Investment themes come and go. Whether it’s internet advertising sending your daily hometown newspaper under or sky high resource prices driven by Chinese demand, the stories behind the movement of money may have various life expectancies, but they all grab our attention for at least a moment.
A decade ago, the plotline of an aging population drove the share prices of pharmaceutical and medical device companies to all-time highs.
In 2000, for instance, one of the largest medical device companies, Medtronic, had revenue of $5 billion and a market cap of $70 billion. Today the company’s revenue is just under $16 billion, and its earnings have also tripled. Yet Medtronic’s market cap today is just under $40 billion.
The World Health Organization, however, confirms that the story of an aging population is a persistent one. In almost every country, it says “the proportion of people aged over 60 years is growing faster than any other age group, as a result of both longer life expectancy and declining fertility rates.
Are medical device stocks ready for a comeback? While the established players in the market appear to have settled on incremental growth, what the medical device market really needs, says the Minnesota Star-Tribune’s Eric Wieffering, (Minnesota has an estimated 35,000 people working for approximately 500 device companies) is “a disruptive technology that would drive further innovation and growth.” Take a look at the Canadian markets and you may notice that a medical device stock is more likely to be listed on the TSX Venture Exchange than the big board. We look at four juniors that have the potential to disrupt the malaise and send a jolt through the healthcare sub-sector that is medical devices. Companies are listed in order, according to market capitalization.
1. Titan Medical (TSXV:TMD)
The company that names its products after a certain famous Austrian composer may one day be music to the ears of investors. Titan Medical, which listed on the TSX venture January 24th, is the company behind Amadeus Composer, a surgical system that has a uniquely designed external robot and flexible instruments, allowing surgeons to work in small spaces, and the Amadeus Robotic Surgical System, the company’s four-armed robotic surgical platform. Titan says the current market for robotic surgery is about $1 billion now, but will grow to $5 billion by 2015. Titan recently signed an exclusive license agreement with Columbia University for technology it says is the world’s smallest, in terms of required diameter, to enter the body while enabling full manipulation capabilities and imaging feedback.
2. Verisante (TSXV:VRS)
For Vancouver’s Verisante, the waiting game appears to be over. The company’s skin cancer detection device, Aura, seems on the cusp of moving from concept to practice, as Verisante has received approval to sell it in Australia, Europe and here in Canada. Rainy Vancouver might seem an odd point of origin for science that may be set to turn the multi-billion dollar skin cancer market on its sunburned ear. But this fact seems much less curious when one notes the company’s deep ties to the UBC Department of Dermatology and Skin Science, which is a world leader.
3. CardioComm (TSXV:EKG)
Shares of CardioComm caught fire after the company announced it had cleared an important hurdle in its goal to market a new handheld ECG device called the HeartCheck Pen. CardioComm’s ECG solutions, including its Global ECG Monitoring System, have been built from the ground up to capitalize on a changing healthcare landscape, where intelligent networks and remote access are meant to ease the burden on busy hospitals and clinics. BCC Research estimates that The global telemedicine market is expected to grow from $9.8 billion in 2010 to $23 billion in 2015, for a compound annual growth rate (CAGR) of 18.6% over the next 5 years.
4. Ventripoint Diagnostics (TSXV:VPT)
Calgary’s Ventripoint, which has designed a three-dimensional diagnostic system for examining the heart, says it can offer a better alternative to traditional methods such as MRIs. Last August, Ventripoint began a research collaboration with Toronto’s Hospital for Sick Kids. Sick Kids is the first hospital in the world to use the company’s VMS 3D system to detect Tetralogy of Fallot, a congenital heart defect in children. The hospital compared the methods to traditional MRI results and were sufficiently impressed to enter into a ongoing research agreement. Ventripoint management says its Ventripoint Diagnostic System can increase the speed of diagnosis by as much as twenty times, and does so using existing 2D or 3D imaging equipment already found in most hospitals. The patented methods in Ventripoint’s software and tracking systems sensor work by identifying anatomical sites, or dots, in the heart and then connect these dots to form an image of the heart that is more realistic and specific than existing MRIs.
Disclaimer: Verisante is an annual sponsor of Cantech Letter.