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expected market clearance in China - coinstarz
<<< I think BDA will approve HIV aware OMT 1/2 in March. This is my opinion.>>>
That would be great absolutely, I hope you are right
but honestly I won't take this expedited review as granted. The company didn't mention expedited review in the PR so there is no guarantee for it.
China is always hard to predict although the accepted filing was very very huge already. It looks like the filing has been prepared in close collaboration with the Chinese authorities which could facilite things tremendously. Very important when doing business in Asia. In fact the acceptance of the filing represented two steps forward. Don't like to sound too pessimistic here.
My hope always was that sales in Africa together with BED would carry us through 2006 until break-even and China sales numbers would send us far behind the profitibility line afterwards. I hope Africa gives us some progress soon too.
Cal
Sower - very good points - Thanks
Imo it is important that the company soon can prove some sales success. Whatever happens otherwise (AMEX delisting or not, I don't really care about this honestly) the only thing which matters is whether revenues start to flow very soon or not. For the beginning, just a small evidence that someone wants to buy at least some rapid tests would be enough already. We know that there are good distributors who like to sell the tests, which is a very good sign, but the next step is now that some health organizations like to use the tests too and pay for them (proof-of-concept).
BED is a different story. I feel there is enough evidence already that the market will purchase this incidence tool. The only question is if the company will achieve the projected multi-million sales numbers in the future and how fast sales will develop.
I listened into this session with Rick Brounstein at the BIO CEO & Investors Conference recently and it seems to me that Rick is generally a well-respected person in the financing arena so we have good personel which won't hurt us. Nevertheless he won't be able to "produce cash on the Xerox machine".
We see other companies getting more and more revenues in Africa these days (e.g. Chembio) and of course Calypte won't have infinite time to take its share of this market.
China might be a bit different which is a much bigger and less "ripe" market than Africa in my opinion. Anyway, I'm wondering about the Chinese joint venture and its ability to do the marketing in China. Will Marr be some sort of rainmaker ? Marr is probably experienced in doing business in China in a general sense but who is doing the distribution there ? Do we still need an extra Chinese distributor? Who will be our expert in the Chinese diagnostics business? Marr won't be it imo. Do we still need a partner in China ?
An extra problem in this connection is that it obviously takes so much time to get all those market approvals for the diverse countries. I really respect that this is a painful task and there is sure no reason to blame the company for any delay but it is critical nonetheless. This also must happen soon (Kenya, Tansania, South Africa, Philippines, Malaysia, Vietnam, Zimbabwe, Botswana, just to name a few where regulatory activity has been announced some time ago).
The company will be taken serious by the markets when one day there is a person who dares to come up publically with a sales projection for the next couple of years, a concrete plan in other words. That is why a new CEO might be a significant move.
Of course the lack of approvals prevents the company to give predictions. But I would be interested to hear what kind of sales numbers (rapids) the company expects in Uganda in 2006.
Just some extra thoughts of mine.
Cal
HIV-Test for Dried Blood Spots - Nice Article
Check it out:
http://www.touchbriefings.com/pdf/1692/Page-Shafer.pdf
Cal
anywho -> Chembio sales
This is what I meant with Uganda.
http://www.aegis.org/news/bw/2006/BW060202.html
Btw, don't worry, the market size is big enough for several diagnostic companies to succeed.
Big news would be, if a country or health institution which used blood tests in the past orders Calypte's urine or oral test. This would show that the market prefers oral or urine testing over blood testing.
Cal
why the company hasn't made more sales? To anywho
I see now what you exactly meant. This is indeed a good question considering that market clearance for all three rapid tests occurred in Uganda some time ago.
We have no info up to today that this has led to significant sales yet. My very personal explanation is: Calypte is not the first company to sell rapid tests in Africa (no first mover), other companies have been there earlier, at least with blood tests. So even with a superior test it takes some time to break into the established sales channels of other companies. The company has indicated earlier that they also expect rather a slow but consistent ramp up of sales numbers than an instant explosion after approval (similar to BED sales). This would be line with my speculation.
Nevertheless, there is always the opportunity that the company wins a bidding for a bigger contract which would lead to a bigger sales volume at once.
I also remember that a company called Chembio is already quite successful in Uganda.
But with all due optimism, sales numbers should start to grow soon otherwise it looks like the tests are indeed not very competitive. This would be especially disappointing with the non-blood tests. I hope we learn soon (e.g. next CC) that rapid sales have started to grow already where market clearance has happened. Besides, apart from sales numbers, the company needs more approvals in more African countries. Hope we hear more soon from that.
