By-the-by, this article also answered a question I had previously as to why last quarter's deferred royalty payment from Intuitive for FireFly Xi seemed only 1/3 of what I estimated it should be. I had forgotten that the total Intuitive pays for a FireFly is $15k and not all that is considered royalty ; $10k purchase price plus $5k royalty. My bad.
Seeking Alpha has a positive article on Novadaq analyzing Q2, reasons for the recent drop in share price and some numeric projections for the future. Since SA no longer appears on Yahoo Financial News, I thought a heads-up was in order.
Novadaq Technologies Knocked Back, But A Large Opportunity Remains.
The Lifecell issue seems to be the main drag in the minds of investors. I, for one, am curious as to how this will play out in the near future. If I remember correctly, a one year hand-off period is specified in the event of non-renewal of the contract. That period should begin within the next two months. I would expect Lifecell to abide by the letter and nothing more, but at this stage vindictiveness gets them nowhere. I would expect them to continue to sell SPY systems to established accounts and current pipeline prospects, but no extra effort.
What terms the contract allows for Novadaq sales personnel is unknown. For example, what if the contract dissolves exclusivity at that point and Novadaq salespersons are allowed free access to customers (probably with 50-50 sharing arrangement still in place)?
This could get interesting.
But dont' they already have such an parneship agreement with CHC Healthcare Group which has exclusive rights to market Novadaq products in Taiwan (and China)? I thought that was announced in January. I know of nothing in the way of sales now that they have the Taiwanese approval.
An email from investor relations confirms approval has been granted for Spy Elite in Taiwan. Maybe this is why they don't expect the Lifecell issue to materially impact sales in the remainder of the year.
Interesting information and consistent with the press release. Curious that Intuitive didn't push harder for an upgraded Firefly to stave off future robotic competition. A competing system utilizing an advanced Pinpoint (access via another point/port) versus an Xi with integrated old Firefly vision is a lot more of an even match than if the Xi wielded an advanced Firefly. I guess a daVinci surgeon will have to wheel in a Pinpoint if they want the advanced functions.
Also, I'm curious, did they sidestep the contract renegotiation issue?
I am in agreement about the press release, another reason to take it as a rumor. In the same article, partner CHC Healthcare sales were to expected to mirror the "miracle" of US sales after approval.
Search Taiwan Novadaq. Take this as a rumor due to possible translation errors (as seen below):
Put swollen medical equipment maker CHENGYE Medical (4164) today (18) announced officially made debut Novadaq SPY fluorescence image-guided surgery systems in Taiwan Product License; Because this product is an oligopoly market, is expected to be CHENGYE medical future growth momentum.
And another Novadaq company main products: PinPoint endoscopic surgery designed for the product license in Taiwan, is expected to also be successfully achieved before the end of the year. As for the mainland market, all products of the product licenses have been sent pieces of the audit, expected within the next year to achieve.
It's official, Novadaq/Lifecell agreement ends September 2015. Arbitration is being pursued to force Lifecell to develop applications beyond breast reconstruction and colorectal. I vaguely remember the existence of a section in the agreement that specifies how the hand-off will be managed over the last year it's in effect. Goodbye, Lifecell. Hello, full revenue.
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"?
As I have stated in another forum, I wish I knew some of the particulars of the agreement, such as non-performance and early termination clauses. But if Novadaq is insisting it be arbitrated (as granted by judgement), you may be sure they feel they have the upper hand.
I think 77k was for year-over-year, the 100k was for last quarter to this quarter; a little more interesting comparison at this stage of the game. I don't know why some companies can't present their story in a more positive light, especially when they can do it truthfully.
At first glance, this release was not overly exciting on the revenue side - until you notice that the microcutter sales figure last quarter was $100,000 versus this quarter's figure of $300,000.
From the conference call, it seems I was correct, the hardware for Firefly is all in place on current Xi systems and awaiting being "turned on" when FDA approval is granted. Hopefully, soon. We should then get a modest revenue bump when they are all finally booked.
More on litigation by searching Novadaq, Lifecell, spar, court. (San Antonio)
The sales agreement has now been taken off life support, all that remains is to call it. I regard this as a plus, as said before, SPY is best looked after by Novadaq.
From my post on the IV board (source theflyonthewall)-
Piper Jaffray says Novadaq not granted motion to dismiss Lifecell's complaint concerning employee solicitation. Lifecell directed to pursue arbitration. Piper Jaffray indicates this squabble will have little effect on Novadaq's sales numbers and rates its stock Overweight.
Link posted on IV.
Just as important, results indicate that from a healing and inflammation standpoint the D-shape is in no way inferior to the B.
On June 24th NOVADAQ presented at the JMP Securities Healthcare Conference. My apologies for not alerting ahead of the talk, but it is archived on the company site.
This is the first I have listened to the Vice President of Operations, Roger Deck, as presenter. The talk was fairly usual in terms of information and format as compared to others given lately. Though not quite as polished as Arun, Roger was more than competent as a spokesperson.
One item that got my attention was that there has been a marked rise in Firefly utilization over last two months due to its increased use in cholecystectomy. (I still think a new, full-color, enhanced Firefly will happen soon. Just look at the difference between the Pipoint and Firely slides.)
On the Lifecell saga, talks continue, Lifecell is anxious to extend the agreement and is open to terms more favorable to Novadaq. However, Novadaq isn’t convinced Lifecell management is as aligned with with them now as they were in the past.
Pressure is still being applied as evidenced from the talk:
Lifecell has done a great job at getting into plastic surgery but that’s a relatively small market. We could get much broader penetration within a hospital to take advantage of lots of other opportunities that they haven’t really worked on so far.