Sphere Medical Share Discussion Threads

[cc2014] 28/7/2015 12:47

Fantastic article Tim. Reminds me to be patient and not sell too early

[timbo003] 27/7/2015 23:26

Thanks for that thought provoking post Buywell

I would not disagree with much of that analysis for our domestic market, however, based on what was said at the AGM I suspect Europe is likely to be bit easier than the UK, which gives some comfort, but Sphere will definitely need the USA and to achieve rapid success there they will need a partner.

Your post prompted me to go off and look at the Proxima competitors





In particular the Abbot I-Stat POC product as that is the one which seems closest to Proxima conceptually.






At the AGM the directors described the I-stat as very expensive and looking at the catalogue prices it's not difficult to see why:



Interesting to see that since launch they have sold 30K units in the US and 20K units in the ROW which definitely gives us an idea of the relative importance of the USA for Proxima

The (single use) cartridges aren't cheap either



I-Stat used to be an independent company, it launched the I-Stat hand held device in 2002 and was promptly taken out by Abbott in 2003 for $392 million



I think most Sphere shareholders would settle for even a small fraction of that!

[cc2014] 27/7/2015 13:31

I think the sales curve is likely to look different. At the moment the product is very new and clinicians are going to require convincing. No amount of CE marks or regulatory approval will be enough for the first few adopters - they will want to be very sure that there are not detrimental affects on critically ill patients.

However, as soon as they have 10 hospitals using it on a regular basis, all of which can be used as reference sites, it is my view take up will be fast. A 4-9 month lead time will be reduced to a month as it will be possible to see it in operation at other hospitals.

I also remain unconvinced a sales partner is required although clearly this has been the strategy so far. Word of mouth is so much more powerful and clinicians in the UK have plenty of forums to share best practice.

[del44] 27/7/2015 12:50

You do make some good points buywell3

[buywell3] 25/7/2015 18:01

Thanks timbo003

It seems to me that a cash strapped NHS is going to go down the road of leasing these units

I have seen this happen with other companies .... from the links , even a price of £3k a unit is too much at the present time


This is the problem .... from your 1st link

Q: How are UK sales going?
A: Sphere has 10 advanced opportunities: 9 in the UK, 1 in Germany. They have received intent to purchase note from Birmingham with the first sale due in H1. The procurement process in the UK Is long winded, it really helps if one of the senior medics becomes a champion. Sphere provides a lot of assistance in preparing the business case for each purchase.

Q: How are these sales structured?
A: The Proxima unit will cost £3K to buy outright, although most customers want to “rent” the proxima unit and then pay a premium for the disposable cartridges, the cartridges can be priced at £200 (plus) each, but prices will depend on volume. It’s one cartridge a patient with a maximum recommended duration of use of 72 hrs. They don’t know for sure how many patients for each Proxima unit, but it is probably in the range of 10 – 20 patients per month.






Whilst interest is talked about in rising numbers , the cash coming in for this year could be say from 10 hospitals out of the 25 mentioned ordering cartridges at £200 a pop for around 15 patients at each hospital

The lease would have to be cheap to get a foot in the door , say £500 a year per unit


Assuming this to be the case

Turnover for the year could be

10 X £500 = £5,000

plus

15 patients X £200 X10 = £30,000

Total is £35k

Which is peanuts and assuming 2016 saw double the amount of hospitals going for Proxima 4 with a dearer cartridge at say £300 a pop

2016 Turnover could be £15k from leasing plus £202,500 = £217,500

Assuming a doubling again in 2017 and a bit of revenue for enhanced cartridge improvements Turnover might be £500k

Can you see where I am going with this ?

Current cash raised is likely to get used up in how long ? 2 and a half years ?

Assuming a 100% improvement in turnover annually 2018 = £1m , 2019 =£2m , 2020 = £4m

When would profits be hit ?

