Great report. Thanks so much for taking the time to write such a detailed report.
Arun mentioned how much ISRG had helped them in setting up their manufacturing. It seems they are also following the ISRG sales model with separate field reps for systems sales and procedure support. They are also following the "7 year" replacement cycle" like ISRG but I can tell you that for the most part daVincis seldom make it to their 7th year because compelling new features drive hospitals to upgrade sooner. For example if NVDQ introduces a new model that supports quantification then hospitals will upgrade quickly if not immediately. Ditto for illumination of specialized molecules etc. In short, there are many new features that can drive the installed base to upgrade much more frequently than once every 7 years. The relatively low price and quick break even make this even more likely than for ISRG and ISRG has not done bad at all with their replacement cycle despite the high cost.
I should have stressed "Most of the time it doesn't mean they are going to use all of the authorized shares" - RIGHT AWAY or at once.
Thank you very much for you reply. I do not know much about AMC at all so it's hard to handicap your speculation of a "reverse merger". The thought that came to mind is the saying "sometimes a cigar is just a cigar" that is to say "desire to avoid outside influence" (a.k.a. retaining control) is a completely legit and common reason for not wanting to go public all by itself. It would seem that CRDC would be much better served partnering/licensing/selling to one of the larger players. The problem is that they might not be ready yet and they need to stay solvent to get from point a to point b. ISRG has invested in them before I have to think that in a pinch they could get additional funding from ISRG although I think that would and should be a last resort. ISRG drives a hard bargain and money from them would not come cheap in terms of what CRDC would have to give up to get it
Not trying to be dense here but is your point that Applied will have to liquidate because they'll need the cash? Another way to look at is that they would be looking even harder for new products that could contribute to their bottom line. I just don't see the mechanics of this situation significantly impacting CRDC. Even if a major holder did liquidate some or all of their position, any impact is likely to be temporary.
These types of moves are fairly common for small companies like this. It's no secret that they will need to raise more cash. Most of the time it doesn't mean they are going to use all of the authorized shares, and sometimes they don't use hardly any. Unfortunately there is know way to know which will be the case until it happens. No doubt there will be some dilution of ownership be it through share placement or trough some other infusion of cash. The question is will it be accompanied by an FDA approval or some other announcement that adds value. I just don't see them going away. what they have is too promising. I think this is a buying opportunity. .
Yes, the doctor presenting on endometriosis was very good. He basically said the results had not yet benn fully validated by stage 3 studies but that the benefits were so self evident that he and others were not bothering to wait. He also shed some light on why standard lap had not gained more market share before robotic despite the fact that it had been around for many years and had come to dominate other procedures such as gall bladder surgery. He attributed this to their fear of damaging the ureter or bladder and the fact that most were not qualified to repair them if they did cause damage. They would have to call in a urologist. Pinpoint enhanced delineation of these structures should make more possible via standard lap.
Some very interesting information in today's presentation. Surgeon's are VERY excited about pinpoint. They even raved about it compared to daVinci's implementation of the NVDQ technology know as Firefly. They contrasted pinpoints simultaneous full color HD + fluorescent image with the Firefly which toggles between blk & wht + fluorescent and a white light image with no fluorescent component. The doctor talking about wound care was also very enthusiastic. He said that reimbursement codes are already in place for outpatient as well as surguical suite use of LUNA for wound care. This is great news, I had no idea this was already in place. He also discussed how sharing the LUNA images with patients made them much more invested in the treatments because the real-time imaging made the results more tangible to them. The opportunity is staggering i wound care. I believe he said there were 190 million diabetics with that number projected to grow to more than 300 million over the coming decade. 2% to 4% of these will develop foot ulcers. LUNA can play a significant role in the treatment of these issues resulting in VERY significant benefits as a result of avoiding amputations. Amputations are associated with much higher cost of care and significanly reduced life expectancy not t mention the obvious quality of life issues associated with losing parts of your body bit by bit. The presentation is long but worth while
Have been listening to presentation. Speaker cited Swiss study showing that for colo-rectal surgery the cost without anastamotic complications was $12,000 vs $84,000 for procedures with anastomotic complications. I believe he said that the typical complication rate for these procedures is 10%-20% without SPY and half or less than that with SPY. I believe the speaker said that the upcoming PILAR study shows anastomotic complications near zero. Less sure about that last point but they previously cited complication rates near zero for reconstructive surgery procedures
Please explain your reference to the AMC carve out. What is this and how did it come to be? Why and when is it ending. Thanks
Let's not start giving them away just yet. Thanks to both for your replies. I'm looking for at least a few good years of making high margins from consumables before they start getting commoditized. Even then newer and or specialized materials should be ab;e to continue to command higher margins. Stay tuned.
