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Analyst: 'New CEO, Larger Sales Team and Greater SUI Focus Should Help Medical Device Growth'
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Cowen analyst Dr. Joshua Jennings highlighted this medical device firm's Q1/18 developments and financial results.

Viveve System

In a May 10 research note, Dr. Joshua Jennings, an analyst with Cowen, reported that while Viveve Medical Inc. (VIVE:NASDAQ) fell short of performance expectations in Q1/18, it initiated changes during that period which should "help Geneveve growth."

For one, the company appointed a new CEO, Scott Durbin, who assumed the role immediately, in May. Also, Viveve expanded its sales team, adding seven representatives and two regional sales directors, and started a domestic "practice development organization with the addition of four practice development managers" who "will work to drive procedure utilization within existing accounts while new business is sought elsewhere," Jennings explained. Now, the entire North American sales team comprises 42 individuals; further additions to it are anticipated in H2/18.

The firm also "realigned its sales field to better disperse the span of control under each director" and restructured each sales territory. With these changes and related training, sales representatives were out of the field for several weeks during the quarter, which is likely why Q1/18 revenue missed, wrote Jennings. "We expect meaningful improvement over the remainder of 2018 now that the company has navigated these challenges," he added.

Viveve's Q1/18 revenue was $3.7 million ($3.7M) versus consensus' forecast of $4.7M and Cowen's estimate of $4.8M. The company, however, reiterated its 2018 revenue guidance of $22–24M, the midpoint of that range representing 50% year-over-year growth.

During the quarter, Viveve's sales team sold 38 systems in the U.S. and 15 ex-U.S., for a total of 53 units, which was below estimates. Despite the shortfall, Jennings noted, the 5,400 treatment tips sold worldwide was "encouraging." He explained, "That's because even if we exclude the 1,900 tips placed as part of the buy one get one free (BOGO) program Viveve initiated for stress urinary incontinence (SUI), the remaining 3,500 tips still beat our forecast (3,295) and represent roughly 35% sequential unit growth from Q4/17." With the aim of garnering faster market penetration in the SUI space, Viveve plans to continue the BOGO program until later in 2018 when it releases the next product version.

Looking forward, a number of factors in North America should boost operations throughout 2018, Jennings indicated. "Those include increasing numbers of 'feet on the street,' traction from the direct sales force in Canada, improving commercial savvy, opportunities created by competitors' struggles and incremental clinical muscle from the VIVEVE I trial results."

Further, sales of systems outside the U.S. should "rebound over the balance of the year" due to, for example, early momentum in the Chinese private market, likely product adoption in Taiwan and South Korea and anticipated uptake in Europe.

Also working in its favor, Viveve has intensified its efforts in SUI, its LIBERATE trials in that indication are advancing and enrollment for the VIVEVE II trial is scheduled to start in Q2/18, Jennings noted.

Cowen has an Outperform rating and a $11 per share target price on Viveve, whose stock is now trading at around $1.77 per share.

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1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following company mentioned in this article is a billboard sponsor of Streetwise Reports: Viveve Medical Inc. Click here for important disclosures about sponsor fees.
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Disclosures from Cowen, Viveve Medical, May 10, 2018

Analyst Certification: Each author of this research report hereby certifies that (i) the views expressed in the research report accurately reflect his or her personal views about any and all of the subject securities or issuers, and (ii) no part of his or her compensation was, is, or will be related, directly or indirectly, to the specific recommendations or views expressed in this report.

Important Disclosures

Cowen and Company, LLC and or its affiliates make a market in the stock of Viveve Medical, K2M Group Holdings and NuVasive securities.

Cowen and Company, LLC managed or co-managed a public offering of Viveve Medical in the past 12 months.

Cowen and Company, LLC received compensation for investment banking services from Viveve Medical in the past 12 months.

Cowen and Company, LLC and/or its affiliates expect to receive, or intend to seek, compensation for investment banking services in the next 3 months from Viveve Medical.

Viveve Medical is or has been in the past 12 months a client of Cowen and Company, LLC; Cowen and Company, LLC has provided or is providing investment banking services during the past 12 months.

Cowen and Company, LLC compensates research analysts for activities and services intended to benefit the firm's investor clients. Individual compensation determinations for research analysts, including the author(s) of this report, are based on a variety of factors, including the overall profitability of the firm and the total revenue derived from all sources, including revenues from investment banking, sales and trading or principal trading revenues. Cowen and Company, LLC does not compensate research analysts based on specific investment banking transactions or specific sales and trading or principal trading revenues.

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