{ "docId": "019dd923-622c-750b-8b98-08d95731b035", "docSlug": "4dea9707af58", "documentTitle": "AtriCure, Inc. (ATRC)", "authorId": "53_Kerrisdale_Capital", "authorName": "Kerrisdale Capital", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2020-09-01 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 19, "pageCount": 34, "prevPage": 18, "nextPage": 20, "slideType": "villain_critique", "function": "name_villain", "density": "overcrowded", "nDataPoints": 6, "notes": "Includes a direct quote from AtriCure CEO Michael Carrel (May 2020) which is then countered by the author's analysis.", "elementsJson": [ "paragraph", "quote_block" ], "metadataConfidence": 0.95, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-08d95731b035/19", "deckHref": "/decks/019dd923-622c-750b-8b98-08d95731b035", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-08d95731b035.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-08d95731b035#slide-19", "components": [ { "bbox": null, "kind": "callout", "text": "Convergent will likely end up like AtriCure's other attempts at expanding the surgical ablation market: foiled by the relentless progress made in the EP lab.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-0396-73da-b906-e9783dc23fc8", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.7, "x": 0.15, "y": 0.85 }, "kind": "paragraph", "text": "The concomitant open heart market, meaning patients who undergo elective open heart surgical procedures such as a bypass or a valve operation and have a pre-existing history of atrial fibrillation...This is a $250 million annual U.S. market opportunity...The important", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "460fabc5-4a69-4a66-8645-cd1434f20581", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.7, "x": 0.15, "y": 0.1 }, "kind": "paragraph", "text": "CONVERGE was lower than the historical experience that had been reported by other Convergent studies, which have ranged from 8-17%. While the increased rate of adverse events in the Convergent arm was not statistically significantly larger than that in the control, the history of documented Convergent studies indicates that the procedure is 2-4 times more likely to result in an adverse safety event than a combined PVI and PW ablation via catheter.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "4ceaee39-60e1-4179-bab2-fa4bf46beb47", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.7, "x": 0.15, "y": 0.25 }, "kind": "paragraph", "text": "Of course, that kind of risk shouldn't be all that surprising – the minimally invasive piece of Convergent is still, in the end, minimally invasive surgery. The patient's abdomen is cut open, and the pericardium is punctured for access to the exterior of the heart. That's certainly an improvement upon open heart surgery, but it's much riskier than sticking a catheter into the heart through the femoral veins. That increased risk is not lost upon the EPs who would need to refer patients for Convergent.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "719dff04-fc74-453f-9680-186298dbca89", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.7, "x": 0.15, "y": 0.4 }, "kind": "paragraph", "text": "EPs will also consider that scheduling procedures 30 days apart needlessly extends the time frame of the more critical PVI procedure (which is the second of the Convergent procedures), and adds a level of logistical complication. Combined with the poor safety record of Convergent and the overwhelming evidence that an endocardial PW ablation is just as effective as a surgical epicardial procedure, we expect that the EP community will react to the final approval of Convergent with a collective shrug. Convergent will likely end up like AtriCure’s other attempts at expanding the surgical ablation market: foiled by the relentless progress made in the EP lab.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c5bf8199-a93a-4d7f-95a1-55174cb7e884", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.25, "w": 0.7, "x": 0.15, "y": 0.55 }, "kind": "quote", "text": "The core business that AtriCure was founded and started on...is the surgical ablation. And that is concomitant with other cardiac surgeries...In the United States alone, there are 300,000 patients that have cardiac surgery. Of those, one-third have Afib. Today, only 25% of those are getting treated. Now, that is a vast improvement though over 10 years ago when 10%. And the reason for that is that we got our device approved through the FDA and PMA. The guidelines changed and we have moved that needle, where we're now treating 20,000 to 25,000 patients per year... Now, it also shows you that there is a big market opportunity on top of that... you get the sense that it's under-penetrated and we've got many years of growth even with the guidelines there. And we are going to bring out new technology to improve the adoption of that from 25%. So hopefully get into 50% and 75% over the coming decade.", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "56a7ec62-6a4a-4014-96fb-decf8cd37cb0", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "The core business that AtriCure was founded and started on...is the surgical ablation. And that is concomitant with other cardiac surgeries...In the United States alone, there are 300,000 patients that have cardiac surgery. Of those, one-third have Afib. Today, only 25% of those are getting treated. Now, that is a vast improvement though over 10 years ago when 10%. And the reason for that is that we got our device approved through the FDA and PMA. The guidelines changed and we have moved that needle, where we're now treating 20,000 to 25,000 patients per year... Now, it also shows you that there is a big market opportunity on top of that... you get the sense that it's under-penetrated and we've got many years of growth even with the guidelines there. And we are going to bring out new technology to improve the adoption of that from 25%. So hopefully get into 50% and 75% over the coming decade. — Michael Carrel, AtriCure CEO, May 12th, 2020", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-0396-73da-b906-efed296ebbd1", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.25, "x": 0.6, "y": 0.8 }, "kind": "source-note", "text": "Michael Carrel, AtriCure CEO, May 12th, 2020", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "65f60c3f-8998-4f18-9dc4-35b032346bcd", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.7, "x": 0.15, "y": 0.49 }, "kind": "title", "text": "The addressable market for AtriCure’s core surgical ablation business is small and saturated, with meager growth prospects", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3267b350-ff0f-41a0-aa4e-d03754b2f307", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "ceo-quote-contradiction", "slug": null, "matchId": "52cada6a-0660-4f17-8d48-6b9364c30b2a", "evidence": "The slide presents a CEO quote followed by a critical analysis of the company's market prospects.", "confidence": 0.9 } ], "arcBeats": [ { "to": 20, "from": 6, "beatId": "4e62a9ca-4c36-4797-a49e-21bad253e137", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "The Struggle", "beatSlug": "overcoming-monster-the-struggle", "evidence": "The document presents various critiques of AtriCure's business model and market prospects", "position": 1, "confidence": 0.8, "parentBeatName": "Development", "parentBeatSlug": "development" } ], "loops": [ { "to": 20, "from": 5, "name": "Pattern Hunter", "slug": "02-pattern-hunter", "bestFor": "Time-pressed audiences, building consensus, when data is strong", "matchId": "ddc2fc5b-a109-4c3d-a59c-6071803a7a20", "evidence": "The document presents various critiques of AtriCure's business model and market prospects", "position": 0, "objective": "To identify patterns in AtriCure's business model and market prospects that indicate a flawed strategy", "structure": "Evidence A -> Evidence B -> Evidence C -> Pattern/Conclusion", "confidence": 0.7, "description": "Group multiple pieces of evidence that together point to a pattern or conclusion" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }