COVER STORY

In the medical device industry, blazing a successful trail into uncharted technological and clinical areas sometimes takes a couple of tries. Such has been the case for Stereotaxis Inc. (St. Louis), a company that started out trying to address clinical needs in the neurology market and has wound up creating a powerful niche in cardiology.

Stereotaxis and its corporate partners have developed innovative technologies that enable physicians to deliver treatment by navigating proprietary catheters, guidewires, and other delivery devices—using computer-controlled, externally applied magnetic fields—through blood vessels and chambers of the heart to targeted sites. To date, the company has sold more than 120 of its systems, and clinicians' use of the system has climbed to more than 10,000 procedures.

But according to Stereotaxis president and CEO Bevil J. Hogg, current uses of the company's system are just the tip of a much-larger iceberg of potential applications. Stereotaxis believes that its system is the platform that will improve the interventional cardiologist's performance of coronary and peripheral interventions, and that it can also serve important roles in cell therapy delivery, mitral valve repair, and other difficult structural heart procedures.

Today, with the number of installed systems increasing steadily and adoption by clinicians growing rapidly, Stereotaxis is continuing its constant march toward profitability—despite the emergence of a formidable competitor in its sector. In this interview with MX editor-in-chief Steve Halasey, Hogg discusses how Stereotaxis's relationships with key thought leaders in electrophysiology and interventional cardiology have helped to shape the company's system, as well as where the company is directing its next efforts on the trail to success.

MX: The clinical need for guiding ablation catheters isn't hard to understand. But how did the concept first come to the attention of Stereotaxis?

Bevil J. Hogg: The technology developed as an extension of work initially done in neurosurgery. Stereotaxis was founded in 1988 by neurosurgeons out of the University of Virginia. These neurosurgeons conceptualized a strategy for using remote magnetic fields to navigate and propel an implant in the brain. That concept was the genesis for the company.

As it turned out, developing the concept was easier than executing it. When I joined the company in 1997, the neuro application struck me as one that was delivering a complex solution to a relatively small market opportunity. After all, even today, 10 years later, there are very few deliverables-be it drugs, stem cells, or other agents-that have been approved for use in the brain. So Stereotaxis was initially focused on a very sophisticated and expensive delivery mechanism that didn't have much to deliver. However, there were lots of applications that the technology could deliver in the cardiac arena, and it was a natural extension to apply it to catheters and guidewires, such as ablation catheters being used for electrophysiology to treat electrical disorders or arrhythmias, and guidewires being used to deliver stents for angioplasty procedures.

How did the founders of the company—the neurosurgeons out of the University of Virginia-go about building a company out of their idea?

Because they were clinicians, they didn't initially think of it as building a company, but more like a grand science project. The founders included three individuals: Matthew Howard, MD, who is currently chair of neurosurgery at the University of Iowa; Sean Grady, MD, who is currently chair of neurosurgery at the University of Pennsylvania; and Rogers C. Ritter, PhD, who is a professor emeritus of gravitational physics at the University of Virginia.

Howard and Grady approached Ritter with the idea of using powerful magnetic fields to propel an implant in the brain. That's how the development of the technology started. But it was only when they teamed up with Sanderling Ventures—a venture capital firm interested in early-stage investments—that the concept really got off the ground. A lot of venture capitalists are more interested in later-stage ideas. The Stereotaxis founders had a very early-stage concept, but the managing partners at Sanderling Ventures—Robert McNeil, PhD, and Fred Middleton—were interested. They provided the company with some seed funding in the very early 1990s.

At that point, the company migrated to St. Louis through a connection with Ralph Dacey, MD, who was chair of neurosurgery at Washington University Medical School's Barnes Hospital. He arranged for the first installation of the Stereotaxis system at Washington University in the early 1990s.

When I came into the picture in 1997, the company had a handful of scientists, a great idea, and a wonderful platform technology that was able to deliver devices through complex pathways with extreme accuracy. At that point, the company didn't have much in the way of funding, but there were some interested venture capital firms, such as Gateway Ventures (St. Louis), Alafi Capital (Berkeley, CA), Ampersand Ventures (Wellesley, MA), Advent International (Boston), and CID Equity Partners (Indianapolis).

Technology Development

When you joined the company, had the company already registered a lot of its intellectual property or was it still in the realm of trade secrets?

The company had registered a tremendous amount of intellectual property. But most of it was in the neuro arena. So as the technology evolved and extended into the cardiac arena, new intellectual property was written under my direction. Since then, the company has generated more than 100 patent applications, with 40 or more patents granted.

