Jacobs interview
THE WALL STREET TRANSCRIPT
Questioning Market Leaders For Long Term Investors
MICHAEL JACOBS - PYNG TECHNOLOGIES CORPORATION (PYNGF)
CEO Interview - published 04/28/2003
DOCUMENT # SAR606
MICHAEL W. JACOBS is the Founder and Chairman of Pyng
Technologies Corp. and it's wholly owned subsidiary Pyng Medical
Corp. Mr. Jacobs has raised all the investment and venture
capital for Pyng's ventures since it's founding. He successfully
took Pyng on the Canadian venture Exchange (now the TSX Venture
Exchange out of Toronto) and onto the NASDAQ OTC Board. Mr.
Jacobs has worked closely with Dr. David Johnson, President, and
Judy Findlay, CEO, in the development and patents associated with
Intraosseous Infusion, which has culminated in the development of
the world's first FDA-approved Sternal Access Intraosseous
Infusion System. He has brought into the company in excess of
$5.5 million to support the research, development and
commercialization of the F.A.S.T.1 System to market. He has,
along with strong support from David Johnson and Judy Findlay,
devoted his energes over the last 12 years toward the commercial
success of the F.A.S.T.1 System and has been instrumental in
having the F.A.S.T.1 System adopted by the key emergency medical
distributors in America as well as successfully negotiated the
adoption of the F.A.S.T.1 System in the United States and
Canadian military.
Sector: medical devices
TWST: Would you give us an overview of Pyng Technologies?
Mr. Jacobs: Pyng Technologies is a publicly traded corporation on
the Toronto Venture Exchange (PYT) and the NASDAQ Bulletin Board
(PYNGF), and we are dedicated to medical device development
through our subsidiary Pyng Medical Corporation. An excellent
Website is available on our company and products at www.pyng.com.
Be sure to visit for a complete profile and contact points.
TWST: Could you describe your products and services?
Mr. Jacobs: Pyng has developed what is known as the F.A.S.T.1
System, which is the world's first adult intraosseous infusion
system that is specific to the sternal site. Intraosseous means
internal to the bone and what the F.A.S.T.1 System does is
deliver drugs and fluids through a portal in the manubrium of an
adult. The manubrium is the upper section of the sternum and is a
highly vascular site that is easy to find. We use the manubrium
because paramedics, medics and combat medics in the field often
have a difficult time getting a conventional IV when people are
in shock or trauma. In fact, statistically between 10% and 30% of
the time that an emergency caregiver attempts conventional I.V.
access in shock and trauma patients they fail due to a
compromised vascular system. Pyng Medical Corp. provides them
with the alternative of F.A.S.T.1, which gives them a central
line in about 60 seconds.
TWST: What are the key components and features of this product?
Mr. Jacobs: The F.A.S.T.1 system is a disposable medical device
that enables insertion of a flexible portal into the manubrium
automatically. The F.A.S.T.1 has a number of safety features on
the product so that it will not over penetrate, and has depth
control, so that the delivery of a flexible portal inserted into
the bone marrow space at a precise depth each so that any medical
caregiver can provide a central portal to the patient each and
every time. Insertion of the portal accesses a highly vascular
site which is ideal for delivery of drugs and fluids because of
its close proximity to the heart.
TWST: Is this product used only in emergencies?
Mr. Jacobs: Yes, it was designed for emergency situations.
Somewhere between 10% and 30% of the time that caregivers attempt
to get a vascular line they fail. Normally a caregiver would try
to establish an IV in a peripheral vein located in a leg or an
arm. Often in patients suffering from shock and trauma what
actually occurs is that the vein collapses due to low blood
pressure making it very difficult to get an IV in at that time.
Standard protocol allows them to try that as many as three times
in order to get a line in prior to rushing the patient to the
hospital. The F.A.S.T.1 System can be easily used once the
procedure is learned. We have a target patch that locates the
sternal notch and provides a zone where you can insert the
F.A.S.T.1, which takes only a couple of seconds. Once the
caregiver establishes the portal they then hook up a conventional
IV bag and start the flow of drugs and fluids into the central
vascular system. We protect the whole site with a clear plastic
dome and the F.A.S.T.1 System that does not interfere with any of
the conventional emergency procedures that the paramedics and the
EMTs go through at the scene.
TWST: How different is this product compared to what else is on
the market?
