HGSI/PML

There's been what ... ~3000 patients treated with anti-BLyS = Lymphostat-B = Belimumab = Benlysta? So far no reports of PML.

Is HGS out of the woods? What if a couple cases turn up? What would that do the share price?

micro

ISRG

>>Microcap,

Congrats on Intuitive. Great recovery.

My main concern does not have anything to do with its sales or earnings but mainly with its greater than $10 billion market cap. When I see 15 to 20 times ebitda I get a little leary.

Time will tell.

good luck<<


Yes, I've heard that before. But with 50% procedure growth continuing through this downturn and system sales temporarily depressed because hospitals' cap ex is way down, I see EBITDA doubling within 2 years as those pressures are alleviated but ~50% procedure growth continues due to GYN penetration still being near the bottom of the S curve.

I think the present share price still has a ways to run, though monotonic appreciation is unlikely.

micro

Onyx / Proteolix

For some time I thought an oncology acquisition made a lot of sense for Onyx, which has a U.S. sales force selling only one product (Nexavar), approved for kidney and liver cancer. Leveraging that sales force would mean a lot more bang for the buck - a great business synergy.

One problem though ... It is most likely that carfilzomib (if approved) will be used primarily or exclusively to treat blood cancers. In that case, the sales force has to start knocking on hematologists' doors and attending ASH in addition to ASCO. And obviously hepatologists will not be prescribing carfilzomib ...

So is there much synergy in such an acquisition, or is it just a way for Coles to make the company - and himself - bigger?

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INCY

>>As for the other drugs, my view is that they are all at least 2+ years behind the 424 MF program and won't bring in worthwhile $$$. For example, if you license the HSD or diabetes drug, you won't get enough upfront to fund the 424 MF program. So what's the point since you'll still have to dilute?<< (pgs)

The point would have been to impress the investment community with the strength of Incyte's pipeline, and reduce op exps going forwarded, thereby jacking up the share price *prior* to selling shares or debt. The cash brought in through the partnership, the reduced future expenses, and the higher share price, could all have contributed to significantly reducing the necessary dilution ... at least in theory.

micro

http://finance.yahoo.com/news/Intuitive-Surgical-Announces-pz-1947219814.html?x=0&.v=1

Intuitive still growing at 50%/year.

"The growth in instruments and accessories revenue was primarily driven by growth in da Vinci surgical procedures of approximately 49% ...".

O.K. I exaggerated ... only 49%.

All the numbers are about what I expected. Hospitals are still finding themselves stretched, so system sales are down a tad year over year (86 vs 91) ... but wait until they start playing 'catch up' next year. Also this year's systems have more bells and whistles than last year's, and therefore are priced significantly higher.

"Intuitive ended the third quarter of 2009 with cash, cash equivalents and investments of $1,024 million, up $122 million from the previous quarter."

That's what I call positive cash flow.

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Geron
>>Better PR dept imo then science. So far it's been a dud in everything related to science for over a decade.<< (wallstarb)

I said "basic science". As opposed to development. Are you clear on the difference?

Geron has a telomerase inhibitor, a telomerase activator, a telomerase promoter, proprietary ways of measuring telomerase activitiy, a telomerase-targeted vaccine, a telomerase-targeted oncolytic virus, etc.

They have ways to grow embryonic stem cells, ways to differentiate them into specific cell types.

They own much of the IP for cloning.

That's pretty impressive basic science.

But 20 years w/o getting close to having a significant product on the market? That's a pretty impressive lack of development.

micro

>>ISRG surged up today on news that Davinci has been recommended for approval in Japan.<< (bridgeofsighs)

Let's recall that you thought it was overvalued at ~100, and now it's 259.

Still cheap, IMO. As long as procedure growth continues at a ~50% rate, it is way too cheap. And look for a whopping rebound in system sales when hospitals' cap ex budgets recover.

micro

INCY >>This company was badly in need of cash, and the convertibles were looming. Others smarter than myself suggested that the company would look to sign a partner for their lead myelofibrosis drug, and use the proceeds to shore up their cash requirements.<< (pgs)

[Why do I seem to be replying to so many pgs posts these days??? Beats me.]

The company had more drugs and more indications than MF, and they've been talking about doing a deal forever, so I think it is a very big negative that that this financing came *before* a nice partnership. It leads me to question the worth of their pipeline that they haven't been able to land even one impressive partnership this year.

