TransEnterix, Inc. Reports Operating and Financial Results for the Third Quarter 2018
RESEARCH TRIANGLE PARK, N.C.--(BUSINESS WIRE)--Nov 8, 2018--TransEnterix, Inc. (NYSE American:TRXC), a medical device company that is digitizing the interface between the surgeon and the patient to improve minimally invasive surgery, today announced its operating and financial results for the third quarter 2018.
Recent HighlightsTotal revenue of $5.4 million, including the sale of four Senhance™ Systems in the third quarter Acquired the technology assets and IP of MST Medical Surgery Technologies Received FDA 510(k) clearance for 3mm diameter instruments Received CE Mark approval for Senhance™ Ultrasonic Instrument System
“We are proud of the progress we made during the third quarter, as we continued to drive adoption of the Senhance System by executing on our sales and marketing strategy and continuing to develop the capabilities of the Senhance System to deliver on our vision of digital laparoscopy,” said Todd M. Pope, President and CEO at TransEnterix. “We are focused on driving the global adoption of the Senhance System by increasing the applicability of the system for a wider range of surgeons, patients and geographies.”
Commercial and Clinical Update
In the quarter ended September 30, 2018, the Company sold four Senhance Systems, with one sold in the U.S. and three in the EMEA (Europe, Middle East, and Africa) region.
On October 11, 2018, the Company received FDA 510(k) clearance for 3 millimeter diameter Senhance System instruments, as well as additional 5 millimeter Senhance System instruments. The clearance of the 3 millimeter diameter instruments will allow the Senhance System to be used for microlaparoscopic surgeries, enabling surgeons to operate through smaller incisions considered virtually scarless for patients, supporting the Company’s mission of advancing minimally invasive surgical capabilities within digital laparoscopy.
On October 1, 2018, the Company announced that it had received a CE Mark for its Senhance Ultrasonic Instrument System. As previously announced, the Company continues to expect to commercially launch the Ultrasonic Instrument System in CE Mark countries in the fourth quarter of 2018.
Acquisition Agreement with MST
On September 23, 2018, the Company announced that it had entered into an agreement to acquire substantially all of the assets of MST Medical Surgery Technologies Ltd. (“MST”), an Israel-based medical technology company. MST is a leader in the field of surgical technology, having developed a software-based image analytics platform powered by advanced visualization, scene recognition, artificial intelligence, machine learning and data analytics.
The addition of MST’s technology, IP portfolio, and R&D team will support and accelerate TransEnterix’s vision to leverage its Senhance Surgical System to deliver digital laparoscopy, thereby increasing control in the surgical environment and reducing surgical variability. In addition, the acquisition will provide immediate access to an established R&D center in Israel with a core team of experienced engineers. The closing of the MST transaction occurred on October 31, 2018
Third Quarter Financial Highlights
For the three months ended September 30, 2018, the Company reported revenue of $5.4 million as compared to revenue of $183 thousand in the three months ended September 30, 2017. Revenue in the third quarter of 2018 included $4.3 million in system sales, $867 thousand in instruments and accessories, and $237 thousand in services.
For the three months ended September 30, 2018, total net operating expenses were $13.1 million, as compared to $14.9 million in the three months ended September 30, 2017.
For the three months ended September 30, 2018, net loss was $20.2 million, or $0.10 per share, as compared to a net loss of $38.5 million, or $0.26 per share, in the three months ended September 30, 2017.
For the three months ended September 30, 2018, adjusted net loss was $12.7 million, or $0.06 per share, as compared to an adjusted net loss of $13.0 million, or $0.09 per share in the three months ended September 30, 2017, after adjusting for the following non-cash charges: change in fair value of warrant liabilities, reversal of transfer fee accrual, amortization of intangible assets, change in fair value of contingent consideration, acquisition-related costs and SurgiBot sale gain/loss.
The Company had cash and short term investments of approximately $81.4 million as of September 30, 2018. On October 23, 2018, Hercules Capital, Inc. funded the second tranche of $10,000,000 under the Hercules loan agreement. The Company continues to believe that it has sufficient cash and additional debt proceeds under the current agreement to fund the business through 2020.
TransEnterix, Inc. will host a conference call on Thursday, November 8, 2018 at 4:30 PM ET to discuss its third quarter 2018 operating and financial results. To listen to the conference call on your telephone, please dial (844) 804-5261 for domestic callers or (612) 979-9885 for international callers and reference conference ID 9991627 approximately ten minutes prior to the start time. To access the live audio webcast or archived recording, use the following link http://ir.transenterix.com/events.cfm. The replay will be available on the Company’s website.
TransEnterix is a medical device company that is digitizing the interface between the surgeon and the patient to improve minimally invasive surgery by addressing the clinical and economic challenges associated with current laparoscopic and robotic options in today’s value-based healthcare environment. The Company is focused on the commercialization of the Senhance™ Surgical System, which digitizes laparoscopic minimally invasive surgery. The system allows for robotic precision, haptic feedback, surgeon camera control via eye sensing and improved ergonomics while offering responsible economics. The Senhance Surgical System is available for sale in the US, the EU and select other countries. For more information, visit www.transenterix.com.
