Yes rh8178  I saw the quarterly update and like you was left wondering at the severity of the sell off.  On the 26/11/24 ARX released guidance of Revenue NZ$80m - $87m and normalised EBITA NZ$2m-6m. Released yesterday were guidance figures of NZ$81m - $84 and NZ$2-$4m. Down, however you would not think a disaster, though these things are all about expectations.

Unfortunately there was a power outage in my area and I did not get to hear the conference call and so do not know if there were any clangers revealed there. In the absence of that taking place I can only think the 24% price drop and further 5% at the time of writing is telling as you indicated, just how jumpy the market is.   We have seen the same with NEU, with it rising 32% in the last 12 days on the back of no news that you would think would justify such a massive change in valuation. Remembering ARX has a market cap of only $270m, so it would not take much selling to push the price around. 

The albeit self-promoted Myriad study was also released yesterday, and showed the product to be both clinically and cost wise top of the (self selected) competitor pack.

I like the management at ARX and the financials appear to have stabilised with ARX having cash of $A20m. I see the main short term risk to ARX is the viability of its US sales partner Telabio.  Telabio accounting for almost half ARX sales and sales to them were down.   

 As to the ARX business I like to look at it like this: If you took away the top 10% and the bottom 10% of surgeons and compared their work over say 100 procedures then I suspect there would be very little difference in patient outcomes. All surgeons are egomaniacs.  So, if you can convince them a particular product is superior, and I think there is some justification that ARX products are, then they are unlikely to stop using them.  The uniqueness of the ARX sheep guts product and accompanying story, I suspect may feed into the surgeons own sense of self.   Only my subjective opinion. We will see what time brings.

(By way of context. Two weeks ago my wife had a bad case of appendicitis and post the operation the surgeon would do his rounds at about 7:00am each morning. I would be there, and on one occasion questioned him as to why the TAZOCIN IV antibiotic was being terminated after 3 days when the product sheet says:  “….. should be given for at least 5 days, and for 24 hrs after all signs of illness and fever have gone.”   

A reasonable person might have responded with something along the lines of:  “Well what you say is true, however when the CRP readings are below 100 and going down and you continue with a course of oral antibiotics straight after the IV dose, it will be just fine. This is standard practice, and have had no relapses in the last x years I have been doing this”.     Instead Napoleon chewed me out for having the temerity to question him. No wonder these guys get sued).