VCR - Ventracor Limited

[ralphski]

Hi visual



I just had a quick look at today's ann out of curiosity and yes it looks encouraging, but imo there are 2 basic fundamental issues to consider for anyone looking to buy as a long term investment as opposed to someone looking to make a quick buck trading the hype/ramping (I'm not saying you're ramping - but VCR used to be a rampers' favourite at another site).

1) I see commsec forcasts have 2007 and 2008 EPS forcasts as -5.4cps and +4.4cps respectively.

So before buying for the long term I would want to know if those forcasts take into account the event's in today's ann....ie....does today's ann change the market's expectations for the time table to production.

2) If the 2008 EPS forcast of +4.4cps isn't brought forward or upgraded as a result of today's ann then VCR already is on a prospective PER of ~24.5 and so any short term rally might be short lived.

Bottom line: unless someone just wants to take a punt on any hype, do your own research especially on stocks like VCR before buying.

Food for thought and good luck to anyone buying now and to those currently suffering long term holders

cheers

bullmarket

I am not sure where commsec pulled those earnings out of.


I did a 2/3 year back of the envelope price target the other day. I made an assumption/estimate that they will implant 720 devices per year, from 08/09. I thought two a day around the states is not unreasonable, given that there is according VCR 27,000 patients a year who need a transplant. Yes I pulled that number from where the sun don't shine... but quite frankly, I can't see anyone coming up with a more rigorously validated figure.

I also assumed

Payment per device 140000
variable margin (excluding fixed costs) per device 0.7
Cash burn rate $4,000,000+month
Trading @ PER circa 15

long story short the envelope showed a Price target of $1.987, or EPS of $0.13.


Whether that is anywhere near true or not, one thing is clear, if they can implant a few devices, they will make $s. Most of my information has come from (publicly available) interviews with VCR people, and info from competitors. I shyed away from stockbroker analysis, to form my own opinion. The long and short of it is, that VCR is an undeniably simple share, if they implant devices, the make money, lots of it. If they don't, it remains a yo yo.

The sack of gold goes to the Great Ape that can best guess the number of devices implanted in 2/3 years time.

 

[bullmarket]

Thanks ralphski

Commsec research data comes from Aspect Huntley as far as I know. What assumptions and input data was used to come up with their numbers I have no idea.

Your example shows that VCR's future earnings estimations can vary greatly between analysts depending on the assumptions that are input into the calculations and I suppose that is the tricky bit in trying to work out what is fair value for VCR, at least until they actually start producing and marketing, which imo is not a certainty yet and a little way off atm.

VCR is not the type of stock I normally look at - too risky for me. I just wanted to throw in my worth of concerns as food for thought.

It'll probably be a good idea to see if broker/analyst forcasts are upgraded at all in the next day or so given today's ann.

cheers

bullmarket

 

[visual]

Bullmarket,
abnamro generally seems to be the people who pay most attention to vcr,and their numbers take into account the milestones to be achieved and those already achieved,
so I doubt that their numbers are going to change seeing that they come up with the numbers taking into account the milestone

Its probably easier for you to go to the vcr website and look up the report.

 

[bullmarket]

thanks visual

I suppose then a lot depends on what PER the market eventually puts on VCR - and that is probably highly debatable as well atm.

If that forcast EPS of 4.4cps isn't upgraded by the market then at 120c VCR is on a prospective PER of ~27 or a PER of ~9 with ralphski's number crunching.

I'll continue to watch with interest from the sidelines

cheers...

 

[ralphski]

Just to add to the discussion, I am mainly concerned with one factor when it comes to VCR, potential profits.


According to my calculations they need to sell 460 units per annum to break even, if they retain the same burn rate, and margin per device.

Just to give you an idea of the changes in value with devices implanted per annum:

Patients SP EPS
400 -$0.45 -$0.03
500 $0.31 $0.02
600 $1.07 $0.07
720 $1.99 $0.13
800 $2.60 $0.17
900 $3.36 $0.22



So basically it all comes down to the number of patients implanted. The figures may change, but given the high margin per device, but high fixed costs, once they make money, they make lot's of it. How close I am to the numbers, I won't know for a while...

 

[saichuen]

cautious as we may be but the announcement released yesterday is definitely another milestone achievement for VCR. i do believe the outlook for VCR in the year of 2006 will be optimistic.



happy trading!

