Titan Medical Inc (TMDIF)

[66Mustang]

A couple reminders, to try to keep timelines in perspective... Start with clips from this article in May 2020:

https://www.medtechdive.com/news/medtronic-earnings-call-coronavirus-updates/578498/

"Eight months ago, Medtronic shared a first look at its soft tissue robot, dubbed Hugo, being developed to rival Intuitive Surgical's da Vinci. At the time, Medtronic told analysts to expect a CE mark submission for the system in the first quarter of fiscal 2021, with approval coming in the second half of the fiscal year. In the U.S., the company anticipated filing for an investigational device exemption in the first half of fiscal 2021 and launching the product in the U.S. around fall of 2022.

But progress on the surgical robot, which former CEO Omar Ishrak believed could add between 2% and 2.5% to the Minimally Invasive Therapies Group's growth rate in the next two to three years, is set back due to remote work and other disruptions driven by COVID-19.

"Our ability to finalize system and pre-clinical testing has been delayed, and given the uncertainty of the pandemic, it’s too early to update you on timelines," Medtronic’s Bob White, head of MITG, told investors Thursday.

Despite the negative financial impacts of COVID-19 on its revenue in the latest quarter, Medtronic has its strongest balance sheet in years and is looking to take advantage of the potential opportunities created in the medtech industry for acquisitions.

Martha told investors on Thursday's earnings call that Medtronic is poised to increase its merger-and-acquisition activities amid the uncertain environment, indicating financial pressures on smaller medtech companies could present buying opportunities.

"There are some opportunities that — at least I felt personally, were out of our reach, too expensive before this, and now are kind of more in line with what we think are reasonable returns for those investments," Martha said.

With asset prices down across the industry, Martha said Medtronic is looking to "play offense" with tuck-in acquisitions that could bolster the company's long-term growth.

While Martha said the company is looking for deals of all sizes, he said he prefers acquisitions in the "medium, billion-dollar" range because they have a bigger impact on Medtronic's growth rate.

Medtronic has the means at its disposal to execute on such a strategy. As of the end of its fiscal fourth quarter, the company has $10.9 billion in cash and investments as well as an undrawn $3.5 billion credit facility, with no public debt maturing until March 2021."


So... takeaways when this is tied to what we know...

Hugo publicly debuted in Sept 2019; COVID hit big in March 2020 and just two months later, they were lamenting the COVID delays as per this article. Meanwhile, they took the opportunity to tout their acquisition model for corporate growth and brag about their financial ability to do so. One month after that, they announce a deal with Titan for some development work in a heavily redacted announcement. License some existing IP, have some additional co-developed IP... No biggie, right? But how long does it take for a substantially revised platform to be prepared for regulatory submission? Let's say when the deal was announced, they already had their eye on certain patented technologies that Titan owned. Sign the deal, then start rolling that new to MDT) tech into Hugo. Given the impact of COVID does anyone really think they had time in the past 9 months to roll some new tech into their design and still have things ready for regulatory filings in a mere 9 months? Not me. For that to be a remote possibility, this deal was already rolling, unannounced, for quite a while before the announcement.

I can't picture there being substantial revisions to the Hugo that they showed in Sept '19. Certainly not anything as substantial as snake arms; the control algorithms in software alone would take that long and more.

ISRG has multiport and single port, and they had their "budget-minded" robot - the "Si-e" was it? I think the "e" stood for "Economy". Not a huge hit at the time because the market penetration for robotics was still in its relative infancy; day surgery centers weren't quite ready to splurge on a robotics program yet. Now that techniques and technologies have advanced, and even an SP Prostate doesn't necessarily require an overnight stay, the state-of-the-art tech now better supports a lower-priced offering in someone's line-up. And that is Enos.

So Enos/SPORT seemed to be much closer to the finish line until Medtronic got involved. What would possibly push these timelines out yet again, when we actually finally attained the financial resources to meet a darned schedule? Coincidentally, when Medtronic got involved, our timelimes got pushed out. One very reasonable explanation is that the project had to undergo some revisions to be compliant with MDT's market vision for robotic surgery, including their then-recent acquisition of Digital Surgery. Hugo had time to be retrofitted with data analytics and other tie-ins to that platform, but Enos had to start from scratch. This would make a viable explanation for the timelines we see from both companies, added to Mr. Martha's clearly stated growth strategy. Hugo helps them get set up with a foot in the robotic surgery door, and then Enos follows to round out their product line offering and make it possible for smaller organizations to jump in. Why would Medtronic not want to be capturing that revenue as well? Add to that Enos' endoluminal capabilities which the market is also moving toward, and MDT really NEEDS an Enos (remember Mr. McNally in near back-to-back sentences mentioning Endoluminal and Natural Orifice Surgery, and all of a sudden the rationale for the ENOS name as an acronym becomes much clearer. And Hugo, a virtual Senhance clone, isn't likely to take the market by storm on its own; they need the other pieces - Titan's pieces - desperately!

All IMO, as always...