I'm a long time investor in both SSYS and DDD/TDSC. One thing puzzles me and I was wondering if anyone has any ideas. It seems odd to me that consumable revs are not growing at a faster rate than they are. My assumption is that when users first get their systems, they are tentative in their usage until they get more comfortable with the new technology. It seems to me that after a while as they get more comfortable and find new ways to utilize the technology that their consumables usage would ramp up pretty considerably. Combine this with a trend towards larger build platforms and manufacturing as well as just prototyping and it seems that the consumables revenue growth rate should be higher than it is. I realize that new systems are probably accompanied by initial stocking orders for consumables and that new users may waste material in their first few weeks of operation but it still seems to me that a system in place for a year would be using two or three times the consumables when compared to a recently placed system. I welcome any serious thoughts and comments. - Thanks
It seems that cardiac surgeons like change least of all. ISRG has been very successful overall but their progress in cardiac has been slow. This despite the fact that it was their initial target market before they shifted to prostatectomy.
CRDC says that pediatric surgery is a wide open for them, the small size of their device is ideal and lack of competition leaves it wide open for them. On the down side, pediatric surgeons are not now using staplers because none are suitable. This puts CRDC in the position of getting them to shift to a new way of doing things. I think the compelling value of the product will overcome surgeons resistance to change in pediatric surgery
let me rephrase that last point. 10 years from now there will not be a high percentage of new surgeons specializing in non-robotic lap techniques
You are overstating what was said and mixing apples with oranges. There was nothing said about "butchering" patients. The problem with small hospitals is not specific to robotic. Surgeons who do not do a high volume of similar procedures USING ANY MODE OF SURGERY can not become or stay proficient. So a patient is just as likely to have a bad outcome from a lap surgeon who has only done 5 procedures as a robotic surgeon, maybe more so. Ditto if they only do a few similar procedures per year.
As far as the ABG recommendation, as I recall it was based primarily on the cost. The cost difference of robotic is based on the initial cost of the robot. If the hospital has to have this to do the more complex cases, then they aren't saving any money by not using it on less complex cases. It also ignores the fact that patients have a choice and they are choosing to go to the hospitals that have robots, thus the hospital is undoubtedly benefiting economically from their daVinic purchase. Most studies criticizing robotic are not claiming it is inferior, only that it is not superior enough to justify the added cost, but as I pointed out, once the hospital has invested in the machine for other procedures, they save nothing by not using it.
Most the the stats used as a basis for these comparisons include the early learning curve for this robotic procedure which is fairly new. Starting from what most critics claim is at least non-inferior outcomes robotic outcomes have already improved and will continue to do so. 10 years from now there will not be a high volume of new surgeons learning standard lap techniques.
According to a 2011 article "Every year 600,000 hysterectomies are performed, but only 15% are performed using a minimally invasive technique." The article goes on to say, and I'm paraphrasing here. That robotic doesn't have a clear advantage over standard lap BUT IT DOES HAVE A CLEAR ADVANTAGE OVER OPEN.
Furthermore they go on to say that often there are factors that prohibit standard lap procedures. ISRG's market opportunity is the 85%+ of these procedures that are not currently done as MIS and/or include factors that prohibit standard lap. This is a huge market and that overall opportunity has not diminished. standard lap has been around for a long time, if it was going to capture a dominant market share it would have already happened. Anyone who thinks that there is going to be some huge resurgence in the number of standard lap surgeons who are going to soak up all this procedure volume, is just kidding themselves.
MIS will replace the vast majority of open hysterectomy over the next 10 years, and that means robotic MIS, not standard lap. The bigger problem for surgeons is that surgical intervention in general is becoming less common for hysterectomy and other diseases. The pie is ISRG's to take but the pie may be shrinking. Still there is a lot of pie in ISRG's future. For the record, less surgical intervention may be a very positive thing for the patients, but that's not my call to make.
Hey guys, thanks for sharing your analysis on this board. I have a question for you.
I'm looking for a source of surgical statistics that would allow me to compare procedure volumes and share for open vs robotic vs lap over time. Right now I'm specifically interested in the historical trend in prostatectomy and recent data for hysterectomy but I frequently find myself wanting data on procedure volumes and trends. Do either of you have any experience finding and using this kind of data?