Definitely agree that we are in a net better position for the current products MX1 is bringing to market. In the investor call this morning, Peter Rowland also mentioned that the multi-emitters integrated into any future imaging products by Varex would require the MX1 generator, as it is optimized for use with NEX technology. This would open up an additional revenue stream to produce components for products MX1 has no current plans in developing. This seems like a smart alignment of objectives, let another company invest 3+ years into designing products that use multi-emitters, and when they do, MX1 will benefit from this through the sale of generators (in a sense this is very much like receiving royalty payments as the generator itself can be a high margin product in its own right).The sense that we are "giving away" the option to enter the market with multi-emitters is founded on some real concern though, as who knows how big the market will be for multi-emitter applications. The vast majority of the breakthrough technology critical in the initial Graphical User Interfaces for personal computers like the Mac wasn't designed by Apple, Apple bought the IP from companies that didn't know how good of a thing they had. Peter Rowland did state however (summarising here obviously) that the engineers have thought about and concluded that the use of multi-emitters in the current 4 business areas wouldn't provide any advantage over using a single emitter. So I think we're safe in that regard, and my initial worries about competition are likely misguided.
The one big negative that still makes me worried though - I believe it was stated in the financial breakdown of the deal by Kingsley Hall that Varex co-owns any future IP with MX1. At the end of the day, MX1's number 1 asset especially at this early stage, but also into the future, is its IP. There are some great minds at this company that will undoubtedly keep coming up with new ideas/applications for this technology. I hope these aren't taken away by Varex with MX1 ending up just being an R&D arm of a much bigger company. These are simply concerns from a shareholder who doesn't plan on ever selling, so it's a long-term thought as to potential limitations we might face many years down the track.
On a separate note, I honestly don't see how management could be criticized for this deal... they've done a very good job so far (excluding the initial exclusive partnership with carestream haha, but that was early on and hindsight is 20/20), and this would've taken months of effort. Credit to the team, well done.
MX1 Price at posting:
16.0¢ Sentiment: Buy Disclosure: Held
