I don't often post on HotCopper but I thought it might be of interest to others if I passed on what I learnt from my recent conversation with Brian Mower. But first, and in broad agreement with what @Rockford said, I just want to make a general observation about the share market - with respect to biotechs in particular. A wealthy friend of mine describes the biotech market as, "An Exercise Yard For Lemmings." He would know since he made a good chunk of his money investing in Sirtex Medical when everyone else was selling - due to problems relating to management and a challenge to one of its patents. At a low of about 70cents he bought in and when the market saw the problems resolved and the Sirtex product getting accepted and revenue flowing he eventually sold out at prices between $40 and $50.
Well, Medibio has a different product to Sirtex, but the reaction of the market to what will surely turn out to be temporary problems within management is not that different. The underlying product is what counts.
Now to my conversation with Brian Mower. Firstly, I found him to be very easy to talk to and very clear headed and I was grateful for the time he gave. I recommend anyone with questions to get in touch.
My main concern was to get a stronger sense of the viability of Medibio's underlying technology. This is the crucial investment question I think: if the technology is sound, then capital raisings and management issues will sort themselves out. (I'm not saying that management isn't important, just that they have to have something worthwhile to manage.)
Here are the key points I confirmed from my conversation.
1. Medibio is submitting its technology as an AID to measuring stress levels - not as a diagnostic in itself. As an aid, in a market which has nothing equivalent at all, it has a much better chance of FDA approval.
2. The DXO4 trial was reduced from 220 enrolled to only 85 subjects in the end - and had the sample been just a bit larger - slightly more than a hundred - then a statistically significant result would have been achieved - all other things being equal. (The sample size was the issue, not the technology - but the market reacted otherwise.)
3. Medibio's algorithm is an excellent fit for other wearable devices - or in the near future - for implantable devices. This makes it widely accessible.
4. Beyond the confirmation that we have in fact got a commercially attractive product, I was greatly encouraged by Brian Mower's confidence and optimism. I also have the impression that we'll get a new CEO soon - and I think the calibre of the individual - whoever it is - will be a very good indication of the strength of Medibio's commercial potential.
Best to all. (And remember Sirtex.)