Mr. Jacobs: Actually, it is the only product like it on the
market. Intraosseous infusion is not new to pediatrics; in fact,
it's the standard of care in pediatrics. The F.A.S.T.1 System was
developed specifically to gain intraosseous infusion for the
adult utilizing the most effective site, the manubrium. There are
devices that insert into the lower leg bone into what's referred
to as the tibia. These devices are difficult to use because the
leg bone is quite thick and quite dense, and these do not provide
a stable insertion because they are ridged needles that are
easily dislodged. These devices therefore have not gained popular
support. The F.A.S.T.1 System has changed that. We are the only
one approved by the FDA for use in an adult sternum. The
F.A.S.T.1 procedure, performed by trained emergency caregivers,
can be done very rapidly. In fact, right now in the field the
average time to complete the whole procedure is around 60
seconds, saving time and saving lives in emergency medicine. An
excellent example of the way the F.A.S.T.1 System has changed
emergency medicine in the adoption of the system by the Special
Operations Command of the US military and the recently announced
inclusion of the F.A.S.T.1 System in all combat medics kits,
ground ambulance kits and field hospital kits by the U.S. Army
through their AMEDD Command. In only a little over 24 months on
the market the F.A.S.T.1 System is now being used by over 500
emergency medical sites in North America. These sights include
ambulance services, air ambulance service, emergency hospitals
and even the White House emergency team.
TWST: What are the risks associated with this procedure?
Mr. Jacobs: There are truly minimum complications. There are
minimal problems with air or fat embolisms. In fact these
complications would occur in less than one in a million cases.
Any drug or fluid that you normally deliver through an IV can be
delivered through this portal. Because of the safety features of
the F.A.S.T.1, the risk of over penetration of the sternum is
indeed very small. We should also realize that the use of the
F.A.S.T.1 System usually only occurs when conventional IV methods
fail or cannot be established. If that happens the patient is at
risk because they are being deprived of drugs and fluids. The
F.A.S.T.1 is a very viable alternative and provides the medical
caregiver with a very acceptable alternative for saving lives.
TWST: Is this device reusable?
Mr. Jacobs: Actually, the device is a fully disposable system and
it is not to be reused in the field. So each time a F.A.S.T.1
System is used it is replaced.
TWST: In your estimate, what is the size of the market for this
product and how many have you sold thus far?
Mr. Jacobs: I will answer the last part first, about 26 months
ago we introduced the F.A.S.T.1 System into the field after
extensive field trials. Since then we have delivered literally
thousands of units, and in fact somewhere in the neighborhood of
14,000 have already been shipped. From the statistics you will
find that in North America the market size will be somewhere in
the neighborhood of $85 million to $90 million a year, and on a
worldwide basis it could exceed $200 million. The F.A.S.T. System
is extremely well placed to take advantage of this market because
of the fact that we are the only product like it in the world and
we have very strong patent protection along with every major
authorization such as FDA, CE Mark for Europe, CHPB, and full
compliance with quality assurance to ISO 9001 and several other
quality standards.
TWST: How are you marketing this product?
Mr. Jacobs: We have a distribution network across America. We
utilize emergency medical distributors such as Bound Tree, Medic
Master, Life-Assist and Southeastern. We are starting to open up
the door for exposure into Europe because we just received our
ISO 9001 approvals along with our CE Mark for Europe. We have a
growing distribution network which has highly skilled paramedics
as a sales force and we intend to extend that to all areas that
offer strong market potential.
TWST: Do you worry that somebody will come up with a better
mousetrap? What type of patent protection do you have?
Mr. Jacobs: We have very strong patents in terms of our product.
We have patents on several components of the product. We have
patents, for example, on the flexible portal, which if anybody
used we would get royalties from it. We have at least 13 years
left on our patents and that will enable us to not only reap the
benefits from this new and unique market niche but we can extend
that by increasing that market potential to other medical areas.
TWST: What is next after F.A.S.T.1? What other products do you
have in the works?
Mr. Jacobs: F.A.S.T.1 actually enables us to open up other
markets. I mentioned to you earlier about the tools that are
available in pediatrics being somewhat crude and hard to use, and
our next goal would be to develop one for pediatrics. It could
also be used in veterinary circumstances, and it could be used
for bone marrow extraction and a number of items areas that where
we can expand our market.
TWST: Do you have any collaborations or partnerships at this
time?
Mr. Jacobs: We don't. We will be actively seeking out strategic
partners. We believe that F.A.S.T.1 System's potential in the
market is quite large and that ideally we'll have a strategic
partner with international connections that can distribute the
product worldwide. That would be an appropriate thing for us to
do at this time. We will however continue to expand our market
potential internally and we will raise more capital to allow us
more market exposure and production improvement capital.
