecasting in 2 years time - 2 years = short term, not medium or long term) last year gives them a market cap of $600 million.

Unlike the promise of licensing deals or clinical binary events, WP has a lot more control over our destiny. His 2020 target may be a stretch and not 100% guaranteed but as a rational investor dabbling in penny dreadfuls (oxymoron perhaps - rational investor & penny dreadfuls), there are far worse and far risky bets out there.