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Japanese ortho/material companies drooling?:
While I think it is most likely that amda is BO by an aggressive top 4 ortho company. I also am pretty confident the bashing campaign for the last several years will have Japanese players (ortho and material) increasingly looking for a way to increase their stake in the outcome of a ceramic ortho niche..... Anyone notice who the first foreign president was met after the recent election ... it was Japanese president Abe who flew to NY just days after the election...Point is top US and top Japanese officials are very close which will make Japanese companies even more comfortable considering purchasing tech either in Japan or in the US... Add on that Japan has the highest average age population in the industrial world ... needing ortho devices the most... The per capita wealth in Japan is very high compared to the Western world. Kyocera (amdas) manufacturing partner, is Japanese and a world leader in ceramic manufacturing. In fact Japan in general is without a doubt the world leader in ultra high quality materials manufacturing.... including steel. Kyoto university in Japan, is likely the top school in the world teaching ceramics and a amda BOD graduated there. An important aspect of the culture there is that they are very focused towards helping their aging population to the best of their ability. The concept of putting an inferior metal ortho product into their population, to protect the incumbent industry, is alien to them...
AMDA has many documented relationships with Japanese connected or based companies. Sonny has visited there recently. Now Japan is (and has been) testing amda products extensively. I am sure the Japanese will strongly weigh the European trial results amda went through. I am sure the Japanese will see themselves as the best asian country to anchor and develop the tech to take it into china.
This is just a sprinkle of the many more characteristics that point to Japan upping their involvement in a massive way in amda tech. They have been quiet but I am sure they are busy bees in the background.
The basher campaign is sending tech too easily offshore; and the top ortho players should rethink their strategy of alignment , for their own benefit.
IMO Sonny likely saved AMDA: if you agree with my general thinking, and think back about what he had to go through in getting financing and generating sales (and what was likely against him) while moving the tech forward, and keeping things afloat you may agree... Amazing actually , but imo Sonny was a complete saviour (unnoticed) of AMDA in difficult times (I doubt the industry even realizes). Like AMDA, he has been falsely branded IMO...
Note for the $150 million tax carry forward to be utilized, in a BO, I believe the buyer would have had to have this much profit cumulatively in the retroactive years and added to the applicable forward years -- unsure the exact time range but something like (maybe 5 years back and 5 years forward)... Point is that its value would be maximized only by a company that has made enough profit in the applicable period to apply this to... I do not think a financial Buyer also, because of different industry, would be able to use it...
remember also, until a deal is done (with one of the major industry players hopefully, and they take care of some of the other industry players with coatings) its in the industries favour to get MC of AMDA up, so no sneaky companies can try to steal away with the tech easily. This is another very important reason for the long term industry players to accumulate IMO... The no brainer for them gets more obvious...
yes a multi JV would have been great thing for the industry -- still a possibility imo (although diminishing).... and yes it was dumb thinking to bash amda for 3 years, and now instead amda has only strengthened behind the scenes (even if it looked like they were on the ropes at times).... It does look to me also like the Industry guys were taken for dummies by an entity or entities, and sold a story that was not true... and what they unknowingly did was to their own detriment IMO...
Big guys need to minimize risk: they have a chance now to do that. Other secondary big benefits is they get to be a player at the table ...and make money to boot... its a no brainer... would not want to be a business dev staff (or cfo or ceo) on the companies watch and missing such an obvious move...
What very likely (IMO 80%) will be the result for Peek Cos that do not own a decent piece of amda or (alternatively have strong connections with the eventual purchaser of AMDA) ? Ever see a WWI German Zepplin bomber after getting hit by British incendiary fire, igniting the hydrogen.......
They sited Delaware Corporate Law, I believe, not NASDAQ or SEC...
good dd as usual: on both the time to do a R/S and also yesterday about the way the market has overlooked critical news like signing "groups" of hospitals up....