 

[bullmarket]

just happy to watch from the sidelines...

as I said in my original post "Bottom line: unless someone just wants to take a punt on any hype, do your own research especially on stocks like VCR before buying."

is a bit of reality creeping back in today or just some profit taking?....I don't know, but VCR still looks like a good day traders' stock and not for the slow or faint hearted.

cheers

 

[Knobby22]

I agree, bullmarket.

They still need to have a raising and there is still a lot of water to go under the bridge.

I have 800 bought recently, mainly to get in on the raising.
I did buy a lot more but found the stock to volatile and the risks too great for my liking so sold down.

 

[visual]

Bullmarket,
remember how I asked you not to let logic get in the way of my fantasy,yeh you got it vcr back down to where it was a few days ago,it just seems to always behave like that ,cant wait for it to release an actual product though,then well be able to judge it on its merits.until then back to the seesaw.

 

[visual]

Did anyone else get a call from someone representing vcr?
enquiring whether we had received the rights offer.
I`m thinking that perhaps its not being well received, hope i`m wrong.

 

[ducati916]

Total revenue for 2005 was $2.7million composed of "interest" earned on cash balances.

The net loss was a further $27million.
Total earnings of Directors = $1.16million or 4.3% of the total loss.
Total earnings of executives = 1.59million or 5.9% of the loss
This doesn't even include options & performance bonuses.

Revenues;
These fell in 2005.
Why?
Because as the cash is spent, so interest payments fall.

Total accumulated losses.
A staggering $84.7million.
Total funds contributed via shareholders = $123.0million

This company as an "investment" is of the most speculative nature. It has no earnings, burns cash at an unbelievable rate, and has no concrete idea of when if ever, earnings will appear.

As if that was not enough, the quality of the medical research is very low.
Patient numbers, recruited into the trials are so low as to provide zero statistical significance. The patient follow-up is too short.

The actual technology is barbaric.
We are talking about an open wound, that is vulnerable to opportunistic infection. The technology failed, and had to be placed on recall. That no patients died, may be down to sheer luck, but then again we'll never know, as the patient numbers were just so low.

With the increasing advances within stem-cell treatments, this is a real non-starter. CHF is an easily diagnosed, slow progressing condition, and very treatable in early stages. The potential monetization of this product will be fraught with difficulty.

jog on
d998

 

[Rafa]

i didn't get a call, but i don't think i'll be taking it up...

only cause I haven't got spare cash at the moment...
by spare cash, i mean cash that I don't want to invest in a resource company

when VCR finally does take off, i think us holders deserve twice the amount of capital gains tax concessions... that’s hows long I’ve held this share for.... hahaha… well, you gotta laugh about it…

 

[Rafa]

yike... just read the duc's post...
you've scared the hell out of me

 

[Knobby22]

duc, you better ring the CEO and tell him that the 15 (is it 20 now) successful inplants were good luck and he had better get out of the business of artificial hearts.

Also tell him there is no future in it as stem cell treatments are practically growing new hearts and it's only a matter of months.

While your at it, ring the CEOs of the nine competitors trying to do the same thing. Obviously there all run by idiots who don't have the clear thinking ability of yourself and would welcome your insight.

 

[ducati916]

Knob

duc, you better ring the CEO and tell him that the 15 (is it 20 now) successful inplants were good luck and he had better get out of the business of artificial hearts.

Funny that, I'm sure someone called Spooner was once upon a time the CEO.
Oh, he jumped ship to another, mesoblast, which by some ironic twist of fate is involved with.........stem cell technology looking at CHF.

You do realize that statistical significance is the GOLD STANDARD in medicine.
Without statistical significance demonstrated within the research methodology there will be no doctors willing to place their careers and malpractice insurance on the line to utilize a new technology that has not the highest research design backing the results.

Also tell him there is no future in it as stem cell treatments are practically growing new hearts and it's only a matter of months.

The aetiology of the CHF is one of the more important factors to be considered. By way of example mitral valve regurgitation, easily treated.
Aortic valve stenosis, again generally easily treated.

The move in medicine is away from invasive procedures, and towards preventative management. The market therefore is not a growing market, far from it, it is likely to be a shrinking market.

A shrinking market, that VCR has lost first mover advantage in.
Will it ever be able to compete on price, or any other metric?
I say no, but, that is simply based on an evaluation of the financial power of the competition arrayed against them, miracles do happen, or so I am led to believe.

