Novadaq Reports Third Quarter 2010 Financial Results

TORONTO, ONTARIO-November 10, 2010 – Novadaq® Technologies Inc. (TSX: NDQ), a developer of real-time medical imaging systems for use in the operating room, today announced 2010 third quarter revenues of $7,570,000 compared to revenues of $1,723,000 in the third quarter of 2009 and $2,646,000 in the second quarter of 2010. Recurring SPY revenues were $1,056,000 compared to $659,000 to the same period last year and $916,000 in Q2-2010, representing an increase of 60% over Q3-2009 and a 15% increase over Q2-2010. Sales of SPY® products in Q3-2010 included $5,000,000 for completing all milestones associated with the License and Development Agreement with Intuitive® Surgical, Inc.

Q3- 2010 Highlights

• Signed a North American Sales and Marketing Agreement for SPY with LifeCell™ Corporation. Received $4,000,000 in fees and $1,000,000 in private placement funds in exchange for exclusive rights in plastic reconstructive, gastrointestinal and head and neck surgery. As a result of the agreement, going forward Novadaq will only recognize net revenues received from LifeCell.
• Restructured sales and marketing overhead resulting in approximately 15 people being either transferred to LifeCell or reduced where redundancies existed.
• Completed the final milestone associated with the Intuitive Surgical License and Development Agreement to integrate SPY imaging into the da Vinci robot and received the final $500,000 milestone payment. According to the company’s completed contract method of revenue recognition, achieving the final milestone resulted in recognizing $5,000,000 in completed contract sales.

Highlights Subsequent to Quarter End

• Executed the definitive Asset Purchase Agreement to essentially purchase all of the TMR assets from PLC Medical Systems, Inc., ensuring product supply and expanding the company’s presence in international markets.

Financial Results
As at September 30, 2010, the Company had cash and cash equivalents of $8,671,000, which included $5,000,000 received subsequent to signing the LifeCell sales and marketing agreement. Novadaq’s net loss of $4,562,000 included a non-cash write-down of $4,829,000 due a change in estimated life of TMR distribution rights. Net loss for the same time period last year was $3,852,000 and $3,525,000 in Q2-2010. The Company’s cash provided by operating activities in Q3-2010 was $2,178,000 compared to cash used of $3,117,000 in Q3-2009 and $2,367,000 in Q2-2010. Novadaq’s Q3-2010 net loss of $4,562,000 or $0.17 per share, compared to net loss of $3,852,000 or $0.16 per share in Q3-2009. Unless otherwise indicated, all dollar amounts expressed in this press release are United States (U.S.) dollars.

Comment
“As we’ve continued to report over the past 12 months, SPY has gained significant momentum in plastic reconstructive and gastrointestinal surgery. Our agreement with LifeCell provides us the leading channel to capitalize on this opportunity in our relevant markets. LifeCell is indeed a leader and the premier sales and marketing organization within the plastic reconstructive, gastrointestinal and head and neck surgery markets,” said Dr. Arun Menawat, Novadaq’s President and CEO. “We are delighted to now be partnered with two industry leaders, LifeCell and Intuitive Surgical. As a result of the significant commercial opportunities these two companies represent, we are increasing our manufacturing and supply capabilities to meet the anticipated growing demands for our SPY products.”

Conference Call
Novadaq is pleased to invite all interested parties to participate in a conference call on November 10th, at 10:00 a.m. Eastern Time during which the results will be discussed.

To access the live audio webcast:
Please login 5-10 minutes prior to the event start time
Go to website: http://www.investorcalendar.com/IC/CEPage.asp?ID=162275
Select “3rd Qtr. 2010 Financial Results”, fill in login information, and then click ‘OK’
A pop-up window will open to display the audio web conference

To access the live conference call:
Live Participant Dial-In (Toll Free): (877) 407-8033
Live Participant Dial In (International): (201) 689-8033

A telephonic replay of the conference call will be made available until midnight on 12/10/10 and can be accessed by dialing 1-877-660-6853 (within Canada and the United States) or 1-201-612-7415 (international callers) and entering the account number 286 and the conference identification number 359775 when prompted. The call will be archived for 365 days on the company’s website at http://www.novadaq.com under the “Events” tab in the Investors section. In addition, a replay of the call will be available for download to a portable audio player or computer, as an MP3 or podcast file, at the same location on Novadaq’s website.

About Novadaq Technologies Inc.
Novadaq Technologies develops and markets real-time fluorescence imaging technologies for use in the operating room. The Company’s primary core technology platform, SPY Imaging, provides clinically relevant, anatomic and physiologic images during a wide variety of complex open and minimally invasive surgical (“MIS”) procedures. SPY empowers surgeons treating life-threatening illnesses such as breast, colon and other cancers and cardiovascular disease to more effectively treat vascular blockages and assess tissue perfusion. More than 40 peer-reviewed publications demonstrate that SPY Imaging leads to fewer post-operative complications and reduced hospital costs. The SPY Imaging System is cleared by the United States Food and Drug Administration (“FDA”) for real-time use during open surgical procedures and the endoscopic implementation of SPY Imaging (“SPY Scope”) is FDA cleared for real-time use in MIS. The endoscopic SPY System combines all of the capabilities of SPY Imaging with state-of-the-art high definition (“HD”) white light visualization offered by conventional endoscopes. The Company’s key markets include plastic reconstructive, gastrointestinal, cardiac and general surgery. To realize the full potential of its SPY Imaging technology platform, Novadaq explores technology alliances. Novadaq announced its first alliance with Intuitive, in January 2009, to integrate SPY Imaging into the 3-D HD imaging capabilities of the da Vinci® Surgical Robotic System. In addition, Novadaq entered into an exclusive, North American sales and marketing alliance with LifeCell Corporation (“LifeCell”) in plastic and reconstructive, gastrointestinal and head and neck surgery in September 2010. Novadaq is the exclusive United States distributor of PLC’s CO2 HEART™ LASER SYSTEM, which is used in the same cardiac procedures as the SPY System. For more information, please visit the company’s website at http://www.novadaq.com.

Forward Looking Statement:

Certain statements included in this press release may be considered forward-looking. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements, and therefore these statements should not be read as guarantees of future performance or results. All forward-looking statements are based on Novadaq’s current beliefs as well as assumptions made by and information currently available to Novadaq and relate to, among other things, results of future clinical tests of PINPOINT, SPY Scope and the SPY Imaging System, anticipated financial performance, business prospects, strategies, regulatory developments, market acceptance and future commitments.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Due to risks and uncertainties, including the risks and uncertainties identified by Novadaq in its public securities filings actual events may differ materially from current expectations. Novadaq disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.