Force Feedback Instruments - More Lives

Now this small FDA 510K update may have passed through mainly un-noticed. Back in early March the FDA document LINK had some small but - for me - very significant changes. I didn't see the company announce this anywhere - but this week it caught my eye.

Let me give a bit of background on Intuitive's force feedback instruments

With the Da Vinci 5 - the company launched the first of their force feedback instruments. These instruments are clearly harder to make - incorporate sensors and different "Gubbings" yes that is a technical term my dad (who wan an engineer) taught me. That makes them a bit more complex and clearly more expensive to make. They are not the same as the current Xi standard instruments that we all love and know. I suspect they are much harder to make, more expensive to make. And require that precision and control within very tight tolerances to ensure that what they grab is what is measured in force is what is transmitted to the force gauge and fed back to the user. I won't go into it now - but it is F'in hard to do. But more so F'in hard to do well so that what the user experiences is meaningful and not distracting (or worse.) See my blogs on Force Feedback instruments here - and here

Now one thing to note. When instruments first come out - the companies are often cautious about how many times they can be used before they lose performance. They are cautious about how they can be cleaned to remove all of the biomass. In instruments that aim to transmit force feedback it is really ensuring high fidelity force measurement on use number one and the last use is equally precise. To collect that data from the real world, and do the bench-top testing takes time. It just is! You cannot shortcut this stuff.

Increase in lives and why it's important

The March 510K update ushered in quietly and with no fanfare from Intuitive (** Update Note Dave Rosa did mention it during the investor update) . I'm not sure why they would not have made more of this than just an investor update, but maybe they just felt they didn't need to.

I have no official data; and the original 510K and the current 510k only say "increasing the maximum uses and cycle." - I paraphrase.

Here's where my sleuthery starts to get a bit wonky - so anyone with better data please correct me. This is the timeline and data I could get my dear friend Chat GPT to dig up. ***Update - during the call they mentioned all instruments now moved to 15 lives and 10 lives for the suture cut ***

For me this is highly significant and let me explain why.

You have to remember that despite how many times an instrument is used the cost of goods is the same. And for each use you can only get so much revenue for that use (either by selling the instrument outright or charging on a pay per case use.)

For the uninitiated: If an instrument costs me $300 to make - and I can only make $300 per use (on say a cost per click model) I net at $0 profit on a single use. If that is the only life it can have - I basically did a lot of work for nothing.

So moving from 1 life to 2 lives - means I go from $0 profit to $300 profit and so forth. So every life I can add on... I get a whopping $300 more profit). You see why lives are important especially in pay per case models.

(no these are not real numbers - I'm showing an example and why lives matter.)

**Technical pause: Lives and sterilisation cycles often differ. Lives being lower. Why? Because every time you clean and sterilise it you still induce wear to components (think seals - plastic etc). But if it was opened and not used it has less wear.

The using of it causes a lot more wear and tear.

You care a lot about this in PPC models as if I'm not paying for each instrument I'm more likely to open one - even if I don't use it - just in case The use is triggered when it is attached to the robot not when it is opened. So it is critical to have lives and then a higher number of sterilisation cycles. Especially as you don't charge for the opening - only the use. **

Every increase of an instrument life makes the razor - razorblade model work better. It also means that the company (if they choose) can become more flexible on pricing - as the margins now work better. They can start to move from Force Feedback being a "luxury" to a more standard use case. And that adds value to the DV5 architecture vs Xi architecture. It also allows a deeper moat - as more surgeons get onto the force feedback the more daylight they put between da Vinci instruments and other companies instruments.

The Krinko factor?

If you don't know - Krinko are sterilisation and cleaning recommendations (reality they are followed not just recommendations) specific to Germany. For lap and robotic instruments they request super high levels of bio-burden removal to tiny amounts.

I think nearly every company to date has had issues with getting the German approval and passing the test. Most companies have had to modify their instrument design to improve cleaning and flushing out bio-burden.

This is wild speculation - but I do imagine that Intuitive might have had to do some design changes as well to meet those standards. Because I do note that in the same 510K

There have been changes to the product design. Now that could be simply to come to meet the FDA standards after they got instruments back and realised they needed changing to be able to hit multiple lives / cycles under FDA. But having lived the KRINKO nightmare - and seeing recent CE mark clearance of DV5 - I cannot help but think this is all intertwined.

Bottom line for me (or rather them)

What do I read from this and why do I care?

For me these small updates actually show something very telling about a company and how much they understand about the 360' of the robotics world.

Firstly - I think (guess) Intuitive launched with an MVP version of Force Feedback - with low lives and were willing to eat the margins to learn. Find out fast in the real world. That to me is smart.

I think they had a plan. The rapid succession of 510Ks to get lives up comes from experience. They know you eat an elephant in small bites. Get out - learn at minimal lives - increment - increase lives - improve design.

They are on a journey with force feedback - and my guess - they want to get lives up and costs down and make these the standard of care going forwards. Force Feedback done well is hard! They know they have a lead over the other big companies, and I feel they will want to make that moat of force feedback universally available. If every user gets real benefit from force feedback - they won't go back to some other companies non-force feedback instruments.

I think they get several benefits from force feedback:

a) To protect their leadership

b) To protect selling prices (justify the higher ASP vs market decline)

c) To collect force feedback data - this is AI training data par excellence

d) I do believe they will see better outcomes (as a physiologist)

e) Easier and faster learning curve to proficiency for new users

What I suspect this also does is make big improvements to margins. One of the biggest levers you can pull in the razor - razorblade model when you do lease deals - pay per use - etc is to get the number of lives up. Every increase on lives has a massive (almost disproportionate impact on bottom line.) It also means you can fully justify to any customers buying the instruments the price and "cost per case" analysis.

Small update - big impact.

These are just musings and speculations by the author purely for educational purposes only.