TWST: Could you lay out your strategy for the company over the
next two years?
Mr. Jacobs: Through our conservative business plan we are
planning to raise capital to expand our markets and substantially
increase sales. Now that the F.A.S.T.1 System has been launched
we would like to raise some capital to automate the procedures on
the manufacturing side to provide as much efficiencies in costs
savings as possible in the manufacturing. We would also like to
expand our market and marketing base and increase our
distribution sales force.
TWST: What are your current sales and what rate of gain in sales
do you plan to see over the next two or three quarters? What are
your financial goals?
Mr. Jacobs: Our budget call for sales this year of $1.2 million.
We are just six months into our fiscal year and we have already
shipped $688,000 with a backlog of orders. Next year we plan on
growing, through our conservative business plan, sales into the
$3 million area, and beyond that we have a growth curve plugged
in that will see sales past the $20 million within five years We
have made these projections based on a conservative model and
with due consideration for the events of the last two years in
the marketplace and the difficulty seen by many small cap
companies in raising capital to meet their growth potential. We
plan on aggressively sending out our message to all potential
investors to let them make a decision on the great opportunities
presented by this product and company in the coming months.
TWST: What benchmarks or milestones should investors use to judge
you by?
Mr. Jacobs: You need to look at sales and you need to look at the
continued growth path in sales. Our current burn rate is around
$85,000 a month and we can grow this company by not more than
$20,000 added to that, so anything above $100,000 to $120,000 in
sales is on a breakeven basis. We are already achieving profit
that has sales exceeding costs of $85,000 a month. A key
component of success will be market penetration and as mentioned
earlier we have already over 500 emergency medical sites using
the F.A.S.T 1 System. We have started to supply the US military
and have received a great deal of interest from military groups
worldwide. Each new site that comes on board with the F.A.S.T.1
usually becomes a strong advocate and passes the message on peer
to peer. We have tried to cultivate both a push and pull strategy
with hands-on training of paramedics through state and county
approvals with medical directors. Many fine magazine articles
written by medical sites using the system have appeared and that
coupled with strong media exposure on the F.A.S.T.1 because of
the military acceptance has proven to be a catalyst to gain more
market share.
TWST: How confident are you in getting the financing?
Mr. Jacobs: I am quite confident, and there is some interest
right now. We have been working hard to deliver our product and
the message on the product. We have had a lot of exposure through
magazines, newspapers and TV, so there is a lot of interest now
in raising capital. Our stock is at a relatively lower price,
given the conditions of the market. We are down around $0.60 so I
would prefer to get the market up on the stock before we go out
and do any serious financing. However, we will consider all
potential as we hear from investors. We are listed on both the
Toronto Venture Exchange under PYT and the NASDAQ Bulletin Board
under PYNGF. We do not need a great deal of capital, in fact our
business plan allows for a capital injection of $1 million plus
cash flow from operations to achieve sales, and high profit
margins, in a reasonable time frame. Additional capital over and
above will speed up market penetration worldwide.
TWST: Are there any risks associated with your future goals?
Mr. Jacobs: I would say the risks are associated with expanding
the marketplace. We need capital to do that, and in order for us
to expand the market we have to get more exposure in the
marketplace and we have to be more proactive in the other
markets. For example, we are now primarily in the pre-hospital
environment and I think we should be expanding our markets into
the hospital environment and into other areas where F.A.S.T.1 can
be used. So most of our efforts to date have been in the pre-
hospital environment and we need to expand those markets into
other areas. Military sales offers very rapid growth potential
and we have already made excellent headway into that market.
Financing will help the company to diversify not only it's
product mix but its market potential. We will also be actively
seeking a strategic partner that could provide international
exposure to our product line while enhancing their own market
potential and exposure
TWST: Could you describe your management team and what sort of
culture you have?
Mr. Jacobs: Pyng Technologies is the parent corporation of Pyng
Medical. Pyng Medical is a wholly owned subsidiary and
Dr. David L. Johnson is the President of Pyng Medical.
