"Over the next few months, PolyNovo and Establishment Labs have...

"Over the next few months, PolyNovo and Establishment Labs have agreed to develop the detail of the project plans for next generation devices specific to breast aesthetics and reconstruction. These plans will provide a roadmap that establishes the development milestones for the delivery of commercial-ready devices."

This statement has been interpreted by some here on HC as meaning that the company is targeting the signature on a contract between PolyNovo and Establishment Labs for sometime months in the future.

I submit that the statement reproduced above indicates no such thing. The statement deals exclusively with product definition and design development. There is not a single word explicitly or implicitly indicating such a timeline for the execution of an agreement based on the heads of agreement already signed and advised to the market. The announcement provides NO timeline to a contract signing. Based solely on the announcement, we don't know if it will be days, weeks, months or years off.

Anyone familiar with the process of design development, review, possible prototyping, etc. knows that the the process involves months (or years) of meticulous, painstaking labor. What the two companies are announcing here is the creation of a responsible and workable design development plan - nothing more.

And it goes without saying that completion of the announced process would NOT normally be a precondition for contract signing. In fact, normally this kind of pre-design activity would only FOLLOW, not PRECEDE contract signing.

Based on the announced signing of the heads of agreement, I think we can expect a formal contract signing within a matter of weeks, not months, but that's just my own educated guess as someone familiar with both design development and contracting. We might expect relatively few weeks, as it is in the interest of both companies to get the agreement formalized in full prior to spending significant money on product design planning and development.

One reason I bring this to the attention of our readers is that I recently saw a comment that asserted that "prior to an announcement" a share price could be based on speculation and misunderstanding, but that "after an announcement", a share price would be fact-based. I don't think that is ever true, but it certainly isn't true when the announcement is widely misconstrued.