It must have been difficult to convince the company to go after cardiology applications rather than neurology applications. How did you get people to accept that shift?

I was fairly familiar with how venture capitalists think, and I've never met one who wasn't interested in expanding the scope of their technology investment to encompass new areas. So I simply told them that we were dealing with a platform technology and that there was a lot of potential in cardiology. We planned to pursue cardiology in parallel with neuro applications. We did that for a year or two, but pretty soon it became obvious that we had a very powerful engine on the cardiology side. Those applications were beginning to fire on several cylinders, and it became clear that the neuro applications—although very interesting from a scientific standpoint—didn't carry much commercial weight.

The evolution explains the company name, Stereotaxis—that term was originally a neurology term.

Yes. We wanted to change it, but there was so much equity in it by then that it just wasn't worth the trouble.

It doesn't seem that the system Stereotaxis was developing would require a lot of technological modification in order to make it work in cardiac applications. But there must still have been a considerable grinding of gears when the company refocused its efforts to create a cardiology system instead of a neurology system.

There was a huge amount of gear grinding. The solution we bring to interventional medicine uses existing elements of a cath lab, which includes an x-ray system, a table and monitors, and various diagnostic devices. Integrating those elements with our magnets required partnerships with Siemens Medical Solutions (Malvern, PA) and, later, Philips Medical Systems (Andover, MA). Those two companies control about two-thirds of the cath lab x-ray systems in the world.

Siemens made an investment in our company, but we were still faced with the challenge of developing a range of devices suitable for cardiac applications. These included guidewires and catheters. Ablation catheters for electrophysiology are very complex because they have a lot of intellectual property wrapped around them. They face a challenging regulatory pathway because the devices ablate tissue in the heart. So rather than tackle that challenge on our own, Stereotaxis partnered with Biosense Webster Inc. (Diamond Bar, CA), a Johnson & Johnson company, which also invested in Stereotaxis.

So we leveraged our partnerships with Philips, Siemens, and J&J to our mutual advantage. But on our side, we had to develop different magnet systems, different software, and different user interfaces, and somehow get all of these disparate elements of the lab to deliver an integrated solution.

The Stereotaxis system is a complex system. Can you briefly describe the functions and features of the system's major components?

The solution is a complex one in the sense that an interventional electrophysiology room is a complex environment. Clinicians cannot see inside the body directly as they would in regular surgery. So in order to map the body and define navigational pathways and positions for the catheter or other delivery devices, clinicians need a lot of imaging and positional information, which comes in the form of x-rays, ultrasound, cardiac mapping systems, or cardiac pacing systems.

All of these various imaging and diagnostic systems already exist in labs everywhere whether or not they have a Stereotaxis system. Electrophysiologists can be thought of as engineers as well as surgeons—they're used to working with a lot of complex equipment. The closest analogy to a cath lab would be an aircraft cockpit. A pilot who's flying a modern jet is surrounded by lots of instruments that tell the pilot what's going on, including pilot systems, radar systems, and global positioning systems. There's a lot of computational horsepower in the plane. Likewise, in the lab, a tremendous amount of complex instrumentation is required to guide the clinician in delivering therapy.

Keeping in mind the complexity of that environment, we developed a system that integrates all of these devices and information sources in the cath lab. It provides a simpler, integrated solution that enables the clinician to see what's happening as the catheter moves along a predesignated navigational pathway that he or she has defined using third-party diagnostic or imaging equipment.

How would you break out the various components of that system?

The imaging component exists in every interventional lab and cath lab today. Worldwide, there are millions of interventional procedures done manually every year. In a manual lab, clinicians have an imaging system, a table, monitors, other diagnostic and monitoring systems, and a catheter. They may have several different kinds of catheters.

In electrophysiology, clinicians typically introduce the catheter at the level of the femoral artery and then manually navigate that catheter into the heart to deliver therapy. The catheter is then used to ablate the source of the errant electricity that is creating the cardiac arrhythmia.

In building on the traditional manual procedure, we introduced two large magnets—one on either side of the patient—and substituted a magnetic-tipped catheter for the manual catheter. And when the magnetic catheter is introduced in the same fashion as a manual one, it can be controlled using the external magnetic field that we're able to generate with the two computer-driven magnets. And because we know the position of the catheter inside the body relative to the external magnets, we can calculate the force. We can also define algorithms to orient the tip of the catheter by orienting the external magnets. This enables clinicians to develop a large number of navigational strategies.

