WPMO, page-9

Had a chance to listen to the call and was pleased. Sounds to me like the FDA process was the expectation of further questions, so I'm not sure why they were sticking to mid year approval when they knew there'd be questions? Saying that, given the questions were mainly around the instructions for surgeons and instructions for home-based patient use rather than the actual product itself, this is very encouraging.

The drop off in sales was the result of reduced procedures as surgeons took time off over the holidays, and management could be forgiven for overlooking this as this was their first experience in seasonality factors. In fact, this could be seen almost as a blessing in disguise. The company had decimated its inventory and said they literally had no stock due to the faster than anticipated Q2 growth. The 5 week drop allowed them to stock up on product, and then add on another shift in Palo Alto to support this high growth and clinical trial in the US. They are reportedly back to the similar growth rates observed in Q2. Pleasingly, all 70 surgeons have been retained and they have just started training more.

Their cash balance at $14m suggests they have got enough for about 9, maybe 10 months without going to market? The outflows are expected to stay fairly constant, so assuming they submit their answers in May, receive FDA response August, answer and submit any additional, short questions not long after, we could have approval by November / December. The company says the manufacturing transfer will have been completed (Dodson has some experience with this, see link below) by end of year with commercial launch straight after approval. They could manage it but I expect I short CR, which is fine by me as this will strengthen up their balance sheet to fuel high growth.

They have identified a strong sales team in the US but are drawing this out to avoid burning cash. However they may not need this. From all reports, US surgeons are keen and eager to get their hands on the product.

I think the sell off has provided a excellent opportunity to get in a company set for years of huge growth. While not without risks, I have been and will continue to add to my position so long as the price stays around these levels.

http://www.bioshares.com.au/queenstown2015/presentations/bbs15_axp.pdf