Comments on the Report...
The directors report opines on the company's flagging share price that:
Quote:
The domestic capital markets appear not to recognize the commercial potential of these medical device stocks.
Some responses:
- Apart from not making their annual report freely available, the company seems not to have published an AGM speech last year or any other form of analyst presentation. If the market potential is to be recognised in the share price, then it is up to the company to explain it to the market.
- Any company which anticipates raising new capital and yet does not attempt to make sure the market has a chance to fairly assess value is not acting in the best interests of existing shareholders. This additional risk factor only serves to further reduce any value attributed to existing shares.
- Believability needs to be maintained and this means realistic/conservative timeframes being put forward. For instance in the 2006 report, the bladder cancer clinical trials were about to start and were expected to take 18 months; in 2007 the trials were supposedly underway and expected to be completed by the second quarter of 2008 and now the report says the the trial has begun and is expected to be completed by mid-2009. The lack of other updates or explanations for this slippage means that anything else the company writes can only be read with scepticism.
- If the company is so cheap, where are the merger and takeover offers? No one shareholder appears to hold a blocking stake, although possibly there is some crossover of interests which protects the company?
The company provides some great info in its annual report which continues to be encouraging in terms of products and potential. However, they also indicate that each programme will require one clinical trial at $1m per trial - suggesting further capital raising will likely be needed unless they obtain significant licensing fees in the near future. I would like to see them make more effort to communicate the potential to NZ investors.