Battle of the Robosurgeons
No doubt, robotic surgery has a bright future. But the two feisty California startup companies that build the Zeus and daVinci computer-assisted surgery systems think there isn't room for two competitors in the field right now (see BW Online, 6/14/01, "Robotic Surgeons Make the Cut").
They may be right. Although Zeus and daVinci both boast breakthrough technology, the procedures they perform remain experimental and await Food & Drug Administration approval. Add to that price tags in excess of $1 million, and only a handful of hospitals will opt to buy these machines. That could make it harder to focus on the big prize, a winning share of a $3.5 billion worldwide annual market for "less-invasive" surgery. Both companies are still running in the red, and whichever achieves profitability first will become the favorite.
Calling itself "the leader in precision surgical robotics," Intuitive Surgical in Mountain View, Calif., sold 12 of its daVinci systems in the first quarter of 2001, racking up sales of $12.1 million. That's a gain of 31% over the first quarter of 2000. It reported a $3.4 million loss, compared to a net loss of $5 million for the first quarter of 2000. Overall, the company, which was founded in 1995, has sold 58 of its systems since they were introduced in 1999.
On the other side, Computer Motion, which dubs itself "the pioneer and leader in medical robotics," logged sales of $3.5 million in its first period. The Santa Barbara (Calif.) company also reduced its net loss to $4.2 million, compared with $5 million for the year-ago quarter. Computer Motion, founded in 1989, has sold 28 of its Zeus systems so far. It wound out the quarter with a cash balance of $7.5 million and no debt.
Both contenders are vying to win FDA approval for various surgical operations and are involved in a variety of clinical trials. In March, the FDA cleared daVinci for use in operations in the chest cavity, and on June 4, it approved the system for removing prostate glands, the most common surgical procedure performed on men with prostate cancer.
Computer Motion's Zeus is approved for commercial sale in the European Community. In the U.S., the company has completed an FDA-approved Investigational Device Exemption (IDE) coronary bypass study and has under way IDE mitral valve surgery, general laparoscopic, and thoracic studies.
FOLLOW THE BEAT.
Beyond that, the two combatants are vying to one-up each other's patent positions. They have already woven a skein of contentious challenges and legal suits. Computer Motion, for example, holds a key patent that makes it possible for surgeons to operate on a beating heart -- the surgeon sees a still image on a screen, making it easier to concentrate on crucial areas, while the instruments that do the cutting and sewing precisely track the movement of the heart.
Any patent can be challenged, however. Computer Motion threw down the guantlet in May 2000 when it launched a lawsuit against Intuitive for allegedly infringing seven of its patents. That kicked off a round of legal jousting that has seen patent challenges and court papers fly. Dozens of motions are now wending their way through the courts and the Patent Office. Until the issues are resolved, almost none of the intellectual property held by these companies is a lock.
While Intuitive and Computer Motion feel defending their intellectual turf is crucial to long-term success, the litigation will burn up a lot of cash -- fast. The cheapest way out for both companies might be a merger. Until then, it's a fight to death between these two robot mavens.
By Alan Hall in New York
Edited by Alex Salkever