All of this is controlled through a simple user interface, a single over-sized flat computer screen with a mouse or a joystick positioned bedside or—more typically—in the control room outside the lab. This user interface can then be networked through a private network to a clinical call center located at Stereotaxis's facility in St. Louis.

Are there benefits to the healthcare provider in not being exposed to the forces being used in the lab?

Yes. Positioned in the control room, the physician isn't exposed to x-rays. The magnetic fields our system generates are very benign—on the order of 10 times less powerful than a typical magnetic resonance imaging field, which is, in itself, very safe. But the clinician is able to avoid exposure to x-ray, and therefore doesn't have to wear the typical 30 to 35 lb of lead shielding while doing the procedure.

The other benefits are numerous. The system provides the ability to achieve greater levels of accuracy, the ability to automate the procedure, and the ability to navigate more complex locations within the heart. The catheters are very flexible and soft because they don't have a mechanical manual control mechanism within them. Thus, they are potentially atraumatic.

What have been the key challenges-and key achievements-in creating the Stereotaxis system?

The most important thing in conceptualizing new technologies is to establish whether they work. Concepts that appear to work well in the laboratory do not always work well in the human body or in the clinic.

At this point, the Stereotaxis system has been used in more than 10,000 cases, and the vast majority of procedures have been done safely and effectively. We have established a track record as a company that provides a means for simplifying complex procedures. This is important because as more complex procedures are undertaken in interventional medicine, it's a challenge to find clinicians who can do them and who can do them in sufficient volume to be able to satisfy the demand. For example, today there are at least 5 million people, if not more, suffering from atrial fibrillation. There are many more diagnosed every year—perhaps as many as 500,000 a year. The drug treatment available to them is only palliative, and is therefore not satisfactory or curative in our minds or in the minds of most patients. Those patients are looking to be treated with a definitive curative treatment.

So the demand for procedures is significant. But the complexity of the procedures is equally significant. The Stereotaxis system doesn't just remove clinicians from the x-ray field; it enables them to undertake very complex procedures with a greater level of precision and ease. It enables them to undertake more-complex procedures than they might otherwise, and do them effectively and safely.

What additional technological developments are under way or are already being contemplated?

Interventional medicine can be divided into plumbing and electricity. Plumbing problems are caused by disease in the veins and arteries and typically require the delivery of stents, which are used to unblock those blood vessels. Electrical problems are caused by irregular electrical currents in the heart, and fall under the auspices of electrophysiology.

We have focused most of our efforts and energies on developing solutions for electrophysiology and positioning and delivering catheters safely, efficiently, and effectively. In recent years, our work has started to focus on the delivery of guidewires to solve plumbing problems as well. A guidewire is a very thin wire that can be navigated through the blood vessel either manually or using our system. In difficult, complex anatomy, it can become problematic to deliver these guidewires manually, and this is where we believe we can bring real value to the procedure.

Stents and pacemaker leads are placed over the guidewires, making the guidewire essentially a delivery vehicle. Stereotaxis has spent a lot of energy, money, time, and talent on expanding its platform to include guidewire delivery. In October, at the annual Transcatheter Cardiovascular Therapeutics (TCT) conference in Washington, DC, we demonstrated some of our guidewire delivery solutions for patients with complex vascular problems. These include solutions for diabetics with blocked vessels in the lower extremities as well as people whose coronary arteries are chronically and totally blocked, making them difficult to navigate.

Developing the guidewire solutions has required the development of new tools, new software, and new imaging capabilities. It's a very broad extension of our platform; there are millions of these procedures done annually.

Are you using your previous model of partnering with other companies as you expand into some of these new areas?

We're very interested in doing so. There's a difference between the two situations, though. For example, in our J&J electrophysiology partnership, J&J builds catheters, they are used in our system, and we get paid a royalty for the business opportunity. But in interventional cardiology, which typically comprises opening and scaffolding blood vessels, the guidewire is a universal delivery vehicle. Most companies' products can be delivered over most guidewires. So our system already complements guidewire delivery without the need for adaptation based on a specific company's technology. Our guidewires can deliver stents that are sold by J&J, Boston Scientific, Medtronic, and others.

In the peripheral vasculature, we believe that our wire navigational techniques and technology would be complementary to the technology developed by companies such as FoxHollow Technologies Inc.—which was recently acquired by ev3 Inc. (Plymouth, MN)—as well as Spectranetics (Colorado Springs, CO) and others. At the end of the day, we will always get a better result if we partner with somebody with expertise in our targeted clinical arena of interest.

