Sign up to SCR Digest, our FREE weekly newsletter, and receive our Notes emailed directly to you.
Email Address *
First Name
Mailing Lists *

SNWV: Initiates U.S. dermaPACE Roll-Out Strategy

By Brian Marckx, CFA


During the dermaPACE FDA approval update call in early January SANUWVAE’s (OTC:SNWV) management provided a framework of their initial U.S. commercialization strategy – the focus was on operational and financial efficiency, that is, to be able to quickly come to market and to do so in a shareholder-friendly fashion.  The plan included securing non-dilutive financing and then commencing sales through already-established relationships.  

SNWV has already made substantive progress in both areas.  On February 12th they announced consummation of a $1M equipment financing line (terms not disclosed) with NFS Leasing.  This equipment financing relates to units in which SNWV retains ownership to and which will be placed (domestically) as part of the company’s per-procedure revenue model.  Given that the equipment financing, like credit lines, will charge on incremental draws, it should be more cost-efficient than an outright debt sale and less dilutive than an equity raise.  It also helps to temper additional balance sheet risk, particularly given the significant uncertainty surrounding initial rates of adoption and utilization of dermaPACE.  Ideally it also affords time to produce additional operational and revenue-generating progress which should, in-turn, result in higher market valuation and limit any shareholder dilution in the event SNWV looks to raise equity-based capital in the future.

As it relates to their initial U.S.-based dermaPACE sales efforts – the following day SNWV announced a commercialization partnership with Premier Shockwave focused on the VA, Indian Health Service (HIS) and U.S. military treatment facilities.  Relative to Premier’s capabilities in reaching these markets, SNWV’s press release notes that, “Premier Shockwave, Inc. is the leading shockwave company for podiatric and orthopedic applications in the United States and currently serves over 30 VA Hospitals and Military Treatment Facilities in the continental United States and Alaska.”    

SNWV has had a long relationship with Premier Shockwave, which currently offers orthopedic pain therapy (for ailments such as tennis elbow and plantar fasciitis) via treatment with SANUWAVE’s OssaTron device.  Mike Stolarski, principal of Premier, has similarly had a long relationship with SNWV, including serving (from 2005 – 2008) as the company’s V.P. of Business Development prior to joining SNWV’s board of directors in 2016.

Under this new deal, Premier will purchase the dermaPACE equipment from SNWV and then be responsible for placing the machines.  Per-procedure revenue will be split between SNWV and Premier.  While detailed terms were not disclosed, we think a small margin on the equipment and somewhere in the range of 5% - 15% of the per-procedure fee would not be unreasonable for SNWV.    

Per the P.R., the agreement calls for Premier to purchase at least 100 units over three years.  Entry into the VA channel will first require acceptance on the GSA Schedules.  IHS’s Biomedical Equipment Governance Committees oversee medical equipment purchasing and related decisions for that organization.  We hope to know more about anticipated timelines related to initial sales to Premier as well as expectations as to when launch into these channels might start.

While we think this partnership could (over time) prove meaningful from a revenue, cash flow and margin perspective, news of the deal has not prompted us to make any changes to our model.  More significant, at least in the very near-term, is that the partnership might facilitate initial entry of dermaPACE into the U.S., provide early awareness and, hopefully, begin to generate clinical experience.  Positive clinical experience and usage can be critical in helping to drive further adoption as well as (eventually) for reimbursement-related purposes.    


SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR. 

DISCLOSURE: Zacks SCR has received compensation from the issuer directly or from an investor relations consulting firm, engaged by the issuer, for providing research coverage for a period of no less than one year. Research articles, as seen here, are part of the service Zacks provides and Zacks receives quarterly payments totaling a maximum fee of $30,000 annually for these services. Full Disclaimer HERE.
User ID:
Remember my ID: