TransEnterix opens $44M equity facility as it awaits FDA go-ahead to launch surgical robot

TransEnterix's Surgibot system--Courtesy of TransEnterix

TransEnterix aims to take on entrenched incumbent Intuitive Surgical ($ISRG) and its da Vinci line of robotic surgery devices. The behemoth recently announced that da Vinci procedure volume is up 15% year-over-year to around 700,000, leading to $2.4 billion in 2015 revenues.

The aspiring market player said it has raised $18 million under its equity sales facility since September 2015, as it seeks FDA clearance of its Surgibot System.

It announced the creation of another "at the market" (ATM) equity sales facility that gives the company to option to raise up to $43.6 million in equity until January 2017. The money is needed to support commercialization of its four-armed Alf-X in Europe and single-port SurgiBot in the U.S., assuming FDA clearance.

In an interview CFO, Joe Slattery said ATMs enable "enable a lot more flexibility as to the timing, price and amount of equity that you can raise" and enable better pricing on equity sales.

On the regulatory front, company said it has completed its response to the FDA related to the SurgiBot's 510(k) submission.

"We are pleased to have completed our response to the FDA and strengthened our balance sheet," said TransEnterix President and CEO Todd Pope in a statement. "We continue to expect FDA clearance for the SurgiBot System in the first quarter of this year, and our cash position allows us to accelerate our transition to commercializing both the ALF-X and the SurgiBot."

Slattery said that the announcement was intended to ensure investors that everything is on track, and added that some of FDA's questions required additional testing. Clearance is crucial because 80% of robotic surgery sales occur in the U.S., he said. 

The small-caps' stock sells for around $4, up from below $2 in mid-January, but has lost about 40 cents on the announcement as of midday. 

During a previous interview Pope said the CE-marked Alf-X has many features that da Vinci lacks, such as eye-tracking software and haptic feedback, enabling surgeons to regain the sense of touch and pressure feedback that they currently have to forgo.

The Alf-X has been commercially available for the last two months. Slattery said the company expects to achieve its first sale in the first quarter, but cautioned, "It's multi-million piece of capital equipment. It's not a decision that hospitals can make quickly." 

Meanwhile, the Surgibot will allow surgeons to be in the sterile field, Pope said, meaning that they can stand beside the patient rather than behind a console. It will also have a smaller operating footprint than the da Vinci and use a combination of reusable and disposable instruments, according to the CEO.

In addition, Toronto-based startup Titan Medical recently unveiled its single-arm Sport robotic system to investors, with a goal of FDA clearance and a U.S. launch by mid-2017.

But Intuitive CEO Gary Guthart warned during Intuitive's latest earnings call that taking on the only established robotic surgery company won't be easy: "So it's easy to think just about the robotic system, because that's the most visible part. But there is the systems, the instruments and accessories, advanced instrumentation like stapling, imaging systems, fluorescence imaging, training technologies like simulators and dual console, clinical validation, training courses offered by academic surgeons that number in the dozens. That whole set of products and ecosystem we think is important, and so as competitors enter they have to choose, can they show that value in terms of outcomes and price? And can they offer the set of ecosystem elements that are going to be useful?"

- read the release