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.
I have read that Firefly will be standard on Xi. This would seem to indicate that either the ones being sold now will have their vision swapped out after approval or, more likely, they already have all the Firefly hardware there and the software is waiting for an enable code.
Dating myself, but I had a computer professor who claimed to be around for a hardware upgrade to an IBM mainframe. The IBM techs gathered around, opened a cabinet, clipped a jumper wire and closed the cabinet. Voila, upgraded hardware.
Actually, I would rather see company action create the news rather than IR. More publications and FDA approval for the new daVinci Firefly would be welcome. My belief is that because Novadaq continues to spend heavily on growth and hover just short of profitability, some marketeers see this as an opportunity to hammer the stock after the large, pre-April run up in price.
Acquisition of Aïmago in April may have added further impetus to their plans to push the price down. Usually, an acquiring company's pps dips. Coupled with that is the question of whether Aïmago's product complements or competes with Novadaq's core technology with lessened revenues. For the traders, doubt equals short, and momentum up equals momentum down.
Short interest for the latest half-month period rose heavily again, up over 30%, standing at 2.2M shares short. Interestingly, since the beginning of April, it has risen a whopping 145%. When the pendulum swings, will it be an axe that cuts both ways?
I agree. SPY Elite applications encompass much beyond Lifecell's areas of expertise and the technology is better handled by the hands of those that made it. Unless Lifecell basically accepts Elite as a loss leader - essentially doing the work for free - and additional agreeing to tough sales non-performance terms, I don't see them keeping the partnership.
Just as a reminder of why Novadaq is a compelling investment, this came from one of the presentation slides. Arun, having included some of this information at other conferences and probably wanting to get on to the technology description, quickly passed over it.
SPY Technology Potential
Maxillofacial/Head & Neck..100,000
Last quarter SPY technology was used in 6600 cases.
Installed base as of 3/31/2014:
Spy Elite 432
Pillar II total leak rate (n=139) was 1.4% with 8% of patients having the surgery altered due to Pinpoint. Of that 8% there were no leaks. A usual leak rate of 12.6% would be expected for low anterior resections of this sort without Pinpoint. Adding the 1.4% to the altered 8% puts you in the ballpark of the expected non-Pinpoint complication rate.
Expect resolution of the Lifecell agreement saga by years end.
Today, May 14, 3:40PM PT. Webcast on company site, investors, events.
Fish's posts did have a way to cut to the core. Though I also miss his posts, I'm guessing that he turned to some other subject worthy of his attention. Not to disparage present company, but it's probably not to be found on a Yahoo message board! Best of luck, Fish.
With regard to Lifecell (KCI), Novadaq lays the blame for the lack-luster quarter squarely on Lifecell’s lack of performance with SPY Elite capital sales. Also contributing was Lifecell's kit inventory adjustment (stated to be a one-time event).
An unhappy Arun clearly stated on the conference call that for Spy Elite capital sales, Q1 was soft compared to the previous one, and that Novadaq desires a financially better contract than the current one which expires at the end of 2015. Negotiations are in progress. (PS. Q1 revs wouldn’t have looked light if Q4’s hadn’t looked so gigantic.)
It’s hard to read Lifecell’s motivation, being a part of a large, privately-held corporation. Lifecell or KCI management may just be heedless of maintaing a good work relationship with Novadaq. They are after all only one piece of overall sales. How motivated is the sales-force with a one-off product? Ill-advised, gross inventory increases and decreases may be have been done in a careless manner. Or management may be flexing its corporate muscles in some way to show their importance.
The story is still a net positive. Luna and Pinpoint sale are now responsible for 50% of sales and they are ramping up quickly. Arun states that partner sales will be a shrinking part of revenues in the future. A short term squabble with Lifecell will go Novadaq’s way regardless; either the contract is renewed to Novadaq’s total satisfaction, or it’s not, and the SPY Elite comes home and becomes a more cohesive part of the of the product array for Novadaq’s own sales team.
In the past Lifecell was useful because they had the hospital connections to get SPY Elite in the door, but how useful they are now is up for debate. Expect hardball.
With regard to Firefly negotiations, you are using the wrong tense; Firefly for the Xi is done and in the hands of the FDA. Equipment like this isn't produced over night, and the agreement for it between Intuitive and Novadaq was done months ago. We just aren't aware of its terms.
SPY CSF Mode - Color-Segmented Fluorescence
Mentioned in the conference call was the introduction of a new mode in SPY technology, available in the new Pinpoint. The ability to recognize and color code different anatomical structures based on perfusion and the type surgery being performed. Arun was emphatic that this technique is well covered by the Novadaq patents. The new mode is illustrated and discussed on the main company web page.
I wasn't aware of this application:
From the CC:
Finally, neurologists see major advantages during robotic prostatectomy. In these procedures, vascular structures needed to be divided, but the limited space in the pelvis prevented the use of conventional staplers and forced these surgeons to revert to the use of clips. The microcutter has now been successfully used to replace these clips thereby offering surgeons a safe and reprehensible method to transact the necessary structures.
there as vascular structures that connect the prostate to the vessels around and the small pelvis they need to be divided. The way they do that right now is by placing numerous clips. They basically dig out the structures and then create a little opening on the back and place called wet clips, fairly large clips too. Then be able to transect now there is so little space that on the side, facing the prostate they sometimes are not quite often have to just cut-off the vessel instead of clipping the opposite side as which is how you would typically do just because there is no space.
So we use a 5 millimeter MicroCutter, you can achieve both, you can divide it without having to dissect it out and have secured the vessels on both sides of your transaction, so there is no back bleeding. That is clearly advantageous.
As far as we understand from neurologists, who have been following us, there is a significant time saving. They yield a quite a number of clips up to the number I heard yesterday was up to 20 maybe 10 to 20 clips, which are not cheap and the time savings especially with the robotic procedure we’ll probably be very strongly driving the use of our products and it’s procedure.
This appears to be a "skin deep" only, diagnostic technology. I'm not sure how applicable Intuitive will perceive this as being to their core, robotic-surgery. Thus, I don't see it as having much relevance to the manufacturing agreement.