Ex-U.S. sales in myeloproliferative diseases would have been a natural partnership. JAK for RA would have been a natural partnership. HSD11 could have been partnered. What's taking so long??

micro

Market valuation

>>OT: Anyone else feeling like a genius in this market?

I think it's out of control.<< (pgs)


The Nasdaq high before the recession hit was 2862, which was in October 2007. At the time I felt the market was fairly valued. I say that mainly because I value the stocks I follow fairly carefully, and on average, I felt they were fairly valued.

Of course I had no inkling of what storms were brewing ...

But for at least the past year, and through the period where we hit 1295 (March 2009), I had one very simple (O.K. - simplistic) thought about market valuation. If we recovered from the recession w/o a huge inflationary or debt-generated hangover ... during the next expansionary phase we should go above 2862.

(Of course 2000 was different. We hit 5133, but were incredibly overvalued. There was no reason we should regain that value in the next expansion.)

Well we're now at 2131 and we seem to be in that next expansionary phase after the ~2008 recession. I'm still not sure whether we can avoid a double dip recession or out-of-control inflation, but it looks like we very well might. Accordingly, 2131 doesn't seem high to me. It's a lot less than 2862. I'm not going to panic before we hit 3000, even if that somehow comes this year.

I've been averaging about 100% in equities the past few months, though I'm in the 90's at the moment. And I'm up 82% ytd - so, yeah -- I feel like a genius in this market too.

So far, anyway ...

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Geron

>>But more importantly, would the FDA buy Geron's argument?<<

What argument? Geron's two PRs on the subject of the FDA hold are an exercise in obfusication.

This is what they seem to be saying in the 2nd PR. Some manufacturing runs generated too many cysts in rat spinal cords, however one run generated no cysts. We'll keep playing with the manufacturing process ...

"We are committed to the optimization of all our hESC-based products as we improve the manufacturing process and identify improved product release criteria." (Geron)

Shouldn't the manufacturing process and product release criteria have been locked down by now, at least for the Phase 1 trial? Isn't having to go back and optimize it a HUGE step backward which could set the program back years?

After all, the first time around the FDA required hundreds of rats to be followed for 9 months after treatment. It seems the least they would require is that rats be followed for 9 months using the new manufacturing process and product release criteria - once those are completely nailed down.

Think about an analogy with a therapeutic protein program. Just about the time a Phase I clinical trial is about to begin, it is found that at least one version of the therapeutic protein generates adverse effects in animals. The clinical trial is halted and the company says it is going to work on optimizing the manufacturing process, but hey - good news ... with one manufacturing run and an unknown number of rats (but plural, so at least 2!), no adverse effects were seen.

You'd say - YIKES!! That means essentially going back to square one as regards the preclinical development.

That would be the reaction if the therapeutic was a small molecule. But now consider the fact that Geron's product is first-in-FIRST-in-class! How much more picky is the FDA going to be?

In a nutshell, I think a delay of more than a year until the trial can be 're-started' is likely.

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HGSI

>>HGSI did a pretty good job with the first trial and it remains to be seen how the 2nd one will turn out since the SPA requires two trials. The way the stock is behaving it could be that the preliminary blinded results from the 2nd trial are pretty good.<<

The 2nd trial is nearly a clone of the first. Same selection criteria and primary endpoint. And since the first trial had p = 0.0006 for the highest dose, it seems extremely likely that the 2nd trial will clear the bar as well.

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Geron

>>For Mick Bhatia, scientific director of the Cancer and Stem Cell Research Institute at McMaster University, it's a bit of déjà vu. In 2004, he succeeded in growing human blood cells from embryonic stem cells but found transplanting them into mice wasn't simple.

"I pushed the program back," Dr. Bhatia said. "We need to do more on the basic biology."<<


Bhatia was working with Geron on that project, and interestingly, Geron put out a glowing PR regarding his project with no mention of problems. You had to dig up Bhatia's paper and read it to find out the study wasn't a smashing success ...

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MD licensing

>>What specific changes should be made to the MD licensing process in the US to facilitate the practice of medicine by doctors with foreign credentials?<< (Dew)

I don't have any particular medical expertise, but I don't think it should take 2 years or more to find out if a doctor from abroad is competent to practice medicine in this country. You can look at where this doctor got his(/her) degrees and where he did his residency. You can look at letters of recommendation. In iffy cases you can require that the doctor pass a written test, which concentrates on clinical practice rather than checking whether the candidate still remembers some of the irrelevant medical trivia memorized years ago in medical school. And you can require that the foreign doctor spend a few days in a hospital making rounds with a medical evaluator.

