Posts Tagged ‘Intuitive Surgical’

Reporter: Aviva Lev-Ari, PhD, RN


The technology functionality of da Vinci Surgical Robot of Intuitive Surgical is described in

3D Cardiovascular Theater – Hybrid Cath Lab/OR Suite, HybridSurgery, Complications Post PCI and Repeat Sternotomy


FDA Letter for Inspection dates 04/01/2013 – 05/30/2013

Observation 1:

A correction or removal, conducted to reduce a risk to health posed by a device, was not reported in writing to FDA.

Observation 2:

Illnesses or injuries that have occurred with use of devices subject to corrections or removals have not been reported

Observation 3:

Procedures for design change have not been adequately established.

Observation 4:

Design input requirements were not adequately documented.

Intuitive Surgical Declines on Warning Letter From FDA

By Robert Langreth – Jul 19, 2013 4:07 PM ET
BSIP/UIG via Getty Images
At the Lyon Hospital in France, they use a surgical robotic system called Da Vinci Surgical System, made by Intuitive Surgical, designed to facilitate complex surgery using a minimally invasive approach.

Intuitive Surgical Inc. (ISRG), the robot surgery company, has lost about $7 billion in value over five months after disclosures about adverse events with its products, a recent recall and, now, a regulatory warning it hasn’t adequately reported on issues concerning the devices.

In February, Bloomberg News reported that the FDA was surveying surgeons on the robots following a rise in reports that included as many as 70 deaths since 2009. A review of Food and Drug Administration records now shows the reports of injuries involving robot procedures have doubled in the first six months of 2013, compared with a year earlier.

On July 8, the Sunnyvale, California-based company reported that sales slowed for its robots in the second quarter, and four days later Intuitive said that 30 of its devices were recalled because they may not have been properly tested. Yesterday’s announcement, coming after the close of trading, prompted JMP Securities LLC to cut its rating on Intuitive to market underperform with a target of $275, a drop from yesterday’s closing price of $421.27.

“We see little reason to own shares at the current levels,” J.T. Haresco, a San Francisco-based analyst at JMP Securities, said today in a note to investors.

Intuitive’s shares fell 6.8 percent to $392.67 at the close in New York after Chief Executive Officer Gary Guthart yesterday advised investors about the July 17 warning in a conference call. The company has lost 32 percent of its market value, or about $7 billion, since Feb. 27, the day before Bloomberg News reported that the FDA was surveying surgeons about the safety of its robot products.

FDA Inspections

FDA inspections in April and May found the most recent deficiencies, according to a report dated May 30. Guthart said the agency is asking for additional steps to resolve two of the observations in the inspection report.

“We believe these issues are addressable and will continue to work with the FDA to ensure this is resolved to their satisfaction,” Angela Wonson, a company spokeswoman, said in an e-mail after the call.

Safety and cost effectiveness of the company’s da Vinci robot devices have been under scrutiny since the disclosure that the FDA was studying how the robot surgeons were being used.

“Rates of adverse events have remained low and in line with historical trends,” Wonson said today in an e-mail.

Robot Use

The robots, in more than 1,300 U.S. hospitals, cost $1.5 million each and were used in 367,000 U.S. procedures in 2012. They are the company’s primary product and have been the subject of negligence lawsuits alleging that patients were injured during surgeries. Cancer surgery, hysterectomies and gall bladder removals are among the procedures conducted with the robot.

Yesterday, Calvin Darling, the company’s senior director of finance, said 2013 revenue is expected to range from unchanged to an increase of 7 percent from 2012. Intuitive in Januaryforecast annual sales growth of 16 percent to 19 percent and in April said it expected the higher end of the range.

“The company will survive but maybe not as-is,” said Erik Gordon, a business professor at the University of Michigan in Ann Arbor. “The pounding down of the share price is fresh bait for activist investors like Carl Icahn and for strategic acquirers. The warning letter puts a dent in the reputation of a company that had once been viewed as a shiny new Porsche.

‘‘They enjoyed some easier, boom years when doctors and patients were awed by the thought of surgical robotics turning surgeons into super-surgeons,’’ Gordon said in an e-mail today. ‘‘Now, the people who pay for the surgery are stepping in and questioning whether the robots are worth the extra cost.’’


With more changes approaching from the Affordable Care Act, community hospitals are likely to reconsider whether it makes sense to do ‘‘money-losing procedures’’ on the pricey robot, Suraj Kalia, an analyst for Northland Securities, wrote today in a report to clients. In particular, using the robot for simple gall bladder surgeries is ‘‘prohibitively expensive,’’ he wrote.

Intuitive’s forecasts suggests new installations of the expensive robot in the U.S. are ‘‘hitting a brick wall,’’ Kalia wrote.

