FDA snubs robotic surgery player TransEnterix, shares off by more than half

TransEnterix's Surgibot system--Courtesy of TransEnterix

The FDA has rejected the 510(k) application for a surgical robot from small-cap TransEnterix. In response, its shares fell almost 60% in early trading, pushing its market cap down to almost $200 million. The company had been a market darling earlier this year in anticipation of the FDA decision--and on anticipation of more real competitors challenging dominant Intuitive Surgical in robotic surgery.

TransEnterix ($TRXC) said it would update on its regulatory strategy for its SurgiBot System on its first quarter earnings call on May 10. The agency found that the system "does not meet the criteria for substantial equivalence based upon the data and information submitted by TransEnterix in its 510(k) submission," the company said.

If the company cannot demonstrate substantial equivalence, that could mean a PMA approval would be required--which would almost certainly necessitate additional clinical testing.

"The FDA's decision is extremely disappointing. We are in the process of reviewing all aspects of the FDA's communication," said TransEnterix President and CEO Todd Pope in a statement. "We will work to complete this review, and will provide an update on the regulatory strategy for the SurgiBot System together with our first quarter 2016 financial and operating results."

The SurgiBot filing had been pending for roughly a year. On its last earnings call, TransEnterix President and CEO Todd Pope summed up the process. "In the second quarter of 2015, we filed our 510(k) which was a big undertaking, it was a very extensive and comprehensive filing. We felt very good about it."

He continued, "As planned, we knew we'd hear back from the FDA with some of their feedback and questions, which we did in the Q3. And we've been taking the last quarter or two to really build up our answers to their question. We've had a very proactive relationship with the FDA that's very good and continues to this day. And in the first quarter of 2016, we finalize our response and send it back to the FDA."

The bad news for TransEnterix comes just as robotic surgery is attracting more investor and regulator attention, as it seems the sector is mature enough to embrace more than the omnipresent Intuitive Surgical ($ISRG). Last summer, the FDA held a meeting to address the regulatory issues raised by new robotic surgery entrants.

And on April 20, Auris Surgical Robotics made a big splash with its proposed acquisition of tiny Hansen Medical ($HNSN). Both companies were founded by Dr. Frederic Moll, who was also a co-founder of Intuitive Surgical.

- here is the release

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