What is the company's strategy for protecting its IP in other areas?

Stereotaxis has so much basic IP in the field of magnetic navigation that we don't think it's likely that another company could easily duplicate our technology. We file patents rather than keeping information as a trade secret—we don't think we're giving away the formula for Coca-Cola. People can see how our system works. But we have very comprehensive patent protection in the field of magnetic navigation.

Most of our recent patents have been written around software solutions and the process for integrating our system with other systems. With our system, when you integrate one and two, you end up with more than three. Our company creates incremental value through greater integration because it makes the system easier for the operators.

How much of Stereotaxis's manufacturing is outsourced? What functions do you outsource, why do you outsource them, and to whom?

We don't claim to be manufacturing experts. There are big companies out there that have the manufacturing facilities and know-how that we can leverage. So we outsource virtually everything. Our guidewire manufacturing is outsourced to Lake Region Manufacturing Inc. (Chaska, MN), a large manufacturer with experience in guidewires and other medical devices. Our magnet systems and electronic components are also outsourced to large contract manufacturing firms.

Stereotaxis's core in-house activities are centered on software development and design, and on the development of new solutions. Such new solutions obviously require new components and products, the manufacturing of which we can then outsource.

Money Matters

How many funding rounds did Stereotaxis go through in its early years?

There were at least six or seven different funding rounds.

When Stereotaxis switched its focus from neuro to cardiology, were you worried about endangering the company's relationship with existing investors?

I think we're in a position that's fairly unique among medical device companies with venture backing because the vast majority of our original venture capital investors are still invested in the company. The fact that they've maintained their investments over an almost 15-year period says something about their level of confidence in the company and its technology. I think it's almost unprecedented.

Did you have to work hard to garner that confidence or do your investors have a pretty strong understanding of the technology?

There are very few stupid venture capitalists out there, particularly among the ones that have been around a long time. Our company still has to be able to tell a story, show a vision, and back it with a compelling reality. And we've done this successfully. Obviously many of our investors have their own visions as to where our technology could go because that's what venture capitalists are—they're visionaries.

If you combine their game plan for us with our game plan for ourselves—and throw in a strong dose of performance—you have a formula not just for contentment, but for continued engagement.

How has Stereotaxis prioritized the need to invest in R&D, and sales and marketing? How much does the company currently spend in these areas?

As of the last time we reported earnings, we were spending somewhere around $25 million a year in R&D. I can't talk to what we're currently spending because it's not all public. But I would think that the $25 million figure would be pretty close to our peak in R&D spending. And last year that represented close to 100% of our revenues. This year, R&D spending has been lower, and will continue to be progressively lower in the years to come as we strive for profitability.

Between sales and marketing and R&D, how do you handle the strain of figuring out where to invest the company's funds?

I learned a healthy lesson early in my career. I cofounded Trek Bicycle Corp. when I was young and naïve. But fortunately, I had good backers. I was in my late 20s, and at that point, I put a lot of weight and value on being the technology leader in the industry. The advice that I got at that time—which was excellent advice—was that there's a time to slow down on the technology and put money into sales and marketing. The lesson was lost on me at that time. I didn't listen very closely and, in fact, I left Trek and ended up founding a bicycle company called Kestrel, which was much more sophisticated from a technology standpoint; it was one of the first companies in the world to manufacture carbon fiber bicycle frames.

Trek went on without me. Its revenues grew to probably close to half a billion annually, and the company did this mainly through investments in sales and marketing. Witnessing such success from the outside made me realize how important it is to make that transition from technology to sales and marketing.

It was a good early life lesson that taught me to not get too caught up in the technology. Executives have to avoid falling too deeply in love with the product and remember that customers don't automatically line up to buy things. You have to go out, find customers, and convince them of the value you can bring to them. That requires competency in sales, distribution, and marketing.

That's a lot of background for a simple answer. In short, we are consciously winding up our sales and marketing efforts.

Stereotaxis went public in 2004, and its opening share price was about $8. How did the market receive the IPO and how has the company stock performed since then?

As of mid-October, the company's stock price was close to $14. So it's up, not down. But it was a difficult IPO. The company faced a very unreceptive market at a very unreceptive time of the year. We went out in August, and the IPO window was not widely open at that time of year. So we had a difficult struggle to get the IPO done.

In retrospect, the valuation was fair. I don't think we could have done better given the fact that no one in the marketplace knew who we were. Nobody knew what robotic interventional navigation was. Intuitive Surgical (Sunnyvale, CA ), another player in robotic-assisted minimally invasive surgery, hadn't made its big move in the market yet. So investors at that time didn't have stars in their eyes when they looked at the market opportunity for robotics.

