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case in point. Amedica's Sales/director of strategic development (brought over with Dana Lyons) who is now Zimmers new regional sales director in spine is very aware albeit without any noncompete in place while moving to that new position within the same month. Adding to the intrigue, This all occurring just last month, while Zimmer announces their new team,
From Hanson Q2: "It's some combination of a new team, new products that we're launching, and the channel strategy that we're putting into place that's all coming together to be able to allow that business to perform as planned or even slightly better."
Amedica has been radio silent during this period.
Well I know this much, Folks over at Zimmer know it well, know it's advantages, and know its key markets, and not to mention - have an understanding how to adapt it to their technology. They have marketing expertise, resources, and the sales channels to educate the masses and get it in more hands.
Either Amedica wasn't thinking clearly when they sent key senior leadership back to Zimmer with strategic intelligence, or something else is a mix. And something you should know FS is that non competes are in place for these exact situations, unless something else is up. If the company is shopping around, you don't just let leadership with that knowledge jump ship for a key competitor. I can't see it unless 'shopping around' is strategic.
The strategic communication and alignment plan is one of the final steps in M&A. This could possibly take up to 6wks and obviously prior to any announcement there are confidentiality constraints (hence no communications). It's been essentially 8 wks since their last confirmed communication to the public with no confirmed upcoming events. Very interesting.
Not a scenario that i'm too familiar with. I would think it's possible, not sure I see the value in it (not from Amedica's point of view, but from those purchasing the IP) I would think exclusivity is part of the lure here.
In our current situation, I do think announcement is imminent. Radio silence is only a bad thing if it’s after ‘day zero’ in M&A. And it’s been over two months.
April 2018 - June 2018 an increased focus on Incorporating Si3N4 into PEEK. The last update on research we saw was via tweet in May, but nothing on these, did I miss something?
Incorporating Si3N4 into PEEK to Produce Antibacterial, Osteocondutive, and Radiolucent Spinal Implants
Si3N4 particulate dispersion into polyetheretherketone (PEEK)
Things seem to be shaping up nicely out there in Colorado. Joe Ross out as general manager in Westminster and Rebecca Whitney takes his place in April 2018. Rebecca Whitney has long been connected to Dana Lyons on Linkedin over the last year. Coincidence given the timing of this new team? I dunno, it's always just been a hunch .
This made me think that A 3D printed Zyston Strut Open Si3n4 Spacer could be in the works? This after Zimms last 510k reminded me. Just another hunch I guess. Seems obvious they would add it to their portfolio and dominate the ceramics offering.
ZB 510k announcement
Here's my take,
I said it was a smoking gun because to me there is ZERO chance someone in a strategic leadership position leaves company A (with breakthrough tech, roadmaps, key confidential knowledge) for company B within the same month without a non compete unless some other arrangement is already in place.
In terms of the Zimmer role, I would guess he will be part of the new team specifically working with selling Amedicas products/material tailored to LDR/Zimmer products. I mean the guy is already familiar with their sales strategy both nationally/internationally. To me it seems obvious, and I guess would blow my mind if he's not connected. Personally I've always thought they have been working with LDR more specifically but that's always been a hunch. I'd love to see mobi-c get the si3n4 treatment. Could Japan be a key market to compete against prestige?
And this may be a small insignificant nugget, but on top of the new team based in Colorado, their seems to be a need for a Strategic accounts director position that opened 7 days ago? And as part of this role,
"serve as a consultative resource for customers on emerging, potentially disruptive Orthopedic technology"
Strategic Accounts Director
nah I would think 3 months is enough time. Just guessing though. I would think any sales staff transition plan could be complete within 4 weeks if you have experienced staff.
Ya, I don't think Japan will make it to a PR, it will likely just come with the announcement if you ask me. We could be waiting a bit longer, but if something did come tomorrow it would certainly mitigate the one dollar listing requirement announcement (now that we are finally back in compliance)
Regarding Mr. Long. If you ask me it's a bit of a smoking gun. Keep in mind Amedica is a company of about 30+ (enough to fill a conference room) and one of their top leadership personal who is directly connected to Dana (also Zimmer & the biomet M&A) just left to go back to Zimmer. Remember after all part of the M&A process and strategy is, "pulling members from the corporate board or other leadership roles from either company."
Why would Sonny ever let this tech and knowledge of it out of his hands with that much risk at stake unless there is already a direct connection, otherwise it would require a non compete and signifiant lawsuits could ensue.
They are competitors. It’s usually something like 2 years before you can make the switch in a non compete. This would not be possible unless something else is in place, personal reason etc. doesn’t matter.
