BioElectronics Chairman Outlines New Direction for Company
FREDERICK, MD, Aug. 10, 2020 (GLOBE NEWSWIRE) — via NEWMEDIAWIRE – BioElectronics Corporation (OTC: BIEL), (www.bielcorp.com) today released a Chairman’s Letter to Shareholders written by Dr. Richard Staelin, the Company’s Chairman of the Board.
Dear BioElectronics Shareholders :
The purpose of this letter is to update you on the activities of BioElectronics Corporation over the last 10 months, their results, and the impact of these activities on the future of the Company. Although many are probably most eager to learn about these results (which are detailed first), I encourage you to also read my discussion on the underlying logic which led us to where we are today, since it is this logic that forms the foundation that will drive your Company forward over the foreseeable future.
Results to Date
- We now have signed long term contracts with, and received initial stocking orders and cash deposits from, three major companies. These initial orders total more than 120,000 ActiPatch devices. These three companies will be selling our devices into the United States over-the-counter (OTC) consumer health retail market. They will differentiate their offerings by utilizing different retail channels, branding strategies, and attachment systems (to affix the device on to various locations on the body). Their retail launch dates vary but are currently scheduled between Q4 of 2020 and Q2 of 2021, reflecting industry practice for retailers to plan launch times six to nine months into the future.
- We also have a signed agreement with a commercial firm that is in the process of recruiting and training up to 400 independent sales representatives who will actively sell our RecoveryRx postoperative pain product line into doctors’ offices, wound clinics, nursing facilities, and hospitals. As with the three OTC retail-oriented companies mentioned above, we will act as the original equipment manufacturer (OEM) for this sales force, providing them with devices upon receiving purchase orders. The principles of this sales force anticipate that sales will begin in Q4 of 2020 and ramp up over the next calendar year.
As an OEM we must respect all of these buyers’ requests not to reveal any specific information about their identity or marketing and sales plans. However, at the appropriate time, probably after retail product launches, BioElectronics will provide more information about each venture in news releases.
- In terms of international sales, we recently signed a licensing agreement with a major international company and are in the final stages of signing an agreement with another large international company. Both of these companies need to register our products with their respective local medical regulatory authorities before they can distribute and sell our products. In addition, the sales force of our long-standing distributor, Mundipharma, has reentered the field after a slow down of sales activity due to the pandemic. Based in part on this new activity, they are forecasting a reorder in Q4 of 2020.
- Our engineering and clinical team has continued to improve our understanding of the mechanism of action for the technology behind our devices and to develop new versions of our products. In addition, in conjunction with some of our new sales representatives, we are in the process of establishing new clinical alliances to further strengthen the clinical evidence on our devices.
The Strategy, Plan and Underlying Logic
In early November of 2019 senior leadership started working on developing a long-term strategy that would allow the Company to better compete and thrive in the pain care health market. This team was composed of the current Board, Kelly Whelan, Keith Nalepka, and myself, and augmented by Dr. Sree Koneru who heads up our product development team. Early on, this group concluded that the Company’s core capabilities were its deep knowledge and experience in Pulsed Short Wave Therapy (PSWT) technology which is the use of non-thermal, high-frequency electromagnetic fields for therapeutic purposes.
This knowledge had already enabled the Company to acquire three 510(k) clearances from the U.S. Food & Drug Administration. This expertise also allowed the Company, working with its trusted manufacturer, to develop processes that enabled mass production of high quality, effective, low cost PSWT devices. The group felt that these two core assets not only allowed the Company to successfully compete in the United States medical and retail markets, but also efficiently a) develop new product offerings that would better serve different segments of the pain management market; and b) launch new initiatives into other neurological ailments linked to chronic pain, such as overactive bladder and migraine headaches.
The question then facing the leadership team 10 months ago was: “How does the Company leverage these core capabilities (both human and product related), given its very weak financial position?”