Hope this helps, all my opinion
Cal
anywho
I'm not sure whether I understood your point but I wanted to say that some significant sales numbers must develop withing the next six months otherwise the marketing or even whole business concept might have been the wrong one. And then, well ... it could get ugly.
But as I understood the company, this is how they themselves have planned their financial resources. If at end of 2006 the revenue situation hasn't improved I will start to question whether this whole thing works out.
I would also like to mention here that the new CEO (they are still planning to hire someone, right?) and a new COO could be very important in this connection too.
Don't get me wrong, I'm still convinced that they will have sales soon. I liked the progress we have seen recently (except for the silence).
Cal
I'm actually fine with the burn rate
Hi que,
I feel that the company has done really well in reducing the burn rate down to about 500K per month. I also welcomed how the company got rid of the legacy business by the Maxim deal. It was a good decision and it was also executed quite well afterwards.
So honestly I think the only nagging question remaining is the revenue issue. Whatever the strategy was or is in the future they must convert it into sales finally. You can't make a living by simply being lean. The cash flow situation must change soon by money flowing into the company.
They have good products now, huge markets and they are getting more and more market clearances. Distributors are also in place. So there is only one final piece missing: Sales
They can't have a zero burn rate. There are only 18 (right?) people left, the CEO is paid only by shares which is a fine agreement for Calypte and a fair committment by Roger Gale at this stage. This is really lean. Other companies might spend half of Calypte's monthly burn rate alone for a CEO's salary.
They must spend at least some resources to execute the commercalization effort. The good thing about this low burn rate is that the company can cross the profitability line rather quickly on relatively moderate revenues. One typical contract of about a few million $ shows up quickly on the balance sheet. This is especially true for the BED sales. Let's hope that the 10K indeed shows us soon some growing sales numbers.
I agree, these are absolutely critical times, the company really needs revenues because somewhere in the second half of 2006 they must live by their own money. According to the forward-looking statement of the company profitability is about 6 to 9 months away. This is not too long away.
Just my opinion right now
One deal -in one country- and a lot of things look different instantly. What will happen when the market sees first clear evidence that the company makes money ?
Good luck
Cal
e.g. mandatory army HIV testing:
It seems that at leat some African governments do not force regular mandatory testings for its soldiers.
South Africa:
http://english.people.com.cn/200502/16/eng20050216_173673.html
Zambia:
http://news.bbc.co.uk/2/hi/africa/2821873.stm
The articles above are not very fresh so I can't exclude that this has changed in the meantime.
Nevertheless my point was that the Chinese or Malaysian government will be quite less reluctant to command regular testings for its soldiers.
Voluntary testing
Thanks Sower,
I went again rather quickly over the article and find the following sentence remarkable:
"I have also heard that there are between six and 16 people who visit the voluntary testing and counselling centre, which is interesting," he added.
I believe this could refer to a quite significant difference between the "typical" African country and China, Malaysia, ...
Why?
Voluntary testing via African hospitals looks not too attractive as indicated above.
China and Malaysia (Russia also? and others?) in contrast are totalitarian states which can force mandatory testings quite easily based on there political power, especially for specific groups like prisoners, sex workers, pregnant women, etc.
If for example the Chinese government commits itself to force such testings (as they have indicated in the past) this puts the number of tests required into a new dimension.
Just a thought.
Cal
Hi sower,
really interesting. I was wondering which country was meant by this article, I didn't find it in the story but I think it is Swaziland.
About Swaziland:
Autonomy for the Swazis of southern Africa was guaranteed by the British in the late 19th century; independence was granted in 1968. Student and labor unrest during the 1990s pressured the monarchy (one of the oldest on the continent) to grudgingly allow political reform and greater democracy.
Swaziland recently surpassed Botswana as the country with the world's highest known rates of HIV/AIDS infection
Location:Southern Africa, between Mozambique and South Africa
Does anybody know what the current status of Swaziland is in terms of the company's marketing strategy/efforts ?
Cal
Hey folks,
an update about the AMEX issue was just published by the company:
http://biz.yahoo.com/prnews/060216/nyth015.html?.v=43
There will be a meeting with the AMEX people at March 13. "If its common stock is delisted from the Exchange after the hearing, it would likely trade on the NASD Over the Counter Bulletin Board." This sounds like the outcome will be decided at March 13. The company will be listed at AMEX until then. I don't know when a potential negative outcome would be executed: Right after the meeting or end of the year (after the earlier 18 months period)?
