Chit Chat Stocks - Trevor Muchedzi | Cellink (CLLKF)

Episode Date: December 22, 2020

On the 22nd day of Christmas Trevor Muchedzi gives to you, Cellink the 3D printing company. Cellink is a life science company based out of Sweden that focuses on 3D printing organs for drug testing purposes. Trevor explains the company and its business model very well. Visit our website: https://www.chitchatmoney.com/ Subscribe to 7 Investing with the code "CCM": https://7investing.com/subscribe/ Follow Chit Chat Money on Twitter: https://twitter.com/chitchatmoney Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to 25 Stocks of Christmas presented by Chit Chat Money. Today we have an interview with Trevor Mucedzi and we talk Selling AB. It's a company I had never heard of but pretty fascinating and he obviously understands the company pretty well. Did you have any big takeaways? I mean he yeah he understands it well if you're into biotech at all this is probably something you want to look at. I think I probably got about 70 percent of what the company did from an outside so I think you can learn a lot no matter what type of investor you are but before we get started some other investors who are really good at the scientific stuff are seven investing you want to talk about our partners there yeah we uh we have partnered with them to get this killer deal

where you get ten dollars off your first month uh if you use the code ccm and uh yeah i mean it helps us it helps them you get great advice and yeah yeah you get seven stock picks each month each month. So it's not just one time. It's going to be continually going. And they give advisor updates that are personable. It covers their bureaus. You know what I mean? So Matt, our friend who talks about Square a lot, who will actually be on the show to talk about Square, he covers FinTech and he does an update with that, give you an overview. And that's for members only. So I think that's great stuff. Yeah, there's a great ROI there. And there's especially a great ROI if you use the code CCL. Exactly. And before we get started into this interview, you want to

say at the end there was a bit of an audio issue um you know zoom it's good but uh trevor uh is gracious enough he's in johannesburg south africa and you know we're trying to do an internet connection around the globe and some of that happens so apologies if sometimes it cuts out maybe a little bit but we still think it ended up fine yeah so yeah there you go welcome to chit chat running on this show host ryan henderson and brett schaefer interview industry experts, and riff on the world of investment. As a quick reminder, Chit Chat Money is a CCM Media Group podcast. Ryan and Brett are not financial advisors.

Anything discussed on Chit Chat Money by Ryan or Brett or any other podcast guest is not formal advice or a recommendation. Now, please enjoy this episode. All right, today we are welcomed by Trevor Mucedzi. Trevor, I think this is your second time on the show. The last one was like a year ago. maybe maybe even longer uh but it's been a while so welcome back to chit chat money how have you been i'm good thanks brady thanks ryan i'm good this has been a it's been a tough year i mean

so many fronts but at the same time from an investment perspective it's been a good year so it's been a mixed big i would say but yeah right now we are towards the end of the year so So hopefully we'll end the year on a good note and then we can start the new year. And we're going to be talking Cell Link, a company a lot of people may not have heard of, but before, maybe we'll get a quick background on like, you know, the fund you run,

where it's located, all that stuff, and then we can get started. Yeah, sure. I mean, I run a fund called One Transaction Capital out of South Africa, Johannesburg in South Africa. is a permanent investment vehicle. So we invest off our balance sheet

and we target companies within, you know, companies that are built on intangible assets that are operating within what we believe are emerging technologies that will reshape various industries. So, you know, we can talk about payments. We talk about telehealth, also edge computing and edge networks.

And now today with Cell Inc, we are going to talk about 3D bioprinting and single-cell handling. So exciting fields, new fields, but I think where we are right now is we are, at least what I believe is the second Gilded Age, where there are various disruptive technologies that will change so many industries.

And with that, it brings amazing investment opportunities. Yeah, certainly. And today we're talking about Cellink. As Brett mentioned earlier, how did you come across this company? I actually came across the company from FinTweet. So I have a colleague that I follow, and they also follow me on Twitter. So I put out a tweet asking for companies that were sub $1 billion, that were interesting outside of the U.S.

And this is one of the companies that they referred me to. And then I started digging deep into the company, trying to understand what they do and where's the opportunity, also trying to understand the management of the company and how they view capital allocation and how they view investing in terms of growing the moat of the company. So it's a company that I'm excited about. It's based out of Sweden,

although the founders and some of the senior management are actually based in Boston in the U.S. But the founders have got a Swedish heritage and the company is listed on the Stockholm Stock Exchange. Okay, and this is a, I don't think I'm exaggerating saying one of the most complicated businesses we probably talked about before. So do you think you can explain it?

