Viveve Medical posts record revenues and analysts foresee continued growth

When Viveve Medical Inc. (VIVE:NASDAQ) announced record-breaking Q4 and FY/16 financial results on Feb. 16, that was just the latest in a string of good news. On Feb. 7 the company reported that the results of its VIVEVE I clinical study were published in the Journal of Sexual Medicine (JSM), and on Jan. 26 it announced the deployment of a U.S. sales team for the commercialization of the Viveve system in the country. This was preceded by other announcements in January reporting regulatory approval in Malaysia, and in Colombia and Costa Rica.

Patricia Scheller, chief executive officer of Viveve, noted that "We have continued to exceed our commercial expectations with six consecutive quarters of double digit revenue growth and with extensive positive feedback from distributors, physicians and patients. In January, we launched our initial U.S. commercial team and we recently announced publication of the VIVEVE I study results, further validating the safety and efficacy of our cryogen-cooled monopolar radiofrequency (CMRF) technology and the GENEVEVE™ treatment to improve vaginal laxity and sexual function. The interest and increasing demand we are experiencing reinforces the opportunity for rapid worldwide adoption throughout 2017."

Jeffrey S. Cohen, an analyst with Ladenburg Thalmann, reported that "Q4 revenue increased 226% on an annual basis and 32% sequentially as the company's commercial and clinical activities continue to drive adoption and penetration in the marketplace. . .2016 annual revenue were $7.14 million and represented 394% growth over $1.45 million during 2015." He noted higher than expected sales: "55 systems were placed during the quarter (vs. our estimate of 45) with 184 worldwide placements [in 2016] and worldwide fleet size now at 217."

Maxim Group Analyst Anthony Vendetti also found the results better than expected, noting that the 55 Viveve Systems sold in 2016 were above his estimate of 45, and "more than 1,300 disposable treatment tips were sold, significantly above our estimate of 450." He wrote, "We would continue to be buyers of VIVE following its sixth consecutive quarter of double-digit revenue growth driven by increasing system sales and disposable treatment tip unit sales that increased more than 300% sequentially."

Brian Marckx, an analyst with Zacks Small-Cap Research, noted that the 55 units sold were in line with his estimates, but the "1,300 treatment tips was not only more than twice the prior best (522 in Q3 2016), it was also well ahead of our 911 estimate. . .we remain very encouraged that this continues to show a significant ramp given that consumables sales are relatively high-margin and a rough proxy for utilization."

Marckx also noted that "VIVE hopes to eventually gain FDA clearance of the Viveve System for an indication related to the improvement of sexual function—a randomized study for which an IDE application has been submitted and which could commence in the very near term. In the meantime, the initial formal marketing message in the U.S. will be limited for use in general surgical procedures for electrocoagulation and hemostasis, the indication for which the Viveve System (recently rebranded as Geneveve) received FDA clearance in October of last year. However, we expect off-label use related to reduction of vaginal laxity and for the improvement of sexual function both of which were endpoints in the U.S. VIVEVE I study, to drive demand. The informal sexual function-related marketing message was significantly enhanced with the recently published results of the VIVEVE study in the February 2017 issue of the Journal of Sexual Medicine."

"While other energy-based devices targeted to the U.S. vaginal laxity market have preceded Viveve's entry, none are FDA-cleared for an indication related to that use. And, more importantly, the Viveve System is the only device that has demonstrated significant efficacy for the improvement in vaginal laxity and/or sexual function. As clinicians look to and often demand robust clinical evidence (i.e., U.S., multi-site, randomized, sham-controlled studies) as a prerequisite to adoption of a particular device, we believe Viveve will have a meaningful competitive advantage," Marckx added.

International sales have also been important for Viveve. Analyst Marckx noted that the "Viveve System is now cleared for sale in 51 countries with the most recent regulatory approvals coming since the beginning of 2017, which included Colombia, Costa Rica and Malaysia. In addition, regulatory submissions in approximately 14 other countries are currently pending." Jeffrey Cohen reported that "approximately 13% or 7 of the Q4 units were placed in North America where we anticipate continued strong adoption, placements and utilization. Other geographical placements and utilization from Q4 emanated from Asia (68%), Latin America (13%), and Europe (6%)."

Maxim's Vendetti concluded, "Going forward, we believe management's focus on attaining additional regulatory clearances, supporting its global distribution partners, expanding its direct sales force, and investing in market awareness should position [Viveve] for continued growth."

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Additional Disclosures for this Content

Disclosures from Ladenburg Thalmann, Viveve Medical Inc., Feb. 17, 2017
ANALYST CERTIFICATION: I, Jeffrey S. Cohen, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report, provided, however, that:

The research analyst primarily responsible for the preparation of this research report has or will receive compensation based upon various factors, including the volume of trading at the firm in the subject security, as well as the firm’s total revenues, a portion of which is generated by investment banking activities.

COMPANY SPECIFIC DISCLOSURES
Ladenburg Thalmann & Co. Inc. makes a market in Viveve Medical, Inc.

Ladenburg Thalmann & Co. Inc. has managed or co-managed a public offering for Viveve Medical, Inc. within the past 12 months.

Ladenburg Thalmann & Co. Inc received compensation for investment banking services from Viveve Medical, Inc. within the past 12 months.

Ladenburg Thalmann & Co. Inc had an investment banking relationship with Viveve Medical, Inc. within the last 12 months.

Disclosures from Maxim Group, Viveve Medical Inc., Feb. 17, 017
I, Anthony Vendetti, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.

The research analyst(s) primarily responsible for the preparation of this research report have received compensation based upon various factors, including the firm’s total revenues, a portion of which is generated by investment banking activities.

Maxim Group makes a market in Viveve Medical, Inc.

Maxim Group managed/co-managed/acted as placement agent for an offering of the securities for Viveve Medical, Inc. in the past 12 months.

Maxim Group expects to receive or intends to seek compensation for investment banking services from Viveve Medical, Inc. in the next 3 months.

Zacks Small-Cap Research, Viveve Medical Inc., Feb. 21, 201
ANALYST DISCLOSURES
I, Brian Marckx, CFA, hereby certify that the view expressed in this research report accurately reflect my personal views about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the recommendations or views expressed in this research report. I believe the information used for the creation of this report has been obtained from sources I considered to be reliable, but I can neither guarantee nor represent the completeness or accuracy of the information herewith. Such information and the opinions expressed are subject to change without notice.

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