I think that's sufficient.

The academic types like pgs will appreciate that this shouldn't be any harder than hiring a good postdoc or faculty member. There are plenty of ways to find out if someone knows their stuff and is competent to work in the field in which they have been trained without requiring them to go back to school for a couple of years ...

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Geron

>>I would be very interested on input and thoughts by members of the board...<<

I've been following that company for longer than I'd like to admit. Good basic science, good IP ... other than that, mainly disappointing.

The telomerase inhibitor has been in the clinic for over 4 years in many trials, many sites and many indications - but there has been no evidence of clinical efficacy.

The telomerase vaccine has been in the clinic on and off for ~8 years. While there have been some indications of efficacy, the company has announced they are going to junk it and start over using ESC-derived dendritic cells instead of taking them from the cancer patients. That's pie-in-the-sky, as far as I'm concerned. It is stupid to combine multiple unproven technologies and expect something to come out the other end in any reasonable amount of time.

The spinal cord injury trial is on hold. Also there were no reports of preclinical work involving pigs or primates - only rats. So the chance of success probably isn't very high - assuming the hold is lifted.

The company paid a lot for the 'Dolly-the-sheep' IP, but that effort has not paid off. In fact the pet cloning company to which they licensed their IP just went under - the second time that has happened.

And so on.

After 20 years of effort and something approaching a billion dollars of investment, the company has licensing and royalty revenues of ~$2M/year, which is pathetic. And it has no therapeutic products anywhere near the finish line.

Good basic science, good IP - but that's about it so far.

micro

OT/restricting the number of doctors - rant

I am amazed to find myself agreeing 100% with a croumagnon post (reproduced below) for the first time. I learned about this issue for myself when my x-wife doctor came to the U.S. and her medical training at Oxford and Cambridge wasn't enough for the AMA. Nor her residency and practice in Oxford after getting her degree. But for a loophole cleverly exploited, she would have had to do her residency over again in order to be able to practice in the U.S. Imagine spending two years working 80 hours a week for peanuts - for no reason other than because the AMA realizes that the average amount of money a doctor makes is inversely proportional to the number of doctors - and that's something they can restrict.

The loophole? She was hired as a Professor at a University in the U.S. I guess even the AMA realizes the absurdity of requiring those who are teaching residents to simultaneously be residents themselves ...

My 2nd and present wife is a MD/PhD, but she can not even call herself an MD let alone practice medicine, because her MD was also obtained abroad. Doesn't matter that her training was probably better than 90% of U.S. MDs; she would have had to spend at least 2-3 years taking exams and doing residency in the U.S. to become board certified, and she wasn't willing to go through that. As a result, even though she mainly uses her Ph.D in her job, her annual income is probably $20-30K less than it would be if she was board certified - and she can never be promoted, because the job above her requires an MD/PhD ...

The AMA is a glorified union. Their behavior is for the benefit of doctors, not patients.

croumagnon: >>This can easily be remedied if the AMA would stop their quota on medical schools and on accepting foreign doctors into resisdency programs. While I appreciate the heavy load on many MDs, this is only by design from the AMA and there is no reason on earth why a medical doctor should be making 10 times more than what a PhD makes in this country, when in fact the PhD has to spend more time in graduate school and is never financially rewarded for their respective accomplishments except when they put their talents to work for Goldman Sachs...LOL...

I am not denigrating the medical profession but I think MDs have had too easy for too long in the US when it comes to making a living. Mind you I come from a family of medical doctors going back all the way to my grandparents and all the way to my nephews and nieces, with two of my brothers being successful medical doctors. Often times when we get together as a family the discussion drifts into the disparity in income between PhDs and MDs, and even the MDs agree that the system is badly skewed mainly because of the artificial shortage of MDs that the AMA has created... <<

ISRG

http://www.investorvillage.com/smbd.asp?mb=3128&mn=11184&pt=msg&mid=7751897

micro

ISRG/bridgeofsighs

>>LOL! I follow it closely enough<<

Think what you like, but I remember some of your comments. I don't use the word "clueless" lightly.

micro

ISRG/bridgeofsighs

Looks like you paid the price of betting on a company that you don't follow closely enough. I often get that urge ... like when GM looked cheap at $1. It must be resisted at all COSTS!

