Intuitive Surgical Gains After FDA Clears Robot Upgrade

Source: Intuitive Surgical Inc. via Bloomberg

Surgeons practice using the "da Vinci" robotic surgical system, which is used to repair torn heart valves without having to open an incision in the patient's chest. Close

Surgeons practice using the "da Vinci" robotic surgical system, which is used to repair... Read More

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Source: Intuitive Surgical Inc. via Bloomberg

Surgeons practice using the "da Vinci" robotic surgical system, which is used to repair torn heart valves without having to open an incision in the patient's chest.

Intuitive Surgical Inc. (ISRG), the maker of the da Vinci robotic surgery system, rose the most since 2009 after U.S. regulators cleared the first major upgrade of its product in five years.

The newest system, called the da Vinci Xi, was cleared by the Food and Drug Administration, Sunnyvale, California-based Intuitive said today in a statement. The shares gained 13 percent to $493.60 at the close in New York, the biggest one-day advance since July 2009, as investors saw that robot sales might grow as hospitals get the new model.

The Xi is a more flexible system that will enable doctors to do more complex surgeries, Chief Executive Officer Gary Guthart said in the statement. It features thinner arms, and a doesn’t require repositioning to reach multiple surgical sites. Intuitive, which received approval of the previous robot system in 2009, had $2.27 billion in revenue last year, including sales of robots and instruments.

“The new Xi launch is a positive for Intuitive, despite the fact that this was widely expected by investors,” Vijay Kumar, an analyst at ISI Group LLC based in New York, said in a note to clients.

Intuitive’s revenue grew 4 percent last year after a 24 percent gain in 2012. “System sales have been declining double digits (in the 20-30% range) over the last few quarters, post the publicity around safety and costs of robotic surgery,” Kumar said in his note. The last time Intuitive brought a new system to market, there was an increase in sales as hospitals upgraded their systems, and the company may eventually sell 1,000 new units, he said in an e-mail.

Imaging Feature

The new model adds as a standard feature a fluorescent imaging system, called Firefly, that could improve safety by allowing better imaging of organs’ blood supply, Kumar said. Firefly’s inclusion with the new model is still subject to FDA clearance. In addition, the new version integrates the robot’s power supply, which may minimize excess energy at the surgical site and lead to less tissue damage, he said.

The company’s shares had fallen 25 percent through yesterday from February 2013, after it became public that the FDA was looking into potential adverse events with the devices in surgery.

To use the robot, doctors sit at a console operating the device from a control panel.

“We strive to provide the most advanced, least invasive option for surgery, and we are working hard to make minimally invasive surgery the standard of care,” Guthart said in the statement.

The new version of the robot will sell for $1.85 million, which is about the same price as the old system when add-on features were included, said Angela Wonson, an Intuitive spokeswoman, said today in a telephone interview.

To contact the reporters on this story: Drew Armstrong in New York at darmstrong17@bloomberg.net; Robert Langreth in New York at rlangreth@bloomberg.net

To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net Bruce Rule, Andrew Pollack

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