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 of
2020.
Recent Highlights
- Year-to-date, eight clinical programs initiated with one
additional system pending installation and over 1,200 procedures
performed globally
- First procedures performed in the U.S. using the Intelligent
Surgical Unit™ (ISU™) enabling intra-operative, real-time augmented
intelligence capabilities in surgery for the first time
- First robotically-assisted pediatric procedures performed
utilizing fully reusable 3mm instruments in Europe
- Established Japanese training center for the Senhance® Surgical
System to drive growth in Asia-Pacific region
- Filed FDA 510(k) submission for general surgery indication
expansion to broaden addressable market
- Appointed Shameze Rampertab as Chief Financial Officer
- Raised $15.0 million in gross proceeds in an underwritten
public offering in July of 2020
- The Company now expects to have cash to support its operations
into the second quarter of 2021
“The third quarter was immensely productive for the Company
despite the ongoing headwinds associated with COVID and the burden
placed on hospitals globally. We achieved several key milestones,
including the first surgical procedures using the Intelligent
Surgical Unit in the U.S. and the first pediatric surgical cases
with the Senhance in Europe,” said Anthony Fernando, President, and
CEO of TransEnterix. “Looking to the balance of 2020, we are
focused on leveraging the continued momentum in system placement
and procedures we have created in recent months to deliver on our
strategy and bring Senhance’s transformative technology to
surgeons, hospitals, and patients globally.”
Commercial and Clinical Update
During the quarter, three clinical Senhance programs were
started and one new agreement was signed. Year to date in 2020, the
Company has installed eight Senhance systems globally.
There is one additional system pending installation in
Japan.
On August 4, 2020, the Company announced that it had filed its
510(k) submission with the FDA for a general surgery indication
expansion. Upon clearance, this is expected to add approximately
800,000 general and bariatric procedures to the Company’s
addressable market.
On September 14, 2020, the Company announced that it established
the first training center for the Senhance in the Asia-Pacific
region in Japan at the Saitama Medical University International
Medical Center in the Greater Tokyo Area. The Japanese Training
Center is expected to drive increased utilization of our seven
system installations in the Asia-Pacific region and encourage
further adoption of our technology in additional hospitals.
On September 23, 2020, the Company announced it completed its
first surgical procedures using the ISU at Hackensack Meridian
Health Pascack Valley Medical Center in New Jersey. The ISU adds
augmented intelligence to the Senhance. Currently, the ISU enables
machine vision driven control of the camera which allows the System
to recognize certain objects and locations in the surgical field,
and provides seamless sharing of the surgeon console’s view across
all members of the operating room team in real-time, all the while
allowing the surgeon to maintain full control. These initial
capabilities are foundational to planned future augmented
intelligence features such as scene cognition and surgical image
analytics that are expected to further enhance the digital
laparoscopic experience with Senhance.
On October 13, 2020, the Company announced the first pediatric
patient procedures at Maastricht University Medical Center+ in the
Netherlands. This is the first pediatric surgical program in the
world to utilize the Senhance and integrate digital laparoscopy
with instruments as small as 3 mm into their standard of surgical
care. The Senhance is the only robotic-assisted surgical system in
the world to provide fully reusable 3 mm instruments.
Underwritten Public Offering
On July 6, 2020, the Company announced the closing of an
underwritten common stock offering, raising gross proceeds of $15.0
million, which included the full exercise of the underwriter’s
over-allotment option to purchase additional shares.
Third Quarter Financial Results
For the three months ended September 30, 2020, the Company
reported revenue of $0.8 million as compared to revenue of $2.0
million in the three months ended September 30, 2019. Revenue in
the third quarter of 2020 included $0.2 million in system leasing,
$0.2 million in instruments and accessories, and $0.4 million in
services.
For the three months ended September 30, 2020, total operating
expenses were $14.6 million, as compared to $96.4 million in the
three months ended September 30, 2019.
For the three months ended September 30, 2020, net loss
attributable to common stockholders was $15.1 million, or $0.15 per
share, as compared to a net loss of $97.8 million, or $5.55 per
share, in the three months ended September 30, 2019.
