Titan Medical Inc. (“Titan” or the “Company”) (TSX: TMD)
(Nasdaq: TMDI), a medical device company focused on the design
and development of a single-port robotic surgical system for
application in minimally invasive surgery (“MIS”), announces that
David McNally, President & CEO, has issued a letter to
shareholders.
The full text of the letter, which also may be found on the
Company’s website, follows.
February 3, 2020
Dear Titan Medical Shareholders,
As we commence 2020, I will provide you with a brief review of
2019 and outline our focus for 2020.
I am proud of our team at Titan Medical and its work over the
past few months to achieve our stated fourth quarter 2019
milestones, despite an acute shortage of capital. The Titan team
remains committed in our efforts to secure the capital necessary to
resume product development of our single-port robotic surgical
system in 2020. On behalf of my colleagues, I’d like to remind
shareholders of the surgical robotics market opportunity, and what
we believe will be the competitive advantages for Titan
Medical.
Positioning for Market Opportunity
Ongoing market research confirms the opportunity for single-port
robotic surgery, with initial clinical success being reported by
surgeons using Intuitive Surgical’s da Vinci SP®, the only
commercially available single-port offering, but currently with
surgical indications outside our initial target area. We believe
that our robotic system, having been designed from the outset with
a focus on single-port surgery, may provide competitive advantages
for physicians and their clinical teams, hospitals and patients.
Should we be able to complete product development and achieve
regulatory clearance in a timely manner, upon commercialization we
expect our single-port system to expand the market for robotic
surgery with attractive pricing, a reduced operating room footprint
and greater portability within the hospital.
Medical-grade robotic systems designed for surgery are highly
technical and complex pieces of equipment, involving medical-grade
software and numerous electro-mechanical systems, precise surgical
instruments and sterile interface components, all designed for
instinctive use and successful surgical outcomes. To facilitate the
unique design and development of our system, Titan has engaged
individuals and third parties with specialized competencies for
assistance with certain aspects of our system such as our
innovative dual-view camera system, multi-articulating instruments
and simulation training software.
Significant Financial Investment
In addition to the investment of time, the financial investment
to develop our single-port system has been considerable; yet
significant additional capital will be needed to fund operations
through to the first commercial sale. With approximately US$215
million in invested capital to date and projections for an
additional US$85 million to fund operations through to the filing
of our 510(k) application with the U.S. Food and Drug
Administration (“FDA”), we expect Titan Medical to be one of the
more capital-efficient entrants to the robotic surgery market if we
succeed in achieving regulatory filing with an estimated total of
US$300 million in invested capital.
Despite Titan Medical having been successful in raising capital
through numerous recent public financings, including having raised
US$28 million in March 2019, like many other pre-revenue technology
companies, the second half of 2019 proved to be challenging for
securing additional capital. Fortunately, we commence the New Year
having executed a common share purchase agreement with Aspire
Capital in December, which like our common share purchase agreement
with Aspire that preceded it in August, has been key to maintaining
our team, satisfying creditors and continuing with the expansion of
our intellectual property portfolio. The F-3 shelf registration
statement with an aggregate offering amount of US$125 million filed
with the U.S. Securities and Exchange Commission that went
effective in July 2019 has enabled us to execute the Aspire common
share purchase agreements, in addition to its potential utility for
other offerings.
Financing and Strategic Alternatives
We are grateful to the retail and institutional shareholders
that have financed Titan Medical over its near 12-year history.
However, as noted above, we estimate that we will require
approximately US$85 million of additional capital to complete
product development and file our 510(k) application. Although the
magnitude of the estimated future market opportunity is
substantial, the amount of capital and the length of time required
to fully develop and commercialize a competitive robotic surgical
system from the current pre-clinical stage of our system, are
beyond the scope of many institutional healthcare investors. These
factors, combined with other constraints in the capital markets,
have made it very challenging for Titan Medical to secure access to
sufficient capital while attempting to minimize shareholder
dilution.
The Board of Directors is actively engaged with management in
seeking financing and broadly exploring strategic options. In
January, the Board established a special committee of independent
directors to oversee the global search for strategic alternative
transactions to maximize shareholder value. The mandate of this
special committee includes a wide range of potential transactions,
including financing through equity or debt, licensing, merger or
acquisition.
Development Status and Milestones
Product development is presently suspended while we focus on
paying past due invoices owed to our valued product development,
manufacturing and service providers. While pursuing financing, we
have been actively engaged with our service providers in managing
payables for our long-term mutual benefit. I’m pleased to report
that certain key service providers have been highly supportive in
this effort. If we are successful in securing sufficient financing,
our planned next steps will be to restart and complete product
development, proceed to product verification and validation, and
submit an Investigative Device Exemption (“IDE”) application to the
FDA to begin human confirmatory studies. Preparation for IDE
submission includes extensive planning for these studies, which is
already in advanced stages having identified four hospitals and the
key opinion leading surgeons who will perform the studies.
Focus on the Investment Community
We continue to communicate the Titan Medical story to members of
the investment community. In 2019 we presented at seven investment
conferences in both Canada and the U.S. sponsored by the investment
banks BTIG, ROTH Capital Partners, Bloom Burton & Co., Wells
Fargo Securities, H.C. Wainwright, Piper Sandler (formerly Piper
Jaffray) and Benchmark. In addition to presenting at investment
conferences and our recent fundraising effort, we embarked on
several non-deal roadshows. In 2019 we met with nearly 100 members
of the investment community, telling our story face-to-face to
prospective investors.