Thanks for your gracious post and good luck in the future.

micro

ISRG results.

It looks like they are still collecting the remaining $6.3M in deferred revenue from Q1 (which will be booked mainly in Q3 and is a minor accounting issue). After adjusting for that, I think I pretty much hit it.

>>second quarter of 2009 revenue of $260.6 million<<
>>The growth in instruments and accessories revenue was primarily driven by growth in da Vinci surgical procedures of approximately 52%<<
http://finance.yahoo.com/news/Intuitive-Surgical-Announces-pz-2429568835.html?x=0&.v=1



My prediction 7/15:
>>My best estimate is ~$274M GAAP revenue in Q2, versus $188M GAAP in Q1 and the analysts' consensus of $230M in Q2.<<
>>In Q1 procedure number grew 60% year over year. I think something closer to 50% is likely for Q2<<

micro

>>G34 came via an acquisition, Profound Pharma, a Danish company. I believe that compound has a small sequence change plus pegylation.<<

O.K.

micro

No MAXY drug reached Phase 2?

>>I had forgot about maxy-alpha getting into p1. This is their only internally invented maxy shuffled compound to have entered the clinic. Study halted early in phase 1a, placed on hold.<<

From what I can see, MAXY-G34 was internally developed by Maxygen.

>>We recently completed a Phase IIa clinical trial of MAXY-G34 in breast cancer patients in Eastern Europe.<<
http://www.sec.gov/Archives/edgar/data/1068796/000119312509051052/d10k.htm
http://www.drugs.com/clinical_trials/maxygen-announces-positive-results-maxy-g34-phase-iia-study-breast-cancer-patients-7721.html

>>I guess if they had it over again they would have spun off the therapeutic arm and kept Codexis and everything else.<<

Yeah. At the time, I felt they were spinning off the most promising parts of their business and that going into drup development was an expensive mistake designed to feed the WS machine.

micro

ISRG Q2 results will be out next week. What should one expect?

First of all there is over $20M of deferred revenue from Q1, most or all of which should be converted to revenue in Q2. (This deferred revenue is associated with systems already sold, shipped, accepted and paid for, but accounting rules required it due to the fact that the new owners of those systems were offered a discount to upgrade to the new version of the system.) Although the conversion of deferred revenue is expected, it might surprise the clueless at least initially to see the huge bump up in GAAP revenue from Q1 to Q2. In addition, there is a new da Vinci system out with a higher ASP. In the past, hospitals have flocked to buy the latest system with all the bells and whistles, and new product introductions have resulted in a big bump up in system revenue. In addition, in this case most of the older systems can be upgraded to the new version, and there is an installed base of 1171 total systems. If even a low single digit percentage of them are upgraded in Q2, the effect on revenues could be quite material.

Offsetting the above is of course the fact that hospitals' cap ex budgets are anemic this year, and I don't know exactly how it will all net out. But I do expect a significant pick up system revenue, even after correcting for the deferred revenue issue.

On the instruments and accessories side, hospitals have been drawing down on their inventory, and they can't do that forever. It is hard to estimate when they will be forced to restock, but it could have started in Q2. So there is significant opportunity for upside in instrument and accessory revenue as well.

My best estimate is ~$274M GAAP revenue in Q2, versus $188M GAAP in Q1 and the analysts' consensus of $230M in Q2.

Of course the most important parameter, whether or not it is widely appreciated, is the growth in procedure number. It directly measures the rate of adoption of the technology. In Q1 procedure number grew 60% year over year. I think something closer to 50% is likely for Q2, which would still be pretty darn impressive given that a significant fraction of da Vinci procedures are discretionary.

micro

tweaking drugs & IP

>>The U.S. Patent & Trademark Office has awarded Auspex a patent on SD-254 and has assigned to Concert patents for deuterated versions of the obesity drug rimonabant and the acid reflux medication mosapride. Both companies have more than 100 other patent applications pending for deuterated versions of existing drugs.<<

I don't know the legal terminology, but I always thought that generally speaking you aren't allowed to take a patented invention, 'tweak' it in a very 'minor way' and then avoid infringing on the original patent. So is it obvious that these deuterated versions of existing drugs will be able to be sold w/o infringing on the patents covering those existing drugs - assuming they haven't expired? I agree that at one time exchanging hydrogen for deuterium in a small molecule drug was probably novel and therefore not a minor tweak, but after the idea became widely disseminated ... would not continuing to pursue the strategy in many hundreds of cases eventually make such changes obvious in the legal sense?