For the three months ended September 30, 2020, the adjusted net
loss attributable to common stockholders was $11.9 million, or
$0.12 per share, as compared to an adjusted net loss of $20.6
million, or $1.17 per share in the three months ended September 30,
2019. Adjusted net loss is GAAP net loss adjusted in the third
quarter of 2020 for the following items: goodwill impairment,
change in fair value of contingent consideration, intangible asset
impairment, amortization of intangible assets, change in fair value
of warrant liabilities, loss from sale of SurgiBot assets,
acquisition related costs, restructuring and other charges, deemed
dividend related to beneficial conversion feature of the preferred
stock, and deemed dividend related to the conversion of preferred
stock into common stock. Adjusted net loss attributable to common
stockholders is a non-GAAP financial measure. A reconciliation from
GAAP to Non-GAAP Measures can be found at the end of this earnings
release.
The Company had cash and cash equivalents and restricted cash of
approximately $21.1 million as of September 30, 2020.
As a result of the restructuring completed in the first quarter
of 2020, cost optimization efforts, and recent equity financing,
together with anticipated cash received from operating activities,
including cash from system sales and leases, instruments and
accessories, and services, we believe that cash on hand will be
sufficient to meet our anticipated cash needs into the second
quarter of 2021.
COVID-19 Impact and Business Outlook
Given the continued uncertainty that exists within the global
healthcare market, we cannot currently predict the specific extent
or duration of the impact of the COVID-19 pandemic on our financial
and operating results. We are not providing forward looking
guidance at this time.
Conference Call
TransEnterix, Inc. will host a conference call on Thursday,
November 5, 2020, at 4:30 PM ET to discuss its third quarter 2020
operating and financial results. To listen to the conference call
on your telephone, please dial 1-800-931-4071 for domestic callers
and 1-303-223-0117 for international callers, and reference
conference ID 21971152 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.
About TransEnterix
At TransEnterix, Inc., we are digitizing the interface between
the surgeon and the patient to improve minimally invasive surgery
(MIS) through a new category of care we call digital laparoscopy.
Digitizing the interface enables the use of advanced capabilities
like augmented intelligence, connectivity and robotics in
laparoscopy, and allows us to address the current clinical,
cognitive and economic shortcomings in surgery. The system features
the first machine vision system for use in robotic surgery which is
powered by our Intelligent Surgical Unit™(ISU™) that enables
augmented intelligence in surgery. The Senhance®️ Surgical System
brings the benefits of digital laparoscopy to patients around the
world while staying true to the principles of value-based
healthcare. Learn more about digital laparoscopy with the Senhance
Surgical System here: https://Senhance.com/. Now available for sale
in the US, the EU, Japan, and select other countries. For a
complete list of indications for use, please visit:
https://www.transenterix.com/indications-for-use/.
Non-GAAP Measures
The adjusted net loss and adjusted net loss per share presented
in this press release are non-GAAP financial measures. The
adjustments relate to backing out goodwill impairment, change in
fair value of contingent consideration, intangible asset
impairment, amortization of intangible assets, change in fair value
of warrant liabilities, loss from sale of SurgiBot assets,
acquisition related costs, restructuring and other charges, deemed
dividend related to beneficial conversion feature of the preferred
stock, and deemed dividend related to the conversion of preferred
stock into common stock. 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.
Forward-Looking Statements
This press release includes statements relating to the current
market development and operational plans for the Senhance Surgical
System, as well as 2020 third quarter financial results and plans
for the balance of 2020. These statements and other statements
regarding our future plans and goals constitute "forward-looking
statements" within the meaning of 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 the extent of the impact of the COVID-19
pandemic on our current and future results of operations, whether
the Company will receive FDA clearance for its general surgery
indication, whether we will be able to leverage our continued
momentum in system placement and procedures to deliver on our
strategy and bring Senhance’s transformative technology to
surgeons, hospitals and patients globally, and whether we have cash
on hand sufficient, together with anticipated cash received from
operating activities, including cash from system sales and leases,
instruments and accessories, and services, to meet our anticipated
cash needs into the second quarter of 2021. 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, 2019, which we filed on March 16, 2020 and
our other SEC filings. 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.
TransEnterix, Inc.
