What's next?
I can only guess based on the existing agreements, and the history of MDT's acquisitions. Again, this fits but may not move in an exact straight line.
We're coming to the end of the last agreement milestone, with the statement by Mc, that the loan will be paid by the end of the year (possibly earlier). It goes in 1, of 2 directions because it's linear and one has to fall before the rest of the options.
MDT already has requested an extension of time from which (speculating) they continue to negotiate either another agreement, or process for BO, and the BO value. No one EVER takes the first offer, and no ever makes the first offer - the actual target value that which they are willing to pay. I'm willing to say I'm wrong if MTD offers $6B-$10B right now. Not likely, so every step of the negotiation must feel like it's been earned, so each side feels like they've accomplished something in return for the compromise. My best guess is MDT is wrangling for another extended agreement, to support the series of conversations necessary with their BOD to authorize the final BO amount. Too many moving parts to explain in an email, but I'm sure (collectively) we see both sides.
Net-Net: MDT wants it both ways. TMDI BOD MUST NOT PERMIT IT. TMDI declares their willingness to pay off the loan and not extend the agreements, if they don't get enough cash and commitments/support. This may not sound like a great idea, BUT now time does not remain an ally of MDT. Competition creates stress and makes negotiations move at a different pace, than MDT may otherwise dictate. And MDT can always re-enter before any final decisions. NOTE: This is a scenario that does not need to exist. MDT's done a lot to get a seat as a guest of BOD's meetings. I don't see them going backwards from their position, knowing the condition of all the IP, its cross-applications, ENOS and TLL. I wouldn't bet MDT is a 1-steps forward and 2-steps back kind of company.
Option 1) MDT stays and further engages TMDI. MDT still wants to string this out as long, and as far as possible b/c they are on the inside of TMDI - for now. I'll bet it's an agreement, with a small % of ownership. If I were TMDI I'd offer license(s) to market ENOS in specific markets - none of the majors. TMDI's not going to market ENOS themselves, so they may as well get cash for something they aren't going to do anyway. IF, (big if) at this time, territory marketplace licenses are discussed, that's a big tell that ENOS is further along than many will admit. 60 procedures is a good number from which to know if they have a device that's usable, effective and safe. Dr. Estape would not associate his reputation with a poorly performing device. And IDT he wouldn't have permitted a video either.
THE BIG QUESTION at this stage is: "How much cash, for what % ownership, and will any IP again be licensed?" IT'S GOT TO BE A LOT OF CASH. 5% of TMDI (~7M shares) for $100M is ONLY $2B total value for TMDI (~$14 a share?). I would really negotiate for $150M, at $21 a share (~$3B), and start from their. It's a good basis from which to begin a BO value. Moving the BO value higher as ENOS continues to perform, and IP patents continue to increase. Keep that in mind. This amount of cash would not create a wild sp frenzy like Mazor. It's well below my estimated value of $6B-$10B.
Further, NO exclusive IP licenses, 100% of IP still resides with TMDI until a change of ownership. The % ownership by MDT must not have the ability to limit further conversations with competitors, or the pursuit of a change of ownership. My view - MDT wants it both ways, TMDI BOD MUST NOT PERMIT IT. TMDI's BOD's job is to ensure flexibility, and greatest ownership value. FINALLY - someone got that point across recently as Mc stated as much a few days ago. Great - now they're on record for understanding shareholders rights.
Option 2) MDT agrees to the completion, and TMDI pays off the loan. MDT watches closely and hopes TMDI flounders about. This is the biggest unknown for us, and MDT. If MDT really wants TMDI/ENOS/TLL, it's their nightmare scenario. They have no control of TMDI, and only 15 patents for camera and end effector IP. My biggest unanswered questions would be "how does MDT build an RAS SP robot with only 15 patents?" Now that $150M for 5% ownership looks like a steal.
And why would they consider building a SP which would take approximately 4-5 years (time contains the most risk & is the most expensive element) , $350M (probably more), and unknown complications submitting IP to USPTO? Incredible amount of risk, competing against what's already known about TMDI/ENOS/??? patents. Our patents have broad application, and not just for SP devices. MDT's has an inside edge. Why would they put themselves in the same position as previously stated by them - sharing revenue with competitors in the same market. Martha's already said he hates that. Guess we'll see how much he hates it.
To credit other posters previous messages - they still need to address the natural orifice trans robot surgeries. ENOS has the basic elements to address NOTES too. From my untrained eye, I'd think some of ENOS would need to be made smaller. But, again I'm not a surgeon, and would defer to those that have that experience. My comment is made to include another RAS market as part of "what next," that's been discussed many times here previously.
Some may say I'm dreaming. I say SO WHAT - they're talking about something. This isn't Tiddlywinks - it's highly possible. Why do I think this is possible? Answer: MDT is here. MDT could have gone anywhere in the galaxy, but came here. MDT wants something more than they can make. If they consider buying anything, that "something" has to move them ahead further in time, it must generate a lot of revenue for decades, is unique and defensible, makes Martha look smart, and gives them a strong possibility of market segment leadership, if not complete ownership. The bonus for considering TMDI - is the cross-applications of the IP, and TLL. Oh, and these would be the same benefits for any other global RAS device company. But again, Martha hates that.
We're worth $6B-$10B.
Good luck to all. Regards,BK.
