Ross, my view of ‘demonstrations’ is that the company simply shows the use of the technology; taking before and after room samples and evaluating them. These demos show the relative ease of AS use, the time required to execute the process, the in-process data monitoring capability, designed safety protocols, etc. The one-off demos don’t do anything to define the protocol necessary to reduce HIAs by X%, which should be the goal of trials.
The information gathered by some of the demos completed heretofore may be useful to structure the trials. For example, after AS was used to clean one Belleville GH ward, it was reported that the recurrence of infection was halted for many months. In isolation, this data point says that AS is effective, but it doesn’t say what the recommended protocol should be on a go forward basis or what the rate of HAI reduction should be expected. Does the information say that AS should be applied only when an outbreak occurs (stop the infection cycle) or should AS be used in a more prophylactic approach after each admission, once a month, once a quarter, once a year or any other periodicity so as to prevent infections prior to the occurrence of an outbreak, and then reapply if an outbreak occurs anyway?
Only when MZEI utilizes AS in multiple protocol designs in multiple locations can they generate the data necessary to narrow the protocol design that most effectively deals with the rate of HAI. The question is not does AS work; the question is what level (frequency) of application is necessary to achieve desired HAI reduction results. Until the optimal protocol is developed, the hospital doesn’t know how many AS units it may need and MZEI can’t say whether a sales or service model best serves the interest of shareholders. {This is one of the major problems with setting up distribution agreements absent knowing the data. IMO} A sales model may be very good if AS needs to be applied frequently to achieve desired results (a higher number of machines and consumables would be required). Alternatively, if the optimal protocol demonstrates that relatively infrequent use is necessary to achieve the desired results, then a $119,500 unit sales model will be a killer and a service model with pricing based upon HIA reduction statistics vis-à-vis average annual HAI costs may be the most compelling model for both the hospital and MZEI/Suitor shareholders.
At $40B annual HAI cost and 5,000 US hospitals, the average US hospital incurs about $8M of associated costs annually. If AS is highly effective and the hospital can get by with 2 machines at a one-time $119,500/unit price, MZEI goes broke. Alternatively, if the use of AS results in a 50% decline in HAIs, or a $4M annual cost reduction, would the hospital be willing to pay MZEI a $2M ANNUAL service model fee and achieve a 100% return on capital? Which model benefits MZEI shareholders? Which model best drives MZEI’s suitor valuation? The fact is, until MZEI has the trial data, they or suitors can only think about this stuff in the abstract context.
I like the sounds of $5 per share, but I have no idea if MZEI is worth ½ that or multiples of that, and neither does anyone else absent trial data, business model development and negotiation of hospital pricing.
I have every expectation that some of the BOD members know these issues well while it is evident, given MZEI’s history, that some BOD members previously failed to grasp the concepts. Here’s to hoping trials get started shortly after EPA action.
