1865

Fellow bloggers, the last forty-eight hours have been interesting to say the least.  The title of our post "1865" signifies the one day damage that Nuvasive has incurred by dropping 12% in share price upon the market's and investors reactions to losing the verdict to Big Blue for infringing upon patents that are "owned" by Medtronic.  1865 is not about the year Abraham Lincoln was assassinated, nor about the year that we as a nation abolished and prohibited slavery. Depending upon the next phase of litigation, it might be a price, that one day, investors yearn for.  For those executives or other platforms that deny this blogs credibility, this is the year of living dangerously. Thank you. The reaction from those in the industry, including Alex Lukianov and his minions of analysts' was predictable.  Would any of our bloggers expect otherwise?  Your vigorous comments say it all.  Even Dr. Gary Michelson, a blast from both the plaintiff's and defendant's past, was thrust into this melee, and was quoted as saying, "people have to be respectful of intellectual property."  And if there is one individual that knows about burning the midnight oil with his cadre of IP lawyers, it is Dr. Michelson.  Whether one agrees with his past, one must be respectful of his legacy.

What does this say about Nuvasive, a company that has built its reputation and mystique on the XLiF and neuro-monitoring?  What does it say about Alex?  Has he lost his panache?  Highly unlikely.  What does it say about investors?  Are they gullible, believing the "hype" that analysts' profess about their favorite spine stock du jour?  Where is that guy that predicted on September 2, 2011 that the stock will go up 40% over the next weeks and months?  And what does it say about the analysts'?  "Painful, but manageable, bloodied, but still standing." Is that all there is?  How does a company predict on becoming a billion dollar baby, when they are spending tens of millions on legal fees battling an assault on their very existence?  If anything this litigation is far from over, and unfortunately for Nuvasive, it is going to take a little longer than predicted on becoming that Billion Dollar Baby.  This verdict was more than a bump in the road, it is a set back. Alex will tell you otherwise because his job is to be the spinemeister and he can play with house money.  The verdict will be appealed with vigor, while Nuvasive anxiously awaits Medtronic's next move.  TSB knows that some will respond that this is the cost of doing business in a highly competitive environment.  But, does this bode well for NuVa?

A company of Nuvasive's size can be sold.  But now, any buyer will have reservation until this litigation plays out. The fact is that until this litigation is resolved, why would anyone risk buying a portfolio that potentially will have royalties tied to Medtronic?  Realistically, at this phase of litigation, it looks like Medtronic is in the drivers seat, at least for the time being.  How long will the shareholders and investors continue to provide a vote of confidence for the leadership team at this company?  These are legitimate questions. In retrospect, many have raised questions regarding Nuvasive's quest, back in June 2011, to raise $325 million through the issuance of Senior Convertible Notes.  Yes fellow bloggers there is much to speculate about, but the reality is that the sun will rise and set today, and NUVA will not shut its doors, let's be realistic.  But what this verdict does is create a dynamic to how this company will proceed, and whether the leadership team here has the longevity to sustain multiple blows as Phase 2 and 3 develop in MDT's quest to utilize the patent laws to its advantage.  Regardless of your love or disdain for the Big Blue, let's be honest, if you were in their place what would you do?  In closing, Nuvasive is lucky that there wasn't an injunction placed on the sale of the products in question.  This brings back memories of the old days when a company named U.S. Surgical laid down the gauntlet and challenged J&J/Ethicon's market presence, only to be repelled like a fly on someone's ass.  Sometimes, history has a way of repeating itself.  So what's Alex's exit strategy if all else fails?  You know, TSB once had the pleasure of meeting Lauren Hutton, and her motto was, "don't ever let them see you sweat." Good Luck and Good Night.