Accuray's Success Still on the Rise

by Katharine Schildt

The health care sector is about as recession-proof as you can get – quite an attractive quality in these trying times. According to some analysts, health care could average a 25% gain this year. These gains are possible because our population is living longer as it grows older.

That means more people suffering longer from harder-to-treat diseases. And disease’s poster-child is cancer. It claimed over 500,000 people in the United States alone last year.

Cancer is one of the leading killers around the world as well. And even with recent gains in cancer treatment, the number of people suffering from this debilitating disease is expected to increase in coming years.

Accuray – A Global Leader in Radiosurgery

It’s what makes Accuray (Nasdaq: ARAY) so special. As a global leader in the field of radiosurgey, it’s the only biotech company boasting a product with the ability to treat cancer patients’ tumors with precision.

Based in Sunnyvale, California, Accuray has created technology that can make the healing process easier and less invasive for cancer patients. Their products allow certain patients to be treated, who might have otherwise gone uncared for due to the scope of their tumors.

Accuray’s most promising product is their CyberKnife, which is designed to treat tumors in any part of the body – of any size – without actual surgery.

The high-tech, computer directed CyberKnife allows for treatment of the tumor with minimal damage to surrounding tissue, giving cancer patients an alternative to other radiation therapies. The ability to treat these tumors with more precision is especially useful in areas of the body that contain critical nerves and/or organs.

Worldwide Usage of Accuray’s CyberKnife

So far Accuray’s CyberKnife has been used on more than 50,000 patients all over the world. One hundred and fifty-five systems are located in various treatment centers throughout North and South America, Europe and Asia.

With a cost of over $3 million each, Accuray doesn’t need to sell too many of these to have a good quarter. As a leading cancer treatment, it’s no surprise that more machines are planned on being installed.

Euan S. Thomson, Accuray’s President and CEO, is excited for what’s still to come. “We are encouraged by the year-over-year revenue growth plus strong installation and shipment numbers for the quarter, reflecting an expanding demand for our CyberKnife Robotic Radiosurgery System.”

Accuray announced a 10% increase over second quarter of fiscal 2008 revenue of $52 million and a 3.2% sequential increase over the first quarter of fiscal 2009.

Last week, Accuray rocketed 26% after meeting second quarter earnings expectations, making it one of the lead small-cap gainers. But that shouldn’t suggest that it’s done marching upwards.

With CyberKnife on their side, and other developments in the works, Accuray is sure to have continued to success in the months – and years – to come.

Comments

[Chris Katje:]

Great post about Accuray, a stock I own in my portfolio, i have written about it on my blog as well at stockworldpicks.blogsp...

Feb 03 09:56 PM

[PauvrePapillon:]

When the market (correctly) understood that CyberKnife was a truly unique and revolutionary technology, investors bid Accuray’s post-IPO shares up to an intraday high of $31.09 (9 February 2007). As Varian and others made repeated claims, in numerous press releases, interviews and conference calls, that their gantry-mounted machines could do the same thing as the robotically controlled CyberKnife, Accuray’s market cap shrank even though its economic fundamentals actually improved.

On 6 December 2008, Accuray, finally, fired back with the release of two animated videos that effectively demonstrate what CyberKnife is and why it is fundamentally different from gantry-mounted radiation sprayers. You can see them for yourself at www.accuray.com.

Since then, Accuray shares have gone up 46 percent. Varian’s shares have gone down seven percent. Tomo is down eight percent. Intuitive Surgical is down 18 percent. The NASDAQ has gone up and come down and settled yesterday (3 February 2009) essentially where it started back on 6 December 2008.

Are investors now beginning to rethink this space and conclude that Accuray really does have something?

From Breakthroughs That Will Change Lives in 2009…

“Cyberknife has the potential to replace surgery as the first form of treatment for cancer,” says Dr. Nick Plowman, director of clinical oncology at St. Bartholomew's Hospital.

www.dailymail.co.uk/he...

Is it just now being discovered by, and moving into, a huge market?

See WSJ’s Is CyberKnife Ready for Prime Time in Prostate Cancer?

blogs.wsj.com/health/2...

It’s making waves in Europe and Asial…

From ABC News London…

www.abcnews.go.com/Vid...

And most CAPS players like it…

caps.fool.com/Ticker/A...

And contrary to some reports, not everyone is putting off capital equipment purchases.


From “Hospital puts off building renovations to buy CyberKnife” Colorado Springs Business Journal (2 January 2009):

Margaret Sabin, chief executive officer at Penrose-St. Francis Health Centers, said, “We are buying a new CyberKnife program for the cancer center. We decided that that program directly benefited patients — it is state of the art technology. But to do it, we had to put off some building renovations. We decided to focus on health care and patient needs — the rest we’ll make do without.”

www.csbj.com/story.cfm...

If you look at Intuitive Surgical as a model for how a disruptive technology rolls out in the medical space, you would have to conclude that it’s a rocky road. Intuitive Surgical languished beneath its IPO price for more than four years and dropped into the $3s twice before taking off to $100 per share and beyond. Accuray will be two years post IPO next week and is still trading about $12 under its debut price of $18.

As clinical data emerges and public awareness increases, CyberKnife will become the treatment of choice for early stage prostate and lung cancer (two huge markets) as well many other cancers. There are not nearly enough CyberKnife Centers, either in the United States or abroad, to accommodate all of the patients that will soon be seeking this treatment. We’re still in the early stages of the adoption curve but this technology is coming mainstream. Not only is Accuray is special company with a special mission, it’s also a multi-bagger in the making.

Feb 04 05:40 AM

[GT 20M:]

Hi all,

I have been buying all the way since 6 bucks now till 4.80. I'm very long this counter and have done all the due diligence. Why is this still tanking???

The major shareholder (10%) have sold 1,000,000 shares recently...this really concerns me and this has shaken my confidence. Do they know something I don't??

I have like this company for a long time since I saw it sometime ago at about $18. I thought that buying in at $6 would offer me a significant margin of safety but that has not proven true so far and this latest news about insider dump makes it worse. I'm okay with market sentiment selling everything but this is worrisome.

There is a great report out on ARAY 7 months ago that predicts that ARAY would be worth $200 in 2014 base on conservative earnings estimates with a PE of 20. Yes that is 5 years out and I'm willing to wait longer if I have to.

Anyway, my am I being too optimistic or rather pessimistic now?

Vested: My single biggest holding in my retirement (6-7 years) portfolio

Feb 24 04:25 AM