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Novadaq Technologies Inc. Message Board

  • e11ndofwar e11ndofwar Aug 11, 2014 8:18 AM Flag

    A little help

    I am getting ready to send and email to the new head of Investor relations dealing with issues not discussed at the recent conference call. I would appreciate your help in insuring I cover all the bases. Here are a few points I believe require an update:

    1) What percentage of breast reconstruction surgeries are using spy elite? Are we getting any closer to standard of care?
    2) Any progress in developing international partnerships, particularly in the far east?
    3) Any further insight into what progress is being made in Endometrosis?
    4) Is NVDQ equipment that is now embedded into DaVince a newer model or is it the old model? If a newer model, where the terms of the original agreement improved?
    What additional questions should be added to the above list?
    Thanks in advance
    regards endo

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    • I had communications with the company yesterday as it related to questions I had posed earlier in the week.

      I was first advised that the company realized that many issues were not addressed at the last CC because a great deal of time was spent discussing the current status of the Lifecell partnership. As it relates to breast Cancer reconstruction the percentage of surgeries using our equipment is now at 17%. Based upon continued strong support from opinion leaders in that field the company remains very confident that at some point they will receive Standard of Care. They also reiterated what many on this message board have mentioned, that in the long run, from every perspective, it will be a positive event when the company takes over the marketing from Lifecell.

      On the questions related to international sales I was advised that currently 8 systems are in place in hospitals throughout Europe. The company continues to have meaningful international partnership discussions. They expect regulatory approval in China and South Korea in the first quarter of 2015, and Japanese approval by the end of this year. Most importantly, the company will have in place and be presenting a comprehensive strategy for marketing internationally. They will present this strategy on Investor Day.

      see next message

      • 2 Replies to e11ndofwar
      • Appreciate the comments, but to conclude the company is running on "all eight cylinders" is a stretch. A couple issues still remain sketchy - if you are expecting Japanese approval by the end of the year (4 months away), how could you not have a marketing venture in place already to take advantage of that pending approval? Having 8 systems in Europe is an embarrassment - if they are trying to establish an international presence by themselves by providing a few machines here and there, is that really a "comprehensive strategy"? Sell the company - by the time Arun gets around to establishing a presence in these markets, the patents will expire.

      • As it relates to the fact that endometriosis was not mentioned at the CC, the company indicated that progress continues to be made in this arena. However, because of overwhelming positive clinical data on G.I. and Lymph node, they have been put into clinicals first. They also indicated that specialized software will in all probability be developed for endometriosis.

        As it relates to DaVinci Xi they again verified that the novadaq equipment is embedded in the system. The $200,000 deferred revenue only represents royalties that were deferred. There are now 900 davinci systems in place that have firefly. Firefly in Xi is the standard model. All the upgrades such as color etc are being reserved for Pinpoint, which I consider a smart marketing strategy.

        Finally I asked about the now 47% decline in the pps since late march. They reiterated many of the comments made by the old timers here. Even adding in the Lifecell sales the sales to capitaization ratio is still a very high 10 plus. So, you have to expect a high degree of volatility as happened to not only Novadaq but many other companies in similar circumstances over the past several months. Overall, they see the current pps as a buying opportunity and some managers have taken advantage of the opportunity.

        Overall, I was left with the impression the company is running on all eight cylinders, and as many here have said we need to see this period through.
        regards endo

    • I'm a long term holder, who has suffered of late like many on this board and still hold, but the bottom line is when you trade at a teens multiple of sales off a small base of revenue, when the rest of the med-tech universe typically trades at 6-9x - you have to deliver the goods on top-line guidance. Period. The sequential trend in y/y quarterly rev growth has been low 40s% 1Q14, to 38% y/y this Q, to 35% for 3Q14 (per Arun's guidance). Like everyone else, I buy the explanations re: the dip in JV sales, the deferral of royalty recog on DaVinci Xi and also think Luna/Pinpoint initial ramp in sales has been excellent, but the recent mark downs on analyst rev/price targets and the stock is not that surprising when taken in this context. When rev growth re-accelerates to 40-45% y/y, I'm sure all will be right in the NVDQ firmament again. And as highlighted, the Lifecell JV resolution will likely mean a $15-16m pickup in annual rev which will be accretive, but they can hardly claim that as organic growth.

    • Hi Endo,
      I think you're asking the right questions...unless Dave Martin's exit is material,( which I don't think it is).
      Certainly never thought that the pps could be sliced in half.
      The guidance about (only) 35% growth in the 3Q didn't help,but unless something else is afoot, that's not a worry. Today's news on Yahoo Finance references Taglich's renewing its buy rating but also lowering the TP from 19 to 16, based on "reduced minimum valuations" (that's read as LIfecell not pulling their weight).
      But since Lifecell will be thrown overboard (IMO) the stand alone company's earnings will be immediately accretive. In the meantime we have to be patient.
      Pezel

    • andersongordon@ymail.com andersongordon Aug 11, 2014 4:14 PM Flag

      That would help greatly Endo. I too would lend support for your request...

      GSA

    • andersongordon@ymail.com andersongordon Aug 11, 2014 4:12 PM Flag

      I thought Arun said in a previous call that he would have each quarter the number of SpyElite, LUNA, and PinPoint units ---Sold, Placed, and # of Hospitals using them. Would be nice to have a web site that was updated telling us what hospitals have these pieces of equipment both so we can monitor their progress and so I can guide folks I know that could benefit from these wonderful technologies. Similar to the ISRG hospital and surgeon web site. That would be a help to us that have invested and to potential users of these services.

      GSA

    • How many pieces of nvdq equipment have been imbedded in the new Isrg da vince that we haven't been paid for, and dollar value of same?

      • 1 Reply to mr_b01
      • I was going to attempt to answer your question with information released on the conference call but the numbers don't add up. A figure of $200,000 of royalties was stated as being deferred until FDA clearance. Also mentioned was a total of "about 90" total Firefly systems shipped. Further, 53 were royalty-paid Si systems. Let's round the the remainder to 40 Xi systems. I was under the impression that under the agreement, Novadaq received $15,000 per unit. If that were correct, then the Xi deferred royalty amount should be in the neighborhood of $600,000. As the title says, "A little help"?

 
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