Can anyone clarify?

Also - is there any implication for the fluoro-sorafenib dispute between Onyx and Bayer?
http://kinasepro.wordpress.com/category/bayer/

That seems rather less novel than using deuterium instead of hydrogen, independent of how one might interpret the Bayer-Onyx contract.

micro

BPAX/CEGE acquisition post mortem

>>If you accept that GVAX is dead, and if you read CEGE's SEC filings indicating that essentially all their other 'assets' are gone (they even had to make a significant payment to get out of the lease on their manufacturing facility - which they spent over $100M on!), you can't value higher than cash minus what they have to pay to buy back the debt. (See the most recent PR about plans regarding the latter.)

At this point the maximum valuation becomes an exercise in elementary school arithmetic ... and you find the present stock price is too high by more than a factor of 2.<<


That was written on May 14 when the stock price of CEGE was $0.54. It is now $0.23.

micro

MAXY

>>I'm not sure anything from their gene shuffling platform ever even made it into the clinic.<<

False. They had at least one product make it to Phase II.

>>Surely that speaks to something about the platform.<<

Even if you were correct in the first statement, which you are not, the second statement does not follow. First of all the directed evolution platform is a general method for optimizing proteins, not just for making protein therapeutics. Look up Maxygen spinoffs Codexis (enzymes) and Verdia (bio-ag), and what happened to them. Also look up Avidia, which Amgen acquired for $290M plus a $90M earnout. Clearly there are entities who felt the technology had value.

Secondly, the success or failure of an application of directed evolution depends crucially on what you screen for and how you implement those screens. ("You get what you screen for" - Frances Arnold.) There are many examples where directed evolution has worked extraordinarily well - including making new enzymes for laundry detergents. But to successfully apply directed evolution - or any other method of protein optimization, for that matter - you need to know what you want to optimize and figure out how to explicitly implement that optimization through high throughput screening methods. If Maxygen failed, that's probably why they failed IMO. It's not that the technology didn't work. Look up some of the papers of Frances Arnold of Caltech (quoted above), for example. Directed evolution is a powerful tool, but like any tool, you have to figure out how best to use it. And that isn't trivial.

micro

MAXY

>>The technology didn't turn out to be great.<<

I would just make the obvious point that one need distinguish a platform technology from the applications derived from it, as the latter depend on the right people choosing the optimum strategies and the people under them executing those strategies with fidelity.

In this case, ignoring the Maxygen spinoff companies, the applications were the therapeutic proteins.

In the early days, there were some really first-rate scientists at Maxygen. From what I was repeatedly told, they all left because they couldn't stomach the bad management.

micro

removing posts

>>From this point forward, any post on this board that uses the word looses in place of loses shall be removed!<<

How about the loozer posts that fail to clearly indicate the subject matter in the first few words?? ;o)

micro

Corky/label posts please!

Can you please NOT title your posts "of interest". Something more specific will allow readers to immediately determine whether they wish to first click on your post, then click on the link inside your post, and then (finally) read the title of your link in order to determine that it was NOT of interest and they have just wasted a minute of their life for no reason ...

Thanks,

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MAXY

>>Comments on #msg-39187399? I can’t recall such a major corporate realignment that generated so little discussion on this board.<<

I haven't followed Maxygen for many years. My conclusion when I stopped following them is that they had great technology (directed evolution), but management was so bad (although they were great at talking the talk), that it was unlikely they would ever extract appropriate value for it.

I note that even after this deal the stock price is less than half the IPO price (10 years later).

On the other hand, if this deal manages to rid the company of the bad management while moving the technology forward ... who knows? Might work out well from here.

But by now the technology is a lot less novel than it was in 1999. I know that a bunch of other protein companies have their versions of directed evolution. And I have no idea whether the product candidates such as MAXY-4 are any good or not.

I plead ignorance.

micro

HGS

Interesting. It's of course possible that GSK's plan is to hire a marketing guy as quickly as possible *should* the trial turn out to be successful - and toss the resumes in the trash if it is not. But if you go ahead and assume they already know the first Phase 3 is successful ... don't they have to worry about Reg FD with that ad???

