Viveve Medical, Inc. (NASDAQ: VIVE), designs, develops, manufactures, and markets a medical device, Geneveve, for the non-invasive treatment of vaginal laxity, for improved sexual function, and for vaginal rejuvenation.
The company recently announced closure of a public offering of 8,625,000 shares of its common stock at a public offering price of $4.00 per share. Viveve estimates net proceeds from the offering will be approximately $31.7 million and the same would be used to fund the company’s ongoing and future operations.
Viveve has been on a rapid growth path, with over $7M in revenue during its first full year of sales. Management expects 100% growth, with 2017 revenue guidance in the range of $14M – $16M. In fact, the company continues to exceed commercial expectations with six consecutive quarters of double-digit revenue growth and with extensive positive feedback from distributors, physicians, and patients.
On an operational front, Viveve demonstrated robust clinical evidence with successful completion of the largest clinical trial for vaginal laxity and sexual function ever conducted. An Investigational Device Exemption (IDE) was submitted in September of 2016 to the Food and Drug Administration (FDA) for authorization to begin the VIveve Treatment of the Vaginal Introitus to EVauate Efficacy (VIVEVE II) study. The study will begin in the U.S. when the FDA completes its review and if approval is received.
Viveve now has a commercial installed base of 217 systems, 102 of which were sold during 2H 2016. In fact, management anticipates a significant increase in its installed base in 2017 as the company continues to advance its global commercial strategy. Based on the increased momentum of its commercialization efforts, management strongly believes that Viveve is presently well positioned to build on its 2016 success.
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Vaginal Laxity is a significant concern for millions of women and Viveve’s business is expected to derive significant strength from this enormous global market opportunity, with 13 million women worldwide as potential early adopters (3 million in the US and 10 million outside the US). Moreover, it has significant additional market opportunities, including, Stress Incontinence, Vaginal Atrophy & External applications.
The company’s stock has witnessed significant strength in the recent past. Viveve reported an increase in price backed by its above-expected performance and robust guidance laying a foundation for revenue visibility and business growth.
Description & about the Company: Viveve Medical, Inc. is a Women’s health and Wellness Company passionately committed to advancing new solutions to improve women’s overall well-being and quality of life. The internationally patented GENEVEVE™ treatment incorporates clinically proven, cryogencooled, monopolar radiofrequency (CMRF) to uniformly deliver volumetric heating while gently cooling surface tissue to generate robust neocollagenesis in one 30-minute in-office session.
In the United States, Viveve currently has clearance to market Geneveve for general surgical procedures for electrocoagulation and hemostasis but not for vaginal laxity or sexual function. Consistent with approvals in many countries internationally, Viveve is currently seeking regulatory clearance in the United States for improvement in sexual function.
About Geneveve: Geneveve is a non-invasive solution for vaginal laxity which includes three major components: the Viveve System™ (an RF, or radio frequency, generator housed in a table-top console), a reusable hand piece and a single-use treatment tip, as well as several other consumable accessories.
Unique differentiating factors of Geneveve includes:
- A non-invasive, non-ablative alternative to surgery with no identified safety issues to date
- It requires only a single treatment
- Compelling physician economics; and ease of use.
Timeline of Successful Results in Multiple Trials:
Distributional network: Its extensive global distribution network benefits Viveve’s operational risk profile. The company has 26 distributors covering 67 countries. Furthermore, it has clearance to sell in 51 countries & pending regulatory submissions in 15 additional countries. Presently, 4 Regional Sales Directors are managing Asia Pacific, Europe, Middle East, and Latin America.
Global Commercial Success & Rapid Adoption of Viveve Systems:
Business outlook over the near to medium term:
The interest and increasing demand that the company is presently experiencing, reinforces the opportunity for rapid worldwide adoption throughout 2017. Therefore, management projects $14-$16 million in revenue for 2017, as against, revenue of $7,141,000 in 2016.
Viveve now has a commercial installed base of 217 systems, 102 of which were sold during the last two quarters of 2016. Management anticipates a significant increase in its installed base during 2017.
Key Stock Influences & Risk Factors:
Product concentration Risk: Notwithstanding its robust guidance over the near to medium term, the company’s business risk profile is dependent upon the success of a single product i.e. Geneveve, which has a limited commercial history as of yet. If Geneveve fails to gain or loses market acceptance, the company’s business is likely to get impinged.
Competitive landscape: The medical device and aesthetics markets are highly competitive and dynamic, and are marked by rapid and substantial technological development and product innovations. Therefore, Viveve competes against companies that have relatively more established products, longer operating histories, and greater resources, which may prevent it from achieving rapid market penetration or increased operating results.
Subject to Regulatory risk: Viveve currently has clearance to market Geneveve in the U.S. for general surgical procedures for electrocoagulation and hemostasis but not for vaginal laxity or sexual function. To sell Geneveve and single-use treatment tips in the U.S. for the treatment of vaginal laxity or sexual function, it will need to obtain additional FDA clearance or approval, which may not be granted.
Liquidity & Financial Flexibility: Viveve’s business is not currently profitable, and it may not be able to achieve profitability even if it continues to record significant growth in revenue. As of December 31, 2016, it incurred losses since inception of approximately $68.6 million. In 2016, it incurred a loss of $20.1 million and in 2015 a loss of $12.4 million.
Therefore, its ability to maintain liquidity and financial flexibility to fund its incremental capital requirements will remain a key financial sensitivity factor for the company.
Earnings Review: Revenue for the full year 2016 totaled $7,141,000 from the sale of 175 systems and more than 2,700 treatment tips, compared to revenue of $1,441,000 for the full year 2015, an increase of $5,694,000.
Rationale for surge in revenue: The increase in revenue was primarily due to sales of 175 Viveve Systems and disposable treatment tips and other ancillary consumables to new distributors. Sales in 2015 included only 34 Viveve Systems and were limited primarily because of insufficient commercial inventory available for sale and most inventory during the first half of 2015 was used to support the OUS Clinical Trial.
Comparative for Key milestones achieved during 2016 vis-a-vie 2015:
Profitability: Gross profit for the full year 2016 was $2,529,000, or 35% of revenue, compared to gross profit of $462,000, or 32% of revenue, for the full year 2015. The increase in gross profit was primarily due to sales of 175 systems to new distributors in 2016.
Net loss for the full year 2016 was $20,111,000, or a loss of $2.18 per share, compared with a net loss of $12,426,000, or a loss of $2.47 per share, for the full year 2015.
Cash Flow & Balance Sheet: Viveve has funded operations since inception through the sale of securities, loans from related parties and bank term loans. To date, it has not generated sufficient cash flows from operating activities to meet obligations and commitments, and management anticipates that it would continue to incur losses for the near future.
The company expects that its cash will be sufficient to fund activities for the next six months, however, it will continue to require funds to fully implement its future of operation.
On Tuesday, April 18th, 2017, VIVE shares surged by 8.84% to $7.79 on an average trading volume of 324,943.00 million shares. Market capitalization is 153.48M. The current 14 days RSI is 78.29
In the past 52 weeks, shares of VIVE have traded as low as $3.75 and as high as $11.16.
At $7.79, shares of VIVE are trading above their 50-day moving average (MA) at $5.16 and above their 200-day MA at $5.87
The present support and resistance levels for the stock are at $5.17 & $10.18 respectively.
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