2021 perhaps , but there would have to be two more cash raisings of circa £13m during that time

I will check cash burn numbers to see if my thinking adds up

The future is NOT in the UK with the NHS for sure as companies like DEMG and LID have found out

Getting established in the USA costs .... so cash burn will rise

Re my turnover doubling year on year for 6 years PLUS 10 hospitals leasing units in 2015 .... I think I have been very generous

more likely another 2 years minimum will be needed ie 2023 to hit £8m turnover and make any profit .... getting sales is proving to be difficult , the EU is in trouble , and a trained USA sales force is going to cost quite a bit , adding circa £1m a year to costs


Currently this looks just shy of £6m a year, moving sales into the USA will I believe take this to £7m plus






Just watched the proactive investors video


A partner is needed to achieve sales penetration

But, no partner is going to get involved till the equipment demonstrates it can make money

I put it to you that leasing it to the NHS on the above figures will not encourage anyone

[timbo003] 25/7/2015 10:05

>>>>buywell

Yes, The question on Proxima 4 (and Proxima 5) has been asked before (twice), and answered by the directors (twice), see links to meeting reports below:

[buywell3] 25/7/2015 06:49

If an enhanced version , Proxima 4 is coming to market in 2016

Which does more than Proxima 3

Have you discussed how such an enhanced product will affect the potential sales of Proxima 3 ?

Why for instance should a hospital buy Proxima 3 later this year when it can buy a better enhanced version next year ?


Proxima 5 coming soon it would seem




Market penetration

Proxima 4 (launch expected in Europe H1 2016)
Add glucose and sodium to sensor panel
Connectivity to HIS/LIS systems
Obtain FDA approval


Future product evolution planned
Expand analytes on sensor panel
Penetrate new target market segments

[cc2014] 24/7/2015 22:38

Well another 75k gone today. Not sure what else to say than it can't go on forever and it's clear it's only one institutional seller supplying these shares

[del44] 24/7/2015 20:17

Or Institution A may have approached the MM in particular, some time ago and had his bid @ 17p accepted for the bargain.I would imagine more then one institution is happy to buy large trade bargains @ 17p....as I am sure most are aware after the AGM that certain institutions are now sellers....So again....yes matched bargains (trades) but different institutions......

Either way we can agree that stock is changing hands in big blocks...:-)

[cc2014] 23/7/2015 22:59

I see your point Del but I look at it this way.
If the buy and the sell are both at the same price the MM doesn't make any money so something else is going on. In this case I things it's either

a) MM gets up in the morning and gets asked for 413,220 shares. He gets them from his mate the big seller and at the same time tops it up to 450,000 as he knows there is news today and he can shift the rest onto some PI's at 17.6
He might be prepared to do it for the same price as a package of deals with other stocks where he can make some money

b) The other way round as he already has a few shares left over from the day before and only needs 413,220

c) his big seller only has 413,220 left but he's got a buy order for 450,000


All we need to know is the stock is now rotating from one big seller to other institutions (rather than PI's). This is probably the best place they could go to as it keeps the free float low.


I could put forward another argument for why the trades are matched. What are the chances that 2 buyers turn up within two minutes of each other for 400k shares? or 2 buyers turn up within a minute each wanting exactly 2m shares?

They have to be matched imho. I think we will know soon enough who is selling and we will see a massive drop in their holdings.

What we do know is that we are getting there. I bought all my stock between 16.3 and 16.8. Whoever was selling down there is gone and now we have one large seller who demands 17.0 and the MM's require 17.6 to sell them on

Once the seller is finished it will move up. Next bit of news will be commercialisation agreement. I won't be surprised if SPHR have an alternative plan to OCD - I think this CEO is more commercially astute and is just what is needed.

[del44] 23/7/2015 21:24

CC2014:
I still see these trades as two separate trades...
=========
23-Jul-15
13:51:32
17.00
413,220
==========
23-Jul-15
13:49:21
17.00
450,000

I understand your point but it makes no sense to print the trade twice.....
To my mind, that has been close to 5.4 million shares traded @ 17p in the last week or two...
But that is just my understanding of the over hang been dealt with....as to for how long, I have no idea....The MMs tend to move the spread very wide when a block is going through, hence, everything looks like a sell of late.

But that is how it has been with this stock from day one @ 92.5p...I'm afraid. That we have buyers for the stock @ 17p is the only bright spot that I can see for the share price at the moment....

[cc2014] 23/7/2015 20:56

I suspect once again that the two large trades at 17p match and are delayed.

