Arthro Kinetics Share Discussion Threads

[jonwig] 27/9/2006 08:00

Yes indeed js (nice username ...).
I suspect they knew the bare numbers would disappoint, and had these 'side-dishes' lined up to help take the taste away!

[jane seymour] 27/9/2006 07:51

Looks like another positive announcement !!!

[learntlesson] 26/9/2006 10:19

Ah! they've pulled out the C word! the same C that made me by into BYOT and CYAN

[jonwig] 26/9/2006 07:30

This could address some capex fears, though giving away some profits further ahead:

TUESDAY, 26th September 2006 - Arthro Kinetics plc (AIM: AKI) ('Arthro Kinetics'
or 'the Company'), the pioneer orthopaedics company dedicated to regenerating
joint mobility and spinal disc function, announces that it has signed a
memorandum of understanding for the establishment of a joint venture with
Tianjin Anda Group Holding Co. Ltd ('Tianjin Anda') for the commercialisation in
China of its CaReS biologic cartilage regeneration products.

[jonwig] 25/9/2006 16:53

adgd2 - yes, like you I tend not to hang about if I lose confidence in a share.

In the case of this one, there was plenty of buying around the time of the big drop, and I suspect most of today's selling is this hot money chasing the exit.

Anyway, we'll see - I have a stoploss and will stick to it.

[learntlesson] 25/9/2006 16:53

hang on! is the mkt cap 2million or 13million - only just spotted the descrepancy of my sources!

[adgd2] 25/9/2006 15:39

With a spread that wide I am sure the MMs are happy to churn some!

Sold out at a loss given the poor reaction. will sit it out for a while, and watch for a possible reentry, probably after full years come out. Will be interesting to see what they do with the R&D budget if it starts getting tighter for cash.

[jonwig] 25/9/2006 15:10

Well, that was prescient of you KL - and only 19,000 shares sold for a 10% drop.

I suspect Mms are having problems finding a price level to keep their books square, and still hold plenty of the 150k sale.

[katylied] 25/9/2006 10:40

Yes jonwig, and going by the figures shown they will be trying to raise more money within the next 12 months. Add to the 6 month operating loss the current liabilities and there isn't very much slack in the finances. My comment was about the recent... unaware of any fundamental reason for the plunge... statement by the company. The numbers tell me, a somewhat different story...

[jonwig] 25/9/2006 10:30

Well, KL, I hope not.
It's in their interests to be suitably 'open' in the country where they'll be raising more cash?

[katylied] 25/9/2006 10:18

Stage 2 of the fall begins today. German company
isn't it? Not quite the usual 'disclosure'
standards, that punters expect on AIM...

[jonwig] 25/9/2006 10:03

Yes, adgd2 - cost of sales shouldn't look like that!

Not remarked on was this (underlined bits) from the AFX report on the 22 August RNS:

LONDON (AFX) - Orthopaedics group Arthro Kinetics PLC moved to reassure the
market and said it is unaware of any fundamental reason for the plunge in its
share price, which more than halved yesterday after a shareholder sold 150,000
shares at a significant discount to the market price.
A seller sold the shares at 30 pence each, 75 pct below the stock's opening
price. The move caused the share price to drop from 111.5 to 55 pence Monday.
The German-based company, which makes a range of biologic implants for
joints and the spine, floated on AIM at the beginning of March, selling shares
at 120 pence each.
The group's house broker Nomura Code Securities said this morning that in
its view nothing has changed the fundamental prospects of the company since the
IPO, and that the scale of yesterday's move was more reflective of the
illiquidity of the stock.
The shares sold represented a 0.5 pct stake.
Nomura Code expects Arthro to break even next year.
"Operationally the company seems to be progressing to plan," it wrote.
At 12.40 pm shares in the company were trading 1.5 pence lower at 53.5,
giving a market value of 15 mln stg.

I'd expect a broker note with some projections after these numbers, and would hope that this rather high cashburn is start-up and training costs rather than what to expect as an ongoing feature.
Break even next year??

[adgd2] 25/9/2006 09:51

To me the real downside is the cash situation - only one year left. Sales will have to start moving some to cover operational costs, otherwise they'll be back to raise more money.