Dr. Johnson has extensive experience in medical device
development. He was formerly with Canadian Health and he has also
been associated with the FDA. Judy M. Findlay is our CEO. She is
an excellent engineer and both Judy and David have been very
active in the development of F.A.S.T.1, so they have been key to
the F.A.S.T.1 development. We also have Dale Lambert, who is a
quality assurance person who makes sure our products go out to
every international standard that needs to be met. We have five
international standards that we work to. We have achieved all of
those standards under Dale's guidance. We have a highly skilled
team of individuals who assemble and engineer the products for
our clients and we are a focused, dedicated team that thrives in
the environment which they have selected which is medical device
development through needs and achieved by excellence. Our
corporate motto is 'Saving Lives/Saving Time' and we are all
dedicated to that cause. My roll as Chairman/Founder has been to
provide the capital and the method by which our developments can
come to fruition and collectively we have worked well together to
achieve our goals over the last 10 years.
TWST: At your current burn rate, how much cash do you have?
Mr. Jacobs: Right now, we have probably about $115,000 in actual
cash, but the cash flow itself from operations is growing. Some
of the goals that we have, such as market expansion, will have to
come through capital expansion and I would have to go out and
raise that capital. We have a small float relative to most
companies; we have approximately 8.5 million shares in the
marketplace. We do have an escrow position, which is a
performance-based situation. So we have kept the dilution very
small and we have already raised about $6 million for the
development and marketing of the F.A.S.T.1 System. We will raise
capital and we will make every effort to expand upon our products
opportunities but we must be fully cognizant of the need to make
the investment world aware of who we are and what potential we
offer as a growth opportunity. Part of the capital raised should
be used for this sole purpose.
TWST: How much money do you expect to raise?
Mr. Jacobs: Somewhere between $1.5 million and $2 million.
TWST: Is your message getting through to the financial markets?
Mr. Jacobs: It has as we have had a lot of exposure lately with
newspaper articles in The Wall Street Journal, The Ottawa
Citizen, the Vancouver Sun, and Vancouver Province. We have also
been on CBS, CBC and CTV, so all of these exposures have helped
us. We have had a lot of people call and ask about the
information. We are listed on the Toronto Venture Exchange (PYT)
and the information for the company can be gotten from SEDAR and
on NASDAQ,(PYNGF) which you can get from EDGAR. So all of the
financials, the data, and the information is available. We also
have an excellent Website at www.pyng.com and it has streaming
video for those who want to see how easy the F.A.S.T.1 is to use.
We have all kinds of clinical information for medical people who
have an interest in it and the Website gives you a very nice
overview of the company itself.
TWST: Do you have any programs for analysts to follow you?
Mr. Jacobs: We have not done that yet, but it is something that
we definitely want to get involved with. Again, and this is a
part of the capital requirement, we believe that investor
relations need to be increased and that would be part of the
financing.
TWST: Give us two or three reasons why people should be buying
your stock over the long term.
Mr. Jacobs: The F.A.S.T.1 System is a system that saves lives, so
it's an ethical investment. We have many life saving events
associated with the F.A.S.T.1. It provides a wonderful way for
paramedics and EMTs to resolve a problem that has been with them
for a long, long time. It's considered by the emergency medical
community to be a medical breakthrough. In fact, the FDA named it
as a medical breakthrough in their annual report. On top of that,
we have won awards for the excellent designs of the F.A.S.T.1
System. So there is an ethical side to it, the life saving
potential for the F.A.S.T.1 System. Also, we have now gone
through the hard parts, if you will, we have done the development
and the research. We have spent the money to do it right. Now we
are seeing growth in the company and we are seeing cash flow. The
first quarter of profit was achieved at the end of our fiscal
period ending in December, and in our fiscal year ending in March
we were at about $100,000 in sales above the fiscal period of
December. So we expect to be in profits this year. As sales
continue, we expect to make a good return on investment. Our
sales potential has only just began. The commercial potential and
the military potential worldwide is in excess of $200 million
annually and we have the only FDA approved product on the market
as well as CE marked. The third reason is simply that there is
opportunity presented by our stock because of lower cost at this
time. Growth potential is very strong and the opportunity exists
to participate in not only the market potential but also the
opportunities presented in the capital needs of the company
through a private placement and/or other methods of financing.
With only a small float of 8.5 million shares and the potential
for rapid sales increases and the resultant profit, we believe
that Pyng Technologies Corp. should be your medical investment
today and tomorrow.
TWST: Thank you. (WT)
MICHAEL W. JACOBS
President & CEO
Pyng Technologies Corp.
13511 Crestwood Place
Unit 7
Richmond, British Columbia V6V 2E9
Canada
(604) 303-7964
(604) 303-7987 - FAX
www.pyng.com
e-mail: info@pyng.com
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