I would suggest the trades took place pre-opening yesterday and thus the reason for the MM realignment. If you believe L2 SHOC have been dealing with the big seller and by moving off the offer the big seller is done.

WNTS and are sitting on both the bid and the offer now and we still haven't enough trade flow to establish since yesterday whether the overhand is finished.

Unfortunately it seems the PI's who believe in this stock are now arriving only in small quantities and aren't enough to significantly outweigh those PI's who are bored of waiting and are moving on to something else.

On this basis WNTS will be happy to stay on the bid and offer and make 0.8p on the turn.

Sooner or later things will change. Just requires patience. I suppose it's not unexpected to find little PI appetite right now with FTSE down nearly 500pts since early May. Lots of bargains out there

[del44] 23/7/2015 15:17

Cheers Tim...
One wonders what it will take or how long it will take for this to move....
Over hang is unending.....

[timbo003] 23/7/2015 15:13

No change since yesterday on L2 Del

[del44] 23/7/2015 14:54

Tim...have any of the MMs moved around after the large trades placed @ 17p today?
Thanks...

[timbo003] 23/7/2015 14:36

A tiny bit of press coverage (don't get too excited)

[del44] 23/7/2015 14:06

863,000 shares just gone through in two trades @ 17p..
Someone dumping ....someone buying....

[cinquepercento] 23/7/2015 09:11

Thank you,Del44 and timbo003 for the information and reassurance re:Ortho Clinical Diagnostics.
Cinquepercento.

[timbo003] 23/7/2015 08:07

>>>>Cinquepercento

Ortho Clinical Diagnostics (OCD) are a privately owned company, you cannot buy shares in them.

Furthermore OCD are a very large company with multi-billion $ sales, so even if they were a publically owned company in which you could buy shares, Proxima would only constitute a small part of their business so would only have a small effect on their overall sales and profitability.

[del44] 23/7/2015 07:57

OCD already have access to the market customers that P4 is looking for...
The negotiations will need to be beneficial to both parties but not at the expense of one over another. OCD got diluted down in the recent open offer, which indicates that there may well be others out there who see having sole global distributions rights to Proxima as quite profitable to have...

[cinquepercento] 23/7/2015 07:51

If O.C.D take up their option to acquire exclusive commercialisaton rights to market Proxima worldwide on behalf of Sphere medical, who benefits the most from this,OCD or Sphere Medical?
In other words: should I be buying shares in OCD and not in Sphere Medical?
I am already holding a several thousand shares in Sphere Medical.
Will Sphere Medical just do all the work while OCD gets all the financial rewards?
Cinquepercento.

[cc2014] 22/7/2015 18:47

Bit of a disappointing day with not enough buyers to test how long wnts want to stay on the offer. Probably lots of bargains elsewhere too on such a bad day on ftse

[del44] 22/7/2015 15:47

Cant find any time fram from submission of the data document...but it is in my head that it is only around a month for OCD to say yeah or nay on the negotiations about P4.

The option agreement allows OCD to require both parties to enter into negotiations to allow OCD to acquire exclusive commercialisation rights to market Proxima worldwide on behalf of Sphere. Under the terms of the Collaboration Agreement, the trigger for these negotiations, which must be conducted in good faith by both parties, is completion by Sphere of the Data Package containing the Milestone Reports, and this is currently anticipated to be achieved by the middle of 2015 which is within the originally anticipated time frame set out in the Collaboration Agreement.

When prepared in due course, the Milestone Reports will cover a number of Sphere's operational and production capabilities, which are designed to provide evidence that Proxima is ready for global commercial launch. These Milestone Reports cover, among other things, CE Marking, post-marketing surveillance for Proxima, manufacturing improvements, clinical cost benefit analyses, utility analyses and the achievement of certain clinical specifications for Proxima.

[del44] 22/7/2015 15:37

I cant find it at the minute but I think they have a limited time frame after the submission of the document today....perhaps a month in which to study and get back to SPHR....
I will hunt down that info later...

[waterloo01] 22/7/2015 14:54

I wonder how quickly they will get a response from Ortho? Regardless if not them ANO are likely to do a global deal. Given you can buy at the recent OO price, it should be a rather good time. Woodfood and co would have an idea of any deal value.