Novadaq Technologies Inc.

Novadaq Technologies Inc.

November 10, 2010 07:31 ET

Novadaq Reports Third Quarter 2010 Financial Results

TORONTO, ONTARIO--(Marketwire - Nov. 10, 2010) - Novadaq® Technologies Inc. (TSX:NDQ), a developer of real-time medical imaging systems for use in the operating room, today announced 2010 third quarter revenues of $7,570,000 compared to revenues of $1,723,000 in the third quarter of 2009 and $2,646,000 in the second quarter of 2010. Recurring SPY revenues were $1,056,000 compared to $659,000 to the same period last year and $916,000 in Q2-2010, representing an increase of 60% over Q3-2009 and a 15% increase over Q2-2010. Sales of SPY® products in Q3-2010 included $5,000,000 for completing all milestones associated with the License and Development Agreement with Intuitive® Surgical, Inc.

Q3- 2010 Highlights

  • Signed a North American Sales and Marketing Agreement for SPY with LifeCell™ Corporation. Received $4,000,000 in fees and $1,000,000 in private placement funds in exchange for exclusive rights in plastic reconstructive, gastrointestinal and head and neck surgery. As a result of the agreement, going forward Novadaq will only recognize net revenues received from LifeCell.
  • Restructured sales and marketing overhead resulting in approximately 15 people being either transferred to LifeCell or reduced where redundancies existed.
  • Completed the final milestone associated with the Intuitive Surgical License and Development Agreement to integrate SPY imaging into the da Vinci robot and received the final $500,000 milestone payment. According to the company's completed contract method of revenue recognition, achieving the final milestone resulted in recognizing $5,000,000 in completed contract sales.

Highlights Subsequent to Quarter End

  • Executed the definitive Asset Purchase Agreement to essentially purchase all of the TMR assets from PLC Medical Systems, Inc., ensuring product supply and expanding the company's presence in international markets.

Financial Results

As at September 30, 2010, the Company had cash and cash equivalents of $8,671,000, which included $5,000,000 received subsequent to signing the LifeCell sales and marketing agreement. Novadaq's net loss of $4,562,000 included a non-cash write-down of $4,829,000 due a change in estimated life of TMR distribution rights. Net loss for the same time period last year was $3,852,000 and $3,525,000 in Q2-2010. The Company's cash provided by operating activities in Q3-2010 was $2,178,000 compared to cash used of $3,117,000 in Q3-2009 and $2,367,000 in Q2-2010. Novadaq's Q3-2010 net loss of $4,562,000 or $0.17 per share, compared to net loss of $3,852,000 or $0.16 per share in Q3-2009. Unless otherwise indicated, all dollar amounts expressed in this press release are United States (U.S.) dollars.


"As we've continued to report over the past 12 months, SPY has gained significant momentum in plastic reconstructive and gastrointestinal surgery. Our agreement with LifeCell provides us the leading channel to capitalize on this opportunity in our relevant markets. LifeCell is indeed a leader and the premier sales and marketing organization within the plastic reconstructive, gastrointestinal and head and neck surgery markets," said Dr. Arun Menawat, Novadaq's President and CEO. "We are delighted to now be partnered with two industry leaders, LifeCell and Intuitive Surgical. As a result of the significant commercial opportunities these two companies represent, we are increasing our manufacturing and supply capabilities to meet the anticipated growing demands for our SPY products." 

Conference Call

Novadaq is pleased to invite all interested parties to participate in a conference call on November 10th, at 10:00 a.m. Eastern Time during which the results will be discussed.

To access the live audio webcast:

Please login 5-10 minutes prior to the event start time

Go to website:

Select "3rd Qtr. 2010 Financial Results", fill in login information, and then click 'OK'

A pop-up window will open to display the audio web conference

To access the live conference call:

Live Participant Dial-In (Toll Free): (877) 407-8033
Live Participant Dial In (International): (201) 689-8033

A telephonic replay of the conference call will be made available until midnight on 12/10/10 and can be accessed by dialing 1-877-660-6853 (within Canada and the United States) or 1-201-612-7415 (international callers) and entering the account number 286 and the conference identification number 359775 when prompted. The call will be archived for 365 days on the company's website at under the "Events" tab in the Investors section. In addition, a replay of the call will be available for download to a portable audio player or computer, as an MP3 or podcast file, at the same location on Novadaq's website.