Consolidated Statements of
Operations and Comprehensive Loss
(in thousands except per share
amounts)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2020
2019
2020
2019
Revenue:
Product
$
436
$
1,649
$
992
$
6,820
Service
378
375
1,076
1,024
Total revenue
814
2,024
2,068
7,844
Cost of revenue:
Product
720
2,399
2,353
6,628
Service
703
1,047
2,220
3,221
Total cost of revenue
1,423
3,446
4,573
9,849
Gross loss
(609
)
(1,422
)
(2,505
)
(2,005
)
Operating Expenses:
Research and development
4,673
5,884
12,867
17,834
Sales and marketing
3,136
6,883
10,291
22,425
General and administrative
3,462
5,908
10,426
14,959
Amortization of intangible assets
2,780
2,558
7,964
7,754
Change in fair value of contingent
consideration
502
(11,647
)
1,770
(9,689
)
Restructuring and other charges
—
—
858
—
Goodwill impairment
—
78,969
—
78,969
Intangible assets impairment
—
7,912
—
7,912
Loss from sale of SurgiBot assets, net
—
—
—
97
Acquisition related costs
—
(40
)
—
5
Total Operating Expenses
14,553
96,427
44,176
140,266
Operating Loss
(15,162
)
(97,849
)
(46,681
)
(142,271
)
Other Income (Expense):
Change in fair value of warrant
liabilities
63
614
(206
)
3,036
Interest income
3
63
34
559
Interest expense
—
(1,230
)
—
(3,407
)
Other income (expense), net
16
(439
)
(54
)
(935
)
Total Other Income (Expense), net
82
(992
)
(226
)
(747
)
Loss before income taxes
(15,080
)
(98,841
)
(46,907
)
(143,018
)
Income tax (expense) benefit
(2)
1,070
1,386
2,549
Net loss
(15,082
)
(97,771
)
(45,521
)
(140,469
)
Deemed dividend related to beneficial
conversion feature of preferred stock
—
—
(412
)
—
Deemed dividend related to conversion of
preferred stock into common stock
—
—
(299
)
—
Net loss attributable to common
stockholders
(15,082
)
(97,771
)
(46,232
)
(140,469
)
Comprehensive loss:
Net loss
(15,082
)
(97,771
)
(45,521
)
(140,469
)
Foreign currency translation gain
(loss)
2,101
(3,670
)
2,191
(4,379
)
Comprehensive loss
$
(12,981
)
$
(101,441
)
$
(43,330
)
$
(144,848
)
Net loss per common share attributable to
common stockholders – basic
$
(0.15
)
$
(5.55
)
$
(0.77
)
$
(8.26
)
Net loss per common share attributable to
common stockholders – diluted
$
(0.15
)
$
(5.55
)
$
(0.77
)
$
(8.34
)
Weighted average number of shares used in
computing net loss per common share – basic
97,538
17,629
59,737
17,015
Weighted average number of shares used in
computing net loss per common share – diluted
97,538
17,741
59,737
17,208
TransEnterix, Inc.
Consolidated Balance
Sheets
(in thousands, except share
amounts)
September 30,
December 31,
2020
2019
(unaudited)
Assets
Current Assets:
Cash and cash equivalents
$
19,964
$
9,598
Accounts receivable, net
903
620
Inventories
10,856
10,653
Other current assets
5,780
7,084
Total Current Assets
37,503
27,955
Restricted cash
1,154
969
Inventories, net of current portion
6,769
7,594
Property and equipment, net
8,702
4,706
Intellectual property, net
24,139
28,596
In-process research and development
—
2,470
Net deferred tax assets
41
—
Other long term assets
1,836
2,489
Total Assets
$
80,144
$
74,779
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable
$
2,973
3,579
Accrued expenses
7,492
8,553
Deferred revenue – current portion
818
818
Notes payable – current portion, net of
debt discount
279
—
Contingent consideration – current
portion
—
73
Total Current Liabilities
11,562
13,023
Long Term Liabilities:
Deferred revenue – less current
portion
—
27
Contingent consideration – less current
portion
2,780
1,011
Notes payable - net of issuance costs
2,536
—
Warrant liabilities
124
2,388
Net deferred tax liabilities
—
1,392
Other long term liabilities
973
1,403
Total Liabilities
17,975
19,244
Commitments and Contingencies
Stockholders’ Equity
Common stock $0.001 par value, 750,000,000
shares authorized at
September 30, 2020 and December 31, 2019;
99,879,029 and
20,691,301 shares issued and outstanding
at September 30, 2020 and
December 31, 2019, respectively
100
21
Preferred stock, $0.01 par value,
25,000,000 shares authorized, no shares issued and outstanding at
September 30, 2020 and December 31, 2019
—
—
Additional paid-in capital
770,368
720,484
Accumulated deficit
(709,120
)
(663,600
)
Accumulated other comprehensive income
(loss)
821
(1,370
)
Total Stockholders’ Equity
62,169
55,535
Total Liabilities and Stockholders’
Equity
$
80,144
74,779
TransEnterix, Inc.
