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 first quarter of
2020.
Recent Highlights
- Obtained FDA 510(k) clearance for First Machine Vision System
in Robotic Surgery in March 2020
- Received CE Mark approval for Pediatric indication for
Senhance® Surgical System on February 12, 2020
- Raised approximately $15 million in gross proceeds in an
underwritten public offering in March of 2020 and $11.6 million in
ATM offering gross proceeds since January 2020
- Increased the number of procedures performed with Senhance by
43% in the first quarter of 2020 as compared to the first quarter
of 2019
- Reduced anticipated cash burn during 2020 by approximately 35%
as a result of restructuring and cost saving initiatives
“I would first like to say how proud I am of every one of our
team members around the world as they have managed the COVID-19
crisis extremely well despite the challenges and uncertainty that
continue to exist,” said Anthony Fernando, President and CEO of
TransEnterix. “During the first two months of 2020, we generated
significant momentum with the successful execution of our strategy
that we first announced in November 2019. While we have seen some
headwinds as a result of COVID, we believe we are well-positioned
to continue to deliver on our strategy and bring transformative
technology to surgeons, hospitals, and patients globally.”
Commercial and Clinical Update
During the quarter, three hospitals initiated Senhance Digital
Laparoscopy Programs, one in the U.S., one in Europe, and one in
Asia.
In addition, the Company has signed two other agreements with
hospitals, one in EMEA and one in Asia, who are on track to begin
their respective Senhance programs during 2020, once their
respective local environments reopen subsequent to the COVID-19
pandemic.
First Quarter Financial Results
For the three months ended March 31, 2020, the Company reported
revenue of $0.6 million as compared to revenue of $2.2 million in
the three months ended March 31, 2019. Revenue in the first quarter
of 2020 included no system sales, $0.2 million in system leasing
and instruments and accessories, and $0.4 million in services.
For the three months ended March 31, 2020, total operating
expenses were $16.0 million, as compared to $21.6 million in the
three months ended March 31, 2019.
For the three months ended March 31, 2020, net loss attributable
to common stockholders was $17.0 million, or $0.59 per share, as
compared to a net loss of $22.5 million, or $1.35 per share, in the
three months ended March 31, 2019.
For the three months ended March 31, 2020, the adjusted net loss
attributable to common stockholders was $12.0 million, or $0.41 per
share, as compared to an adjusted net loss of $18.7 million, or
$1.12 per share in the three months ended March 31, 2019, after
adjusting for the following charges: change in fair value of
warrant liabilities, amortization of intangible assets, change in
fair value of contingent consideration, restructuring and other
charges, acquisition related costs, deemed dividend related to
beneficial conversion feature of preferred stock and loss from sale
of SurgiBot assets. Adjusted net loss attributable to common
stockholders is a non-GAAP financial measure. See the
reconciliation from GAAP to Non-GAAP Measures below.
The Company had cash and cash equivalents and restricted cash of
approximately $22.7 million as of March 31, 2020.
As a result of restructuring, cost optimization efforts and
recent equity financing, we believe that current cash on hand will
be sufficient to meet our anticipated cash needs into the fourth
quarter of 2020.
COVID-19 Update and Business Outlook
During the fourth quarter of 2019, prior to the impact of the
COVID-19 pandemic on our business, the Company instituted a
corporate restructuring in conjunction with our strategy shift. As
part of that restructuring, we reduced our headcount by
approximately 40% compared to our peak in 2019.
In response to the COVID-19 pandemic, the Company instituted a
number of initiatives aimed at keeping its employees and their
families safe while at the same time ensuring business
continuity.
- Employee safety, including remote working for applicable
employees, as well as establishing safe working environments, in
accordance with all federal, state, local and foreign
directives.
- Expense reduction measures, including cash compensation
reductions for certain members of the management team; partial
furloughs of our commercial, clinical, and service organizations; a
reduction in travel and training spending; cancellation of
participation in all trade shows in 2020; and, as previously
announced, conversion of Board compensation to all equity
compensation, and
- Adding cash to the balance sheet to fund payroll costs and
other approved expenses through the receipt of approximately $2.8
million in the form of a loan under the Paycheck Protection
Program.
The Company believes that the combined impact of the
restructuring along with the initiatives instituted in response to
COVID-19 have reduced the anticipated cash burn during 2020 by
approximately 35%.
The global response to the COVID-19 pandemic has had, and we
expect will continue to have, a negative impact on the Company’s
operations and financial results. Due to the uncertain scope and
duration of the pandemic, and uncertain timing of global recovery
and economic normalization, we are unable to estimate the overall
impacts on our operations and financial results, which could be
material. Accordingly, we are withdrawing our previously provided
full-year 2020 revenue guidance of $3.0 - $3.2 million.