Anyone notice bashing starting to taper off, and they never talk about fundamentals (anymore) ...its the chart, or hurling profanities... I think we are transitioning away from a negative campaign that was in the past mainly powered by industries poorly thought out plan to make amda go away, to a realization by industry that AMDA tech is here to stay...and "if you can not beat em, join em" mentality. I think more and more the bashers left will be accumulators, lone rogue swing traders, and those covering. Its pretty funny to see a basher call amda junk at 0.40 when just the tax loss carry forward is worth $3.00 at amda (not including the tech)...
low cash burn equals control:
IMO hiring a lot of employees is what the competition want avxl to do imo ... First, the higher the burn rate the more avxl is reliant on capital markets; and therefore the more avxl can be manipulated. Just when the money is running out they would short it hard and then ask for a partnership... Secondly, the industry does not like the idea of a ten person shop outsmarting the tens of billions wasted by them...
Sorry to take sides on the manpower issue ...but I agree fully that avxl does not need more manpower; and that outsourcing will handle shortages where necessary. On the matter of sales and distribution, many have said this is where they have to partner to handle the huge countrywide sales. What many do not know, is that if you have a breakthrough drug for a huge indication ... you get free massive countrywide promotion from the media.. Prescribing Doctors would get pestered to fill out a prescription endlessly... This is not rocket science. Freight is cheap and fast for meds... Also there are contract sales forces that can be hired overnight .... When you have a monopoly of a high demand product things are much easier. If avxl partners sales in all likelihood a partner may hire out a contract sales force anyway. Is it worth giving up a huge percentage for something any college marketing grad could figure out how to do on a weekend... IMO this is where avxl gets back at all the harm others have inflicted on avxl; by not falling for the trap of thinking things are so overwhelming you need the big boys and handing them all the benefit.... Yes lets finance it all with LPC and forget the partnership...
Top 10 ortho cos material Hedging, Investment strategy:...
(the recent stabilization of financial position of amda, looks like it might be a sign that the large negative campaign against it is nearing an end. The nearing end of the Hercules loan is another big flag to switch the planning to action. If this is so, what should ortho companies consider as a strategy going forward. Here are some thoughts to consider, on what I would do...)
1 to 4 rank: These are the top ortho companies I discussed earlier. If I were a VP/CEO at one of these companies I would be looking to protect the playing field. No need for panic buying but either a company or grouping of companies in the top 4 should look at acquiring a "largest" position, imo, 25% of the amda shares outstanding, roughly. I would not trust anyone ... there are probably two to three hundred companies worldwide that would like to buy amda --- I would start to acquire shares.
5 to 7 rank: Ortho companies falling just outside the top 4, I would look at purchasing around 10% of the outstanding shares... This is a bargaining chip to make sure their products can be coated to stay competitive and be a voice at the materials table... and additionally a hedging against outdated material. Investment potential is a big factor...
8 to 10 rank: Ortho companies in the 8 to 10 rank I would be looking at purchasing around 5% of the outstanding shares of AMDA for the same reasons as companies in the 5 to 7 grouping --- hedging strategy, investment strategy and ensure a voice in negotiating for coating materials.
I'll try to make it easy for cfos and business dev officers from the big boys cos (some clearly need help) .... If amda shares are bought up, from here, to say $50 per share bid, your average cost might be $25 roughly on accumulation .. and you have created a wall around amda from the opportunistic bidders...not only that but you have at the same time created the most perfect hedge, by being a major owner, against the risk of the disruptive tech.. and you still have huge upside on the money invested to accomplish this.... This is the clear choice to take...
The negative alternative approach (which financial types will tout you on) is not only unethical, risky and degrading but without any control or visibility.... IMO cfos and bus dev officers that want to keep their jobs, and remain in the industry, should make the obvious choice on which approach to take...
The main way for the big boys to protect themselves against this disruptive tech is to buy amda stock ....IMO they need to get the MC up to about $1 B minimum (its worth more) ... this will squeeze out the dreamers and scammers (and sneaky offshore buyers) ....leaving the tech to sit and wait for the big boys.... Sonny may have actually saved amda....
