A Robotics and Artificial Intelligence Company
Set to Dominate Medical Technology
Company Overview: Mazor Robotics is a medical device company, which engages in the development and marketing of innovative surgical guidance systems and complementary products. It specializes in robotic, computerized and imaging-based systems, primarily in the field of spine surgery. Its flagship product, Renaissance, is a surgical guidance system that enables surgeons to conduct spine surgeries in an accurate and secure manner. The company was founded in 2001 and is headquartered in Israel.
Focused on the development of surgical robotic systems. Mazor Robotics is dedicated to the development of robotic surgical guidance systems and complementary products in the spine surgical markets that provide a safer surgical environment for patients, surgeons and operating room staff. Mazor’s flagship product, Renaissance Surgical Guidance System, is designed to transform spine surgery from freehand procedures to highly-accurate, state-of-the-art procedures that offer higher standard of care with proven clinical results.
Favorable clinical reviews validate accuracy, usability, and clinical advantages. Peer-reviewed publications and presentations at leading scientific conferences worldwide in the last few years have validated the accuracy, usability, and clinical advantages of Mazor Robotics technology for spine surgery. The company’s robotic systems (Renaissance and SpineAssist) are FDA cleared and CE-marked and are in use in over 40 medical centers worldwide. Renaissance and SpineAssist have been used successfully in over 4,000 surgeries, involving over 35,000 implants.
Poised to benefit from the sizable and growing market for spinal implants and biologics. Back pain is the second most common neurological ailment in the U.S. (behind headache). According to the National Institute of Neurological Disorders and Stroke, Americans spend at least $50 billion each year on the treatment of lower back pain. It has also been estimated that there are about 360,000 thoracic-lumbar spinal fusions performed annually in the U.S., and on average about $13,000 worth of implants and biologics are used in a thoracic-lumbar fusion surgery. The spinal implants and biologics market is estimated at $6.7 billion annually. Favorable megatrends such as the growth of the global middle class with increased spending on healthcare in both developed and emerging countries are expected to drive the continued growth of the spinal implants market in coming years.
Management team focuses on driving sales. Mazor’s management team remains focused on driving sales of the Renaissance systems and generating recurring revenue through sales of disposable products and service contracts by establishing Renaissance spine surgery as the “standard-of-care.” The company expects to continue to work with hospitals as part of the company’s outreach program to demonstrate the key benefits of Renaissance. We believe that growing the company’s top-line which hinges upon the company’s execution of sales and marketing strategies remains a top priority for the management team and is critical to the success of the company. The sales and marketing strategies include: (i) expanding the U.S. commercial organization, ii) continuously improving the company’s product offering to help surgeons deliver the best clinical care to their patients, (iii) targeting the early adopters of technology, (iv) offering the highest level of training and support to customers, and (v) demonstrating the clinical and financial value proposition of Renaissance. With the sales and marketing strategies, favorable clinical outcomes and industry peer reviews, we anticipate greater market adoption of the Renaissance platform in coming years.
Solid pipeline positions the company well for growth. Provides revenue upside opportunity. Mazor Robotics’ core technologies and clinical pipeline include surgical robotics, robotic-guided implants, new procedures using these technologies, and medical 3D imaging for surgery. Renaissance Brain is a new application of the Renaissance system that is expected to provide precise control over the insertion of surgical instruments and other brain accessories or implants, during brain surgery. From a timeline standpoint, head-mounted application for brain surgeries was cleared by the FDA in 2012.
BMR Take: Mazor shares increased 150% in 2017 and we believe the momentum is going to continue. The company is coming off of a record 3Q17 earnings where it was announced that orders were received for 22 systems comprised of 19 Mazor X and 3 Renaissance. Medtronic was responsible for 11 of the 19 Mazor X purchase orders, which is only the second phase of the commercial agreement between the two firms. Additional orders are in the pipeline. There is just clear surgeon interest in everything Mazor is doing. Why? When you step back and think of it, this is the start of artificial intelligence and robots beginning to take over the healthcare and other industries to increase productivity. Mazor is at the center of the action in the Medical Technology sector where the advancement will change lives and the economic opportunity for investors will be lucrative. Mazor’s sales are set to scale from $62 million this year to over $100 million by 2019. We see an addressable market opportunity for Mazor to do $1 billion in revenue if they can expand their expertise in robotics and artificial intelligence into new products within the sector.
As you know, we had Mazor in our portfolio last year for a bit and it did well for us. But it had a sharp drop in June which scared us out of the stock. Did you know that the toughest thing for an investor to do is to buy back a stock at a higher price than he sold it? Well, we are going to do just that. We believe in the future of the company and expect big things from the firm in the coming years.
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