I know when you first look, it's like 3D printing of organs, but if that's not correct, please correct me. I feel I agree. I mean, it's a very, very difficult company to understand from the technology perspective. But I think one thing I should just highlight upfront is that the business model is very, very easy to understand. And it actually reminds me of the first time that I looked into Illumina, which is the US-based DNA sequencing company. It's also one of those companies that are very, very difficult to understand from the technical solution in what they do. uh but the business model is very very easy to understand so i agree with you um i can probably just give you a highlight a high level overview of what the company does um but there's no way

i mean from a technical perspective that i can you know really really tell you the ins and out but i think we'll share what you know on high level what the comment does and where the opportunities lies and then we can talk about the business model to just give some perspective on why we believe this is a good long-term investment. Sure, yeah, go ahead. So, Cell Inc. is a Swedish-based company that is the market leader in a fast-growing fuse of 3D bioprinting, single-cell handling, and precision dispensing and live cell analysis. The way to think about it is that the company provides tools and technology required to fabricate live tissues that are used in drug development or testing of cosmetic products and also in terms of disease modeling and understanding

healthy issues i mean to think about it i think probably the easiest way to think about the company is that it is almost like two business two businesses or three platforms let me say uh the 3d bioprinting platform right at the moment where the company is at is that they fabricate 3d live tissues which are used to test drugs so just to give some perspective right historically when a company wants to develop a drug the first thing that you do is that you first do some pre-clinical trials normally on animals to measure you know what dosage that you can potentially use in in live humans and then i think i saw a statistics that says one in 5,000 of the compounds that I introduced

or at least I introduced in preclinical, only one will actually get to commercialization. So there's a lot of inefficiencies or failure. Failure is quite high in terms of drug development. And normally what happens is that first of all, you first measure, like when you have a drug that you want to develop, you first measure what dosage that you can use in humans so the first part is you do it it's called it's called pre-clinical trials and you do it on animals and then you do phase one where you measure the safety

of the drug then you go to phase two where you measure the efficacy of the drug then to phase three then the phase four then phase five right so that's almost like the standard the standard routine of how it's done today but where 3d bioprinting comes in is that you can actually print live human tissues and then you can test your drugs on live human tissues so instead of you doing phase zero one and two and three you can actually combine everything right and what that does is that it actually cut costs significantly for the pharmaceutical companies because instead of you going on with a drug only for it to fail in stage two or three you can actually eliminate the drug up front if you can see that there's a problem with that particular

compound so 3d bioprinting where they are at the moment is that it's actually used for research especially um initially it was within universities but now they've moved into into the pharmaceutical industry and it's used for research so if you say oh it's a oh if it's a cosmetic company and they want to try a new cosmetic product, they just print 3D live tissues of a human skin, and then they can do product testing on that product. So it's almost a very efficient way for you to develop drugs in cosmetic products. So that's the first thing that they do. And then secondly, they're also into what's called single cell handling and precision

dispensing. essentially what this is is that the process of developing 3d bio bioproducts there's a long process involved which includes you know like uh like separating single cells and then analyzing them and then preparing them for 3d bioprinting so all that workflow requires what's called single cell handling and this company cell link they provide the uh the rails or they provide the tools and instruments that are used for that so they're almost like um i think a very good equivalent of this company will be illumina which is in the dna sequencing but that's almost what selling that does but within the 3d bioprinting space okay and then how large of a market is this

is the bet really that this market's going to grow over time or do they have, you know, how many customers do they currently have? At the moment, the company has got 1,800 customers within 60 countries, mainly pharmaceutical companies, laboratories, and then diagnostic companies. But I think the way to think about this, probably if I can give some context of where the market is and then where it's

where it's going. The concept of 3D bioprinting has been around for a few years, but the industry had two big problems. Number one is that the cost of bioprinters were extremely high. You're looking at $300,000 just for one printer, right? So what this meant is that besides the big laboratories or the big diagnostic companies, if you're a small lab, you couldn't afford to buy a printer because they were extremely quite expensive. So that's the first problem that they had. And the second problem that they had is that scientists within those laboratories

or diagnostic companies, they had to develop their own bio-inks. So bio-inks, just think of it as a, it's like a cartridge or a toner that you use in a printer, right? So after buying a printer, you had to develop your own cartridge and your own toner,

which also obviously became a very, very cumbersome and expensive process. So those two factors really hindered the ability of the market to grow. And for a while, the market was almost stagnant, although the concept had been around for a while. So the founders for selling, to give you some history in that,