The adjusted net loss and adjusted net loss per share presented in this press release are non-GAAP measures. The adjustments relate to the change in fair value of warrant liabilities, reversal of transfer fee accrual, amortization of intangible assets, change in fair value of contingent consideration, acquisition-related costs, loss on extinguishment of debt and SurgiBot sale gain/loss. These financial measures are presented on a basis other than in accordance with U.S. generally accepted accounting principles (“Non-GAAP Measures”). In the tables that follow under “Reconciliation of Non-GAAP Measures,” we present adjusted net loss and adjusted net loss per share, reconciled to their comparable GAAP measures. These items are adjusted because they are not operational or because these charges are non-cash or non-recurring and management believes these adjustments are meaningful to understanding the Company’s performance during the periods presented. These Non-GAAP Measures should be considered a supplement to, not a substitute for, or superior to, the corresponding financial measures calculated in accordance with GAAP.
This press release includes statements relating to the 2018 third quarter results and plans for 2018 and beyond. These statements and other statements regarding our future plans and goals constitute “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that are often difficult to predict, are beyond our control and which may cause results to differ materially from expectations and include whether we are driving global adoption of Senhance by increasing the applicability of the system for a wide range of surgeons, patients and geographies, whether we will commercially launch the Ultrasonic Instrument System in CE Mark countries in the fourth quarter of 2018, whether the acquisition of MST’s technology, IP portfolio and R&D team will support and accelerate TransEnterix’s vision to leverage its Senhance Surgical System to deliver digital laparoscopy, and whether the Company has sufficient cash and additional debt proceeds under the current agreement to fund the business through 2020. For a discussion of the risks and uncertainties associated with TransEnterix’s business, please review our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on March 8, 2018 and our other filings we make with the SEC. You are cautioned not to place undue reliance on these forward looking statements, which are based on our expectations as of the date of this press release and speak only as of the origination date of this press release. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
The non-GAAP financial measures for the three and nine months ended September 30, 2018 and 2017 provide management with additional insight into its results of operations and are calculated using the following adjustments:
a) Gain from sale of SurgiBot assets relates to amounts received from Great Belief International Limited in excess of the carrying amount of the assets sold.
b) Intangible assets that are amortized consist of developed technology and purchased patent rights recorded at cost and amortized over 5 to 10 years.
c) Contingent consideration in connection with the acquisition of the Senhance System in 2015 is recorded as a liability and is the estimate of the fair value of potential milestone payments related to business acquisitions. Contingent consideration is measured at fair value using a discounted cash flow model utilizing significant unobservable inputs including the probability of achieving each of the potential milestones and an estimated discount rate associated with the risks of the expected cash flows attributable to the various milestones. Significant increases or decreases in any of the probabilities of success or changes in expected timelines for achievement of any of these milestones would result in a significantly higher or lower fair value of these milestones, respectively, and commensurate changes to the associated liability. The contingent consideration is revalued at each reporting period and changes in fair value are recognized in the consolidated statements of operations and comprehensive loss.
d) Acquisition related costs were incurred in connection with the MST purchase agreement and consist of legal, accounting, and other costs.
e) In connection with the Senhance acquisition, the Company recorded an accrual in 2015 third quarter for potential assessment of additional transfer fees. In September 2018, the Company determined that the accrual was no longer required and reversed the accrual.
f) The Company’s Series B Warrants are measured at fair value using a simulation model which takes into account, as of the valuation date, factors including the current exercise price, the expected life of the warrant, the current price of the underlying stock, its expected volatility, holding cost and the risk-free interest rate for the term of the warrant. The warrant liability is revalued at each reporting period and changes in fair value are recognized in the consolidated statements of operations and comprehensive loss.
g) In May 2018, in connection with its entrance into the Hercules Loan Agreement, the Company repaid its existing loan and security agreement with Innovatus Life Sciences Lending Fund I, LP. The Company recognized a loss of $1.4 million on the extinguishment of notes payable which is included in interest expense on the consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2018. In May 2017, in connection with its entrance into the Innovatus Loan Agreement, the Company repaid its then-existing credit facility with Silicon Valley Bank and Oxford Finance LLC. The Company recognized a loss of $308,000 on the extinguishment of notes payable which is included in interest expense on the consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2017.
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CONTACT: For TransEnterix, Inc.
Mark Klausner, +1 443-213-0501
Joanna Rice, +1 951-751-1858
KEYWORD: UNITED STATES NORTH AMERICA NORTH CAROLINA
INDUSTRY KEYWORD: SURGERY HEALTH HOSPITALS MEDICAL DEVICES
SOURCE: TransEnterix, Inc.
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PUB: 11/08/2018 04:05 PM/DISC: 11/08/2018 04:05 PM