This is my hunch (I have no proof or evidence) is that they wanted to cause a financial collapse at amda.... so the ip would get tied up in BR court , possibly for years, and then divied up on the cheap -- at prearranged scenarios. This could (very likely) also have been a big setup of them (a false plan) though.... with the main intent to get them helping and financing the shorts...and then someone sneakily, buys on the cheap.... peek boys dumbfounded.. Bottom line , if this hunch is correct, peek boys loose unless they wake up and start buying (reverse this terrible plan)...Honestly,IMO, it would be in their best interest to buy up to $50 per share... even $100....
Peek boys are playing amda incorrectly imo.....
I have my hunch on why they made this mistake, but the reason is less important now than their ability to realize that they need to do a 180 deg turn on their strategy. It is in all the top Peek competitors interest that AMDA trades at a valuation fitting its tech platform ... It may seem ironic but the higher amda trades, the less likely AMDA's tech falls into hands outside of the top circle of competitors; and in addition, the higher AMDA trades will help ensure that there is not a top player in the upper circle that trys to snooker the others in an underhanded way. Things like bashing amda on the stock market or bashing amda to surgeons will only backfire, in a much bigger negative way to the incumbents that partake in this....Peek boys, if they are smart, will start to buy amda shares steadily... before its too late..
What is the early repayment penalty on the Hercules loan?... I recall seeing $1.5 million as the early pay penalty but I do not have a source document on this.... The loan fully matures on Jan 1 2018 (thats this coming new years day) but they can early pay it out before then with a penalty...
If Zimmer comes out with a non-competitive first bid, it will be to their detriment. To have any chance IMO their first bid has to be reasonable .... and not based on amda market cap at all....
I have a few theories I am thinking: First it is quite often (believe it or not) that a well orchestrated bashing program (like done with amda) can cause potential partners/suitors to back off ... Quite often the personal in business development departments want to feel proud of the moves they make, and a sense of failure can surround making a move on a very heavily bashed company.... since the target company is being "branded" as a failure by the bashers, causing staff in business dev. departments to back off of any deals.
The above may have happening to some of the upper ortho competitors by I am speculating, that at least one of the big ortho competitors, has known all along how valuable (and dangerous to their own business viability) the AMDA tech is... I think this company, or companies, has likely been tricked into thinking that the best way to respond , to the threat of this valuable game changing tech, was to bash amda into the ground --- try to basically destroy the company. I say tricked because it looks like they are shooting themself in the foot actually, just making amda a cheaper buyout for their competitor, who can then use the same tech, against them, to destroy their MC.....This is just a theory but is what it looks like to me... Yes the peek boys were tricked...
This will sound hard to grasp but I just did some calculations on how much damage a BO of AMDA by Zimmer could cause to the MC of Stryker...... estimated calculation showed around a $10 Billion hit to Strykers market cap... If the Stryker Business Development team (and very likely the CEO also) missed this, they would be shown the exits surely ... Stryker currently has a $52 B Market Cap...
I do not see it as likely, that at least one company in the top group of top 4 or 5 ortho companies , besides Zimmer, would not come to their senses and see that they have been played (by the bashers) and that the AMDA tech is a huge transformational disruptive tech; and a great danger to their future in the industry.
Played like where in a magic show the classic trick where the magician waves one hand to distract your eye and then a bird magically appears in the other hand... Well the massive bashing has been the hand waving and the developing tech is the bird about to emerge...
Competing bids, will be ready, as it is obvious how dangerous AMDA tech will be to other ortho company's future..
I think any deal with Zimmer would need shareholder approval. This should give time for a competing bid...
think Stryker has been very complacent about emerging tech ,mainly due to its leading strength in the Ortho segment (this is not uncommon in various industries and the skeletons of similarly over confident companies are littered) --- and has failed to see how significant the dangers are of transformational tech. The bashers of the AMDA stock, don't kid yourself, has also affected the Stryker over confidence with their own tech.. "Asleep at the switch" comes to mind....