What do you think, Dew? You don't have to be following the Lymphostat B program closely to comment on this, just have a bit of experience, wisdom and perspective. If a company puts out an ad for a marketing guy for product X two weeks before an investor cc to dislose top-line results from a Phase 3 trial testing product X, does that imply they already know that the Phase 3 trial was successful?

micro

INCY/HSD1 inhibitor

>>INCY didn't go up for no reason.<<

This is far from a home run. The key parameter here is the lowering of HbA1c. Several months ago management was asked what is the minimum lowering of HbA1c they would expect to see for the trial to be successful. They said 0.5%, and they only barely made that in one of the arms. There are other drugs which have done better, although it is of course always hard to compare data from separate trials in different patient populations.

While these results are far from a home run, I think they are probably at least a solid single.

1. The Type II diabetes market is huge. You don't have to be #1 to prosper.

2. The AE profile suggests this drug is about as safe and harmless as one could hope for.

3. The mechanism of action is very different than other Type II diabetes drugs out there. Keeping in mind #2 above, and you have the makings of good combination therapy.

4. While the A1c lowering is only modest, there are at least early hints of other nice benefits of the HSD1 inhibitor, including lowering of LDL.

I think Incyte has a good chance to succeed in partnering this product, but there is little chance this will make more than a dent in their debt problem.

Disclosure: I don't know squat about Type II diabetes.

micro

HGS/lupus

>>the posting of a position specifically for benlysta on the GSK career website<<

Got a link?

micro

INCY

>>In that respect, the 35% reduction over placebo appears to be a favourable endpoint for the company.<<

I agree that if they get that written into their SPA, and they probably will, they should hit it out of the ballpark in Phase 3.

The problem for Incyte for some time now has not been their drugs but their cash and debt position. They don't have sufficient cash to get to market, and their debt position (>$400M) is so large that it makes raising cash w/o horrendous dilution virtually impossible.

The funny thing is that their stock price had nearly reached the point where nearly all that debt would have been favorably converted when the bottom dropped out of the debt and equity markets. Sad ... but that's business.

micro

HGSI/lupus

Sorry, iwfal. Hadn't seen your post.

micro

HGSI/lupus
>>The phase two they run in seropositive SLE patients was stat sig (P=0.03 if I remember correctly). If you believe in statistic there is 97% chance it will be stat significant.<<

You don't remember correctly. Their Phase 2 trials were not in seropositive SLE patients. When post-facto they defined "seropositive SLE" and threw out the patients that weren't ... they STILL didn't have statistical significance for their original endpoint, only trends. So (post-facto again) they made up a new endpoint (that the FDA later signed off on for their Phase 3 trials) and only then did the Phase 2 data - with the post-facto patient population and the post-facto endpoint - show statistical significance.

I'm not saying the Phase 3 trials will necessarily fail, but certainly the probability of success is way less than 97%. More like 25% is my guess.

HGS also presented data of a continuation of the Phase 2 trial. The data looked good, but the patients who choose to continue getting treated are obviously self-selecting themselves. If you are in that continuation trial and you get a flare ... you're probably going to leave the trial, right? So those who remain are going to have less symptoms and that's going to make Lymphostat B look good. But so would koolaid, under those conditions ...

micro

ISRG

Dew asked me to post on ISRG from time to time.

This is from "Mad Money". It's nuts.
http://www.cnbc.com/id/31112735/site/14081545?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo

>>One final point to consider: Intuitive has reached near market saturation. Sixty-three percent of Tier I hospitals own da Vincis, and the machines accounted for 81% of all prostate-removal procedures in the US last year. A shift to more hysterectomies wouldn’t help much, either, as the per-surgery revenues made from one-use parts generate $500 less than those from prostate surgeries. The ride, it seems, is over for ISRG.<<

