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Biotech / Medical : Neopath (NPTH)

NPTH 0.000600

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Mar 7 3:00 PM EST

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To: Jim Armstrong who wrote (145)	5/8/1998 8:52:00 PM
From: Sigmund	Read Replies (1) of 178

Ah ha now we get to the key point. How to balance the two. Yes you are right, if the product/service has no benefit no one wants it. If the company makes no money, no one will provide the capital. And furthermore, if the company doesn't treat its employees right, no employees and if it doesn't treat the community right, no place to locate. But the part about needing to provide a benefit is obvious and applys equally well to medicine, mining or garbage collection. Try doing medicine without copper and try doing anything without food and try keeping free of disease without garbage collection. Almost all human activity except for the obvious negatives is worthwhile. And quite frankly probably equally valid to any supreme being we might believe in or if not to our spouses and children when they think of us. Certainly NPTH must provide a product/service that is in demand. But to use saving lives as a mantra to justify not making money is very off target and I think raises red flags to potential investors. It certainly does to me. This reimbursement business is very tricky. I studied it a number of years ago as part of some work that I did for a non-profit funded first by the Sloan Foundation and later by the Robert Wood Johnson Foundation. It is the sticky point in making infostructure happen in medicine. Normally there are two parties to a transaction the buyer and the seller. In medicine there are three the patient, the physician/laboratory and the insurer. And the interests of the physician and the laboratory are not always the same. Figuring out how to make all three of these parties want AutoPap to happen is tricky. But if you can't also make a profit at it, then it certainly will not fly. One key question is was applying for a 25% sort rate a good idea or a bad idea? The good part about a low sort rate is it made approval more likely. The bad part about it is it may mean that not enough labs will want it. If Nelson made the wrong decision on this it will be a big problem. Sure they can now go in and ask for 40%, but that might take another year and the company may not be here by then or at least the existing investors may be gone. I didn't get the feeling that Nelson understood what he was doing when he decided on the 25% sort rate. I just don't think that he is a strategic thinker. I have heard him respond to analyst's questions and he appeared to not understand their questions. For sure he didn't answer them. First impressions can be incorrect, but the impression he made on me that day was so very negative that I just wish he would go away.

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