RE:RE:Do Your Due DiligenceI have to respectfully disagree with your statement that "this management has had 10 years to sell this product" because:
- The previous version 125L model is commercially flawed, because the sterilization process is so harsh that negatively affected equipment life much more than competitors' models. I don't think even the Steris or JNJ team could have pushed that product successfully.
- The current VP4 was not approved until Dec 2014. The exclusive Getinge distribution deal was signed immediately. Yes, this management team are the ones who signed up Getinge, but most investors (inlcuding myself) thought Getinge was a credible and logical partner at the time. Since this is NOT a co-promotion agreement, TSO3 has little to no say in how things would run commercially. This is true in any small biotech/large pharma type licensing deal, and not unique to this relationship
- This TSO3 management took its first opening to renegotiate the contract (because Getinge hasn't met the required minimums, specifically the 2018 PO). We could argue whether that was a good move because it killed the stock from $2.5 to its current price, but most of us would agree that something needs to be done now versus having a thousand of VP4s rotting in Getinge warehouses when the contract ends in 2020
- TSO3's own internal sales force started selling on their own on Jan 25, 2018. The typical sales cycle for a sterilizer is around 6mths. We must remember the hospitals that TSO3 is detailing to now are the hospitals that Getinge did not market to AT ALL. This means they likely never heard of the VP4, and the TSO3 people has to start from scratch: from introduction, to education, to talking to different stakeholders in a hospital system, etc. This will take time, not because VP4 is flawed, but due to where things are. I would guess many agree with TSO3's strategy in the most recent IAHCSMM conference--giving out a VP4 at $33k (our cost) led to a huge buzz and over 200 credible leads
I am advocating giving this management team another AGM before we judge them on their commercial prowess (or lack thereof) because:
- This management is doing things I considered appropriate in launching this device--strategy, type of people hired, etc.
- The sales cycle is 6mths and we are 3mths into our internal launch--this is too early to judge whether they are successful
- By next year's AGM, if things are still not moving commercially, I wouldn't hesistate booting these guys out
Finally, lots of doom and gloom on the Getinge relationship. Relating to my LinkedIn due diligence advice, does the activities of Getinge people (on the VP4) seems to you that they are preparing to wind down that relationship? It is interesting that several Getinge sales people only blasted out information on the VP4 in the last 3-4 months--only after Getinge started to pay VP4 specific sales commission?? Again, given the 6mths sales cycle, we won't see any true installations from these efforts till 2H18.