I was reflecting on the AGM and the time Wayne spent discussing the Admedus share price performance. I am not a big fan of CEO’s spending much time discussing the companies share price. The market will do what the market will do. If the business is managed well and results are delivered the share price will ultimately reflect the business performance.
That is how it is supposed to work in an efficient market. However, I have been investing long enough to know that the best opportunities come in times where the market is not efficient and there is a prolonged disconnect between the share price performance and the companies fundamental performance.
With this prolonged disconnect, shareholder criticism, the need for capital and the aspiration to get more institutions on the register it is understandable that Wayne spent some time trying to shed light on this issue and how our history impacted it.
No matter how you feel about this company the reality is that while the share price has had 4 years of significant decline the last two years has actually shown a dramatic improvement in the company fundamentals.
Furthermore, the pipeline, forecast, outlook and potential is better than at anytime in the companies history. Now that we have our capital position sorted and the capital raise behind us we are finally clear to progress forward and deliver on our long awaited potential.
So with the share price down over 50% since June 1st 2015 and down over 80% since it’s all time high how is Admedus different now to then? What’s the catch?
Here are some snap shot bullet points, not all in chronological order and with some comments. Unlike previous lists of what could and should happen this is a list of what HAS happened. The list of what is still to happen is excitedly just as substantial.
Management, the board and the operations team changes.
* Wayne becomes interim CEO 1st July 2016
* Wayne becomes CEO (3 year contract) - 15th March 2017
* John Seaberg becomes Chairman
* Scott Bliss - helps improve margins, pass rates and manufacturing processes and capabilities.
* David St Dennis becomes COO
* Jim Lemle - National Account’s strategy - critical to our IDN strategy put in place over a year ago to help achieve the Health Trust GPO and be in the running for another possible 7 by the end of 2018.
* Eric Lambert - RVP Europe - a cardio thoracic surgeon himself!
* A shift in strategy towards a distributor model in Europe.
* Michael Oswell (ex Medtronic) - VP of Development - already making an impact.
* Management changes in general including appointments in Infusions.
* Cessation of the funding of Immunotherapies. Not an easy move as a lot of shareholders invested for this part of the business but a critical move for our future success and sustainability.
* Deal to fund Immunotherapies is in progress with a letter of intent - $18 million cash injection to drive trials while we retain 30% and no cost liability. Large potential upside if it list on the Hang Seng. $500k break fee in the bank.
* A fundamental shift in product innovation from one flat patch to 4 products including a 3D curved patch and a 3D development portfolio with upwards of 14 potential products to develop - estimated revenue potential of $200 million to $400 million. (Massive real potential here - not blue sky either).
* Validation of our products and ability to scale from the Health Trust GPO agreement that could be worth around 2 million to us this year.
* Increased Innovation - contracted engineers - working on multiple projects the most important of which is TAVR.
* The TAVR project - unique patents lodged and continual improvement.
* The set up of an astute TAVR Advisory board - 9 Doctors from around the world helping us develop and improve our unique single piece valve TAVR with a revolutionary 13 mill outer French Size. These Doctors are from leading TAVR centres and do 10 to 15 operations a week. They will be an instant market and huge help with trials and FDA discussions down the track.
* Animal trials now booked in for July with the same body that did important initial trials for Edward Life Sciences. Remember 3 months in a sheep equals 4.5 years in a human so we will get some meaningful results in a short space of time.
* Adapt sales forecast to outstrip Infusion sales in 2018
* We secures The Royal Adelaide hospital contract win for Infusions up against other very large companies.
* Capital position now resolved as we move towards CF + with improving margins and a 60% increase in revenues.
* New data that shows our tissue has zero DNA and now 10 years calcification free.
* A potentially company changing deal to supply 4C Medical with Adapt tissue for there innovation and very promising TMVR device heading towards a $10 billion dollar market.
So in summary a quick read of the above clearly outlines that Admedus in 2015 is a VERY different company to the Admedus of 2018.
While the share price has had an 80% decline that is HISTORY now (I do have empathy for those that bought at the highs, are significantly in the red or have sold and lost capital.)
However, there is much hope. The current share price (IMHO) does not yet reflect this substantial progress outlined but importantly it has stabilised and with multiple good news announcements on the horizon it will soon start to move.
Just in my humble opinion and Not advice
DYOR
Exciting times ahead as we progress to 2020 and beyond.
AHZ Price at posting:
31.0¢ Sentiment: Buy Disclosure: Held
(20min delay)