We were pleased that our stock was added to the LD Micro Index
in August. This index is comprised of microcap stocks, is market
cap weighted and includes 996 stocks in the U.S. and Canada. This
addition was another means of broadening awareness of Titan Medical
among investors. Furthermore, we gained expanded visibility as a
result of sell-side research coverage. Piper Sandler initiated
coverage of Titan in 2019, adding to coverage previously initiated
by Northland Securities and Maxim Group. We continue to communicate
with these and additional sell-side analysts.
In Summary
Looking ahead, our top priority is to secure sufficient capital
to resume product development and preparations for our IDE
submission. In order to proceed with our plans, we must secure
substantial capital to satisfy our payables, and then re-engage our
product development and service provider base. In parallel and with
the active support of our Board of Directors, we are considering a
wide range of strategic alternatives to maximize shareholder value
under our unique circumstances.
We believe that the magnitude of the market opportunity
justifies the investment of substantial human and financial capital
to improve patient outcomes through single-port robotic surgery. We
remain committed to our search for the capital necessary to pursue
our vision of delivering both patient and physician satisfaction
through a product that, upon completion, we expect will be able to
reduce trauma and deliver virtually scar-free surgery.
I have often said that I am proud of our team, which includes
our employees, our expert consultants, development and
manufacturing partners, and the surgeons who advise us. It is
through their ongoing commitment, energy, guidance and teamwork
that we have achieved so much. We remain grateful to you, our
shareholders, who have provided the capital for our growing team to
execute on our collective vision for single-port robotic
surgery.
I look forward to reporting on our progress.
Sincerely,
David McNally President & CEO
About Titan Medical Inc.
Titan Medical Inc. is focused on computer-assisted robotic
surgical technologies for application in MIS. The Company is
developing a single-port robotic surgical system comprised of a
surgeon-controlled patient cart that includes a dual-view camera
system with 3D and 2D high-definition vision options and
multi-articulating instruments for performing MIS procedures, and a
surgeon workstation that provides an advanced ergonomic interface
to the patient cart and a 3D endoscopic view inside the patient’s
body. Titan intends to initially pursue gynecologic surgical
indications for use of its single-port robotic surgical system.
For more information, please visit the Company’s website at
www.titanmedicalinc.com.
Forward-looking Statements
This letter contains “forward-looking statements” and
“forward-looking information” within the meaning of applicable
Canadian and U.S. securities laws, which reflect the current
expectations of management of the Company’s future growth, results
of operations, performance and business prospects and
opportunities. Wherever possible, words such as “may”, “would”,
“could”, “will”, “anticipate”, “believe”, “plan”, “expect”,
“intend”, “estimate”, “potential for” and similar expressions have
been used to identify these forward-looking statements. These
statements reflect management’s current beliefs with respect to
future events and are based on information currently available to
management. Forward-looking statements involve significant risks,
uncertainties and assumptions, and include, without limitation,
statements regarding: the surgical indications that the Company’s
surgical robotic system will address; the Company’s expectation
that its robotic surgical system will offer certain competitive
advantages; Titan’s belief that, if completed, its robotic surgical
system will expand the market for robotic surgery; the Company’s
expectation that its robotic surgical system will be available at
an attractive price, with a reduced operating room footprint and
greater hospital portability; the features that the Company expects
the commercialized version of its robotic surgical system to
possess; the Company’s ability to secure additional financing; the
amount of additional capital required to fund operations up to and
beyond the stage of commercialization; the Company’s expectation of
its capital efficiency on the path to commercialization vis-à-vis
other market participants; the Company’s ability to expand its
intellectual property portfolio; the Company’s capacity to complete
the scheduled milestones on the path to anticipated regulatory
filings; the Company’s intention to complete human confirmatory
studies as part of its IDE application to the FDA; the Company’s
submission of its IDE application and anticipated approval of such
application; the Company’s expected timeline for the submission of
its 510(k) application with the FDA and technical file for the CE
mark; the Company’s expectations regarding research and development
costs in the future; the Company’s timeline for its transition from
product development to manufacturing to product launch and planned
commercialization and the ability of its employees and board
members to assist with this process; the Company’s engagement with
members of the investment community; the Company’s intended next
steps to secure additional financing and, if successful, to resume
product development, satisfy its payables and re-engage with its
service providers; the Company’s intention to consider strategic
alternative transactions; the ability of the Company’s robotic
surgical system to deliver certain surgical outcomes. Many factors
could cause the Company’s actual results, performance or
achievements to be materially different from any future results,
performance or achievements that may be expressed or implied by
such forward-looking statements, including, without limitation,
those listed in the “Risk Factors” section of the Company’s Annual
Information Form dated March 29, 2019 (which may be viewed at
www.sedar.com and at www.sec.gov). Should one or more of these
risks or uncertainties materialize, or should assumptions
underlying the forward-looking statements prove incorrect, actual
results, performance or achievements may vary materially from those
expressed or implied by the forward-looking statements contained in
this news release. These factors should be considered carefully,
and prospective investors should not place undue reliance on the
forward-looking statements. Although the forward-looking statements
contained in the news release are based upon what management
currently believes to be reasonable assumptions, the Company cannot
assure current or prospective investors that actual results,
performance or achievements will be consistent with these
forward-looking statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200203005442/en/
LHA Investor Relations Kim Sutton Golodetz (212) 838-3777
kgolodetz@lhai.com or Bruce Voss (310) 691-7100 bvoss@lhai.com
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