Thus, Stereotaxis faced a lot of skepticism. And my background in bicycles and, later, wheelchairs was hardly one to make me a celebrity CEO on the IPO circuit. But at the end of the day we did successfully execute the offering. And here we are today with a share price that is significantly above the IPO price. And hopefully it has more room to grow.

Although Stereotaxis has been around for 17 years, the company still hasn't made a profit. But things seem to be changing. As sales and adoption ramp up, do you expect to see not only a crossing into profitability but also a corresponding boost in your share price?

Our share price is determined by a lot of factors that are not just about our bottom line. There are psychological factors at play, and we have competition in the form of Hansen Medical (Mountain View, CA), whose CEO was also involved in the founding of Intuitive Surgical.

In some ways, I think that competitive hyperbole has had a dampening effect on our share price that is completely unwarranted by our performance or by our technology. But that being said, we're from Missouri, which is the Show-Me State. So we've focused on delivering strong financial performance, and we will continue to do so. We recognize that our company does have to be profitable. Profitability is the only true way to value a company in any space. We haven't made a specific forecast as to when we expect to become profitable, but we're certainly heading in that direction. And we're mindful of the steps we need to take to achieve profitability and of the inherent lumpiness in our sales cycle.

What is the company's reimbursement status with regard to the Centers for Medicare and Medicaid Services and other third-party payers?

Because Stereotaxis is providing a piece of equipment that uses existing devices and is used in existing procedures, the technology is covered by existing reimbursement practices. Many companies that develop devices later seek new reimbursement to pay for those devices. We don't. We sell ourselves to hospitals on the basis of being able to save them money or make them money over time by either reducing the cost associated with running their electrophysiology labs or enabling them to accommodate more patients and perform more procedures. So our argument to our customer—the hospital CEO—is built up around the economic value that we bring to the hospital. We are not expecting to be favored by any particular changes in reimbursement.

When the Sterotaxis system is introduced into new applications, does that take the company into a slightly different world in which it might have to get new coding for its applications?

No. We are doing existing procedures better. We're not pioneering new therapy. It would be nice to successfully argue that we should be paid more money because our system saves money and enables more patients to be treated at lower cost to society. But that's a difficult argument to make—to say we should be reimbursed more money because we save money. So it's not one that we are putting any energy into at this point.

Clinical Adoption

What role have healthcare professionals played in the development and adoption of Stereotaxis's products?

Like most healthcare companies, we have lots of stakeholders. It's sometimes difficult to define a company's true customer base. Is your customer the government because it reimburses your products? Is your customer the hospital CEO or hospital administration? Is your customer your shareholders?

The most important group of stakeholders that Stereotaxis deals with is clinicians. They are the backbone of our company. We have sold more than 120 systems worldwide, many of which have gone to the top electrophysiology labs in the world. The 10,000 cases that have been done with our system have been done by very experienced thought leaders in the field.

We continue to put a huge amount of emphasis on clinical support and training, as well as improvements in our software and basic technology. These efforts are all focused on meeting the requirements of our principal stakeholder, which is the clinician. Our ability to sell systems is driven by word of mouth and the endorsement of the professionals who use our system. I can stand on Wall Street and say whatever I want. But at the end of the day, the only thing that counts is whether clinicians are using our system and whether they're happy with it.

To bring about that word of mouth, are you working with medical specialty societies? Do you have a formal scientific advisory board or work with a defined set of key opinion leaders? Or is it a little bit more rough and ready?

It's pretty much all of the above, though it's not rough and ready at all. We have multiple scientific advisory boards. We have identified key opinion leaders and thought leaders in the electrophysiology world, and we're working with all of them intensively to develop new concepts, to pursue new evidence in research, and to improve our techniques, processes, and products. These constant, ongoing efforts are the lifeblood of our company. So that's where our principal focus lies. That's where I and the rest of the company's senior management spend much of our time.

Are those key opinion leaders involved in conducting clinical research on the Stereotaxis system?

Some of them are conducting clinical research with us. Some of them are doing it independently. We have a fairly balanced mix of commercial hospitals and research institutions. Public institutions, especially in Europe, are becoming increasingly involved in conducting private research.

So there's an even blending of research being done. We've got to be sure that we're getting the research we need done and that we are leveraging such research in order to gain a better understanding of the value that we bring to the lab. So we're not only focused on medical or scientific research, but also on economic research. After all, part of our value proposition is economic.

