INTERVIEW- Spine-Tech Inc backs high-end views
By Kevin Drawbaugh
CHICAGO, Sept 23 (Reuter) - Spine-Tech Inc chief executive David Stassen said Monday the
company is comfortable with the high end of analysts' 1997 revenue estimates ranging from $30
million to $50 million.
"We're certainly comfortable with the high end of that range...toward $50 million," Stassen said
in an interview.
Chief financial officer Keith Eastman said the medical devices maker may post a third-quarter
loss greater than the First Call consensus estimate of $0.06 per share.
"Right now my guess is the loss is going to be a little bit higher than that," Eastman said of the
$0.06 per share loss estimate. "It won't be double that...but it could also be that we're breaking
even."
Much depends on how rapidly orders come in for the company's BAK system for encouraging
lumbar spinal fusions. The BAK system was approved by the U.S. Food and Drug
Administration late Friday, Stassen said. "This is our first and hopefully our home-run product,"
he said.
For all of 1996, Eastman said, "We're still looking at breaking even for the year...to a $0.05 (per
share) loss."
For 1997, Eastman said Spine-Tech is comfortable with the high end of earnings estimates
ranging widely from $0.36 per share to $0.82 per share. "We remain comfortable with the
high-end numbers for revenues and earnings" for 1997, he said.
About 100 surgeons are trained to implant the BAK devices. "We would expect to have
somewhere between 400 and 500 surgeons trained by the end of the year," Stassen said.
The devices are small, hollow cylinders made of titanium alloy and threaded on the outside like a
screw. Pairs of them can be implanted between damaged spinal vertebrae to encourage their
growing, or fusing, together.
The BAK devices were approved by the FDA for use in degenerative disc fusions in the lumbar
spine, which accounts for the bulk of the 100,000 to 120,000 lumbar fusion surgeries done
annually in the United States, Stassen said.
"We believe that this technology addresses somehwere between 70 and 80 percent of those
fusions," he said.
A typical set of BAK devices sells for $3,800 to $4,000, which represents about a tenth of the
total cost of a lumbar fusion procedure, he said.
In anticipation of the FDA approval, Spine-Tech has stockpiled inventory to meet estimated
demand through the second quarter of 1997. "We have inventory on the shelves currently to
address the launch and some fairly lofty financial expectations," Stassen said.
BAK systems for cervical and thoracic spinal fusions are in clinical trials, he said.
Companies developing "fusion cage" devices similar to the BAK include Sofamor Danek Group
Inc ( Sofamor/Danek Group Inc ) and U.S. Surgical Corp ( United States Surgical Corp ), which
is expected by analysts to receive FDA approval for its device in December.
"I have Spine-Tech and U.S. Surgical splitting the market for fusion cages next year," said Piper
Jaffray analyst Thomas Gunderson.
Public only since last year, Spine-Tech continues to be seen by analysts as an acquisition
candidate.
"If you're a major orthopedics company, you have to take a look at them," said Piper Jaffray
analyst Thomas Gunderson.
--Chicago Newsdesk 312-408-8787 |