Lets assume that Stryker, for what ever reason, "wakes up", from its tech hibernation, and see that AMDA is cleaning the books, auditing assets etc, and other hallmarks of a potential sale. Lets further assume, they understand how AMDA tech would likely help Zimmer take many Billions of their revenue away over the next 5 to 10 years and add incremental new revenue, from new sources, to Zimmer..
If you look at Strykers history, it looks to me to have more experience than Zimmer at growing by acquisition ... Even if Stryker has some kind of relationship with Zimmer currently likely this would be superficial. Anyways, based on these assumptions, why would Stryker sit back and let this deal happen with no interference (i.e. competing bid) from it .... even if they know of the personal connections between AMDA and Zimmer. So for example lets says Stryker calculates an AMDA sale to Zimmer would take $5 Billion off the Present Value (roughly equal to market cap) of Stryker.. and lets say Zimmer trys to low ball a $100 million bid for AMDA... Under this scenario, no matter what relationships are, it would make no sense for Stryker to just sit back and let this deal happen with no response. Even if Stryker thinks Zimmer may potentially outbid them , its better for Stryker to have Zimmer pay up at least , if they do succeed.
Bottom line is Stryker needs to wake up to emerging tech and protect their future by trying to own the tech at AMDA....The bashing and manipulation of AMDA hides the true value, and danger if in the hand of a competitor, of the technology..time is of the essence...
I think Stryker has been very complacent about emerging tech ,mainly due to its leading strength in the Ortho segment (this is not uncommon in various industries and the skeletons of similarly over confident companies are littered) --- and has failed to see how significant the dangers are of transformational tech. The bashers of the AMDA stock, don't kid yourself, has also affected their over confidence with their own tech.. "Asleep at the switch" comes to mind....
Lets assume that Stryker, for what ever reason, "wakes up", from its tech hibernation, and see that AMDA is cleaning the books, auditing assets etc, and other hallmarks of a potential sale. Lets further assume, they understand how AMDA tech would likely help Zimmer take many Billions of their revenue away over the next 5 to 10 years and add incremental new revenue, from new sources, to Zimmer..
If you look at Strykers history, it looks to me to have more experience than Zimmer at growing by acquisition ... Even if Stryker has some kind of relationship with Zimmer currently likely this would be superficial. Anyways, based on these assumptions, why would Stryker sit back and let this deal happen with no interference (i.e. competing bid) from it .... even if they know of the personal connections between AMDA and Zimmer. So for example lets says Stryker calculates an AMDA sale to Zimmer would take $5 Billion off the Present Value (roughly equal to market cap) of Stryker.. and lets say Zimmer trys to low ball a $100 million bid for AMDA... Under this scenario, no matter what relationships are, it would make no sense for Stryker to just sit back and let this deal happen with no response. Even if Stryker thinks Zimmer may potentially outbid them , its better for Stryker to have Zimmer pay up at least , if they do succeed. So to what extent would Stryker under this scenario be willing to bid for AMDA to protect $5 Billion of its own market cap and keep the tech out of the hands of Zimmer?
AMDA should keep the door to Stryker open:
"The reason they use Stryker products is because they are the best and cover most procedures. The doctors use the products because it is a one stop shop. There is no selling going on just attending cases and assisting with surgical procedures." discussion by industry personnel on why Stryker is very successful..
Stryker has a very good sales division (they hire many competitive ex pro athletes to attend the operating room and meet surgeons directly there) , and because it is a one stop shop with great products it is successful.
As good as Stryker is however, they have to think smart if they want to protect their future. Their powerful sales force alone will be no match (in the longer term) for much higher quality, transformational products and tech... Surgeon's delight dealing with ex-pro athletes can not compete with game changing tech... Wake up Stryker Corp .....before its too late!