JMP’s Haresco also questioned the company’s future, saying that more use of personalized medicine will make it easier for physicians to tailor medical therapy and treat patients conservatively, that insurers will continue to drive procedures to outpatient settings, limiting the need for robotics, and that recent declines in benign hysterectomy appear to be the start of a long-term decline.

‘Outright Invalid’

‘‘While we still believe that robotic surgery will play a central role in the delivery of medicine, we also believe that some of the underlying assumptions that define the market potential are questionable, if not outright invalid,” Haresco said today in his note.

One of the two issues Intuitive has been asked to respond to by the agency in its warning letter is the observation that some device corrections hadn’t been adequately reported, Wonson said. She couldn’t provide a copy of the agency’s letter.

In the inspection report, FDA officials also said the company didn’t document the need for surgeons to sometimes clean robotic instruments during procedures. Intuitive has received complaints about arcing of energized surgical instruments after some surgeons cleaned off instruments by scraping them against each other during surgery, the agency said.

The scraping “led to tears or holes in protective tip covers that led to arcing that in turn led to injuries to patients,” the agency said in the report.

Intuitive Surgical also yesterday reported second-quarter net income rose 2.7 percent to $159.1 million, or $3.90 a share, from $154.9 million, or $3.75 a share. Revenue gained 7.8 percent to $578.5 million, missing the average of $596 million of 17 analysts’ estimates compiled by Bloomberg.

While sales of instruments and accessories increased 18 percent during the quarter, revenue from systems declined 6 percent, the company said.

To contact the reporter on this story: Robert Langreth in New York at

To contact the editor responsible for this story: Reg Gale at



Intuitive Surgical’s ($ISRG) share price plunged more than 13% in extended trading after the company disclosed July 18 it had received an FDA warning letter, adding to the cracks beginning to form in its da Vinci surgical robot track record.


The stock price listed at $363.91 in pre-market trading on July 19, down a whopping 13.6% from its $421.47 closing price at the end of trading on July 18. It had gained a healthy amount at the end of trading, in the wake of Intuitive’s generally positive 2013 second quarter earnings release.


But as Bloomberg reports, the company’s stock price went into a spiral after CEO Gary Guthard disclosed Intuitive’s July 17 warning letter during an analyst conference call held late afternoon to discuss second-quarter earnings. Regulators inspected the company in April and May, after which they cited Intuitive for not adequately reporting device corrections to regulators or patient “adverse events.” (Regulators detailed their initial concerns in a Form 483 issued earlier this year, which generally precedes a formal warning letter.) Additionally, the FDA faulted Intuitive for not documenting the need for surgeons using the da Vinci system to sometimes have to scrape instruments against each other during a procedure in order to clean them. This causes arcing and injured some patients, according to FDA concerns detailed in the story.


An Intuitive spokeswoman told Bloomberg that the issues cited with the FDA are “addressable” and that the company will continue working with regulators to solve the problem.


But investors are watching closely to see if company obstacles become more widespread. As The Wall Street Journal reported before Intuitive’s earning release, some hospitals and surgeons have said they are more heavily scrutinizing their use of da Vinci products in the wake of controversies over their safety and price tag (an average $1.55 million apiece).  Experts are questioning da Vinci’s benefits compared to standard hysterectomy procedures, for example, versus the extra cost of the machine and procedure.


Observers predicted that Intuitive’s stock would take major hits if its growth momentum slowed any more, the article noted. The new warning letter against the company pointed to a “growth momentum” risk, and investors reacted accordingly.


While 2013 second quarter results are generally good, there are signs of trouble. Sure, second-quarter revenue hit the $579 million mark, up 8% from the $537 million figure generated by the company over the 2012 second quarter. But analysts had expected much higher than this, The Wall Street Journal notes. And net income reached $159 million ($3.90 per diluted share), a moderate rise from $155 million in net revenue a year ago ($3.75 per diluted share).


Broken down, it’s more of a mixed bag.


Second-quarter systems revenue for 2013 dipped 6% to $216 million, versus $229 million over the same period last year, as the California company sold fewer da Vinci Surgical Systems, a trend it blamed in part on hospitals cutting back their spending. But more da Vinci surgical procedures and greater demand for new products bumped instruments and accessories to $265 million, an 18% jump over $224 million in revenue generated during the 2012 second quarter. Service revenue also enjoyed a double-digit jump, thanks to a greater installed base of the company’s surgical robots.


Spencer Nam, an equity analyst at Janney Montgomery Scott, noted to The Wall Street Journal that this was the first time since mid-2009 that Intuitive sold fewer da Vinci systems than it did in the previous year.


When Intuitive released its preliminary second-quarter results a week ago, Guthart said in a statement that the company was “disappointed” in its performance during the quarter but remained confident in the value Intuitive’s products offered. Meanwhile, the company’s stock closed July 18 at $421.57, up nearly 1.5%, after some wild fluctuation during the day.



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