Wednesday, October 14, 2009

Trans1: October 29th Day of Reckoning

October 29th looms as a big day for Trans1. On that day, the company will release its full third quarter results. Earlier this month, the company announced that revenues were expected to fall short of previously announced guidance for the quarter. So why the concern? Like most readers, TSB is concerned that this could be perceived as the beginning of a trend for this company.

Even though this company has exhibited nice growth, they are not meeting the Streets and their own expectations. But that happens when you dance with the devil. The primary reason that this company has lost some traction can be attributed to reimbursement issues surrounding their flagship product. Most of our readers understand that when surgeons cannot get reimbursed for using product, they stop using product. Trans1's challenge is to get this device down classified from a Category III CPT Code (aka an experimental device) to a Category I, meaning that insurers will not pre-approve the procedure or pay the code. TSB is sure that this organization is working feverishly to overcome this obstacle. This company has managed their cash flow very well, considering, they have opted to build their business model with a direct sales force.

But there are other concerns, if you track their stock (TSON, NASDAQ) the share price has taken a beating over the past year, affecting the companies market cap and valuation. On October 13, 2008 the stock opened at $8.57 and closed at $9.54, jumping as high as $10.03 on October 17, 2008. As of October 13th, 2009 the stock officially closed at $4.52 per share. The question must be asked, are investors losing interest in Trans1? If this company is projected to finish '09 with an estimated revenue of $30-$35mm are they doing a great job, or, do other factors loom that our readers are unaware of . The Spine Blogger wants to know what our readers think?


  1. reimbursement is issue #1. Big issue obviously since why would a surgeon change their fusion business but open up a major concern to whether or not they should get paid. major issue #2 is clinical results. From what I understand the salvage procedure is keeping the device in,adding plifs anterior and adding an anterior plate. Doesnt sound very revolutionary when the salvage procedure is midieval.

  2. As much as I am intrigued by this product, especially for "Zoftig" patients, at an estimated sell price of $10,700 that is expensive. In addition, if you need to augment this fixation with medieval hardware where is the advantage? Is it because it is minimally invasive? If they cannot get a quick response in changing the CPT Code they could be in for a long ride, and as most of you know long rides tend to get expensive.

  3. What Trans1 needs to do is swallow their pride and aquire one of the better me-too spine companies out there. Lets face it, the oft-maligned "me-too" technology is where the revenue and reimbursement is.

    Although the AxiaLIF is an interesting product, it's indications and customer base are quite limited. If they were to acquire a decent suite of products to supplement their technology, they would see revenues multiply. The AxiaLIF could still serve as a halo product, but they would be able to capture more of the bread and butter business that that are currently giving away. Just my 2 cents.

  4. SpineDoc1: Great commentary, interesting enough prior to reading your comments a colleague and I were having a discussion about how this company would benefit if they acquired someone's "me-too" portfolio. Unfortunately, we believe that their strategic plan has been to "flip this" product to one of the big boys. Let's wait and see!

  5. If they are planning to flip it, they are not trying to do so at least I don't think. If they could straighten out the reimbursement issues, then my opinion is that Nuvasive and Trans1 under the same name would be a huge force: with the name of Nuvasive, and their capacity for innovation--engineers already familiar with novel approach-based technologies, a marketing team with similar experience, and a sales force with the experience and relationships...not to mention the name recognition: "wow, the execs at Nuvasive believe in this technology!? There must be something to it." But perhaps others recognize this, and would intervene to prevent this from occurring.

  6. dynamo your post is silly. transone isnt trying to flip it? of course their not since they cant hold their own britches up with a technology that is nothing more than a screw near the rectum without a salvage.

    nuvasive and transone have the same marketing? what are you even talking about.

    i completely agree that transone needs to take their $50million they have left and invest it in something else or the entire ship will go down in about 18 months. if theres one thing ive learned it is that professionals dont admit mistakes so chances are they're going down with the ship.