Conference Call
TransEnterix, Inc. will host a conference call on Thursday, May
14, 2020, at 8:00 AM ET to discuss its first quarter 2020 operating
and financial results. To listen to the conference call on your
telephone, please dial 1-844-804-5261 for domestic callers and
1-612-979-9885 for international callers, and reference conference
ID 1946139 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
TransEnterix is a medical device company that is digitizing the
interface between the surgeon and the patient to improve minimally
invasive surgery by addressing the clinical and economic challenges
associated with current laparoscopic and robotic options in today's
value-based healthcare environment. The Company is focused on the
market development activities for, and increasing utilization of,
its Senhance Surgical System, which digitizes laparoscopic
minimally invasive surgery. The system allows for robotic
precision, haptic feedback, surgeon camera control via eye sensing
and improved ergonomics while offering responsible economics. The
Senhance Surgical System is available for sale in the US, the EU,
Japan and select other countries. For more information, visit
www.transenterix.com.
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 the change in fair value of warrant
liabilities, amortization of intangible assets, change in fair
value of contingent consideration, restructuring and other charges,
acquisition-related costs, deemed dividend related to beneficial
conversion feature of the preferred stock and the loss from sale of
SurgiBot assets. 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 System,
as well as 2020 first quarter financial results and plans for 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 we will be
well-positioned to continue to deliver on our strategy and bring
transformative technology to surgeons, hospitals and patients
globally, whether we have cash on hand sufficient to meet our
anticipated cash needs into the fourth quarter of 2020 and whether
we can meet the operational goals we have set forth for 2020. 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. 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
March 31,
2020
2019
Revenue:
Product
$
242
$
1,829
Service
358
352
Total revenue
600
2,181
Cost of revenue:
Product
913
1,273
Service
825
1,194
Total cost of revenue
1,738
2,467
Gross loss
(1,138
)
(286
)
Operating Expenses
Research and development
3,934
5,655
Sales and marketing
4,253
7,674
General and administrative
3,349
4,560
Amortization of intangible assets
2,564
2,611
Change in fair value of contingent
consideration
1,056
998
Restructuring and other charges
858
—
Acquisition related costs
—
45
Loss from sale of SurgiBot assets, net
—
97
Total Operating Expenses
16,014
21,640
Operating Loss
(17,152
)
(21,926
)
Other Income (Expense)
Change in fair value of warrant
liabilities
(155
)
(106
)
Interest income
27
318
Interest expense
—
(1,116
)
Other expense
(15
)
(305
)
Total Other Income (Expense), net
(143
)
(1,209
)
Loss before income taxes
$
(17,295
)
$
(23,135
)
Income tax benefit
697
610
Net loss
$
(16,598
)
$
(22,525
)
Deemed dividend related to beneficial
conversion feature of preferred stock
(412
)
—
Net loss attributable to common
stockholders
$
(17,010
)
$
(22,525
)
Other comprehensive loss
Net loss
$
(16,598
)
$
(22,525
)
Foreign currency translation loss
(872
)
(1,949
)
Comprehensive loss
$
(17,470
)
$
(24,474
)
Net loss per common share attributable to
common stockholders – basic and diluted
$
(0.59
)
$
(1.35
)
Weighted average number of shares used in
computing net loss per common share – basic and diluted
28,906
16,677
TransEnterix, Inc.
Consolidated Balance
Sheets
(in thousands, except share
amounts)
March 31,
December 31,
2020
2019
(Unaudited)
Assets
Current Assets
Cash and cash equivalents
$
21,816
$
9,598
Accounts receivable, net
951
620
Inventories
9,829
10,653
Other current assets
7,341
7,084
Total Current Assets
39,937
27,955
Restricted cash
925
969
Inventories, net of current portion
7,201
7,594
Property and equipment, net
6,060
4,706
Intellectual property, net
27,939
28,596
In-process research and development
—
2,470
Other long term assets
2,168
2,489
Total Assets
$
84,230
$
74,779
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable
$
4,047
$
3,579
Accrued expenses
8,026
8,553
Deferred revenue – current portion
903
818
Contingent consideration – current
portion
72
73
Total Current Liabilities
13,048
13,023
Long Term Liabilities
Deferred revenue – less current
portion
13
27
Contingent consideration – less current
portion
2,068
1,011
Warrant liabilities
73
2,388
Net deferred tax liabilities
649
1,392
Other long term liabilities
1,217
1,403
Total Liabilities
17,068
19,244
Commitments and Contingencies
Stockholders’ Equity
Common stock $0.001 par value, 750,000,000
shares authorized at March 31, 2020 and December 31, 2019;
47,078,314 and 20,691,301 shares issued and outstanding at March
31, 2020 and December 31, 2019, respectively
47
21
Preferred stock $0.01 par value,
25,000,000 shares authorized, including 7,937,057 and 0 shares of
Series A Convertible Preferred Stock at March 31, 2020 and December
31, 2019, and 4,884,117 and 0 shares issued and outstanding at
March 31, 2020 and December 31, 2019, respectively
49
—
Additional paid-in capital
749,506
720,484
Accumulated deficit
(680,198
)
(663,600
)
Accumulated other comprehensive loss
(2,242
)
(1,370
)
Total Stockholders’ Equity
67,162
55,535
Total Liabilities and Stockholders’
Equity
$
84,230
$
74,779
TransEnterix, Inc.