The cost-effectiveness of the Stereotaxis system is something that we're looking into with help from clinicians. We're evaluating the length of the procedure, the number of staff required, the number of disposables used, and the cost of those disposables.

How long will it take for the company to begin penetrating all of the interventional medicine markets in which it has an interest?

We're interested in finding customers in electrophysiology. That is still our principal focus. Many of our key institutions are visited by clinicians and administrators from hospitals all around the world—from Japan, India, China, the United States, and European countries. Our presence at key institutions gives us a huge amount of exposure among electrophysiologists, which is the customer pool of greatest interest to us. We value the exposure to new prospects who might acquire our system based on their visit to an existing institution that's using one and is satisfied with it.

At the same time, we have started to put together scientific advisory boards and are working with thought leaders in the vascular arena, which comprises coronary work and peripheral work. Since peripheral vascular areas are a natural fit for our technology, we presented some of our prospective solutions at TCT this year.

Beyond vascular, there are a host of other potential applications, which could include pulmonary or gastrointestinal activities. But the vascular arena itself is very large. Not just cardiovascular, but peripheral and neurovascular. There is enough business there to keep several companies working for a very long time.

Stereotaxis has one key competitor in the market, Hansen Medical, which went public last November at about $12 and is now trading at more than $30. But I gather from your last comment that you don't feel particularly threatened by its emergence in your key field.

Given the size of the markets that are out there, there's room for more than one player in this market. But we do not see much clinical activity around Hansen. And it's what the clinicians say that matters most. I'm sure the leaders at Hansen are capable people, but the path they've chosen is not the approach we've taken or intend to take. It is our understanding that their system requires the operator to remain in the x-ray field, for instance, covered in lead, with a two-dimensional view of the catheter's location, while we position the operator in a control room with a three-dimensional view. We believe we have the superior technology, and we're very close to the key thought leaders in the field. So long as we are the leader in the clinic and in the hearts and minds of the clinicians, we're not concerned about Hansen.

Growing into the Future

As an emerging company, how has Stereotaxis benefited from its membership in industry association AdvaMed?

We look to the association to provide rules for clinical conduct and clinical behavior. And we try to emulate the best practices that are disseminated by or through AdvaMed. That's probably the principal benefit our company receives from its membership. It's important to be able to look at a group of other companies in the industry to compare our best practices and be certain we are abreast of the latest developments across the industry.

Are there particular areas related to the medical device industry—for instance, IP management, regulatory affairs, reimbursement, or international policy—that you find especially challenging for small medical device companies?

Regulatory affairs are no more challenging for us than they are for big companies. Stereotaxis has a large regulatory department, and it's well staffed and competently run. And frankly, we have found FDA to be tremendously accommodating. Obviously, they have a job to do, but they seem to do it well. We don't believe that we have been discriminated against because of our size.

Where size matters—apart from the obvious advantages of having more cash available—is in trying to develop a global footprint. As a small company, it's hard to envision providing technical support and service to a Stereotaxis system in Russia, for example. So in order to satisfy our customers in countries like Russia, Saudi Arabia, and Turkey, we have to partner with companies like Siemens and rely on their worldwide distribution, sales, technical service, and other capabilities. Of course, gaining access to those capabilities costs money, which puts smaller companies at a disadvantage since we'd be challenged to perform those functions ourselves.

How important is it for Stereotaxis to be able to maintain its status as an independent company? What factors would influence the company to consider selling to a larger company?

That's a question to be answered by all of our shareholders, or at least a majority of them. Stereotaxis has a lot of potential to grow its business independently, and it has the potential to grow its share price independently. There's a lot for us to accomplish, including achievement of profitability.

A company can create a lot of value in a fairly short amount of time compared with the tremendously long time that it can take to build a technology. Stereotaxis could be acquired like any other public company, and if it is, we hope it would attract a premium price. But an acquisition is not in our game plan for the near future, and we would like to have an opportunity to go about the business of creating significant value before that would occur.

What do you consider to be the most important factors that will contribute to the advancement and success of Stereotaxis and its technology?

Continued clinical success is first and foremost. In other words, our principal stakeholders, the clinicians, have to be satisfied with what we're giving them. We have to be attuned to what they want. We can't listen to our own wishful thinking—we have to hear what they're really telling us; that is an essential ingredient for success. If we remember who our customers are and we listen to them—and do our utmost to respond to their needs—I believe we'll be very successful.

Copyright ©2007 MX