Printable Weekly
Earnings
Align Technologies reported 2Q:10 revenues of $108.2 million, which included $14.3 million in deferred revenue from Invisalign Teen replacement aligners. Adjusted revenue of $93.9 increased from $90.1 million in the year-ago period and beat estimates by $3.8 million. During the quarter, 67,500 Invisalign cases were shipped, accelerating from 63,600 in 1Q:10 and 53,000 2Q:09. Non-GAAP net profit for 2Q:10 was $16.5 million, or $0.21 per diluted share, beating estimates by $0.07.
Biomet reported F4Q:10 sales of $702.5, up 8% over the year-ago period. Dental sales increased by 2% during the quarter. Growth rates exclude the effects of currency. The company reported a net loss of $14.5 million for the quarter, narrowing from a net loss of $170.9 million during F4Q:09.
Dentsply reported 2Q:10 sales of $565.1 million, up 2% as reported over the year-ago period and missing estimates by $3.5 million. Chairman and CEO Bret Wise noted, "The dental markets have shown a modest recovery in the first half of 2010," though the company said that the strengthening U.S. dollar is expected to have a negative impact on results in the second half of 2010. Net income for the quarter was $72.4 million, or $0.49 per diluted share, missing estimates by a penny.
Zimmer reported 2Q:10 revenues of $1.1 billion, representing a 3% increase over 2Q:09 and missing estimates by $0.1 billion. Dental sales increased by 8% to $56.0 million. Growth rates exclude the effects of currency. Adjusted EPS for the quarter was $1.09, increasing 9% over the year-ago period and beating estimates by $0.04.
Product Introduction and Update
Astra Tech announced that they have expanded their Atlantis patient-specific abutment options to include Dentsply Friadent's XiVE and Frialit implants as well as Straumann's Standard/Standard Plus (Wide Neck) implants for North American customers. The announcement follows Astra Tech's strategy of "providing patient-specific abutments for all major implant systems."
Clinical
A U.K. survey led by Align Technology reported that one in three British people believe an attractive smile will help them attain professional success; similarly, 26% of HR managers polled said they "would be less likely to hire a potential employee if they had an unattractive smile."
Collaborations
Biomet 3i and Renishaw plc, a manufacturer of in-lab dental scanners, will collaborate to offer "comprehensive digital solutions to dental professionals and patients worldwide." Combined solutions will give dentists access to a "wider range of dental milling options" and will feature 3i incise copings and frameworks; Renishaw contact scanners; 3i incise CAD software; and Renishaw in-lab milling machines.
Operations
BIOLASE Technology announced a cost-cutting initiative whereby the company will shed 20 jobs and implement additional measures that they estimate will save approximately $3.0 million annually. Additionally, the company reported that CFO Brett Scott had resigned. CEO David Mulder and the company's corporate controller have assumed the CFO's responsibilities until a successor is named.
Recognition
In conjunction with the Periodontal Research Group of the IADR, Straumann recognized Professors Martha Somerman and Ulf Wikesjo for their "significant contributions to research in periodontology" at the 88th General Session of the International Association for Dental Research in Barcelona. The newly-created IADR/Straumann Award in Regenerative Periodontal Medicine comes with a cash prize of $5,000.
Appointments
BIOLASE Technology appointed Alex Arrow, M.D., CFA, and Norman J. Nemoy, M.D., F.A.C.S., to their Board of Directors. Drs. Arrow and Nemoy will replace George V. d'Arbeloff and Robert M. Anderton, D.D.S. Dr. Arrow is the CFO of Arstasis, a manufacturer of interventional cardiology devices. Dr. Nemoy is a practicing physician at Tower Urology Medical Group and is on the attending staff at both Cedars-Sinai Medical Center and Century City Medical Center.
Dental Technologies, Inc. announced the appointment of Russell I. Olsen to the position of Senior Vice President of Sales, Marketing and Service. Mr. Olsen has over 25 years of executive management, sales and marketing experience in the dental and medical industry. Most recently, he served as President and Chief Executive Officer at Keystone Dental, Inc., where in three years he implemented the company's go-to-market strategy, grew the customer base into the thousands, oversaw three acquisitions and evolved the business into the #9 dental implant manufacturer worldwide.
Straumann Chief Financial Officer Wolf-Rudiger Daetz is resigning his post as of September 2010 "to pursue his career outside Straumann." Mr. Daetz joined the company in March. A successor has not been announced, though the company notes that President and CEO Beat Spalinger will supervise finance and operations until a new CFO is identified.
Earnings
CONMED reported 2Q:10 sales of $181.1 million, up 8% over the year-ago period and beating estimates by $4.1 million. Arthroscopy sales increased by 19% to $74.9 million. Growth rates exclude the effect of currency. Adjusted EPS of $0.32 improved from $0.17 in 2Q:09 and beat estimates by $0.06.
LDR reported that 2010 year-to-date sales have increased by 112% over the same period in 2009, which the company attributed to "widespread adoption of [the] ROI-A ALIF device coupled with the success of the ROI-C Cervical Cage." The company added that they have expanded their sales organization, adding Area Sales Directors and partnering with approximately 50 U.S. distributors.
Integra LifeSciences reported 2Q:10 sales of $178.6 million, up 8% over the year-ago period and beating estimates by $2.5 million. Orthopedics contributed $72.8 million in sales, representing a 12% increase over 2Q:09. Adjusted net income was $20.9 million, or $0.68 per diluted share, beating estimates by $0.13.
NuVasive reported 2Q:10 sales of $119.6 million, up 35% over the year-ago period and beating estimates by $2.0 million. The company also raised full-year guidance from $480.0-$500.0 million to $485.0-$500.0 million, with President and CEO Alex Lukianov noting, "Our strong momentum driven by continued adoption of the XLIF technology and increased traction from our biologics and international areas gives us the confidence to increase guidance." Net income in 2Q:09 was $17.0 million, or $0.42 per share, beating estimates by $0.13.
OrthoFix reported 2Q:10 sales of $142.8 million, up 4% over the year-ago period and missing estimates by $0.1 million. Total spine sales increased by 11%, with spine stim up 12% and implants and biologics up 10%; orthopedic sales increased by 11%; and sports medicine declined by 6%. Growth rates exclude the effect of currency. Net income for the quarter totaled $10.2 million, or $0.57 per diluted share, beating estimates by $0.03.
Ossur reported 2Q:10 sales of $90.0 million, up 12% over the year-ago period, with prosthetics up 15% and bracing and support up 11%. Growth rates exclude the effect of currency. The company reported net profit of $14.0 million, up from $2.0 million in 2Q:09.
Synthes reported 2Q:10 revenues of $892.2 million, up 7% over the year-ago period. Synthes does not report growth rates by product segment, though among geographies, North American sales increased by 4%; European sales increased by 8%; AP sales increased by 13%; and ROW increased by 27%. Growth rates exclude the effect of currency. For 1H:10, the company reported revenues of $1.8 billion, up 8% over 1H:09 and beating estimates by $3.1 million. Net earnings for 1H:10 were $424.6 million, or $3.58 per share, up 9% over the year-ago period and missing estimates by $0.07.
Funding
AxioMed raised $14.5 million in two tranches, which the company will use to complete enrollment for its IDE study of the Freedom Lumbar Disc, pursue CE Mark approval for its cervical disc, expand European sales of the Freedom Lumbar Disc and initiate European sales of the cervical disc.
Orthopedic devicemaker China Kanghui Holdings filed for an IPO of American depositary shares. The offering is valued at up to $75.0 million.
Regulatory
An FDA panel voted 6-5 in favor of approving Medtronic's Amplify, a BMP-2 with a different formulation and carrier than InFuse. Heading into the meeting, concerns circulated over a higher incidence of cancer in patients treated with Amplify, though the panel ultimately voted 9-4 in support of safety (with 1 abstention) and 10-3 (with 1 abstention) on efficacy.
Orthovita received FDA approval of a PMA supplement that will permit the company to operate a new collagen processing facility in Malvern, Pennsylvania. The facility will process the highly-purified form of collagen used in the VITAGEL surgical hemostat. The company says the approval gives the company "enhanced control over the supply and quality of a key raw material."
Product Introduction and Update
curasan initiated pre-marketing activities for their ATR (Advanced Tissue Regeneration), which the company describes as a "standardized system for extracting growth factors." The system includes applications for cartilage regeneration. The company is actively seeking distribution partners.
TranS1 launched the AxiaLIF 2L+ product line, its next-generation instrumentation and implant system for L4-S1 lumbar fusion. The system has been in limited release since receiving 510(k) clearance in January. Among the AxiaLIF's features, the device "allows a surgeon to provide controlled distraction during the operation to precisely restore lost disc height."
Clinical
Ortho Kinematics initiated a multi-site study of the KineGraph VMA, a diagnostic technology designed to be used in conjunction with MRI and x-rays. The study is designed to "help determine which types of patients are best evaluated with KineGraph VMA testing" and has already enrolled 23 patients.
An FDA panel voted 6-5 yesterday in favor of approving Medtronic's Amplify, a BMP-2 with a different formulation and carrier than InFuse. Heading into the meeting, concerns circulated over a higher incidence of cancer in patients treated with Amplify, though the panel ultimately voted 9-4 in support of safety (with 1 abstention) and 10-3 (with 1 abstention) on efficacy. In the final 6-5 vote, which affirmed that the panel believed the product's benefits outweighed its risks, there were 3 abstentions.
Medtronic is seeking a single-level, posterolateral fusion indication. The FDA usually makes its final determination in line with the panel recommendation.
In addition to awaiting a verdict from the FDA, Medtronic is also facing a BMP payment review in the form of a CMS MedCAC panel. MedCAC will convene on September 22 to discuss the evidence in support of continued coverage of InFuse (and, potentially, Amplify) in the Medicare population, particularly as it pertains to off-label use. The AHRQ recently completed a technology assessment on BMP-2 and concluded that the data in support of radiographic fusion is "moderate," which is favorable, though the agency noted that is little evidence that BMP-2 improves other outcomes.
Sen. Al Franken and AdvaMed faced the Senate HELP Committee last week, urging legislators to increase financial incentives for devicemakers addressing pediatric indications. Franken and AdvaMed President and CEO Stephen Ubl argued that devicemakers should be awarded financial credits similar to those available to drugmakers, stating that pediatric populations are often too small for devices to be profitable.
Among specific proposals, Ubl requested an NIH survey to clarify pediatric device needs and a clearer regulatory pathway for humanitarian device exemption (HDE) products, which are designed to treat diseases affecting 4,000 or fewer patients each year. Ubl said HDE devices are hindered by a lack of guidance and encouraged the FDA to develop material "outlining appropriate types and levels of data necessary for approval." Finally, Ubl lobbied for a pediatric device R&D tax credit program as well as a tax credit for pediatric HDEs.
Watching TED talks on iTunes - or an iPad for that matter - is the futurist's equivalent of a basketball fan's immersion into March Madness. TED, which stands for Technology, Entertainment, Design is a non-profit organization devoted to spreading forward-thinking ideas via web lectures from today's most distinguished scientists, thinkers and polymaths.
While the famous TED lectures or "talks" are manna from heaven for digerati, environmentalists or merely curious souls, most of the topics typically deal with mapping the universe, new media paradigms or sleek new energy alternatives.
How happy were we to see orthopedics get its day (OK, 10 minutes) in the sun last week when TED published a lecture by Dr. Kevin Stone on the future of joint replacement.
Filmed last February, Dr. Stone's talk starts out with the unsettling statistic that anyone with an average lifespan in the US has a 50% chance of developing arthritis from aging or common injuries. Despite the advances in joint replacement made over the last several decades, these are essentially engineering developments that have a finite life or other limitations.
The solution? Biologics.
Dr. Stone then goes on to highlight the substantial potentialities of biologics and the range of materials available to advance clinical care. One notable potential is stem cell paste grafting for damaged knee cartilage. In the talk, Dr. Stone also highlights growth limiters such as cost and the constrained supply of young, healthy allograft tissues. One way around the supply question is to use animal tissues so long as we can bypass the immunology barriers. Promising examples include Regeneration Biologics' collagen meniscus implant (now called Menaflex) which is derived from pulverized bovine tendon or intact porcine ligaments that have been treated to prevent tissue rejection by humans. The end game - call it Super Biologics - is to harness 400 million years of evolutionary biology and make it work for us.
Dr. Stone's TED talk can be viewed by clicking here or by copying the link at the bottom of this blog into your browser.
http://www.ted.com/talks/kevin_stone_the_bio_future_of_joint_replacement.html
Zimmer's data rich earnings announcement this mornining contained an interesting nugget about their China plans.
Zimmer announced that they have completed a definitive agreement to acquire Beijing Montagne Medical Device Co., Ltd. a 360-employee company that develops large joint implants and instruments. Located in an industrial park near Beijing, the company has been investing heavily in manufacturing equipment and biomechanical labs over the last deacde to build a presence in the large joint area.
We spent quality boothtime with Beijing Montagne at a Chinese Orthopedic Association meeting not too long ago and noticed that, while they are mainly involved in developing hip prostheses locally, the company is just starting to make a foray into knee replacement. That being said, local Chinese manufacturers who develop any kind of motion preservation implants are more scarce. Witness the recent Trauson IPO. For all the hoopla, Trauson is essentially and trauma and spinal fusion company.
Although terms were not disclosed, Zimmer's management wasn't shy about sharing the breadth of China's growth opportunity with equity analysts on this morning's call. Zimmer is already there, but the acquisition enhances their presence from a development, manufacturing and marketing perspective. Management asserted that the Chinese orthopedic market is approximately $1 billion and at least a third of it is in large joint.
Zimmer also made the case that the Chinese government's increased interest in supporting healthcare initiatives could well cause the Chinese orthopedic market to double in the next 3 to 4 years. Our own models are consistent with this thesis although we qualify the $1 billion market size as end-user price x volume. Between that and actual company revenues quite a few middlemen take a cut. Aside from that, the growth is real and Zimmer is not the first to take the plunge. Medtronic really got the wheels turning in China with their Weigao joint venture/investment in 2008 and Smith & Nephew acquired Chinese manufacturing facilities with their Plus acquisition in 2007.
While an agreement has been reached, Zimmer's acquisition of Beijing Montagne is subject to regulatory approval and is expected to close late this year or early next year.
Posted Jul 22, 2010 by Sander Duncan
Earnings
Genzyme posted 2Q:10 revenues of $1.1 billion. Revenues dropped 12% over the prior year period and missed analysts’ expectations by $0.1 billion. The company eked out a profit of $23,000, down from $187.6 million over the year-ago period. Excluding items, EPS were $0.18, down from $0.68 in 2Q:09 and missing estimates by $0.33. Synvisc, the company's treatment of osteoarthritis of the knee, contributed $107.7 million to Genzyme's 2Q:10 revenues, up 31% over the same period last year.
Johnson & Johnson reported 2Q:10 revenues of $15.3 billion, flat over the year-ago period and missing estimates by $0.4 billion. DePuy reported 2Q:10 sales of $1.4 billion, up 4% from 2Q:09. Among segments, hip sales increased by 6%; knee increased by 5%; and spine sales were flat. All growth rates exclude the effects of currency. Adjusted net earnings and EPS for the quarter were $3.4 billion and $1.21, respectively, up 5% over the year-ago period and in line with estimates.
OsteoMed realized 11% YTD growth through 2Q:10. This growth was driven by the company’s Small Bone Orthopedics division, which has YTD growth of 14%, including 144% growth internationally.
Stryker posted 2Q:10 revenues of $1.8 billion, up 7% from 2Q:09 and meeting analysts’ expectations. Orthopedic implants contributed $1.0 billion, a 1% increase over 2Q:09. Among segments, hips increased 2%; trauma increased 7%; and spine and knee remained flat. Growth figures reflect constant currency. Adjusted net income and EPS for 2Q:10 were $319.0 million and $0.80, respectively, up 10% over the year-ago period and in line with estimates.
Zimmer reported 2Q:10 revenues of $1.1 billion, a 3% increase over 2Q:09 and missing estimates by $0.1 billion. Segment-wise, reconstructive sales increased 3%; dental increased 8%; extremities increased 13%; trauma increased 2%; and spine decreased 9%. All growth rates reflect constant currency. Diluted EPS for the quarter were $1.09 adjusted, increasing 9% over the year-ago period and beating Wall Street estimates by $0.04.
M&A
Biomet acquired Cytosol Laboratories on July 16, 2010 for an undisclosed amount. Biomet noted that they were acquiring "substantially all" of Cytosol's assets, but did not specify what they intend to leave behind. Cytosol manufactures anticoagulants and other products to aid in the processing of blood components.
Funding
Orthopedic Synergy Inc. has raised $2.7 million of a $4.0 million mixed-security offering, according to an SEC filing. The funding included commitments from 12 unnamed investors.
Oxford Financial Corporation has agreed to loan $20.0 million to United Orthopedic Group (UOG). The financing consists of a $10.0 million revolving line of credit and a $10.0 million growth capital loan and will be used to spur further growth in UOG’s business and product line.
Regulatory
Replication Medical received a warning letter from the FDA contending that the company is marketing its EnGuard Vessel Guard outside of the bounds of its 510(k) clearance. The cleared indication for use for the EnGuard is "as a cover for vessels following anterior vertebral surgery," according to its 510(k).
Product Introduction and Update
DePuy Mitek announced the introduction of VERSALOK PEEK, a new nonmetallic rotator cuff anchor, at last week’s 2010 Annual Meeting of the AOSSM. VERSALOK PEEK aims to make soft-tissue procedures more time-efficient with a self-punching pilot hole and knotless anchors that allow for quicker suturing. The anchor, which does not interfere with MRI scans, is indicated for use in knee, elbow and shoulder procedures.
Intellectual Property
SANUWAVE has been granted a European patent titled “Shock Wave Generating Device.” The patent grants SANUWAVE exclusive rights to manufacture devices that generate acoustic shock waves using piezoelectric fibers. The company expects the fibers, which are highly malleable and can be densely packed into devices, will improve the precision of their existing Pulsed Acoustic Cellular Expression (PACE) technology.
Trinity Orthopedics, LLC was granted a Notice of Allowance from the U.S. Patent Office for a “monoplanar pedicle screw method, system and kit.” The method will contribute to Trinity’s ReStor product, a posterior fixation system that returns the spine to an anatomical and structurally-sound position.
Applied Spine Technologies, Inc. was also granted a Notice of Allowance this month. The application outlines a device that stabilizes the lumbar spine while allowing for a limited range of movement, a system the company compares to its existing Stabilimax device.
Clinical
The American Academy of Orthopedic Surgeons (AAOS) released a set of 16 research-based guidelines on the treatment of glenohumeral joint osteoarthritis. A summary of the recommendations can be found here.
Hospitals could avoid annual charges for pediatric patients of nearly $30 million by reconstructing ACL tears in children early instead of delaying treatment to a later date, according to a study presented at the AOSSM’s 2010 Annual Meeting.
Appointments
RTI announced the appointment of Dean H. Bergy to their board of directors. Bergy was Stryker’s CFO from 2003 - 2009 and currently advises the company’s financial operations.
The BBC reported this week on a non-invasive device that can detect early-stage osteoarthritis using sound. Researchers at the universities of Lancaster and Central Lancashire have developed acoustic techniques that can detect changes in the normal patterns of sounds in the knee, which the developers say can predict the onset of osteoarthritis.
In the prototype, two leads are simply taped to a patient's knee, and the device picks up on sounds that come from sitting and standing. Data on an early version of the device published in the journal Medical Engineering and Physics last year indicated that "osteoarthritic knees are found to produce six to ten times more acoustic emissions than healthy knees, with amplitudes which can be 20dB higher and durations which can be 10 times longer."
The researchers suggest that the device could help observe changes in the knee before the symptoms of OA occur, allowing for earlier treatment intervention. Additionally, the device could offer the benefit of being "cheap and practical" for practitioners and hospitals.
