Stereotaxis Inc. (STXS) operates in the Medical Appliances & Equipment industry. It is a leading developer of robotic instrument navigation systems mainly used in the cardiology field. Its systems aid in the treatment of coronary diseases and arrhythmias. The company also offers information management solutions designed mainly for interventional laboratories.
The past year has been a bed of thorns for investors in the company's shares. In fiscal year 2012, the company's shares were down by approximately 80% and this left investors jittery. However, on July 29, 2013, news that would change the trend of this stock was broken - the much awaited FDA approval for commercialization of the company's Vdrive Robotic Navigation System with V-Sono Intracardiac Echocardiography catheter manipulator in the US has been granted. The Vdrive line of product has been in use in Europe since 2011.
By the opening of market on July 30, 2013, the stock which has been trading below $2.00, traded as high as $6.90. The company currently has a market cap of $46.97 million and maintains an EPS of -1.09, which investors believe will change for the better in the near future, all thanks to the FDA approval.
Stereotaxis Inc. is a US-based Medical Appliances and Equipment developer with its headquarter in St. Louis, Missouri. The company was founded in 1990 and has some notable products to its credit. Some of these products include NIOBE ES Remote Magnetic Navigation System. This product serves the purpose of navigating guidelines and catheters through patients' blood vessels and heart chambers during cardiology procedures. The next product is the NAVIGANT system. It helps physicians to effectively visualize and at the same time, keep appropriate track of cardiology procedures. Another product is the Odyssey which enables physicians to effectively manage clinical information of patients.
These are just a few of the over hundred hospital interventional surgery patents owned by the company. Over the years, these products have performed differently in the market, with Odyssey and NIOBE bringing less revenue in comparison to the V-Sono disposable catheters.
It can be recalled that with the launch of the company's EPOCH platform, a version of the remote-controlled system for catheter management, the management hoped it was going to up the company's sales rate but not much happened. For example, instead of the company's Q2 2012 results increasing after the launch of the product, it declined as the company reported revenues of $10.5 million in comparison to $11.6 million reported in the same quarter of 2011.
Although Stereotaxis was generating sales from a couple of other products, including the NIOBE ES system, there were proofs that the company was losing out in market share and at a faster pace too.
Also, with the approval of the Vdrive line of product in the U.S., it means the company is relying solely on one product to improve sales and revenue growth.
Stereotaxis' dream of its Vdrive line of products being approved in the U.S. has been realized but it has also raised some questions in my mind, even though I am optimistic it would help the company back on its feet and let investors have a little feel of what profitability is all about. How well would this opportunity be utilized?
According to the Interim CEO and Chairman of the company, William Mills, the clearance is "Exciting milestone for Stereotaxis, the Vdrive platform has added significant clinical value to a growing number of Niobe ES labs in Europe, and this V-Sono clearance should accelerate procedure growth in our U.S. installed base as well as open up an untapped, expanding electrophysiology (EP) market where ICE catheters are widely utilized. More than 68,000 ICE catheters are used in U.S. EP labs each year, a number that is growing at an annual rate of 15%."
Agreed but then, just as I said earlier, Stereotaxis has not proven to be a profitable company for some time now. Even the then CEO of the company, Michael Kaminski invariably admitted this fact when he made a promise to ensure that the company works towards reducing operating losses. From the company's Q1 2013 earnings release, it seems however, that the company is keeping its promise. The company's operating expenses was down 23% when compared to the same quarter in 2012.
It reported a cash burn of $1.1 million, a decrease when compared to $4.3 million reported in the same quarter of 2012. The operating loss stood at $3.6 million, a 14% decrease when compared to $4.2 million reported in the same quarter of 2012. With further reductions in the company's expenses, the management just might be able to make the most of the 15% annual growth rate of ICE catheters used in the U.S. and transform Stereotaxis into the profitable company investors have never known it to be.
The company's future is now hinged on profiting from the approval and clearance of the Vdrive Robotic Navigation System with V-Sono Intracardiac Echocardiography catheter manipulator for use in the US. Should it fail to profit from this product, added to its debt of $32.5 million as at March 31, 2013, it might just spell doom for the company and investors too. The company's management and investors are also looking forward to the approval of the V-Loop circular catheter manipulator which is currently undergoing clinical trials prior to clearance. If this one is also approved, I believe it could further boost the company's stock.
On my take, with the over enthusiasm following the announcement of the approval of this product comes an opportunity for investors to make their decisions: buy more shares, hold what they already have or sell. What happens if V-Loop is not approved or the one already approved is unable to boost the company's finances? I leave these questions unanswered.