Sonny is locked in a dance of promises, but if he is smart he will keep the door open to Stryker and others, while continuing his dance... Why promise the tech to #3 company.... a deal with 1 or 2 would result in a much stronger resultant company; and (for shareholders also)....
Amedica books have been recently getting cleaned up and assets audited at Amedica, prepping for a sale, so Stryker could be successful in a quick purchase of Amedica. Japan approval is coming and China is ready also... Lobo needs to give this a priority in Business Development..
JNJ , if they are quick, could purchase the leading ortho material tech from Amedica... By all accounts Zimmer Biomet is planning to acquire but with JNJ size and M&A ability could easily be the first and be successful. The Amedica tech includes
-new SiNi gen two with worldwide patents
-3-D printing
-anti-infective properties
-many products being developed
-approval coming at several asian countries, Japan and China
Basically Amadeca has the tech to make, whoever succeeds in buying, a world leader on ortho and medical devices for years to come.. Amedica is being audited and cleaned up and prepared for sale... Zimmer appears to be closing in on Amedica but Johnson , by being quick can get the tech prize..
Medtronic has a chance to leapfrog into the top of the orthopaedic implant business. Zimmer Biomet is by all accounts planning to make an acquisition of Amedica. Medtronic could, by moving swiftly, buy Amedica first. This would give Medtronic a strong competitive advantage. Amedica tech includes new generation of sini with worldwide patents, 3-D printing, anti-infective properties, and approval on the horizon for many products and markets... Lets see Medtronic be a tech leader.... buy Amedica
Lobo needs to act quick ....Stryker has a chance to acquire Amedica and its tech before Zimmer Biomet. If Stryker, drops the ball, and allows Zimmer to get Amedica, with world wide patents for its new SiNi, 3-D printing tech, main asian markets near approval, anti-infective properties, and many more advantages, Zimmer will be a tough night in Hip-knee, and gain share in spine .... It is simple for Stryker to block Zimmer, if they act quick.... Zimmer is preparing now to acquire this tech but Stryker , by using its superior M&A skills can be quicker and block this threat ....
You guys are probably correct on the BO but what I was alluding to when talking about a PE taking private (as a lessor possibility) the PE company would have to make a hostile (or friendly) bid for AMDA.. If the bid was too low it would be of interest to other acquirers to jump into the fray and up the bid... but if a stealthy PE could do a deal quick they might be able sneak in and get a deal done (less likely than your scenario though) to flip it in a year to Zimmer , Stryker etc... Personally I would not be happy to see a greedy PE try to sneak things on the cheap...
BTW you guys showed how AMDA tech would be a game changer for Zimmer; and allow it to out compete stryker in spine .... Flip side is that Stryker surely sees this also, and buying AMDA would eliminate that risk and move them ahead even more of Zimmer in this area... Point is that, since the tech is so valuable to several key players its possibly that Stryker trys to block Zimmer by moving first on AMDA...
The optics of the situation however, with so many staff moving from zimmer to AMDA and the CEO of AMDA so connected to Zimmer (and likely with a supply agreement already) it appears things are getting polished up and ready for Zimmer.... It sure would be nice though to see Stryker and/or others step up to bid also.... Only way to maximize value is an auction IMO.....
Zimmer would not have to purchase AMDA directly ..... it could be one of their affiliated Private Equity companies in a taking private BO. There is also the possibility that a straight opportunistic medical focused P/E would try and make a quick buck on a BO --- thinking Sonny lacks the ability (or neutrality) to maximize value....
DD question for Boston and CL:
-- Is there much available information on who the investors were in the last two Amedica financings?
(was wondering if they are parties friendly to Zimmer?) Not sure but Zimmer could have connections to a lot of Amedica ownership currently...
-- IMO they will try to use "bleeds" to buy up stock since they made an effort to place retail interest solely with the "flipper/social media crowd" purposely... bleeds work with this crowd... however, this game may be ending as stock has been getting accumulated for some time now...
