BIOLASE shipping essential materials in coronavirus shutdown

Dental Tribune International

Wed. 1. April 2020

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IRVINE, Calif., U.S.: Limited shipping activities have restarted at the California facility of medical device company BIOLASE, as its technology and consumables are deemed essential supplies for medical professionals.

Todd Norbe, president and CEO of BIOLASE, told analysts in an online conference call that specialty procedures are leading to demand for the company’s consumables, despite the stark disruption and office closures that are happening across dental markets.

Responding to a question in the call, Norbe noted that the majority of these procedures are being undertaken by endodontists, periodontists and oral surgeons: “[You’re] absolutely correct; our technology and lasers are perfect for what they are doing and the ones that are using it as a standard of care around perio treatment also around the root canal process and cleaning the root canal out from an irrigation standpoint.” He said that demand for consumables would continue, at least in the short term.

John Beaver, executive vice president and chief financial officer, commented that “there are dental procedures being performed. We’re actually getting information and requests from our customers to support them on that with the disposable tips orders and service calls. A lot of this revolves around endodontics and we had some late-breaking news yesterday in that we got very comfortable working with the ADA [American Dental Association] and our clinicians to be able to believe that we are a central business under the state of California requirements. And so we have begun very skeletal shifts, keeping social distancing, for some of our workforce. They’ve gone back into the plant now and begun shipping some essential materials that are required as of today.”

General manufacturing and operations at BIOLASE’s headquarters in Irvine have been temporarily halted owing to the March 19 executive order for California’s 40 million residents to shelter in place. Norbe noted that it is not clear how long the order will remain in place and what impact it will have on the company.

Norbe said that sales for the first quarter of 2020 were expected to be significantly down, owing to the closure of dental offices around the world, and that the coronavirus pandemic was likely to dash hopes for revenue improvement at the company this year. “Prior to the coronavirus pandemic, we felt strongly that having filled almost all of our open U.S. sales territories would lead to year-over-year revenue improvement for the last three quarters of 2020; however, whether we can achieve this now depends on how quickly our U.S. and international business returns to some level of normalcy,” he explained.

Progress made in 2019 in commercial transition

BIOLASE in 2019 continued its ongoing transition from being an entity predominantly focused on research and development to a commercially driven business. At $37.8 million, net revenue for the full year ended Dec. 31 was down 18% compared with that from 2018, but gross margin increased by 1% and the company’s operating expenses of $29.9 million were down $7.9 million on the prior year.

Norbe said: “When I joined [in 2018], BIOLASE’s revenue was $46 million and the company was operating with $15 million EBITDA [earnings before interest, taxes, depreciation and amortization] loss. Not only was this unacceptable, it was not sustainable. We successfully pared this back by 30% in 2019 to $10 million while exiting additional top-line revenue.”

The company received U.S. Food and Drug Administration clearance in December for its Epic Hygiene laser for dental hygienists, and in March, BIOLASE received regulatory clearance for Epic’s laser bacterial reduction system for the nonsurgical management of periodontal disease. The company aims at expanding the reach of this technology through increased awareness and improved sales and marketing execution.

BIOLASE is also considering targeting dental support organizations (DSOs) as part of its strategy. In 2019, the first phase of a Waterlase trial was conducted at Heartland Dental, the largest DSO in the U.S. Norbe noted that the trial was a success, and participating clinicians saw a return on investment within a period of five to seven months, based on the revenue generated from laser treatments in areas such as periodontal therapy, treatment of periimplantitis and soft-tissue management.

In the call, Norbe also drew the attention of listeners to a forthcoming study by the McGuire Institute on the clinical efficacy of Waterlase-assisted treatment of periodontitis versus traditional gingival flap surgery, which he said will be published in the Journal of Periodontology in the coming weeks.

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