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As an orthodontist, I suspected that (and took advantage of) ALGN's heavy marketing campain pre IPO for a one day position. However,I am not currently in this stock, and encourage caution with my newfound fellow fools. The concept certainly has mass market appeal, but they have some serious hurdles ahead.

Although they can market directly to the public, Dr.'s are the true market, since the technique must be performed by a licensed orthodontist. There aren't that many of us out there, and ALGN has very few finished results. The company indicates that over half of the orthodontists have taken their training course, yet they rarely discuss how many of these orthodontists are submitting multiple cases to the company. Most of us who straighten teeth for a living are taking a wait and see attitude.

An orthodontist's expense for the technique is double that of conventional braces, thus it has to be passed on. If you pass that kind of expense on to a consumer, the technique had better work, and so far we aren't sure.

More importantly, even the company agrees that this technique will only work for a very limited amount of correction, in very specific patients. I estimate that only 10% of my patients would qualify using the company's case selection criteria. Of that percentage, how many can afford a current price tag that probably will exceed the national average of $3850 for conventional braces.

In fairness to the company, I have not taken their training course yet, but I certainly plan to in the near future. If it turns out that invisalign's work, and there are patients that want to shell out the extra expense to avoid braces, I am as enthused as any to offer the technique. But for the forseable future, I won't be putting my money in this company, they certainly won't be replacing braces.
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I would be interested in knowing where the limitations are in this technology?

The cost is obviously one and that is what will hurt them short term. Eventually, I believe there will be enough mass market appeal that the cost will become reasonable.

Why is it only applicable to 10% of the cases? Why are kids a problem?

My orthodontist is now using the procedure on himself and 4 or 5 other patients. None of the treatments are finished but he is amazed at the results so far and is a string proponent of this "technology". He feels that a lot of its limitations can be removed in the future.

Jeff
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Why are kids a problem?

According to the patent analysis, it is explained that kids' teeth are too hard to predict what they will do for the 3D Computer Simulation software that ALGN uses to create the series of plastic moldings used to gradually move the patient's teeth.

I got this information from an earlier post containing a link an analysis of their patent.

...Danny
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I would think that all orthodontists would jump at this new technique.
Low 'startup' costs: The training is only one day and the one-time cost of the dental impression machine is only $600.

Larger Market: It seems that many more adults would be willing to pay the extra amount for the "invisible" braces. Look how many are going for the laser techniques so they don't need to wear eye glasses.

Higher patient through put leads to higher revenue: With no tightening of wires and bands, how much time needs to be spent with ALGN patients during treatment? 5 minutes/month?

Lower Overhead Costs leads to higher profit: The 'material' costs might be higher then the bands and wires but this can be passed on directly to the patient. By spreading the office overhead to more patients, the existing fixed costs could be leveraged to the max.

I'm not invested into ALGN yet but giving it serious thought. I am concerned about the limited IP they seem to have and their ability to reduce the manufacturing costs. They seem to be burning a lot of cash lately.


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Most useful insight, thank you. This is a wait and see, profit takers have swept through and there just isn't enough market to keep it from free falling. It is worth watching however, market appeal is indeed not to be discounted. As you mention, final results are still pending.
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thanigan: I'm wondering if you did finally take their training course, and if so, what you thought and whether you followed up.

I've done a bit of reading recently and placed a number of posts on the yahoo ALGN board in case anybody is interested.
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