November 26th, 2020
It has been a few months since I wrote a Chairman’s letter laying out our new OEM strategy that we implemented just about a year ago. The purpose of this letter is to document some of our accomplishments over the last 12 months and to share with you some of the major events that have occurred, or we believe will be occurring in the early part of 2021.
Soon after the management reorganization, our sales team got on the phones to re-establish relationships with firms that the Company had talked to over the last few years. After a few false starts, the team re-engaged with three firms with interest of selling our medical devices into the domestic OTC market. The first was Scott Specialty. This firm was in the process of developing specialty wraps for DonJoy. Scott placed their first order in August and we anticipate that the final units associated with this initial order will be delivered by early December. (DonJoy is already selling units online and we are told they will be placing units in brick and mortar outlets next month.) We are anticipating a new order from Scott just after the new year.
Two other firms have also placed orders to sell our device in the domestic OTC market. However, they have yet to distribute their products into retail and thus we are not able to identify them. With this noted, both will be receiving delivery of units in December and thus we anticipate booking sales to these customers in fourth quarter 2020. (These two customers anticipate selling into their retail markets in first quarter 2021.)
Internationally, we landed a contract with Adcock, a large firm in South Africa. Adcock is now in the process of registering the product and first sales to them should occur in early 2021. In addition, now that we have re-acquired our CE mark, we are able to reopen communications with our international distributors. We anticipate (or have already received) new orders from Romania, Italy, Australia, Sweden, the UK, and Spain. These sales should be booked in 4th quarter 2020 or 1st quarter 2021. In addition, one of our major domestic customers has been talking to us about also acquiring distribution internationally. These talks will probably continue into 2021.
Finally, we are in the early stages of selling into the medical professional channel with our RecoveryRx product. The plan is to use a 300+ salesforce of independent reps. This salesforce is being set up by Medi-Launch, a firm that has expertise in forming medical salesforce teams and launching new medical products. We have already signed up over 275 salespeople who have distributed more than 1500 samples to surgeons and other medical professionals. These samples allow the medical professionals evaluate our product for post-surgical pain and wound care, the claim associated with our non-OTC 510 (k). A few sales have already been booked and ultimately, we believe this channel of distribution could account for as much as 15% of our total sales volume.
Although I suspect most of you are primarily interested in the above information on sales (and ultimately profits) I would briefly like to mention the support activities that have occurred over this time period to make all these sales happen.
Modifying the product design and building up production capability
One of our customers wanted major design changes to our 720 hour device. This required extensive internal design changes to the device and modifications of the manufacturing processes. In addition this customer wanted to completely redesign the packaging. Coordinating all these changes resulted in extensive communications with the customer’s design team (and their top management) as well as nightly calls to our overseas manufacturer.
There were surprisingly few bumps in the road and we are well on the way to fulfill their order. Importantly, this experience has greatly enhanced our core capabilities in product design and manufacturing.
We started off the year with significant regulatory issues. The regulatory team worked tirelessly with the firm, NEMCO, to get re-certified. It was a long battle, but we received notification in early November. This certification was critical as it allows us to again sell internationally.
I wish this was the only regulatory issue that we faced this year. We also need to get another certification, called MDSAP. This certification will allow us to sell in Canada and Australia among other countries. The short story is that we are well positioned to complete all the audits needed for certification by late January 2021. In the process we have developed a totally new inventory tracking system needed to augment our quality control processes. Development of this system has been a total team effort.
Other issues—Salesforce sales, Rebranding and R&D
Three other efforts that are currently in progress deserve mention. The first involves developing systems to handle sales through our new salesforce network and new marketing and training materials to support this salesforce. The training materials have been developed and are being used in numerous training zoom meetings, where we educate the independent sales reps on how to present the information concerning our device.
This new emphasis on selling our Rx product has also led us to revise our branding strategy so as to better differentiate the RecoveryRx device from the ActiPatch device. This rebranding is particularly important because the sales prices for these two devices are quite different. Our current plan is to discontinue North American sales under the brand name of ActiPatch by the end of the year. OTC sales in North America will be under the brand names of our marketing partners- essentially a license and supply agreement. We will retain the ActiPatch brand for units embedded into an appliance and sold under the appliance manufacturer’s brand name as “Powered by ActiPatch.”
Last, but not the least, we have made good progress with our R&D efforts. We started basic research to ascertain how our device affects brain waves. This project could open up the doors to solving numerous other diseases/ailments. We have also received notification that our neck study paper has been accepted for publication. The results reported in this paper not only show efficacy of the device over NSAID’s but also strong evidence supporting our claim that our device works via central sensitization. This latter finding is very useful when talking to medical professionals, since they want to know the “mechanism of action”, i.e., why our device works.
In summary, it has been a busy and productive year. The Company is moving in the right direction. Numerous new systems have been developed to support our new OEM strategy. Our core capabilities of R&D and expertise in designing and manufacturing Pulsed Short Wave Therapy devices have increased. The forecast for the next year has us above breakeven sales. Meeting these projections will not be easy, but it is doable. I am sure there will be some bumps, but the BIEL team will rise to the challenge and come out stronger. Thank you for your continued support, have a great Thanksgiving and stay safe.
Richard Staelin, Ph.D.
Chairman of the Board
Certain information set forth in this email contains “forward-looking information”, including “future-oriented financial information” and “financial outlook”, under applicable securities laws (collectively referred to herein as forward-looking statements). Except for statements of historical fact, the information contained herein constitutes forward-looking statements and includes, but is not limited to, the (i) projected financial performance of the Company; (ii) completion of, and the use of proceeds from, the sale of the shares being offered hereunder; (iii) the expected development of the Company’s business, projects, and joint ventures; (iv) execution of the Company’s vision and growth strategy, including with respect to future M&A activity and global growth; (v) sources and availability of third-party financing for the Company’s projects; (vi) completion of the Company’s projects that are currently underway, in development or otherwise under consideration; (vii) renewal of the Company’s current customer, supplier and other material agreements; and (viii) future liquidity, working capital, and capital requirements. Forward-looking statements are provided to allow potential investors the opportunity to understand management’s beliefs and opinions in respect of the future so that they may use such beliefs and opinions as one factor in evaluating an investment.
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