Interview: Endosonics CEO Discusses Company's Products, Performance
August 13, 1997; Wednesday 5:18 pm Eastern Time
GUESTS: Reinhard Warnking
BYLINE: John Defterios
JOHN DEFTERIOS, CNNfn ANCHOR, CAPITAL IDEAS: From a company treating heart disease to another that specializes in finding the problem Endosonics (ESON). Endosonics makes imaging systems and catheters to spot heart disease. The company coming off of a merger this year with a smaller group worth $65 million.
For investors looking for an easy ride higher Endosonics presents a challenge. The stock riding up and down between $9 and $15 a share. Joining us is Reinhard Warnking. He is present and chief executive of Endosonics. It's is nice to have you here on CAPITAL IDEAS.
REINHARD WARNKING, PRESIDENT & CEO: Nice being here, John.
DEFTERIOS: Welcome. Very interesting because you brought us something that you can actually show the product for us. If you can talk us through it first. What is so unique about Endosonics in terms of the product you have on the market place?
WARNKING: We build intravascular ultrasound devices and our technology is all electronic. That is unique. Nobody else out there has our electronic technology. Other companies rely on electro- mechanical approaches for doing this imaging and that is unique. It gives you better performance. Better feature sets and better reliability.
DEFTERIOS: OK. Give us a quick example of what you have here in terms of the product and why-if you can describe why it is so unique.
WARNKING: Well, the feature sets I listed as one of the advantages for the electronic approach that is documented here. You have a combination device combining balloon angioplasty. Can that be seen there?
DEFTERIOS: Sure we can see it there.
WARNKING: OK.
DEFTERIOS: So this does the angioplasty here.
WARNKING: The balloon. Yes.
DEFTERIOS: Right. And the bottom feature there does what?
WARNKING: And then you see the gold section here behind the balloon that is the imaging portion. So we combine imaging with balloon angioplasty on one catheter. That means it is quick. It is simple and that's what matters in the (AUDIO).
DEFTERIOS: OK. In terms of your array of products right now how does this rank? Is this the main product that you have and are there other products coming to market place?
WARNKING: Currently our main product is an imaging only device without the balloon.
DEFTERIOS: OK.
WARNKING: The reason is that we are waiting for approval for our latest image quality on this combination device.
DEFTERIOS: OK. If you can we have some video here looking at the imaging devices. If we can take a look at that right now. Describe what we are seeing and how much of the market share you plan to get in this arena for imaging and the dual product.
WARNKING: What we see here is a cross section cut through an artery and this artery is heavily diseased. Right now we see some calcium in there that was this bright stuff inside the artery.
DEFTERIOS: And your product gives us the picture and the images we are seeing now then. Right?
WARNKING: Yes. Ultrasound gives you the ability to look into tissue. The physician can determine what is this block made of. How is it best treated? You have a variety of therapies. You can choose drugs. You can choose stints (ph). You can choose balloons. You can choose little roter-bladers (ph). Ten years ago it was laser and ten years from now it probably will be radiation. So there is a spectrum of therapies. But you need to make an intelligent decision what is the best therapy and ultrasound provides that information.
DEFTERIOS: There are some fairly phenomenal numbers rolling around here and I'm going to see if I've got this right. Post merger you are gong to go from say 5 to 7 cents a share in '97. Up to 45 cents earnings per share in 1998. That's phenomenal growth. Why is that?
WARNKING: Well, John the main reason is we have a strong revenue growth. We keep our expenses pretty level. I mean they will increase some but as..
DEFTERIOS: Because of the R&D. Right?
WARNKING: Well as a percentage of sales they will clearly decrease and we have increasing margins. I mean we figured out how to build this what you see here in this imaging section here. I have a hard time picking this up.
DEFTERIOS: That's OK.
WARNKING: Here you have 64 transduser (ph) elements and five integrated circuits. It took us years and years and millions of dollars, tens of millions of dollars to figure out how to build this. Once you have figured it out then you can increase margins and that is what we are doing right now and that is why we have these projections and I feel very comfortable results.
DEFTERIOS: OK. Great to have you and thanks for the excellent explanation. I have to say, you did that very well. Reinhard Warnking, once again, the president and CEO of Endosonics.
Nice to have you on CAPITAL IDEAS. |