one of the key founders, which is the CEO at the moment, his father developed the material that could be used to produce bio-inks in Sweden. So what he then did is that he managed to take that material and commercialized it and began to develop what they call universal bio-inks. It's almost like a toner or a cartridge that anyone, if you wanted to go into 3D bioprinting,

you would simply buy from them off the shelf, right? So what these guys did is that once they developed the product, they set up a website just to measure demand for the product and within 24 hours all this talk was sold out so then they knew that there was a market for the standardization of developing of bio of bio inks and that's kind of like like how the company was launched but then to further expand the market they had to tackle the first problem which was cost prohibitive you know the cost of the which is very, very prohibitive, $300,000.

So they invested quite a bit of capital and they developed a 3D bioprint which cost $5,000 down from $300,000. And that opened really the opportunity for 3D bioprinting to take place. This company is less than five years old, so it's quite small, it's quite new. And the market really for bioprinting

is estimated at around 200 billion US dollars in totality. Wow, 200 billion, wow. That's a lot bigger than I would have thought. Yeah, definitely, yeah. It's just that I think for the past couple of years, it has been stagnant because most of the laboratories or diagnostic companies, right, or the smaller pharmaceutical companies

just couldn't afford the cost of bioprinters. It was just too much. But right now, you can easily get a bioprinter for $5,000. And probably within the next few years, you can start getting a bioprinter for $1,000, which is like the price of an iPhone. Right. Once you do that, then, you know, the adoption rates for the technology will simply, you know, will simply go up exponentially. Do you want to talk more about management, sort of who they are, who runs the company, and then what you think of them? so the three co-founders were actually quite young i think they were around 25 years when

they launched the company five years ago so probably they are slightly over 30 uh they own 42 percent of of the company the ceo eric it was his father that developed the material that's used for bio ink so that's kind of like the historical perspective uh for that and then the other two guys. One is the CFO and one is the CTO, the Chief Technological Officer. So those are the three founders for the company. I think right now the way, because I mean, they've got so much skin in the game, right? I mean, you're looking at 42% of the, they own 42% of the outstanding shares in the company. And the way to think about it and the way that they've been building the company over the last few years, the CEO really talks about being in it for the long haul. They're still

quite young at the age of 30 so i think they'll be with the company for a very long time okay uh i have one question and then we'll get to the investment thesis part so you mentioned that they're getting the cost of these bioprinters down are they almost trying to just get as many out to the labs and pharmaceutical companies as possible and then they're making money on either when people use it or when they buy these you know cartridges um as you like to to describe it yes so that is that is exactly the business model right so the business model at the moment is to expand your installed base so it's very simple right so they they lower the cost of the printer significantly which will you know make it easy for small medium-scale

laboratories laboratories and diagnostic companies and also pharmaceutical companies to buy these printers and install them within within their within their labs and then they make money from the consumables which is the bio inks that they sell right so that's one part of business so it's a simply it's simply a matter of growing your installed base and then you make money off the consumables and then the second part of the business is that 3d bioprinting was their legacy product. Over the last year, they've made three acquisitions in Germany that have moved them into the space which is called liquid handling and precision dispensing. What that simply means is that the process of 3D bioprinting itself is a long process. So you have to get human cells,

Then you have to create like an environment that enables the human cells to reproduce. And then, you know, you have to then feed those human cells into the 3D bioprinter and then do the printing. So there's like a workflow behind the process of 3D bioprinting. So these acquisitions that they've made, it enables them to expand their presence across the entire workflow. So they are not only providing 3G bioprinters and the inks, they are also now involved in the entire workflow of 3G bioprinting. I think a good analogy for this is that if you think of like a payment company, let's say Stripe, right?

And initially, you know, when they launched, they were providing payment tools to enable companies to accept payments online. but then soon you realize that if your client they need more than just payments and they need invoice invoicing tools they need inventory management tools they need they need customer analytics tools so you start providing all these other ancillary services so that you become a one-stop shop for your customer so it's almost a similar model in a similar approach that they are using within the 3D bioprinting when they're now going to a single cell handling and also into live imaging of single cells. It's just expanding their product line so that they can become a

one-stop shop for pharmaceutical companies, for diagnostic companies and laboratories that are moving into 3D bioprinting. Okay, go ahead. So it's not just like a one-time sell to the customers, the customer relationship is more recurring, is that what you're saying? So the customer relationship is actually more recurring, right? So here's the interesting part within diagnostic or laboratory pharmaceutical companies. When they, if a pharmaceutical company established a workflow on drug development, right, that workflow becomes It's very, very difficult to change. And also it becomes almost a standardized way