1. Some Tier I U.S. hospitals have as many as FIVE da Vincis, so Intuitive is far from saturation there. Then there are Tier II and III U.S. hospitals and ex-U.S. hospitals, which are much further from saturation. Plus the company gets half its revenue from instruments and accessories, not systems, and that percentage is continuing to rise as the installed base becomes more heavily utilized.
2. The 81% number is wrong. It is obtained by taking all da Vinci radical prostatectomies carried out in 2008 and dividing by the total number of radical prostectomies carried out in the U.S. But the denominator includes ex-U.S. and the numerator doesn't. So dVP's are not yet saturated in the U.S., though they are getting there. And they are far from saturated ex-U.S.
3. Hysterectomies are FAR from saturated. That market is about 3 times larger than the prostatectomy market and da Vinci only has about a 10% market share (depending on how big you think the addressable market is), with dVH procedures are roughly doubling year to year right now. So what if instrument and accessory revenue is ~25% lower for dVH's vs dVP's? Does that mean that the hypergrowth in the dVH market is not going to "help much"??? Nuts.
4. While the dVP and dVH markets are huge, they are far from the end of the road for Intuitive. For example cardiac bypass surgery is close to the same size as the hysterectomy market (or at least it used to be), and da Vinci still has only a very small market share there.

Forgive me for not sticking around to respond to a clueless 'rebuttal' or two ...

micro

>>Why dedicate a surgical suite to a Davinci if you are doing three procedures a week?<<

You don't have to dedicate a surgical suite to a da Vinci because the damn thing is portable!! You can just roll it out of the way and carry on with open or lap procedures.

Plus the hospital takes in ~$100,000 for 3 procedures!


>>OK, I am done until the next quarterly report.<<

Which is precisely your problem ...

micro

same store sales

>>Rather, what bridgeofsighs is seeking (if I understand him correctly) is the growth in procedures conducted by machines that have been installed for more than one year.<<

I don't have that number. Furthermore it isn't clear what bridgeofsighs would do with that number if he had it.

However new systems aren't used nearly as often as systems which have been installed for more than one year, so one could obtain a *crude* estimate of 'same store procedures' by simply taking the total number of procedures and dividing it by the installed base a year prior.

micro

ISRG yet again [yikes!]

>>Installed base YOY % growth vs procedure % growth?<<

I'm sorry ... Are you asking me for further information? With all due repect, why don't you get this on your own as it is all in the public domain??

At the end of 1Q09, the installed base had grown 35% during the previous year. I already gave you the procedure growth for 1Q09: 60% yoy.


>>I have heard from very good sources the robots sit idle too often and some hospitals they even "collect dust".<<

System usage apparently varies from 0 (or close to 0) all the way up to 3 procedures/weekday. The average is about 3 procedures/week right now.


>>I thought the instrumentation would grow faster as the units were installed.<<

Faster than what? Anyway, instrumentation usage comes from procedure demand, and system installations also come from procedure demand. There is a long-time fallacy that systems generate procedures, but it is the other way around. The company has stated this many times and you can see it from studying the past 9 years of data as well.


>>I am more interested in the reload revenue growth then I am the actual sales of the instrument.<<

You are confused. The "reload growth", as you put it, is precisely the sales of the instruments. Perhaps you are confusing instruments with systems.


>>If the year starts with a thousand instruments in the field ...<<

Yeah, that is your confusion.


>>I want to see the reload revenue growth at a much higher rate then the sold base growth.<<

Let me try to make this clear one more time. Procedures are growing ~60% annually. Long-term, I&A [Instrument & Accessory] revenue grows in direct proportion to procedure revenue - and this is much faster than the rate of growth of system sales or the installed base of systems. However due to short-term issues including de-stocking of instrument inventory by cost-cutting hospitals and a change in mix from higher instrument volume procedures like dVP to lower instrument volume procedures like dVH, this proportionality has broken down such that in 1Q09 I&A revenue grew by 'only' 32% while procedure number grew by 60%. However looked at long-term it is certainly true that I&A revenue has been growing faster than system revenue, which is what you say you "want to see".

If you are serious about discussing this company futher, I strongly encourage you to first read the SEC filings and listen to some cc's in order to better familiarize yourself with the business and terminology, and to understand how some of the basic parameters you are asking about have trended over time.

micro

ISRG >>How much is procedure % growth greater then the pace of Davinci installations? I think it is a good question.<<

1Q09

Procedure growth: 60%
da Vinci system installation growth: -11%

Difference: 71%.


Okay, I know that isn't quite what you wanted, but there is a lot of related data out there in the SEC filings and cc's. I&A revenue per system in the installed base is something I keep track of. And the company shares the approximate I&A revenue per procedure, including and not including initial stocking orders. From those numbers you can approximately track procedures per system in the installed base. I believe that has grown roughly linearly for the past five years.

micro