Consolidated Statements of
Cash Flows
(in thousands)
(Unaudited)
Nine Months Ended
September 30,
2020
2019
Operating Activities:
Net loss
$
(45,521
)
$
(140,469
)
Adjustments to reconcile net loss to net
cash and cash equivalents used in
operating activities:
Loss from sale of SurgiBot assets, net
—
97
Goodwill and intangible assets
impairment
—
86,881
Depreciation
2,015
1,651
Amortization of intangible assets
7,964
7,754
Amortization of debt discount and debt
issuance costs
—
1,437
Amortization of short-term investment
discount
—
(328
)
Stock-based compensation
5,800
9,727
Interest expense on deferred consideration
– MST acquisition
—
762
Deferred tax benefit
(1,386
)
(2,549
)
Bad debt expense
—
1,630
Write down of inventory
—
761
Change in fair value of warrant
liabilities
206
(3,036
)
Change in fair value of contingent
consideration
1,770
(9,689
)
Changes in operating assets and
liabilities:
Accounts receivable
(252
)
4,313
Interest receivable
—
3
Inventories
(4,410
)
(14,141
)
Other current and long term assets
2,233
(2.313
)
Accounts payable
(706
)
(914
)
Accrued expenses
(1,191
)
(1,439
)
Deferred revenue
(56
)
(867
)
Other long term liabilities
(376
)
1,613
Net cash and cash equivalents used in
operating activities
(33,910
)
(59,116
)
Investing Activities:
Purchase of short-term investments
—
(12,883
)
Proceeds from maturities of short-term
investments
—
65,000
Purchase of property and equipment
(3
)
(392
)
Net cash and cash equivalents (used in)
provided by investing activities
(3
)
51,725
Financing Activities:
Proceeds from issuance of common stock,
preferred stock and warrants under 2020 financing, net of issuance
costs
13,525
—
Proceeds from issuance of common stock,
net of issuance costs
24,861
23,725
Proceeds from notes payable, net of
issuance costs
2,815
(30
)
Payment of note payable
—
(15,000
)
Taxes paid related to net share settlement
of vesting of restricted stock units
(33
)
(499
)
Payment of contingent consideration
(74
)
—
Proceeds from exercise of stock options
and warrants
3,340
539
Net cash and cash equivalents provided by
financing activities
44,434
8,735
Effect of exchange rate changes on cash
and cash equivalents
30
(191
)
Net increase in cash, cash equivalents and
restricted cash
10,551
1,153
Cash, cash equivalents and restricted
cash, beginning of period
10,567
21,651
Cash, cash equivalents and restricted
cash, end of period
$
21,118
$
22,804
Supplemental Disclosure for Cash Flow
Information
Interest paid
$
—
$
2,073
Supplemental Schedule of Non-cash
Investing and Financing Activities
Transfer of inventories to property and
equipment
$
5,839
$
478
Exchange of common stock for Series B
Warrants
$
2,470
$
—
Transfer of in-process research and
development to intellectual property
$
2,425
$
—
Issuance of common stock – MST
acquisition
$
—
$
6,600
Conversion of preferred stock to common
stock
$
79
$
—
TransEnterix, Inc.
