Fast Forward Investing by Jon Markman

Author:Jon Markman
Language: eng
Format: epub
Publisher: McGraw-Hill Education
Published: 2019-12-15T00:00:00+00:00

The Future of Spinal Surgery

In science fiction movies, surgeries are always performed by robots. The science part is still true. The fiction is no more. Surgical robots are here.

Mazor Robotics (MZOR) makes surgical robots that must be seen to be believed. Its Mazor X platform combines data analytics, 3D imaging, and cutting-edge robotics to help surgeons perform the most delicate of spinal and brain procedures with remarkable precision.

Now the install base is surging. And an important partnership is kicking into gear.

The Israeli company was founded in 2001 by Moshe Shoham, a professor of mechanical engineering at Technion, and Eli Zehavi, a former vice president of engineering at Elscint. By 2004 they had built SpineAssist, the first commercial guidance system for spine surgery.

The early success attracted Medtronic (MDT), the giant medical device company. However, the current platform is light years ahead of its early devices. Its Renaissance surgical arm, developed in 2011, takes robotic surgery assurance to the next level.

An integrated 3D camera uses spatial tracking to map the pre-operation surface and surrounding area. Fluoroscopic images taken with 3D markers build surgical plans. Sophisticated algorithms govern the robotic arm, translating the surgical plan with pinpoint accuracy.

It all seems like something from a crazy efficient future.

The industry is taking note. With the help of Medtronic, Mazor has 170 installations on four continents. Surgeons have assisted 27,000 patients, and 190,000 screws and other implants have been precisely placed.

In an August 2017 investor presentation, the company noted it expects to reach almost 5,000 procedures and 113 installations in the United States alone, in fiscal 2017. These numbers represent 52 percent growth over fiscal 2016.

The second phase of its deal with Medtronic will bring exclusive global sales and support, annual minimum targets, and a commitment to noncompete.

It’s a win for Medtronic, Mazor, and operating rooms. The platform reduces complications and failures over freehand procedures. In the high stakes world of modern medicine, that is time and money. It’s also something that can be easily sold.

There are rewards due Mazor shareholders, too. As its deal with Medtronic transitions to phase 2, employees and marketing costs will shift to the larger company. Mazor believes this will lead to a decline in operating costs from 124 percent of sales in 2016 to 45 percent by 2020.

Revenues have been very steady. Through fiscal 2017, sales reached $233 million, up 67 percent over fiscal 2016 and a threefold increase over the 2013 results.

Its shares have begun to reflect the strong growth and substantial potential. The Mazor X is the leading robotics platform in its category. Installations and patients served are growing steadily. These trends should accelerate as its partner, Medtronic, seeks more market penetration. In 2016, the stock rallied 115 percent. That was followed by gains of 135 percent during 2017.

Ultimately, this is the future of complex surgery. Just like in the movies.

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