It is also interesting to note the following (hopefully formatting doesnt screw up)
1H06 2005
Revenue 901 1,400

Cost of sales (995) (977)
----------- ----------
Gross (loss)/profit (94) 423

Distribution expenses (1,088) (1,539)


The cost of sales for 1H06 is higher than the full year previous! Maybe this has something to do with opening up the new markets, I am not sure. Also the distribution expenses are extremely high (I presume that arises from the need for highly specialised biological transport procedures/couriers).

Like you jonwig, I only have a small holding, and am happy to hold as a speculative punt.

[learntlesson] 25/9/2006 09:09

Nice summary jonwig!

Yep there doesn't seem to be any reason for a big jump - but it certainly seems to be fair value, so what would hold this back if they were to announce a nice deal?

2.5 million, without going into it, seems cheap for a company with 7mil cash.

Growth potential - well we all know there are more old people these days etc. - what's more there are more private health contracts owned by those old people. Every development advancing cancer therapy, cardiovascular health etc. is another year or ten that we must suffer our aging joints...

Must be something to be said for investing in a company that might actually help you one day (or somebody else)!

[jonwig] 25/9/2006 08:57

HY results.
Good points:

• Revenue increase looks strong (+50%),
• Surgeons' strike in Germany deferred rather than lost revenue,
• [CaReS]"...signed European distribution deals covering Italy, Switzerland and the Netherlands and expect these to begin generating revenues in
the latter part of 2006....anticipate signing agreements covering the UK and Greece in the second half of 2006....added to our existing footprint in Australia ..."
• [MISS] "...received FDA approval for the endoscopic suite of its Minimally
Invasive Spinal Surgery (MISS) product range in August 2006. Initial feedback
from surgeons in the USA and Latin American ahead of the approval has been
extremely encouraging ..."
• [Outlook] "Market demand for biologic based joint regeneration and minimally invasive access is significant and both areas are forecast for strong growth in the
future."

Bad points:

• "...operating cash outflow in the first six months of the year of €3.0
million (31 December 2005: €2.4 million) and held cash of €7.3 million at the
half-year (31 December 2005: €3.8 million)." Looks a bit tight.
• how do they manage a loss at the gross level? It's unclear how they have recognised 'cost of sales'.
• [MISS]"In Asia, expansion is proving a challenge ..."

Overall, I don't see any coded nasties here, but also nothing to send the share price ahead quickly.
Suppose the 150k sale hadn't happened, and the share price has stayed around 110p. Would these results have sent it to 52p? Very doubtful.

LL - for me, a strong hold. I've only 2000 shares, and intend keeping them.

[learntlesson] 25/9/2006 08:45

I can't bring myself to go through the whole report this morning. What do you say jowig? is it a buy or a sell?

[jonwig] 24/9/2006 17:50

Revenue figures for Ars Arthro (larger component) in Eur'000, taken from prospectus. For some reason no figures for FY05.

FY03 FY04 H104 H105
Revenue 313 694 331 735
Cost of sales (1,350) (888) (440) (583)
Gross (loss)/profit (1,037) (194) (109) 152
Loss for the year/period (4,514) (6,065) (3,052) (3,858)

Doubt that Endospine (EKL) will contribute more than £0.15m to revenue for the HY.

[adgd2] 14/9/2006 08:19

Yeah, its a bit disappointing, but I aint getting my panties in a bunch about it . Prospects for sales growth of Cares have enhanced significantly compared with 1H05 (sales agreements in Australia, New Zealand and Italy) when ARS had revenues of over £1m, which I feel easily supports the current market cap of £15m.

I am hoping to see some revenue guidance in the half-year results, maybe then a wider audience will become interested, which is why I feel the share price has been sagging - just not enough interest yet.

[jonwig] 14/9/2006 07:24

The FDA 510(k) documentation:



Share price sagging again - I won't add before the results on the 25th.

[jonwig] 07/9/2006 09:36

Yes. And the nms is pathetic - I had to phone in (took ages) to get just 2,000 shares.

[quotes_4_u] 07/9/2006 09:35

Shame there's only 2 mm's here and they are both very twitchy !

[jonwig] 07/9/2006 09:33

Thanks, q4u - this is the news which was originally flagged for completion in H1.
Also it's very much the centrepiece of their development strategy!

...announces that it has received approval from the US Food and Drug Administration (FDA) for its endoscopic instrumentation 510(k) application.

[quotes_4_u] 07/9/2006 09:30

Big news and one mm is still asleep.