for the pharmaceutical companies to do things. So what Cell Inc. has been doing for the last four years or five years is to really insert themselves into a pharmaceutical company's workflow, right? When it comes to drug development and when it comes to product testing. So the way that they do it is that you provide tools

like 3D bioprinters or you provide tools like liquid cell handling, right? But that's not where you make your money. For a pharmaceutical company to fabricate human life tissues, they need bio-inks, right? So you start making your money from selling them bio-inks. And the more human life tissues that they want to fabricate, the more bio-inks that they have to use. so so then that's where you start making your money on the bio inks or what they call the

consumables rather than the actual printer itself okay so kind of like the gillette model yeah a little a little more complicated yeah yeah a little more technical but a bit like the uh what's it the razor blades and the yes yeah uh do you want to head into your investment thesis I know we've talked a little about about why the business model is sound But is there any other reason why you like selling as a potential investment? I Think I'm you know, I was actually reading a book coach. I think it's called the The future is faster than you think and it talks about that most technological breakthroughs go through you know like a five stage process and one of the stages is what they call the deception stage

where a technology is hyped but then for some reason it feels to live up to the hype right and then it goes through this domain stage where you know there isn't much traction and there isn't much adoption that's going on and it's mainly because most technologies they require almost like other pieces to come together right so if you talk about let's say for example if you talk about like social media right why it became easier for facebook to take off might just because other technologies you know fell into place at the same time the mobile technology really took off right and then at the same time he had ai taking off yet cloud also taking off So a combination of different technologies makes it easier for a company to take off.

And I think there are also historical examples of companies that are referred to as though they came in too early, right, for the mass adoption of the technology. But some of the missing pieces were not there yet. I think that's the place that we find ourselves with 3D bioprinting. There were a lot of other technologies that were not yet developed, therefore the adoption rate for 3D bioprinting and what it can achieve stored a little bit. But now if you look at the past few years, I think now we are getting to a point where most of these fundamental foundational technologies are now in place. and we can see the adoption of 3G bioprinting really, really taking off, right? And if you look at the company,

I mean, if you look at the company results for the last, since their launch five years ago, they've been growing revenue at about 163% year-on-year, if you include this year. But obviously there was some impact in terms of laboratory activities because of COVID. so growth for FY20 is around 70 percent. If you exclude FY20, if you just look at the four years prior to that, the company has been growing at 200 percent year on year and one of the big drivers

has been the adoption of this technology within the pharmaceutical and diagnostic industries because now what pharmaceutical companies have realized is that instead of them spending around 2.5 billion US dollars just to develop a drug and take them four years to do that. Now they can actually develop a drug for like a lower fraction of that cost. And also they can also cut the time that's required to develop a drug

because you don't have to go through clinical trials anymore, right? So you don't have to test your drugs on animals anymore. You can simply print human life, human tissues and then you can test your drugs there. So it really cuts your development time and also really cuts the wastage and also, therefore, it actually lowers your cost. So if you look at for selling, for example, if you look at the past four years, they just grown almost 200% year on year, right, in terms of the revenue. and it's really been driven by the adoption of this technology

within the pharmaceutical industry. And then going forward, right, the foundational technologies actually also is actually falling into place where they can now start using this technology to print human organs that can be used in transplants. I mean, globally, they are close to over 3 million people that are on a donor waiting list for an organ. you know, those people, only 30% actually receive the organ.

The other 70% simply die whilst waiting. And because the current model, right, for you to receive an organ, someone has to die. That's the current model. But with 3D bioprinting now, it's possible to start thinking about printing a lung or a heart or a bone marrow or a kidney and then just replace or just use that for the organ transplant. So that in itself is a very huge market that I can see going forward.

But I think to answer your question, probably in summary, I think one of the key takeaway from this is just that the technology or the foundational technologies that are required for 3D bioprinting to take off, I think we now have them. And I think over the next few years, we start seeing the massive adoption of this technology across the board. Okay, it sounds like, yeah, the value proposition is there. It sounds like they have a large potential for growth. What kind of margins are they at right now?

