Dextera Surgical Inc (NASDAQ:DXTR)'s Target Numbers Suggest Growth

Dextera Surgical Inc (NASDAQ:DXTR) is up more than 120% so far this week, on a corporate update put out by management to address the fiscal 2017 sales of its lead asset. If the numbers outlined in the update can be hit, and based on the numbers to date there's no reason that they can't be, then this one could continue to run throughout mid-to late 2017 and beyond. Here is what the update told us, and where we're looking to as reinforcing a bullish thesis for the stock.The company has developed a product called the Microcutter 5/80. The product picked up 510 (k) clearance from the FDA in January last year, and Dextera announced the first procedures undertaken with the device in April 2016. When a surgeon undertakes surgery, be it internally or as a type of external procedure, they use a device called an articulating stapler. The device is designed to offer easy and accessible closing to a surgically inflicted wound.Dextera hasn't really revolutionized the space with its Microcutter product, but it has made the device far smaller than anything that was previously available on the market, and in doing so, has made it far easier for surgeons to achieve precision closing on their surgical procedures. The product also supports, and perhaps this is more in line with its branding, more accurate dissection of the tissue being operated on, rooted in the fact that it has the thinnest jaws available on the market, and allows for 80% articulation.There's a host of anecdotal and clinical evidence supporting the suggestion that surgical procedures undertaken using the Microcutter device are superior to those undertaken using its closest competitor, and as such, markets are expecting a relatively rapid uptake of the tool in the US. Of course, it is still very early days; 12 months is nothing from a medical device commercialization perspective. Particularly when it comes to surgery, it takes a long time for traditional methods to shift into newer technologies, and this transition is – not surprisingly – costly to the company attempting to drive the shift. The ability to close wounds more accurately may be beneficial to a surgeon, but unless Dextera can get its product in front of said surgeons, and can persuade the surgeon to use the product in a live surgical environment, it's tough to promote uptake.As such, nobody was really expecting a great deal of sales this early on. The company started to commercialize the product during fiscal 2017 (which was the start of the calendar third quarter 2016).Which brings us to the latest update. According to the release, management expects to report product sales of $260,000 to $280,000 for the second quarter of fiscal 2017, ended December 31, 2016. For what is essentially a soft launch product, that's not bad at all. And it gets better. The company expects these numbers to rise to between $400,000 and $500,000 during the third quarter of fiscal 2017 (that's this quarter), and to between $700,000 and $800,000 for the fourth quarter. All told, total product sales for fiscal 2017 are expected to be $1.4 million to $1.6 million.During the short period between FDA approval and the beginning of the fiscal year (in other words, the remainder of fiscal 2016 – first and second quarter calendar 2016), the company brought in less than $400,000 revenues from the product. This illustrates the growth, and in turn, the potential, of the device going forward.So what are we looking for next? Well, the company outlined a few goals for 2017, and the hitting of these goals represents catalysts in our opinion. Production is expected to hit more than 120 units per week by the end of March, slightly outstripping sales and allowing the company to build up some stock. By June 30, Dextera wants to expand the number of surgeons reordering to 75, from the current 20. There's also an ongoing collaboration agreement in Spain with B Braun that we would like to see come to a successful conclusion, as indicative of the product's potential in Europe.The real risk here is one of dilution. The company had a little over $3 million cash on hand at last count (September 30) and that's not going to be enough to ramp up sales growth in line with potential. In other words, the company is going to have to issue equity to raise capital, which is in all likelihood going to impact the holdings of current shareholders. If the numbers are hit, however, that shouldn't matter too much.We will be updating our subscribers as soon as we know more. For the latest updates on DXTR, sign up below!Disclosure: We have no position in DXTR and have not been compensated for this article.