Reconciliation of Non-GAAP
Measures
Adjusted Net Loss and Net Loss
per Share
(in thousands except per share
amounts)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2020
2019
2020
2019
(Unaudited, U.S. Dollars, in
thousands)
Net loss attributable to common
stockholders (GAAP)
$
(15,082)
$
(97,771)
$
(46,232)
$
(140,469)
Adjustments
Loss from sale of SurgiBot assets, net
—
—
—
97
Amortization of intangible assets
2,780
2,558
7,964
7,754
Change in fair value of contingent
consideration
502
(11,647)
1,770
(9,689)
Acquisition related costs
—
(40)
—
5
Change in fair value of warrant
liabilities
(63)
(614)
206
(3,036)
Restructuring and other charges
—
—
858
—
Goodwill impairment
—
78,969
—
78,969
Intangible assets impairment
—
7,912
—
7,912
Deemed dividend related to beneficial
conversion feature of preferred stock
—
—
412
—
Deemed dividend related to conversion of
preferred stock into common stock
—
—
299
—
Adjusted net loss attributable to
common stockholders (Non-GAAP)
$
(11,863)
$
(20,633)
$
(34,723)
$
(58,457)
Three Months Ended
Nine Months Ended
September 30,
September 30,
(Unaudited, per basic share)
2020
2019
2020
2019
Net loss per share attributable to
common stockholders (GAAP)
$
(0.15)
$
(5.55)
$
(0.77)
$
(8.26)
Adjustments
Loss from sale of SurgiBot assets, net
—
—
—
0.01
Amortization of intangible assets
0.03
0.14
0.13
0.46
Change in fair value of contingent
consideration
0.00
(0.66)
0.03
(0.57)
Acquisition related costs
—
(0.00)
—
0.00
Change in fair value of warrant
liabilities
(0.00)
(0.03)
0.00
(0.18)
Restructuring and other charges
—
—
0.01
—
Goodwill impairment
—
4.48
—
4.64
Intangible assets impairment
—
0.45
—
0.46
Deemed dividend related to beneficial
conversion feature of preferred stock
—
—
0.01
—
Deemed dividend related to conversion of
preferred stock into common stock
—
—
0.01
—
Adjusted net loss per share
attributable to common stockholders (Non-GAAP)
$
(0.12)
$
(1.17)
$
(0.58)
$
(3.44)
The non-GAAP financial measures for the three and nine months
ended September 30, 2020 and 2019 provide management with
additional insight into the Company’s results of operations from
period to period without non-recurring and non-cash charges, and
are calculated using the following adjustments:
a) Loss from sale of SurgiBot assets relates to additional
outside service costs to transfer the assets in connection with the
sale of SurgiBot assets to Great Belief International Limited.
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) 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 or upon exercise and changes in
fair value are recognized in the consolidated statements of
operations and comprehensive loss.
f) During the fourth quarter of 2019, we announced the
implementation of a restructuring plan to reduce operating expenses
as we continue the global market development of the Senhance
platform. During March 2020, the Company continued the
restructuring efforts with additional headcount reductions which
resulted in $0.9 million related to severance costs in the nine
months ended September 30, 2020.
g) As of September 30, 2019, goodwill was deemed to be fully
impaired, and the Company recorded an impairment charge of $79.0
million. As of September 30, 2019, IPR&D was deemed to be
significantly impaired, and the Company recorded an impairment
charge of $7.9 million. No impairment charges were recorded during
the three or nine months ended September 30, 2020.
h) During the first quarter of 2020, the Company closed an
underwritten public offering under which it issued, as part of
units and the exercise of an over-allotment option, 25,367,646
Series C Warrants, each to acquire one share of Common Stock at an
exercise price of $0.68 per share, and 25,367,646 Series D
Warrants, each to acquire one share of Common Stock at an exercise
price of $0.68 per share. The Company concluded that the Series C
Warrants and Series D Warrants are considered equity instruments.
The fair value of the Series C and Series D Warrants on the
issuance date was determined using a Black-Scholes Merton model.
The unit proceeds were then allocated to the Series A preferred
stock, Series C Warrants, and Series D Warrants, respectively,
based on their relative fair values. As a result, the Company
determined that a beneficial conversion feature was created by the
difference between the effective conversion price of the preferred
stock of $0.37 and the fair value of the Company's common stock as
of the issuance date of $0.42. The Company therefore recorded a
beneficial conversion charge of $0.4 million as an immediate charge
to earnings available to common stockholders for the nine months
ended September 30, 2020. Upon conversion of the preferred stock to
common stock during the three months ended June 30, 2020, an
additional deemed dividend of $0.3 million was recorded as an
immediate charge to earnings available to common stockholders for
the nine months ended September 30, 2020.
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version on businesswire.com: https://www.businesswire.com/news/home/20201105005840/en/
Investors: Mark Klausner, 443-213-0501
invest@transenterix.com or Media: Terri Clevenger,
203-856-8297 terri.clevenger@icrinc.com
TransEnterix (AMEX:TRXC)
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