Obviously, within your analytical paradigm, little things like facts, carry no importance.

While your at it, ring the CEOs of the nine competitors trying to do the same thing. Obviously there all run by idiots who don't have the clear thinking ability of yourself and would welcome your insight.

I'm sure that they would. Unfortunately they probably couldn't afford my consultancy charge.

jog on
d998

 

[visual]

Duc,
the recall was never undertaken because it placed people at risk.

however perhaps you should contact the people who over the last couple of years have been able to leave hospital and actually enjoy a good quality of life due to the ventrasist and tell them that the operation is barbaric and they should be dead, really.

Yes vcr is speculative but you know that when you go in. So we whinge a bit but your dismissal of the technology is mindboggling

 

[ducati916]

visual

Duc,
the recall was never undertaken because it placed people at risk.

Incorrect.
VCR implemented a field exchange. This field exchange was classified as a product *recall* by the Australian Therapeutics Goods Administration.

however perhaps you should contact the people who over the last couple of years have been able to leave hospital and actually enjoy a good quality of life due to the ventrasist and tell them that the operation is barbaric and they should be dead, really.

Well one is dead, and therefore is not contactable.
This however raises another study issue.
Patient selection, and selection bias. The previous data that I had looked at was not of a particularly high standard, and again, with a potentially life & death intervention, the research must at a minimum meet the gold standard, and ideally try to surpass the standard.

Yes vcr is speculative but you know that when you go in. So we whinge a bit but your dismissal of the technology is mindboggling

That is fine then. As a speculator, you have then risk management appropriate to your strategy, and have not exposed yourself to undue, or unnecessary risk in excess of that analyzed.

The *technology* is clever from an engineering point of view.
Unfortunately, it is just not clever enough.
Another example, the statistical significance of the risks associated with blood clotting due to intrinsic platelet activation, and or extrinsic activation.
This is a vital set of data that just has not been adequately tested.

Additionally, what was the rationale of selling the only profitable component of this business, back in 2003 sometime? This was the only source of revenue, and would have been instrumental in developing markets, and market contacts, never mind amortizing some of the R&D costs, rather than the shareholders...............oh yes I remember now, management claimed it was too difficult to manage...........

From a stock selection point of view, at $0.88'ish, it is grossly overvalued.
Even for a speculator, ignoring any fundamental analysis, there is nothing in the chart that currently suggests an entry point..........so why even bother with it currently?

The only other possibility is someone who purchased the *story* without regard to fundamentals, or technicals, and now is just holding and hoping that the hole doesn't get too much deeper.


jog on
d998

 

[visual]

Duc,
the people who are having the ventrassist implanted are people with no other choice, without this operation they would have died. So far the people who have died havent been linked to the ventrassist. The recall was not life threathening and not linked to any deaths. As for the price, its an open market, the market decides the price.
The ventrassist does not damage the blood, thats why all over the world its accepeted by eminent cardiologists as a good product, so far its outlasted everyones expectation. Once all the data is in then we`ll see.

 

[ducati916]

visual

the people who are having the ventrassist implanted are people with no other choice, without this operation they would have died. So far the people who have died havent been linked to the ventrassist.

And how has this been ascertained?
Through statistically significant research?
Not a chance, that is simply the marketing blurb released to the media.
The truth is, the research design is of a low standard, and none of the difficult questions can be answered, because there is a paucity of relevant data.

As for the price, its an open market, the market decides the price.

The *price* relates to a value.
The value, is very generous at $0.15, and represents the value of the patents, that could be used in other industries. The value in the medical industry is probably not that high.

The ventrassist does not damage the blood, thats why all over the world its accepeted by eminent cardiologists as a good product, so far its outlasted everyones expectation. Once all the data is in then we`ll see.

Incorrect.
It most certainly does damage blood components.
The *damage* was deemed non-material by the company.
Which just highlights the question...........how do they know it's non-material.
Do they have statistically significant results by which such a claim can be supported by the evidence?............Not even close.

As to being accepted by eminent cardiologists..........
When they are no longer on the research payroll, and they have to take responsibility, and put at risk their liability insurance, and their careers on the line, we'll see how many really believe.

jog on
d998

 

[Knobby22]

duc loves an argument or should I say his real identity....

Sideshow Bob!