I mean, maybe they're unprofitable and they might just have some positive gross margins. And how do you look at that margin structure over time? So from a gross margin perspective, the 3D bioprinters, I mean, you're looking at about 70% gross margin. The consumables, which is the bio-ings and the reagents that are used, those ones are quite profitable. You're looking at between 90% to 95% profit margins, right? So on a company-wide level, I think right now the company is around 70%

because most of their sales are still the 3D bioprinters, but the consumables are becoming a larger and larger proportion of the total sales. So when the company develops and matures, I expect gross profit margins to be around 85%, you know, by and large. and then in terms of profitability right selling is almost like another SaaS company or another startup right now they spend a lot of capital in terms of driving marketing and sales because remember the model is to install your printers in as many laboratories as possible and then they

also spent almost half of their sales on recession development that what that's what enabled them to reduce the cost of a printer from 300 000 us dollars to 5 000 us dollars so they spend a lot of capital on um you know on decision development and they're also doing the same in terms of developing the bio inks right now they've got a portfolio of over 60 bio inks within their within within their stable and they need you know that probably spending more capital in terms of developing um developing uh those products so in the short term i think the you can expect the they come in probably to slightly break even or make a small loss

as they ramp up the sales and marketing. But in the long term, if you look at other life science companies, you're looking at around 35% to 40% in terms of net profit margins. Okay. I think that answers most of our questions. Brett, do you have any more for the first half?

I'm all good. Okay. We're going to hit a quick break and then we're going to try to poke some holes in Trevor's thesis. Cox Panoramic Wi-Fi includes advanced security to help protect all your connected devices. You'll get real-time alerts. Oh, like this one, so you don't have to worry about malware.

Or when your kid downloads a song from a shady link. And now all your computer can play is... Red color, red color, where are you? All blocked, thanks to advanced security, included with Cox Panoramic Wi-Fi. Advanced security must be enabled in the Panoramic Wi-Fi app. Restrictions apply. Welcome back in. Next up, we have Devil's Advocate. You guys know how this goes. We have our counterpoints and it's Trevor's job to refute them. I'm going to go first. The first one is around share dilution. So over the last year, share count grew by 21%. They're currently

operating cash flow negative. As a shareholder, does it concern you that they might have to finance growth from here on out through further equity raises? Sure. I mean, just to give some color, right, on the increase in share count over the past financial year, the company conducted two capital raises first in January 2020 to raise 45 million. And then most recently in August to raise 115 million US dollars. And this was partly to finance the acquisition of a German-based company called Sineon.

I hope I'm pronouncing it correctly. But it's a German-based company that is focused on liquid handling and precision at dispensing technology. And the rationale behind this acquisition, right, as I probably noted earlier on, is that Cell Inc. initially or historically had only been involved in the provision of 3D bioprinters and bio-inks, but they wanted to expand their value proposition so that they become a one-stop shop company

for pharmaceutical companies and diagnostic companies. So this capital raise that did increase the share count was to finance that acquisition. And just to give some color, right, on what they are paying for the acquisition. Sineon, which is the German-based company, had a revenue run rate of around $50 million U.S. And Cell Inc. paid $97 million for that company.

And so essentially they paid 2X last 12-month sales for the company. and the company is growing at 40% year-on-year. So I think it then boils down to the question around, you know, is management disciplined in terms of the acquisitions, in terms of the M&A? And also, are they not overpaying for these M&As? But I think in the US, probably you guys know, if you can find a company that's growing 40% year-on-year

with also 80% profit margin and you can pay 2X last 12-month sales for that, I think that's a good deal. Oh, for sure, yeah. That sounds like they got a great deal there. Does it concern you at all that they might do this again, I guess? Or are you okay with the acquisitions? Do they have a long history of making acquisitions?

Is this like 21% shares outstanding increasing? Is that normalized? Is that something that people might see again? So right now, I mean, the company is very old and they've only made three acquisitions to date. So that's as far as their history goes. So they only made three acquisitions. But of those three is the last acquisition in September,

which was quite big, where they paid 97 million USD. So that's the biggest ticket item that they've paid. The CEO has noted that they've got 15 to 20 companies in the acquisition pipeline. and they are looking to do a quite a few more going forward but they also highlighted that some of the acquisitions that they might do might be some much smaller companies so we'll probably not expect same ticket ticket sizes is the sanion acquisition which was done in september which closed in september for about 97 million us dollars but i mean it's a growth

this is a growth story right and the company really i mean in a nutshell and also what the ceo mentioned in the last ending score is that they want to create a platform a platform company where if you are operating a pharmaceutical company you'll know that you can you can get all the tools and instruments that you need to automate your workflows in drug development in in product testing from one company. So, you know, control as much of the value chain that they can in terms of automating that process that then also feeds into the bioprinting business.

