OSX (ASX) Ann: OSX receives A$10m commitment for commercialisation in China

Originally posted by mirri11: ↑

I have been promising to post the answers to my emailed questions - I 'm afraid nothing really significant.
1) I expressed concern at the increase in staff costs from the previous quarterly ( $500,000) to the last quarterly ($700,000). The answer was that an annual wage supplement is paid in Singapore -a thirteenth month salary is paid just at or after the end of the financial year. I looked back through numerous quarterlies, and this did not seem to have happened the previous year. In fact, the staff costs seemed to fluctuate randomly. (At any rate, one extra month's salary would not account for that large increase.) It will be interesting to see what the staff cost is in the coming quarterly. (I hope the increase was due to the employment of extra sales staff, whose efforts will be seen soon.)

2)Osteopore does not pay the researchers; their institutions pay them.

3) I questioned who pays for the studies- for example, the study on heparan sulfate .'The costs relating to the trial are substantially reduced due to a R&D relationship with the collaborating institutions.'
An aside from me - it cannot be overestimated how much money this would save. One reason why the market cap is only $12m, in comparison with some companies testing a couple of cancer fighting molecules, where the market cap is in the hundreds of millions - and often still nothing to show for it.
We are not paying for a CMO either, or a COO (I think I am correct in saying that)-positions that can cost more than $200,000 per year.

4)In answer to my question about whether any inroads had been made in India -
'We have four regional distributors in India, who have subdistributors to provide geographical coverage.
We have been working with opinion leaders in the specialties of neurosurgery, dental surgery and facial surgery .'

The way that the tiny leadership team has managed to spread the geographical footprint in just a couple of years is astounding . I think necessary - they are niche products (perhaps the dental implants are a little less niche), so there are never going to be large numbers sold in any one country. Furthermore, many of the products are at least somewhat like those of other manufacturers, so it is vital to establish some presence everywhere , to show that OSX is ready to compete .

What worries me is not so much whether they are spreading themselves too thin geographically, but that they may be trying to diversify into too many fields. The field of tendon and cartilage repair is already the specialty of Orthocell, I believe, and probably other companies.(@bedger may have an opinion on this.) Researchers would like to continue to research forever, but even if OSX can come up with competitive products in this field, the sales staff will have the burden of trying to sell too many products in the face of so much competition. The path to profitability will stretch so far into the distance that it may be lost to sight. The market will no longer forgive companies that are not heading towards profitability ,even if revenue is increasing.
It began to look favourably on Megaport and Xero again only when expenses were cut, and positive EBITDA and cash flow arose, or at least were in sight.
If the quarterly does not adequately break down the expenses , and give some idea of the progress of the many projects that were started in the last year - there will be plenty of questions for my next email .

Wrt Michael Keenan - I felt less annoyed about the appointment when research showed that since retirement from politics he founded and leads Sana, a company that builds accommodation for disabled people. A worthy cause - but his connections would have helped him to begin the business - connections that might help OSX to get a grant - needed non-dilutive funding. Perhaps a reasonable choice for that reason (@bedger says something like this)

I cannot understand why people are selling at less than the CR price - the effect of the dumping of ML's shares ? or just that people no longer want companies where profitability is far in the future - or may be just a mirage.
All the best, Mirri

Expand

Great insights.

Only to quickly say there are dozens of different feasible approaches and varying patient/clinician requirements in the cartilage and tendon regeneration space that leaves the field wide open for OSX, even if someone did have a relative monopoly on all things tendon and cartilage (which no one ever will).

Honestly sometimes I have to pinch myself at the markets. Not that long ago I shorted Tesla when it was worth, wait for this, as much of the rest of the world's entire automotive companies combined (I was of course told I was mad shorting it - my last buy to cover at $106 barely a year after its $400+ highs). Here I am building a large position in little known OSX. Mkts are irrefutably terrible at valuing companies/businesses. Keenan was arguably a poor choice. Its not a significant a factor in Osteopore's future.

At a $12 million cap, given recent sales growth, sales footprint, various Singapore and now Chinese collaborations, etc, etc, this stock is stupidly priced. Look forward to its quarterlies....

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Ann: OSX receives A$10m commitment for commercialisation in China, page-55

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