Orthopedic News Roundup 20-Oct-05
BY HUYEN NGUYEN, OCTOBER 20, 2005
Some orthopedic stocks declined as two of the big five ortho-companies reported their 3Q:05 earnings this week. Stryker Corp. and DePuy (division of JNJ) both reported top line sales growing at 14%. On Tuesday, Stryker reported below street's estimates by $0.01 and came out at $0.40 (adjusted) per diluted shares. By Wednesday, all of the large joint players' stock prices were down due to SYK's unfavorable 3Q:05 earnings call.
DePuy, however, reported operational growth at 13% for 3Q:05 compared to 3Q:04. According to management, the worldwide pricing trend in orthopedics is slowing down due to difficulties raising prices on some products. Core business in spine (excluding Charite) was down for the quarter, due in part to changes in sales management, unrelated to products. In 3Q:05, the number of Charite artificial disc surgical procedures was basically flat compared to last quarter; less than 1,100 procedures were performed; Charite continues to have problems with reimbursement. DePuy has recently introduced its direct-to-consumer (DTC) advertising hip campaign and will follow up with advertisement for knee as well. This, they believe, will help sustain their growth ahead of their competitors in the same industry.
Earnings: Anika Therapeutics ("ANIK") reported 3Q:05 earnings results with 57% increase in revenues, net income was reported at $2.5 million compared to $0.9 million in 3Q:04. In the quarter, ANIK received a final payment of $3.1 million in connection with clinical trial development costs and a contract termination fee from OrthoNeutrogena for its hyaluronic acid based cosmetic tissue augmentation product. However, ANIK's hyaluronic acid (HA) injection for the osteoarthritis knee, OrthoVisc®, sales were down by 34% for the quarter. Sales decline was offset by higher inventory level by ANIK's distributing partner in the domestic market.
LifeCell Corp. ("LIFC") reported preliminary results for 3Q:05 with product revenues growing at 62% ($24.3 million vs. $14.9 million) year-over-year. LIFC's primary product, AlloDerm® Regenerative Tissue Matrix increased 76%, while the orthopedic revenues (Graft Jacket® and AlloCraft™DBM) increased by 24% for the quarter. Due to the involuntary recall of tissues relating to Biomedical Tissue Services, LIFC is recording approximately $1.4 million in inventory write-off in the quarter. LIFC will announce its final financial earnings results on October 26, 2005.
Business Update: On Monday, the Musculoskeletal Transplant Foundation (MTF) withdrew its previously announced unsolicited take-over of Osteotech ("OSTE"). Richard Bauer, CEO of OSTE issued a statement saying that due to the take-over bid, OSTE incurred significant legal and investment banking fees and a short-term impact on their business for the month September - October. OSTE's stock plummeted by 20% at the close.
Clinical: At the annual meeting of the Orange County Podiatric Medical Association in Huntington Beach, CA Dr. William Van der Reis presented his findings on BioElectronics' ActiPatch® anti-inflammatory, battery operated microchip patch for the treatment of tissue swelling and pain. Dr. Reis found that the ActiPatch® may resolve pain associated with plantar fasciitis in as little as 2 to 3 days.
Distribution Agreement: Based in Canada, a biodegradable material company, BioSyntech signed an agreement with Kuhnil Pharma Co. Ltd ("Kuhnil") for BioSyntech's BST-CarGel® and BST-InPod™. Under the agreement, Kuhmil is acquiring the right to market, sell and distribute these products in the Republic of Korea for 1.5 million common shares of BioSyntech's stock at $0.80 per share, or total proceeds of $1.2 million. Zimmer is expanding its agreement with German-based Heraeus to include a worldwide distribution agreement for its Palacos® and other Heraeus bone cement products.
Name Change: Spinal Motion, LLC, a Viscogliosi Bros. LLC portfolio company, has changed its name to Paradigm Spine, LLC. Paradigm Spine, LLC. is an artificial disc company specializing in the treatment of spinal diseases and conditions.
Operational Update: Symmetry Medical is opening a new 25,000 square foot facility in Cheltenham, UK to support its European customers. The new facility will be called, Symmetry Medical Cheltenham Ltd.
Product Introduction & Update: Smith & Nephew's Endoscopy, a division of Smith & Nephew, announced a product launch of the DYONICS 25 Fluid Management System. The system is a pump that is used during arthroscopic procedures to control the flow of sterile fluid into treated joints.
Miscellaneous: Whether or not artificial disc will alleviate pain is still an issue of debate among surgeons and patients. Some patients regretted having the surgical procedure done, while others are completely satisfied with the outcome. An injury lawyer from New Jersey has created an International Charite Artificial Disc Practice Group to investigate problems patients are having concerning the Charite artificial disc surgery. Just in time for Halloween, the funeral home scandal story continues with the New York Daily News providing updates on Joseph Nicelli and Michael Mastromarino backgrounds. As obesity in America is growing in numbers, people who suffer from foot/heal pain increases. The American Orthopaedic Foot and Ankle Society found a direct correlation among people who are overweight and are also suffering from foot problems. Since the percentage of smokers in the military is higher than the general population, and more soldiers suffer from bone fractures and trauma due to combat, the Defense Department is giving $1.4 million in grant money to scientists to study the effect of bone recovery in smokers. Dr. Flu, an orthopedic surgeon in the University of Pittsburgh has developed a new technique for double-bundle ACL repair. The current standard is a single bundle for related sports injuries. While NuVasive was named the fastest growing technology company in North America by Deloitte & Touche LLP's Technology Fast 500, the Lutheran Hospital was ranked number one in Indiana for spinal surgery and number five nationally for overall cardiac care, cardiology and spine surgery by the HealthGrades Hospital Quality in America Study. Finally, for OrthoKnow subscribers only, Knowledge Enterprises is offering its' market research data called, The Worldwide Orthopaedic Market 2004-2005.