Very unlikely haha, especially since these company’s typically have non compete agreements in place as well, unless...
Prospect research (DD) complete? Our director of strategic development is now back with Zimmer.
3 years to this day the LOI was announced. Sonny was convinced: “it will lead to faster and more widespread market penetration of silicone nitride, positioning it as the biomaterial of choice for medical applications.”
Look, When a company has a proven industry leading tech but doesn’t have the channels to market and sell it, you partner with someone who can. I recall the LDR CEO saying essentially the same thing at the time - to get the tech in more hands after they sold. If they are waiting to position this for widespread market penetration Japan is obvious, in addition to adding to their geo presence and outlook - all tied to value.
I don’t think they’ll be working exclusively as Amedica for much longer.
A few more thoughts,
The article linked below further backs up known evidence. Most notably,
1 . Common Vision and Growth Strategy
"The successful M&A will develop a shared and clear vision of what the new company will stand for and how it will operate. Not only is it important to have a shared goal of what you want the company to be, but there has to be a strategy implemented for growth. Merely merging or buying out a company and expecting it to operate as before is impossible. Instead, a successful growth plan will involve such things as expanding business to neighboring markets and taking advantages of opportunities where there is already an overlap between the two companies. The strategy will also be clear on things such as the size and timing of deals it will seek and how often it will seek them."
2. Selection of a Strong Leadership Team
"A well-prepared and available M&A team is essential to the overseeing of a successful merger or acquisition. Not only do you need to have members who can devote significant time to the process, but they also should have extensive knowledge of the unique needs of each company involved. It may involve pulling members from the corporate board or other leadership roles from either company. Regardless of who is chosen, ensuring that they are given sufficient resources, including in the form of time or compensation, is vital to their success as leaders of the M&A process."
-My Thoughts: In terms of timeline, we already know they signed a 5 year loi SD shared with another company 3 years ago. We also know they have been expanding their market presence and partnering to take advantage of opportunities. We know about the 3 year audit (more common for Mergers btw) What we also know is they are looking to sell the company per the latest filing that we saw that mentioned it. In LOI SD's it is possible to expedite the signature upon M&A - 5 years is an estimate, but based on where they stand, I believe the S1 was a notice to shareholders of an M&A which is coming very soon based on where they stand in the process. Its also very possible they timed the audit to conclude within this timeframe to target 2018. Also think about it, they probably already have crunched the numbers and know what they are willing to sell for to make shareholders happy, however if those valuations include all expandable markets then doesn't it make sense to wait until they clear? It's pretty simple really. =Japan!
5 signs of a strong merger & acquisition
Patent and valuation,
You probably are already aware or have crossed this in your DD, but all these patents makeup their 'patent portfolio'. My guess is they are leveraging cost, income, market or future based valuation methods by showing value across applicable platforms and regions while weighing the market/tech risks. Another reason why I believe Japan factors in here. We already know we have market comparisons to some degree, while the tech is unique and one of a kind the value of the patent portfolio could be insane.
More and more lately I've been starting to think that an announcement will just come alongside Japan. Not sure what the point would be with the PR since they have already disclosed that their corporate strategy is to sell the company or partner. Got to imagine, now with the Patents enclosed, research established for GCV, no debt, and geo presence all but finalized (with exception of Japan) they just wait it out.
1/100 Anyone else notice this? Now another patent for an increase to the GCV.
The only thing I see holding up an announcement is Japan. Not sure why the 483 would hold that piece back.
This is not a surprise. Revs have been declining ever since they started burning down debt. Sure there are many possibilities that could happen here but still seem to me like like they’re treading water To set the stage a debt free sale of the tech if not a merger.. Too much under the table to ignore. Still think Japan is key. The only thing that scares me is possibility of reverse merger (could explain debt raise and vote grab), but just think lawsuits would ensue and would be tough to pass.
My thoughts exactly! Poison pill was the first thing that came to mind when I saw this. Especially after recent s1 filed and current debt to income ratio. Look at sequence of recent events unfolding here.
Patent
Clinical trials update
Geo presence (Japan) next. Which I think is the last piece to the puzzle.
All things that help going concern and establish increased synergy before the presentation is released.
Vol Spike during ceramics expo? Meeting with partners and suppliers.
If there is a SEC investigation for manipulation,
Just something I was thinking about this morning, but wouldn't the SEC force those 'hedge funds' or similar parties to cover their naked shares if suspended from shorting among fines and other penalties? Also prevent shorting in the future?
