Here is the first draft of Letter #3 on a very quiet day. I used Wednesday's date to allow tomorrow for feedback and updates before the big send. We also need a revised distribution list to match the revised leadership team. Let me know what you think...
Subject (for email subject line): Titan Medical Shareholder Letter 3
January 18, 2017
To Titan Medical Inc. Board of Directors and Management:
This letter is the third such document from our group of shareholders who regularly communicate via the InvestorsHub Titan Medical message board, and the first to be addressed also to our new CEO. To Mr. McNally, welcome to the Titan Medical community. We do not know if you have been informed about our group and our prior letters, so for a very brief history, we banded together on the aforementioned message board to convey our concerns over the direction of the company last year. We are unanimously pleased to have you on the team. As a group, we had reached substantial agreement on the list of attributes we had hoped to find in a new CEO, and your experience shows you to be a great match for that list. To Mr. Barker, we would like to express our gratitude for stepping up to the proverbial plate as interim CEO when it became necessary, as well as for creating a new model for shareholder communications, and also for finding Mr. McNally to help guide Titan Medical through these next critical phases.
One of our greatest concerns in the past was the infrequency of communications from the company, leaving shareholders feeling as though we were “in the dark” with regard to our investments. In November, Mr. Barker wrote a Letter to Shareholders which was unprecedented in our recent experience, and greatly appreciated. He provided information and status updates on a number of fronts including personnel and leadership changes, funding, development, and the need for 2017 milestones toward regulatory approval and commercialization. Despite the tenuous situation we felt the company was in at the time, his letter appeared to initiate a new chapter for the company and for investor relations. We truly hope that the depth and breadth of that letter can be a model for ongoing investor communications, whether issued as a Press Release or as a Letter to Shareholders via the Titan Medical web site, as was the first one. The Investor Presentation dated January 5, 2017, is certainly pertinent to new investors who may be getting familiar with Titan Medical and the opportunity being pursued, but most existing shareholders are seeking more intimate details on ongoing operations. As this is now a period of rapid transition on most of the topics from the first Letter to Shareholders, we would hope that more such letters can be written with reasonable frequency. Some contributors on the InvestorsHub message board have also suggested that we propose periodic conference calls with shareholders, but either form of ongoing communications would serve to help dispel fears and increase confidence within the investment community.
The first Letter to Shareholders touched upon the topic of funding and the “desire and need to fund the development all the way to market.” Ongoing discussions on the message board frequently address the concerns over funding, including whether non-dilutive funding measures are possible, and if a merger or buyout is imminent in order to reach the commercial market. The latter options would likely reduce financing risk substantially, but most likely would also greatly diminish the ultimate returns for those of us who are in it for the long haul. This leads us to pose the following questions:
Is Titan Medical still committed to remaining an independent organization, or is it more likely that Mr. McNally’s strong experience in developing partnerships will be relied upon for a new direction?
Is the “Longtai deal” (as it is colloquially known) still a possibility?
Is Titan currently working with any private equity investors?
Might Titan be considering a reverse split for uplisting potential, or is the prevailing assumption that it would not be necessary given a natural rise in price per share due to imminent milestone achievements?
From a shareholder perspective, funding is closely tied to schedule. Can information be shared about the correlation of funding and schedule, such as approximately how much additional funding is budgeted to reach each of the imminent milestones? Also, have the 2017 milestones yet been determined from a schedule perspective?
We know in very general terms that we need to achieve conclusion of development efforts and design freeze, and we need to file for regulatory approvals, and we presume some amount of clinical data will need to be generated via pre-clinical and clinical trials to support the regulatory filings. Is there a fairly firm date anticipated for design freeze and some additional estimates for subsequent milestones?
How many SPORT systems are to be built as "production equivalent" systems for clinical trials and other activities, and what anticipated costs are associated with these early systems?
Are we actively working with the regulatory agencies to ensure we are on the optimal path to approval?
We understand that we cannot necessarily expect detailed answers to all these questions in a public forum, but this represents a sample of the most frequent topics of discussion among our group, and we feel they best represent our most pressing concerns at this time.
We also look forward to an increase in public exposure to the SPORT system as it nears completion, via appearances at trade shows, conferences, and trade journal articles both in print and on the internet. Updated videos on the Titan Medical web site to show SPORT's capabilities would also attract favorable attention.
In summary, we are grateful for the recent and ongoing changes in personnel and we feel the outlook for our Titan investments is certainly brighter than it had recently been. We believe that continued communications and frequent status updates are critical to encourage new investors and allow for a more optimistic outlook within the investment community, ultimately improving share price and thereby making subsequent funding requirements easier to fulfill. We hope our newly revised management team is in agreement.
Sincerely,
Name:
City/State:
Shares held as of January 18, 2017:
