Novadaq (NVDQ)

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Novadaq Reports Second Quarter 2012 Financial Results

http://www.novadaq.com/content/novadaq-reports-second-quarter-2012-financial-results

Toronto, Ontario - August 2, 2012 -
Novadaq® Technologies Inc. (“Novadaq” or the “Company”) (NASDAQ: NVDQ, TSX: NDQ,), a developer of clinically-relevant fluorescence imaging solutions for use in surgical procedures, today announced financial results for its second quarter ended June 30, 2012. Unless otherwise indicated, all dollar amounts in this press release are expressed in United States (U.S.) dollars.

Novadaq reported total second quarter 2012 revenue of $5.4 million, up approximately 48% compared with $3.6 million for the second quarter of 2011. Second quarter of 2012 revenue growth was driven by continued adoption of SPY Elite® and FIREFLY procedures and higher SPY Elite and FIREFLY system sales.

Second quarter of 2012 recurring revenue for Novadaq’s SPY businesses increased 124% to $2.5 million from $1.1 million in the second quarter of 2011, and increased 18% sequentially from $2.1 million in the first quarter of 2012.

Second quarter of 2012 operating contribution (cash contributed by operating activities before changes in working capital) was $0.2 million compared with an operating burn of $0.9 million in the second quarter of 2011. During the second quarter, working capital consumed $1.3 million, and $1.7 million was invested, including $1.6 million to build the SPY Elite installed base.

Cash and cash equivalents were $41.6 million at June 30, 2012, reflecting an increase of $33.7 million, compared to the cash position as of March 31, 2012. In April, the Company raised $40.3 million by way of an underwritten equity offering (net proceeds approximately $36.9 million), issuing 7,015,000 shares at a price of $5.75 per share.

Novadaq shipped 130 imaging systems and approximately 4,000 SPY Elite and FIREFLY procedures kits during the second quarter of 2012. The combined installed base of SPY technology in the United States now exceeds 500 systems.

“We are seeing increased adoption in breast reconstruction and partial nephrectomy, our initial markets, as evidenced by the 18% sequential increase in recurring revenues”, commented Dr. Arun Menawat, Novadaq’s President and CEO. “At the same time, focus on our PINPOINT® endoscopic fluorescence imaging system is increasing. Novadaq plans to market PINPOINT directly, and expects that the product will be familiar to surgeons and hospitals because they are already using SPY technology through our existing installed base. With PINPOINT, the clinical and cost savings benefits of fluorescence imaging will be available to surgeons choosing to perform minimally invasive procedures, which is a large segment of the surgery market. We have started the process of building our sales and marketing team for PINPOINT, and recruitment into the PILLAR™ multi-center clinical study has begun.”

Conference Call
Novadaq is pleased to invite all interested parties to participate in a conference call today, Thursday, August 2, 2012, at 4:30 p.m. Eastern Time during which the results will be discussed.
Novadaq Reports Second Quarter 2012 Financial Results

Those wishing to access the live conference call by telephone should dial 1-877-407-8031 (within Canada and the United States) or 1-201-689-8031 (international callers) several minutes prior to the beginning of the call. A telephonic replay of the conference call will be made available until midnight on September 2, 2012 and can be accessed by dialing 1-877-660-6853 (within Canada and the United States) or 1-201-612-7415 (international callers) and entering the account number 286 and the conference identification number 393085 when prompted.

The call will be archived for 90 days on the Company’s website at http://www.novadaq.com under the “Events” tab in the Investors section. In addition, a replay of the call will be available for download to a portable audio player or computer, as an MP3 or podcast file, at the same location on Novadaq’s website.

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ISRG beat earnings estimates but warned for a slow down in Europe and fewer prostatectomy procedures.

In the CC there were some mentions relevant to NVDQ...

The increases in instruments and accessories were driven by procedure growth of approximately 26% and sales of our new instrument and accessory products, including Single-Site, vessel sealer and Firefly.

Our second quarter average sales price per system was $1.53 million, an increase from the $1.44 million realized in the second quarter of 2011 and $1.47 million realized in the first quarter. ASPs include all da Vinci models, all simulators and Firefly when configured with the system and exclude upgrades.

Operationally, we continue to make progress toward optimizing the manufacturing process while reducing product costs. Regarding system attachments, namely da Vinci Simulator and da Vinci Firefly. Both attachment rates remained high in the second quarter. Strong market acceptance for these products has helped buoy our da Vinci system ASP to an all-time high.

Growth in general surgery was also multifaceted, including growth in colon and rectal surgery, as well as cholecystectomy.

Clinically, we had a solid quarter, achieving year-over-year procedure growth of approximately 26%. Gynecology, general surgery, along with the emerging categories of thoracic and head and neck surgery, accounted for a large part of this growth. Da Vinci Hysterectomy, Cholecystectomy, Colon and Rectal Resections, Lobectomy, Endometriosis Resections, Myomectomy and Partial Nephrectomy exhibited strong quarter-over-quarter growth, which was partially offset by dVP softness in the United States.

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JMP presentation notes...