SEC manipulation
LDR When asked why they sold,
“Christophe Lavigne, Co-Founder, Chairman, President and CEO of LDR, said, "We are delighted with this combination, which will further our commitment to improving spine care by providing greater access to our innovative product offerings for patients around the world, while offering our stockholders immediate cash value.”
Sounds exactly what Amedica needs.
Regarding the audits, Merger vs. All Cash,
From Thomas Reuters Practical Law,
"Audited financial statements of the bidder for the most recent two (for all-cash offers) or three (if securities are offered) years, unless the bidder's financial condition is not material to the target's shareholders (for example, in a purely cash offer for all outstanding shares that is not subject to a financing condition)."
Hence Merger and just one of the reasons why i'm thinking this is why they went back 3 years. Only 2 required for all cash. Likely securities plus cash if you ask me considering above.
Completely Agree, and Japan likely right around the corner.
This FDA clearance will be about more than just increased revs. They'll use this to attract more oversees, gain additional clearances and device sales, new designs w/predicate, strengthen their position to surgeons etc. It was HUGE and somewhat unexpected news considering how long it has taken historically to get responses from the FDA.
Seriously, posted this morning via a tweet from Zimmer
What Materials Are Implants Made Of?
Hip being the possible product they are working on together
“an implant must be sufficiently strong, flexible, and resistant to wear.”
“they must work with your bones to restore function.”
“the biological effect the material has on the body, as well as the effect the body has on the material.”
What do all these quotes directly coming from Zimms tweet have in common with? What were the outcomes of the wear results again?
Exactly! Keep in mind that that regardless of ER it'll look good to keep the cap structure clean. Notes will get absorbed with any M&A and repaid after. Heck just read through a few M&A pressers, this is very common.
My thoughts on the current status of M&A
First, nobody can predict an M&A, we can obviously come up with our best guesses or speculate, but there are only a handful of folks on the BOD for each company and likely their M&A transition team that will know when it's going to happen. So just a tip, for those bears out there that think that just because you work for Zimmer for example that you would know what's going on - well forget about it. That being said, I do think it's coming SOON, and was likely delayed already. I think the delay is caused mainly by PMDA, but could have been some other factors as well (tax reform, repatriation, new leadership etc) Keep in mind any merger is likely going to be reliant on growth and long term growth that caters to synergies between the two companies and their shareholders. I personally think the key driver here is geo presence to position them for growth/long term growth. Just think about it, why the key expansion to Europe, Brazil, Australia, potentially Japan/China/Taiwan yet have virtually no sales presence there? (because someone like Zimmer will just take over?). They can get this product into more hands, and benefit from it all. This creates a global presence for them to hit the ground running. I don't think CSC is a driving factor, yet an added bonus that will drive value potential. I do think an announcement could def happen prior to any CSC approval. In fact the only reason I see to delay for CSC is to trigger warrants and obtain some extra cash before the announcement in the event that they want other news to remain confidential until the announcement.
All this being said, you've got to wonder when that PMDA approval is coming. If it was on the roadmap as a milestone for last year, you have to think it could come anytime - VERY risky short here, but a wonderful value play, and longs will finally have something to celebrate.
E-Trade shows last trade at 12:12pm
Just a another thought here,
A standstill agreement in the LOI could have been a deterrent and limited their options. They could have moved with the note considering it was an approved route, through private placement within the LOI to eliminate something as you say was preventing them from moving forward effectively. Not saying this was the case, but just another possibility.
Why is nobody talking about this?
Lets remember the whole reason they did this was to get rid of one of the worst term loans in Hercules entire portfolio! This loan has been a nuisance for the last 2 years - crippling their working capital. I'm not making this up, has anyone actually compared Amedicas loan to the rest of the loan terms in Hercs portfolio?
I'm more than happy, ecstatic that they have removed this loan from their existence and replaced it with none other than a note to repay essentially the termination fee under much better terms. Bears will try and focus on the note, magna, why it couldn't be paid of another way etc....blah blah, it's all speculation with how they will actually value this deal (Value, Opportunistic, etc) and this situation they were in when this was obtained, however if you truly believe there is an M&A coming then one could argue that this was simply used as a bridge.
Cleaning capital is not the same as raising capital.
I think it's more likely Japan. CFDA has always been pending, and will be a bonus once completed. The success of Taurus should help there and I do think CFDA will be ironed out and still come sometime next year.. In Japan, They have strong ties. It'll bring money upfront, no waiting, no IP Issues, and Sales galore. I'm sure Zimmer is well aware. If you have a prime market to sell in, then the additional clearances set to come will only strengthen your foothold.