About Novadaq Technologies Inc: 

Novadaq Technologies develops and markets real-time fluorescence imaging technologies for use in the operating room. The Company's primary core technology platform, SPY Imaging, provides clinically relevant, anatomic and physiologic images during a wide variety of complex open and minimally invasive surgical ("MIS") procedures. SPY empowers surgeons treating life-threatening illnesses such as breast, colon and other cancers and cardiovascular disease to more effectively treat vascular blockages and assess tissue perfusion. More than 40 peer-reviewed publications demonstrate that SPY Imaging leads to fewer post-operative complications and reduced hospital costs. The SPY Imaging System is cleared by the United States Food and Drug Administration ("FDA") for real-time use during open surgical procedures and the endoscopic implementation of SPY Imaging ("SPY Scope") is FDA cleared for real-time use in MIS. The endoscopic SPY System combines all of the capabilities of SPY Imaging with state-of-the-art high definition ("HD") white light visualization offered by conventional endoscopes. The Company's key markets include plastic reconstructive, gastrointestinal, cardiac and general surgery. To realize the full potential of its SPY Imaging technology platform, Novadaq explores technology alliances. Novadaq announced its first alliance with Intuitive, in January 2009, to integrate SPY Imaging into the 3-D HD imaging capabilities of the da Vinci® Surgical Robotic System. In addition, Novadaq entered into an exclusive, North American sales and marketing alliance with LifeCell Corporation ("LifeCell") in plastic and reconstructive, gastrointestinal and head and neck surgery in September 2010. Novadaq is the exclusive United States distributor of PLC's CO2 HEART™ LASER SYSTEM, which is used in the same cardiac procedures as the SPY System. For more information, please visit the company's website at

Forward Looking Statements:

Certain statements included in this press release may be considered forward-looking. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements, and therefore these statements should not be read as guarantees of future performance or results. All forward-looking statements are based on Novadaq's current beliefs as well as assumptions made by and information currently available to Novadaq and relate to, among other things, results of future clinical tests of PINPOINT, SPY Scope and the SPY Imaging System, anticipated financial performance, business prospects, strategies, regulatory developments, market acceptance and future commitments.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Due to risks and uncertainties, including the risks and uncertainties identified by Novadaq in its public securities filings actual events may differ materially from current expectations. Novadaq disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 