Spy...
in > 400 U.S. hospitals
75+ new installs per Q
In 12% of U.S. hospitals with > 200 beds

Lifecell...
largest application … breast reconstruction... 9% penetration
expanding into abdominal wall and colorectal and vascular surgery in the future

ISRG...
focusing on partial nephrectomy expanding into colorectal and gynological procedures

KCI...
Going forward - Excited about KCI relationship with new Luna device for vascular assessment...will be launching...reimbursement in outpatient setting should be “pretty significant” (6M procedures/year)

LUNA trial... http://www.prnewswire.com/news-releases/novadaq-announces-initiation-of-luna-system-human-clinical-trials-56582332.html

PINPOINT...
Beginning PILLAR trial this quarter... 150 patients

In colorectal procedures early data shows reduction of necrosis from 15-25% down to 3-4% has “significant implications as to cost of treating patients”

Direct sales & marketing team...looking to hire 80 . Will build up slowly over the next few years.

First hiring on the sales side in Q3 and Q4. Already started hiring on the marketing side.

Reducing necrosis in breast reconstruction and colorectal surgeries to “almost negligible amounts”... when you can reduce complications prevent a surgery that can cost $200K-$300K it’s “very significant for the hospital”

Working on nerve imaging agent and auto-flourescence to detect early stage cancer in hollow organs

Leverage Going forward...
Establish base in breast reconstruction
Leverage breast reconstruction for new applications such as colorectal, abdominal wall or vascular
Use the foundation of ISRG, Lifecell and KCI to drive adoption of new technologies i.e. PINPOINT
Use total installed base to work with new molecules
“We’re constantly approached by companies developing molecules... to target cancer etc. where our devices can be adapted to allow imaging using their agents.”

Q&A Session (could not hear any questions - inaudible)

SPY...
Advantages over other imaging technology... MRI, PET, CT... these technologies require huge infrastructure costs

Main difference is usability, Spy give real-time streaming data... immediate assessment.

Main competition are flow probes. Flow probes measure flow... Spy measures perfusion in an area of tissue.

ISRG...
just over 50% out the door with Firefly option.
70% going on new systems... 30% are retrofits
As data builds up and what’s presented at meetings with users... seeing more retrofitting
started out with partial nephrectomy now seeing good data on colorectal so now seeing uptake in usage there

PINPOINT...
Hired the first marketing people a few weeks ago
Will hire 5 sales reps between Q3 and Q4
Will train reps at PILLAR sites
Will announce data in April 2013.. then “will really start ramping” on the sales reps... about 80 reps
Will hire 5-10 sales reps each Q depending on productivity... (doesn’t want to commit)
In the endoscopic space you want your reps “up to $1M-$2M in sales before you feel they’re successful” “Once they’re trending toward that then we’ll speed it up”

Lifecell...
“What’s exciting... the excitement level has gone up tremendously since the reimbursement on the outpatient side because wound care is such a competitive market”

The feedback is “we’ve got the number one player in that market (Lifecell) with what respect to what they have with wound VAC and their penetration into centers” “They have a very good reputation out there”

Nerve imaging...
“we have developed a way to introduce our imaging agent specifically for nerves” doing small and large animal studies this year. Testing in humans next year - partners showing interest.

Lifecell...
Lifecell learning how to introduce new device..”it’s been a learning curve” .has added more Spy specialists... they have more success stories... “playing out quite well”. “Lifecell is committed to adding resources as needed” The issue with operating rooms is access... Spy is the trojan horse that get’s Lifecell reps into the operating room to market other products.... reps are seen as bringing the latest technology to physicians. Hard to get face time with physicians... “Spy is changing that”

“Spy is changing the way surgeons perform procedures” “Spy is changing the outcomes of procedures”

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JMP Securities Healthcare Conference live webcast Thursday July 12, 2012.

TORONTO, ONTARIO--(Marketwire -06/28/12)- Novadaq® Technologies Inc. ("Novadaq" or the "Company") (NDQ.TO)(NVDQ), a developer of real-time medical imaging systems for use in the operating room, today announced that Dr. Rick Mangat, the company's Senior Vice President and General Manager, will present Novadaq's corporate overview at the Seventh Annual JMP Securities Healthcare Conference at 2:00 PM ET on Thursday, July 12, 2012, at The Peninsula New York Hotel in New York, NY.
A webcast of the presentation can be accessed live on the Company's website at http://www.novadaq.com under the "Events" tab in the "Investors" section, and will be archived for 90 days.

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New investor presentation... July 2012

http://novadaq.com/sites/default/files/Novadaq-July-2012.pdf

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10 small companies with intriguing technology in an emerging market.

http://www.onemedplace.com/blog/wp-content/uploads/2012/04/OMR-Research-Issue-4-March.April_.pdf

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FireFly mentioned in ISRG's conference call several times:

http://seekingalpha.com/article/505201-intuitive-surgical-s-ceo-discusses-q1-2012-results-earnings-call-transcript?source=feed

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ISRG reports earnings today... will be interesting to see how many DaVinci's were sold.