So I think over the next few years, we can see a bit of acquisitions. Some of them might be financed probably by other capital raise, but I also believe that right now, If you look at the revenue growth trajectory and also the company's gross profit margins, I think soon rather than later,

the company will get to a point where they start financing these acquisitions from internal cash flows. Okay, well, I'll hit my counterpoint. You may have mentioned this, you mentioned this a bit when you talked about how they are already growing revenue, they already are proving this business model works, But are you worried at all that this might be hyped up as a possible everything product that can solve a lot of different issues in pharmaceuticals and, you know, with organs and things like that?

But in reality, it may only work in a few cases. Well, I mean, if I look at customer count, all right, I mean, just to give some color also, last year in FY19, 2019, they had something close to below 1,000 companies or customers that they had in their portfolio. And then within a space of one year, they have signed close to another 1,000 companies. So they've almost doubled their customer count. And this is really showing the adoption of the product across the board, between pharmaceutical companies, between laboratory and then diagnostic companies.

All the big pharma companies, the 25 biggest pharma companies in the world, all of them are customers, including Pfizer, I mean, including all pharmaceutical companies in Europe and also in Asia. So the biggest 25 companies, pharmaceutical companies are now customers. So I think we are seeing a massive adoption of their products and also of their solutions across the board. And then secondly, if you also look at the volumes of consumables that they are selling, they've also been increasing exponentially. What this means is that customers or their existing customers are using more and more of the consumables.

So it just shows the velocity of product usage within their customer base. And what the company has actually done is that they've implemented a program where they can give their customers a slight discount in terms of the products in return for a customer providing feedback on how they can make the consumables more effective, much cheaper, and also, you know, increase the efficiency and also, you know, the effectiveness of the products. so if you look at the volumes of consumables because it tells you how much or at what velocity are customers using selling products and that has been increasing exponentially and that actually also feeds into the revenue growth which has been north of 200 percent year-on-year what would have to happen for you to sell selling um is there anything that would concern you anything that could change your thesis probably

I think obviously if the management in the unlikely event that they have to leave the company then probably that's one indicator and also I think but I think one of the

most effective leading indicator of this business model really is to look at the consumables volumes right because that tells you the velocity at which customers are using these products right because if you buy a printer and you don't use it if and you don't use it that much then there's only as much toner or cartridge that you demand right but if you buy a printer and then the rate of printing increase it also means that then you

have to start using more and more cartridge so i think consumables are one of the leading indicators so you have to look at what proportion of total revenue is coming from consumables And I want to say that increasing over time. Over the last four years, it has increased from about 4% to around 14.5% right now. And the industry standard for this business model is for consumables to become about 50% to 60% of your total revenue. So I think this is one indicator that I'll be looking at

from quarter to quarter, just to see that volume ramp up for the consumables. And then probably that's also another indicator. If you see your consumables flattening out at a much lower level, then that may show that customers may not be, or the demand for their products may not be that strong in the market.

Okay, and to wrap things up with the last question here, I know this is a tough one with a high growth company because they're changing things all the time but are is there one change you would like to see selling make um not really i mean i think one of the biggest changes but i mean they are now implementing right so what they used to do before is that they never had an in-house sales team so they used to sell their product products using a distributor model right but the problem with the distributer model is that a distributer has no inherent incentive

just to push your own product because they also have other products to sell. So they come and used to use a distributer model but now they started shifting to in-house sales team. So this is one of the I think this is one

of the key issues that they've addressed because although moving to an in-house sales team can affect profitability in the short term it really drives higher gross margins going forward and also it also deepens your relationship with your customers in terms of understanding what they want and what they are using and what changes need to be made and how you know to make your products more useful

and also more efficient in their workflows so this is one model but I think I would like to see the company investing more into their you know in-house sales team so that's the first And then I really can't think of anything else because right now, I mean, on the decision development, they are spending half of their sales on R&D. And the CEO has also indicated that one of the medium-term strategic objective is to develop the technology such that they now start moving into the printing of human organs

that can be used for transplants within hospitals. so I mean to me if they maintain that spin on R&D I think the company has got a very bright

future going forward okay I think that's all the questions we have for selling where can listeners find you

reach you see any more of your content Twitter handle Twitter handle at Trev Mucetzi

that's my Twitter handle and then they can also visit our website onetransactioncapital.com dot com there you go yeah thank you thank you for joining trevor it's always a pleasure yeah definitely thanks ryan uh all right we want to remind our listeners that we are not financial advisors anything we say or discuss here on chit chat money is not formal advice or a recommendation

thank you guys for listening we'll see you next time