Very good discussion continuing here.. Valuation is critical of course...
I preferr to value based on potential market penetration with a new strong management and the size of overall markets..
Another way to look at it is though,is what was market cap when amda went public and what has been accomplished since then .... We have sini gen 2 with worldwide patents!!! Huge deal with China simmering !!! Japan coming !!! We have 3-D printing !!! and much much tech progress...... I think amda is worth 4 or 5 times (min) its market cap when amda first went public.... based on that method ... but worth much more based on my first method..
The stock price means nothing to me....as we all know it has been manipulated aggressively from every angle and forget about sales/revenues to base value ...it also has been manipulated heavily from every angle...
great sleuthing Boston and Cl .... I never even considered that an external company could be so involved , through consultants, in the inner workings of trials and testing.... Since you, and CL pointed out their last tech purchase did not work out as good as Zimmer expected, they seem to have wanted to be extra careful.... I sure hope that is because they plan on spending significant funds in a purchase...
I have to say, from the excellent DD you guys have done it sure looks to me like Sonny has been a Zimmer man all along...and it would seem less likely a bidding war could ensue as a result; and it will therefore be extra important to have those asset impairment evaluations done fairly....
Sonny is smart ( lawyer , docter, pilot , multiple consultant) but that does not make him the choice going forward to run things at amda . Not pounding him down, he's probably in the top 1% IQ wise and I hope he stays with the tech for a long time. What I am getting at is I think he realizes this, has planned accordingly, and does not actually want to pilot the amda rocket ship... So this is another non-direct hint that a B/O is in the cards IMO...
Good points on the synergy between the tech and Zimmer:
When Zimmer buys AMDA (unless a under the radar Japanese medical company comes in and quickly puts in a winning bid , which they have been known to do) the AMDA tech will transform Zimmer.
I will likely go long Zimmer, at that point, if that is the result.....
Agree with you also on the points that AMDA does not have the capability from a size and managerial capacity point of view to compete against the big boys in the sector... I see Sonny as being good as a knowledgable orthopaedic surgeon , and methodical planner, but not ready to lead a multi billion dollar high growth company.... At this point I would be happiest with a solid partnership or buy out where new strategic management takes over.... Zimmer would be a good candidate IMO...
I nominate CL and Boston to the BOD of AMDA:
great job guys...sincerely...
Once you have it posted on a free blog, get creative with your search terms on google, trying many variations of relevant terms to find sites that showcase stocks with some of the similar characteristics such as "break out stocks" , or "undervalued stocks" etc.....Google should be all you need to find everything.... You can also post the link under discussion of similar stocks on various boards, google search Facebook investment groups (join up and post), and there are probably a 100 other locations online to drop the link or post the article but all can be found through google... Medical/Bio stocks would be good...Heck send it to TV money shows that have appropriate coverage... You might get a TV to bite if you bring out some interesting (like why does this wicked Tech get no press) angles appealing to the audience... IMO this would be much better than SA and ST, and you would be in control and the potential is endless...
BTW with the skill you guys have , this could even develop into a business for you if you are interested...
Cheers
If you have access to a free blog... that would be a good place to initially post it, and then from there you can send out links to all kinds of sites or analysts... including chat boards, face book etc...
CL and Boston ... IMO both of you do top notch DD .... Professional level at least. The value of the asset is massive at AMDA (IMO almost priceless)... The fact that a lot of flippers were purposely placed in the stock should not mean much in the medium term but in fact creates an opportunity. IMO the financial side has stabilized, and the stock trading side should follow as the tutes and others strip the flippers shares. In a weird way the bashers actually are speeding up the process of putting shares into more solid hands...but that being said IMO its important the valuable info you are revealing...extremely valuable .... the weak will still sell on the FUD.... but the smarter will act on your much more credible and supported information...and it will give them less power to work the bleeds.... If you can get your info to other sources besides ST, that would be helpful...