Novadaq Technologies Inc.  
[expressed in U.S. dollars]  
  As at   As at  
  September 30,   December 31,  
  2010   2009  
  $   $  
Cash and cash equivalents 8,670,587   2,524,958  
Accounts receivable 1,699,539   1,398,593  
Current portion of prepaid expenses and other receivables 1,045,835   2,003,681  
Inventory 562,699   1,017,268  
Total current assets 11,978,660   6,944,500  
Long-term investment ––   150,000  
Property, plant and equipment, net 1,206,925   1,762,554  
Prepaid expenses and other receivables 173,055   189,148  
Deferred development costs 405,195   405,195  
Intangible assets, net 1,893,344   7,273,564  
  15,657,179   16,724,961  
Accounts payable and accrued liabilities 3,605,318   3,254,575  
Current portion of deferred revenue 629,712   710,365  
Current portion of deferred license and development revenue ––   3,000,000  
Current portion of deferred revenue of sales and marketing agreement 800,000   ––  
Total current liabilities 5,035,030   6,964,940  
Long-term debt 3,797,349   3,527,700  
Long-term income tax payable 40,115   48,979  
Deferred revenue 229,371   238,158  
Long-term portion of deferred revenue of sales and marketing agreement 3,133,333   ––  
Total liabilities 12,235,198   10,779,777  
Shareholders' equity        
Share capital 87,917,005   81,188,324  
Warrants 916,560   ––  
Contributed surplus 7,490,606   6,882,280  
Deficit (92,902,190 ) (82,125,420 )
Total shareholders' equity 3,421,981   5,945,184  
  15,657,179   16,724,961  
Novadaq Technologies Inc.  
[expressed in U.S. dollars]  
  Three-month period ended   Nine-month period ended  
  September 30   September 30  
  2010   2009   2010   2009  
  $   $   $   $  
Product sales 7,215,522   1,332,758   11,611,522   5,334,009  
Service revenue 354,815   389,784   1,024,615   1,101,751  
Total revenue 7,570,337   1,722,542   12,636,167   6,435,760  
Cost of sales 2,688,528   1,078,948   5,325,072   3,556,418  
Gross profit 4,881,809   643,594   7,311,095   2,879,342  
OPERATING EXPENSES                
Sales and marketing 1,798,960   1,751,555   5,535,025   5,406,979  
Research and development 1,369,566   965,346   3,395,207   2,771,625  
General and administration 1,109,125   869,218   2,549,111   2,432,830  
Depreciation 53,487   103,841   197,728   302,151  
Amortization 154,441   308,247   551,615   924,740  
Impairment of inventory ––   266,379   426,600   266,379  
Impairment of intangible assets, net 4,828,605   ––   4,828,605   ––  
(Gain) loss on foreign exchange (27,189 ) 85,854   12,811   107,089  
Total operating expenses 9,286,995   4,350,440   17,496,702   12,211,793  
Loss before the following: (4,405,186 ) (3,706,846 ) (10,185,607 ) (9,332,451 )
Impairment of long-term investment ––   ––   (125,000 ) ––  
Interest expense and imputed interest expense (161,442 ) (149,003 ) (477,612 ) (359,473 )
Interest income 4,273   3,549   11,449   9,880  
Net loss and comprehensive loss for the period (4,562,355 ) (3,852,300 ) (10,776,770 ) (9,682,044 )
Deficit, beginning of period (88,339,835 ) (72,965,833 ) (82,125,420 ) (67,136,089 )
Deficit, end of period (92,902,190 ) (76,818,133 ) (92,902,190 ) (76,818,133 )
Basic and diluted loss per share $(0.17 ) $(0.16 ) $(0.40 ) $(0.39 )
Novadaq Technologies Inc.  
[expressed in U.S. dollars]  
  Three-month period ended Nine-month period ended  
  September 30 September 30  
  2010 2009 2010   2009  
  $ $ $   $  
Net loss for the period (4,562,355) (3,852,300) (10,776,770 ) (9,682,044 )
Add (deduct) items not involving cash            
 Depreciation and amortization 359,407 589,704 1,237,179   1,767,534  
 Imputed interest expense 92,107 81,578 269,649   196,579  
 Impairment of inventory –– 266,379 426,600   266,379  
 Impairment of intangible assets 4,828,605 –– 4,828,605   ––  
 Impairment of long-term investment –– –– 125,000   ––  
 Stock-based compensation 175,707 203,591 608,326   455,637  
  893,471 (2,711,048) (3,281,411 ) (6,995,915 )
Net change in non-cash working capital balances related to operations 1,284,944 (406,048) 1,844,477   3,147,761  
Cash provided by (used in) operating activities 2,178,415 (3,117,096) (1,436,934 ) (3,848,154 )
Issuance of convertible debentures, net of transaction costs –– –– ––   5,062,409  
Exercise of options 33,126 –– 35,084   ––  
Issuance of common shares and warrants, net of transaction costs 1,000,000 4,989 7,610,157   4,989  
Cash provided by financing activities 1,033,126 4,989 7,645,241   5,067,398  
Purchase of property, plant and equipment (38,579) (30,303) (129,936 ) (160,257 )
Redemption of long-term investment –– –– 25,000   50,000  
Sale of short-term investments, net –– 699,304 ––   ––  
Cash (used in) provided by investing activities (38,579) 669,001 (104,936 ) (110,257 )
Foreign exchange income (loss) on cash held in foreign currency 70,235 (23,869) 42,258   (38,092 )
Net increase (decrease) in cash and cash equivalents during the period 3,243,197 (2,466,975) 6,145,629   1,070,895  
Cash and cash equivalents, beginning of Period 5,427,390 7,529,703 2,524,958   3,991,833  
Cash and cash equivalents, end of period 8,670,587 5,062,728 8,670,587   5,062,728  

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