Consolidated Statements of
Cash Flows
(in thousands)
Three Months Ended
March 31,
2020
2019
Operating Activities
(Unaudited)
Net loss
$
(16,598
)
$
(22,525
)
Adjustments to reconcile net loss to net
cash and cash equivalents used in operating activities:
Loss from sale of SurgiBot assets, net
—
97
Depreciation
570
563
Amortization of intangible assets
2,564
2,611
Amortization of debt discount and debt
issuance costs
—
330
Amortization of short-term investment
discount
—
(220)
Stock-based compensation
1,923
2,981
Interest expense on deferred consideration
– MST acquisition
—
204
Deferred tax benefit
(697
)
(610
)
Change in fair value of warrant
liabilities
155
106
Change in fair value of contingent
consideration
1,056
998
Changes in operating assets and
liabilities:
Accounts receivable
(340
)
(129
)
Inventories
(1,063
)
(4,621
)
Other current and long term assets
(76
)
(2,663
)
Accounts payable
509
286
Accrued expenses
(433
)
(2,518
)
Deferred revenue
83
(197
)
Other long term liabilities
(130
)
1,112
Net cash and cash equivalents used in
operating activities
(12,477
)
(24,195
)
Investing Activities
Purchase of short-term investments
—
(10,894
)
Proceeds from maturities of short-term
investments
—
40,000
Purchase of property and equipment
(2
)
(118
)
Net cash and cash equivalents (used in)
provided by investing activities
(2
)
28,988
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 and
warrants, net of issuance costs
11,212
—
Taxes paid related to net share settlement
of vesting of restricted stock units
(33
)
(499
)
Proceeds from exercise of stock options
and warrants
—
236
Net cash and cash equivalents provided by
(used in) financing activities
24,704
(263
)
Effect of exchange rate changes on cash
and cash equivalents
(51
)
(58
)
Net increase in cash, cash equivalents and
restricted cash
12,174
4,472
Cash, cash equivalents and restricted
cash, beginning of period
10,567
21,651
Cash, cash equivalents and restricted
cash, end of period
$
22,741
$
26,123
Supplemental Disclosure for Cash Flow
Information
Interest paid
$
—
$
750
Supplemental Schedule of Non-cash
Investing and Financing Activities
Transfer of inventories to property and
equipment
$
1,958
$
86
Exchange of common stock for Series B
Warrants
$
2,470
—
Transfer of in-process research and
development to intellectual property
$
2,425
—
Conversion of preferred stock to common
stock
$
30
—
Reconciliation of Non-GAAP
Measures
Adjusted Net Loss and Net Loss
per Share
(in thousands except per share
amounts)
(Unaudited)
Three Months Ended
March 31,
2020
2019
(Unaudited, U.S. Dollars, in
thousands)
Net Loss Attributable to Common
Stockholders (GAAP)
$
(17,010
)
$
(22,525
)
Adjustments
Loss from sale of SurgiBot assets, net
—
97
Amortization of intangible assets
2,564
2,611
Change in fair value of contingent
consideration
1,056
998
Acquisition related costs
—
45
Change in fair value of warrant
liabilities
155
106
Restructuring and other charges
858
—
Deemed dividend related to beneficial
conversion feature of preferred stock
412
—
Adjusted Net Loss Attributable to
Common Stockholders (Non-GAAP)
$
(11,965
)
$
(18,668
)
Three Months Ended
March 31,
2020
2019
(Unaudited, per basic share)
Net Loss Attributable to Common
Stockholders (GAAP)
$
(0.59
)
$
(1.35
)
Adjustments
Loss from sale of SurgiBot assets, net
—
0.00
Amortization of intangible assets
0.09
0.16
Change in fair value of contingent
consideration
0.04
0.06
Acquisition related costs
—
0.00
Change in fair value of warrant
liabilities
0.01
0.01
Restructuring and other charges
0.03
—
Deemed dividend related to beneficial
conversion feature of preferred stock
0.01
—
Adjusted Net Loss Attributable to
Common Stockholders (Non-GAAP)
$
(0.41
)
$
(1.12
)
The non-GAAP financial measures for the three months ended March
31, 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.
g)
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 three months
ended March 31, 2020.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200514005200/en/
Investors: Mark Klausner, 443-213-0501
invest@transenterix.com or Media: Terri Clevenger,
203-856-8297 terri.clevenger@icrinc.com
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