My personal opinion is that AMEX listing shouldn't change the situation dramatically. We need full China approval (the sooner the better) and we will be fine. If approval in China occurs I think it is getting really evident that the company will make it finally. Sales in China will be a different situation even when compared with Africa. I guess a lot of African clinics have established supply channels in terms of HIV tests so it is not very easy to break into this established relations these days. China might be different because most of the regions have no HIV testing seen so far and the medical infrastructure might be even worse than in Africa (which makes an oral test even more attractive).
Oral test is ideal for mass testings done in the country far away from hospitals.
Also, there was a Medmira deal announced recently about several millions. Nice for Medmira. But Calypte is now a very lean company so just one deal of similiar size for Calypte changes even a lot here (together with ongoing BED sales).
Cal
Hi sower,
you said that the deadline for 10-K filing (annual report) will be end of March.
How about 8K-filing (quarterly results of 4th quarter 2005). Is the deadline for this 8K also end of March or is February 15 ?
Can you confirm Feb 15 as deadline for 8K ?
I expect at least quarterly results (I'm especially keen on BED sales) next week (as well as the long awaited CC with a general overview of all ongoing operations)?
Thanks !
Cal
sower,
thanks for this hint, I didn't know this. That is like a preview.
I hope I haven't raised the blood pressure of some Calypte longs by my lapse. Just kidding, I know every Calypte investor is familiar with much harder stuff for years now.
Go Calypte
Cal
Damn, sorry,
I meant OSUR does NOT have significant progress in China
Hi hetty,
OSUR does look to have significant progress in China ("ongoing talks with distributor in China"). They said the same thing last quarter already and there is no regulatory activity at all by OSUR (my knowledge at least). I'm not concerned because they are not competitive price-wise in China.
It is clear that OSUR is predominantly targeting the European Union now and other industrialized countries Singapur Korea, ... but this is not Calypte's market which focuses on countries where HIV infections are much more frequent. The reason for OSUR's strategy is probably the price.
The only thing noteworthy:
OSUR said yesterday they are close to sign a distributor for Oraquick in the Middle East. So the price will decide in this region one day.
Cal
Hi que,
I check it too. Today's action indicates that yesterday's fear has cooled off. Everything looks quiet again.
Cal
Sower,
thanks, good luck, is it true that everyone can only three posts a day ?
(This is my third one today)
Cal
Hi sower,
<<< I would think they should have requested a review of operations before issuing the delisting notice >>>
Such a review could be part of the appeal procedure. After AMEX has initiated the process that could lead to final delisting they have to simply follow the established scheme by checking established criteria and it is now up to the company to answer (by appeal). Possibly the AMEX can't stop the whole process just like that without the proper appeal of the company. Such legal processes are generally strictly defined by law. It sounds logical to me that the AMEX can only take actions after those criteria from the sections have actually become violated (which was after end of 2005, another year of losses)
Just my opinion without being familiar with it.
After year's of losses it looks obvious to me that the company must break-even this year. But honestly, I don't need AMEX to demand this. It is simply my expectation for 2006 too. If the company doesn't start to sell in 2006 they won't ever do (BED starts to look good already btw). And I won't really expect Marr to allow this financing game going on in 2007. So they have to make it this year or I have to seriously reconsider my investment.
One important point is to me that I can't see anything (additonally !!!) negative which has happened since the company filed its plan to the AMEX. Have they promised to AMEX to have huge rapid sales in January 2006 ? I don't think so. So it wouldn't make sense for AMEX to further increase pressure on the company these days. I conclude from this logic that the recent notification should be part of the known and expected process.
Nevertheless, this is my speculation and I like to point out that the company should really show up very soon (CC) and clarify this (as well as a thousand other things that happened since we heard from the management). It is not about making new and bigger promises but to simply update about what has happened for the last couple of months. I can't believe that we know all right now.
Cal
Hey sower,
just joined this board here. I like to comment on the AMEX news:
<<< "Section 1003(a)(ii) with shareholders' equity of less than $4,000,000 and losses from continuing operations and/or net losses in three out of its four most recent fiscal years" >>>
I'm not sure about it but it looks to me that this is a rather formal action after the fiscal year 2005 has just ended recently and led in consequence to the violation of the above section.
So I think after Calypte had another year of losses in 2005 (which was not surprising of course) the AMEX has been forced to formally file this action. But it should not change the AMEX plan as it was known before to us. So this could be just a necessary formal step by the AMEX following the established procedure.
Just my uneducated opinion.
Cal
This board looks much better (less background noise)