I'm getting the sense that something regulatory related is pushing this back. Maybe waiting on Japan, or other regulatory submissions or clearances. At a high level it is indeed obvious that the two companies can benefit from each other. You have 1 company that has disruptive tech, proven scientifically now, and starting to grow sales with increased demand while the other is lowering guidance and seeing a decrease in sales.
With that said, nothing should be discounted here - an acquisition can always happen at anytime or when we least expect it, especially given the recent qtly numbers.
Revisit what they said in the LOI agreement, it says the following,
"Amedica will assist this company with their proprietary design, development, manufacture and supply of silicon nitride spinal implants. The two companies will begin negotiating the definitive agreement once it is satisfied that all necessary and appropriate regulatory approvals can be obtained without significant expense."
So what is an entry into a definitive agreement?
It’s known by many other names, including “stock purchase agreement” and “definitive merger agreement” and so on and so forth.
But it does the same thing in each case: it spells out the finalized deal terms that the buyer and seller are agreeing to.
What is a definitive agreement
The timing of a finalized deal continues to be a mystery, however the development/design partnerships continue with a primary focus on spinal devices (recent partnership with Morgan) Would they be utilizing them on a possible mobi C+si3N4 device? Who knows. But the possibility of something like this could be a game changer. Does it also mean that by saying, "obtained without significant expense" is referring to the years of DD they have performed to justify the science and regulatory approval (Predicate devices etc) necessary to obtain the approvals once they take over? I'm in the camp that think so, This is also why I think this agreement will be signed very soon.
There was at one point a while back issues with instrumentation required to set surgeons up for success in the past that resulted in them losing surgeons. This was well documented, however has since been resolved. After updating their instrumentation (among others things), There has been a 38% increase in surgeon users since the end of 2016. In addition, the demand for Silcone Nitride - Specifically Taurus (with modular head/helical flange design) has never been higher as expressed in the latest business update and the tech has now been backed by extensive research publications.
While the build from Alpha to Beta for Taurus has been slow and steady, They do appear to be rising month to month with increased demand and 3Q now turning out some of the highest monthly revenue year to date. It's a hint at things to come, with having to pull more units just to keep up with demand for 4q a VERY good sign. Considering revs increasing while debt decreasing (herc nearly gone) and the company seeking alternative financing methods as opposed to toxic financing is a sign of strong financial discipline to maintain operations and controls. While longs did take a beating, Their financial recovery over the last two years alone should be mentioned as pretty miraculous. With China and Japan just around the corner, SN revs growing and increased interest/demand for the tech, I don't see this company sitting on the shelf for too much longer.
They def left it open for interpretation in the June PR.
You can read it just as it's written that presumably presents itself as if a CSC mod sub coming in Oct, or you can read between the lines and notice it's not historically how they have presented news like this, Since there are indeed two separate devices in play here. The Market has historically treated CSC delays as a neg. The share price has historically plunged after such an announcement. In this case on June 8th the stock price actually went up following the news. The market didn't see this as a neg at all. Just thought I'd point this out. I honestly don't know for sure how they are treating the submissions, but your post makes sense to me and would be a huge bonus if it is approved prior to Oct. if not I don't think It's a big deal either - just another product candidate on their roadmap at this point.
Unfortunately no. I've been tied up in other meetings and couldn't listen in. I assume it'll be avail on their website to listen to, or at least the presentation?
Zimms new knee system ->
To me 'Persona' looks like a necessary evolution to keep their revs relevant and a necessary evolution that will (in the same way mobi-c can) utilize Si3N4 in the future. This is what biomet specializes in, and it's a way for them to work in tandem on a new product without disrupting sales forecasts. This still uses Trabecular Metal and Amedicas knee uses aren't FDA approved and at least another year or two away. This will allow them to tread water per say until they are allowed to enhance the current model with the next evolution or si3N4 versions. Keep in mind a recent research paper shows tibia antibacterial strengths for si3N4, something that zimmer could leverage in their side specific articulation This could also further enhance the wear properties of the implant in addition to utilizing the antimicrobial benefits. Simply killing TM is a bad PR move for them if you ask me, however enhancing current products with the next evolution of biomaterial is much more compelling.
Thanks Drews for the link:
Tibial Implants
I was thinking the same. Who knows if it's to appease the nasdaq hearing, or if it's due to something else cooking behind the scenes. I did find that odd. I mean with 36% of the vote outstanding, you push it out only 14 days and push up the start time an hour earlier which is actually 7:00am MT. Very interesting.