The group quickly coalesced around the strategy of not trying to directly sell its existing products into either the medical or retail markets in the United States but instead becoming an efficient, low-cost original equipment manufacturer (OEM) that would form strong relationships with other companies that not only had the financial resources, but also the marketing expertise and knowledge to effectively introduce our devices into these markets. With this noted, we also decided to strengthen the Company’s international footprint, by continuing to contract with noted international companies and provide them with products and clinical evidence (and thus verifiable claims) that would help them be successful.
This two-pronged OEM selling strategy had a number of implications. First, it did not require the Company to acquire large sums of (expensive) outside financing to penetrate these large and complex domestic and international markets. Second, it meant that the Company would seek to do business with multiple companies, many of whom serve niche markets not easily available to us. Third, it implied the need for us to continue to develop innovative products to attract new companies (customers) and markets, as well as enhance our offerings to our existing customers.
The Last 10 Months’ Activities
Armed with the OEM strategy, we aggressively pursued activities intended to support this two-pronged selling approach. Members of the sales team began communicating with several potential domestic and international companies. Concurrently, a major effort was initiated by our regulatory and engineering staff to accelerate the renewal of our CE mark, thereby allowing us to export product to the EU and other international markets.
Just as we were making some progress, it became clear that the world was facing a pandemic. This unanticipated event had many ramifications for us. First, it limited our ability to work centrally. In addition, it also greatly affected our two potential markets. Many retailers significantly altered their buying processes and thus their willingness to accept new products into their channel system. Likewise, many doctors who normally performed elective surgery (which requires pain management) temporarily discontinued their practices.
Despite these realities, we continued to follow our strategic plan and focused our efforts on establishing strong channel relationships. In addition, we started working with our manufacturer to develop variants of our existing product line. As a result, we now have the capability to design products that vary along four dimensions: battery life, on/off functionality, treatment (antenna) size, and aesthetics (color, branding logo, etc.). This should greatly enhance our ability to meet the special requirements of niche markets.
I am happy to report that BioElectronics has made substantial progress in the last 10 months. It has developed a new strategy that centers on OEM and research & development activities. This has allowed the Company to establish several new distributing relationships and develop new product offerings. The intent of this letter is to update investors on the results of these new initiatives and the logic behind these initiatives.
Finally, I would be amiss if I didn’t mention that although our progress is encouraging, the Company still needs to continue to focus single-mindedly on our core capabilities and work hard to ensure that these newly established company relationships remain stable and profitable for all members within the channel. In addition, we need to continue to monitor our costs and keep our cash needs as low as possible and to maximize the cash intake as we build up inventory to meet our anticipated demand. We cannot lose sight of staying ahead of the curve in terms of leveraging our PSWT expertise. These challenges are substantial but within our abilities.
I anticipate reporting to you significant progress over the next 10 months via a series of news releases. Until then, I want to thank the current shareholders for their willingness to stick with BioElectronics Corporation.
Richard Staelin, Ph.D.
Chairman of the Board
About Dr. Staelin: Richard Staelin is the Edward and Rose Donnell Professor of Business Administration at The Fuqua School of Business, Duke University. He served as Associate Dean for Faculty Affairs at The Fuqua School from 1984 until July 1991. For the next two years, he was Executive Director of Marketing Science Institute in Cambridge, Massachusetts. After that, he served as Managing Director of The Fuqua School’s Global Executive MBA program (GEMBA) 1995-1997, Associate Dean for Executive Education 2000-2002, Co-Director of the Teradata Center for Customer Relationship Management at Duke University 2000-2005, and Deputy Dean 2002-2004. As of July 1, 2004, he stepped down from his administrative duties to devote all his attention to research and teaching. Subsequent to that he was one of the initial members of BiVarus, a start-up that utilized his research on patient experience data and its relationship to the quality of healthcare.
About BioElectronics Corporation
BioElectronics Corporation is a leader in non-invasive electroceuticals and the maker of an industry-leading family of disposable, drug-free, pain therapy devices: ActiPatch® Therapy, over-the-counter treatment for back pain and other musculoskeletal complaints; RecoveryRx® Devices for chronic and post-operative wound care; Allay® Menstrual Pain Therapy.