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Intuitive Surgical

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By RWRocksOn
February 12, 2007

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ISRG management has always said that procedure adoption (not system sales) has been, and will continue to be the main growth driver for ISRG. Increased procedure adoption = Increased per system utilization, which means increasing instruments and accessory sales (recurring revenues). Increased procedure adoption is a direct result of the public's acceptance of the new surgical technology and it's very significant advantages. 

Forgive me for sounding like a pessimistic broken record......

Can I caution the non-surgeons in the reading crowd about judging whether or not a medical technology represents a "very significant advantage"? To make this statement, demands a peer reviewed prospective randomized study studying two issues - complications and correction of whatever problem lead to the indication for the surgery in the first place.

I will tell you that to date in my particular area of expertise, which is robotic assisted laparoscopic radical prostatectomies, no such study exists comparing robotic versus straight lap prostatectomies (that I know of). In fact, our group (COHMG) published an article in the Journal of Urology (2/2006 Hu et al) that showed that straight lap and robotic surgeries have comparable complication rates. What IS true is that robotic surgery is easier on the surgeon BUT demands TWO skilled surgeons, while straight lap surgery demands only one (the lead surgeon can guide the assisting surgeon since they are right across the table from each other).

In addition, we have not been able to show any advantage in overall complication rate in our patients who have robotic assisted cystoprostatectomies or anterior exenterations versus even OPEN surgery. While the blood loss is less in the robotic surgery, the operating time is MUCH longer (like 5 versus 8 hours although we are still working on our data base). We are currently discussing whether or not to set up a randomized trial to figure out what we ought to recommend to our patients.

Pat Walsh (and if you don't know who Pat Walsh is, you shouldn't be investing in ISRG) has voiced his concerns many times in the Journal of Urology concerning the high positive margin cancer rates that robotic surgeons are reporting with robotic prostatectomies. Given the long natural history of prostate cancer, we have do not have a good idea of whether or not we are giving our patients comparable onocologic control. Certainly, there has been no data to date that says we aren't, thus we continue to do the operation.

In addition, prostate surgeons in general face competition, if you will, from radiation oncologists and oncologist for the treatment of prostate cancer. As radiation techniques improve, complications from radiation will decrease and it is possible that a significant amount of prostate cancer patients may chose radiation for treatment rather than surgery. One should be cognizant of competition from Accuray, IMRT, IGRT and so forth. The complication rate from brachytherapy has proven to be higher than we previously thought (see d'Amico's article, J. of Clinical Oncology, 11/10/2006, SEER data) so I think that modality is on the way out and should only ever be proposed for low risk patients anyway.

The oncologists are one molecule away from being able to cure patients with prostate cancer. The Proscars and Luprons of the world will be replaced by gene therapy and we do more molecular studies on tyrosine kinases and so forth. In addition, we will be able to group patients much more tightly into risk category groups for progression of disease. You must understand that the medical community knows that we are overtreating many men with prostate cancer, we just cannot figure out which men those are at this time.

I have trained several good gyn onc surgeons on the robot. These are people with good lap skills and pick up on using the robot quickly. They are not really that impressed with the robot over lap hysterectomies to date. Sure, we use the robot because we have the robot and frankly the robot is a marketing tool for our group. I very much doubt that a paper showing a "very significant advantage" will come out anytime soon for robotic v lap gyn surgery.

I'll also relate that we do not use the robot very much for kidney or retroperitoneal surgery - no advantage in our hands over straight lap surgery.

Now, whether or not these medical issues impact on the public demand for the robot is something entirely different. The lay community many times buys services and products that make no sense at all - look at the billion dollar supplement business. So, if a patient has it in their head that they want the latest in technology, they will pay for it, even if there is no medical difference in outcomes or complications.

This is my caution - the growth of this product will probably happen. The question is, and I say this as an investor, not as a robotic surgeon, what is the risk and what price are you paying for the STOCK. It is very important to understand in your mind the difference between the product, the stock and the company. The robot is my favorite toy, the company I think is well run with some significant risks on the horizon to its one trick pony business and the stock is, I think, overvalued most of the time given the risks of the business model. Tread with caution and buy intelligently - on dips if you must buy. And understand the difference between medical and technological advantages.

Rog


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