Investors are looking to place a bet on surgical robotics companies that can follow in the massive footprints of Intuitive Surgical ($ISRG). That company has long stood alone in the promising, but often treacherous field. Micro cap TransEnterix ($TRXC) saw some of that Wall Street support earlier this year in advance of an expected clearance for the company's SurgiBot system.
But the FDA rejected SurgiBot as not substantially equivalent in April--and to continue to pursue it may have required a new 510(k) submission, the company said on its May 10 earnings call. So, it's opting instead to put all its efforts into a 510(k) submission for another robotic surgical platform, ALF-X.
TransEnterix plans to make the ALF-X 510(k) submission by yearend--with a potential U.S. market launch next year. It already has a CE mark in Europe.
Wall Street didn't take the news well, shoving TransEnterix shares down roughly 20% in early trading. That puts the company off about 65% since the FDA rejection news broke in April--giving it a tiny market cap of only about $175 million.
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| TransEnterix's ALF-X system |
TransEnterix will trim its SurgiBot business, which it had been "been investing substantially and continuing development and production efforts for SurgiBot," the company's President and CEO Todd Pope said on the call. "This week we've taken significant actions to reduce infrastructure in these areas of the business."
Those resources will be refocused toward preparing the FDA submission for ALF-X, as well as investing in expanding the capabilities of that platform, Pope said. He tried to be upbeat describing the potential of the ALF-X system.
"Our platform offers unique features and benefits that are resonating in the market. Surgeons love the independence the eye-tracking camera provides. The haptic feedback restores the sense of touch that they have been without since the advent of robotics. And ALF-X allows them to be more engaged in the surgical field, which has multiple benefits," said Pope.
"Our ROI model on ALF-X, due to the reusability of the instruments is also resonating with hospitals," he continued. "This economic shift gives us the opportunity to expand the current market for robotics. Our conversations are starting to redefine robotics as a potential mainstay technology across many specialties in the hospital rather than limiting the applicability only to high reimbursement indications."
TransEnterix had about $75 million in cash on April 30, with operating expenses of $15 million in the first quarter including $8.4 million for R&D that was primarily related to ALF-X platform development.
- here is the release