Press Release
TransEnterix, Inc. Reports Operating and Financial Results for the Third Quarter 2018
Recent Highlights
-
Total revenue of
$5.4 million , including the sale of four Senhance™Systems in the third quarter - Acquired the technology assets and IP of MST Medical Surgery Technologies
-
Received
FDA 510(k) clearance for 3mm diameter instruments - Received CE Mark approval for Senhance™ Ultrasonic Instrument System
“We are proud of the progress we made during the third quarter, as we
continued to drive adoption of the Senhance System by executing on our
sales and marketing strategy and continuing to develop the capabilities
of the Senhance System to deliver on our vision of digital laparoscopy,”
said
Commercial and Clinical Update
In the quarter ended
On
On
Acquisition Agreement with MST
On
The addition of MST's technology, IP portfolio, and R&D team will
support and accelerate
Third Quarter Financial Highlights
For the three months ended
For the three months ended
For the three months ended
For the three months ended
The Company had cash and short term investments of approximately
Conference Call
About
Non-GAAP Measures
The adjusted net loss and adjusted net loss per share presented in this press release are non-GAAP measures. The adjustments relate to the change in fair value of warrant liabilities, reversal of transfer fee accrual, amortization of intangible assets, change in fair value of contingent consideration, acquisition-related costs, loss on extinguishment of debt and SurgiBot sale gain/loss. 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 2018 third
quarter results and plans for 2018 and beyond. These statements and
other statements regarding our future plans and goals constitute
"forward looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and 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 whether we are
driving global adoption of Senhance by increasing the applicability of
the system for a wide range of surgeons, patients and geographies,
whether we will commercially launch the Ultrasonic Instrument System in
CE Mark countries in the fourth quarter of 2018, whether the acquisition
of MST’s technology, IP portfolio and R&D team will support and
accelerate TransEnterix’s vision to leverage its Senhance Surgical
System to deliver digital laparoscopy, and whether the Company has
sufficient cash and additional debt proceeds under the current agreement
to fund the business through 2020. For a discussion of the risks and
uncertainties associated with
| 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, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Revenue | $ | 5,422 | $ | 183 | $ | 16,578 | $ | 3,713 | ||||||||
| Cost of revenue | 4,249 | 921 | 10,536 | 3,227 | ||||||||||||
| Gross profit (loss) | 1,173 | (738 | ) | 6,042 | 486 | |||||||||||
| Operating Expenses (Income) | ||||||||||||||||
| Research and development | 4,838 | 4,889 | 15,384 | 16,814 | ||||||||||||
| Sales and marketing | 5,819 | 4,528 | 17,835 | 12,000 | ||||||||||||
| General and administrative | 3,686 | 2,920 | 9,989 | 8,688 | ||||||||||||
| Amortization of intangible assets | 2,674 | 1,821 | 8,244 | 5,144 | ||||||||||||
| Change in fair value of contingent consideration | (1,358 | ) | 773 | 81 | 1,226 | |||||||||||
| Issuance costs for warrants | — | — | — | 627 | ||||||||||||
| Acquisition related costs | 345 | — | 345 | — | ||||||||||||
| Gain from sale of SurgiBot assets, net | 44 | — | (11,915 | ) | — | |||||||||||
| Reversal of transfer fee accrual | (2,994 | ) | — | (2,994 | ) | — | ||||||||||
| Total Operating Expenses (Income) | 13,054 | 14,931 | 36,969 | 44,499 | ||||||||||||
| Operating Loss | (11,881 | ) | (15,669 | ) | (30,927 | ) | (44,013 | ) | ||||||||
| Other (Expense) Income | ||||||||||||||||
| Change in fair value of warrant liabilities | (8,760 | ) | (22,887 | ) | (24,438 | ) | (25,213 | ) | ||||||||
| Interest income | 391 | 62 | 982 | 124 | ||||||||||||
| Interest expense | (685 | ) | (563 | ) | (3,398 | ) | (1,581 | ) | ||||||||
| Other expense | (52 | ) | (194 | ) | (109 | ) | (294 | ) | ||||||||
| Total Other (Expense) Income, net | (9,106 | ) | (23,582 | ) | (26,963 | ) | (26,964 | ) | ||||||||
| Loss before income taxes | $ | (20,987 | ) | $ | (39,251 | ) | $ | (57,890 | ) | $ | (70,977 | ) | ||||
| Income tax benefit | 781 | 738 | 2,554 | 2,337 | ||||||||||||
| Net loss | $ | (20,206 | ) | $ | (38,513 | ) | $ | (55,336 | ) | $ | (68,640 | ) | ||||
| Other comprehensive loss | ||||||||||||||||
| Foreign currency translation (loss) gain | (561 | ) | 2,952 | (2,651 | ) | 9,515 | ||||||||||
| Comprehensive loss | $ | (20,767 | ) | $ | (35,561 | ) | $ | (57,987 | ) | $ | (59,125 | ) | ||||
| Net loss per share - basic and diluted | $ | (0.10 | ) | $ | (0.26 | ) | $ | (0.27 | ) | $ | (0.51 | ) | ||||
| Weighted average common shares outstanding - basic and diluted | 209,088 | 149,516 | 204,531 | 134,622 | ||||||||||||
| TransEnterix, Inc. | ||||||||
| Consolidated Balance Sheets | ||||||||
| (in thousands, except share amounts) | ||||||||
| September 30, | December 31, | |||||||
| 2018 | 2017 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 41,748 | $ | 91,217 | ||||
| Short-term investments | 39,670 | — | ||||||
| Accounts receivable, net | 5,669 | 1,536 | ||||||
| Inventories | 10,242 | 10,817 | ||||||
| Interest receivable | 51 | 80 | ||||||
| Other current assets | 9,039 | 9,344 | ||||||
| Total Current Assets | 106,419 | 112,994 | ||||||
| Restricted cash | 663 | 6,389 | ||||||
| Property and equipment, net | 6,659 | 6,670 | ||||||
| Intellectual property, net | 42,925 | 52,638 | ||||||
| Goodwill | 70,669 | 71,368 | ||||||
| Other long term assets | 224 | 192 | ||||||
| Total Assets | $ | 227,559 | $ | 250,251 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 2,785 | $ | 3,771 | ||||
| Accrued expenses | 7,432 | 10,974 | ||||||
| Deferred revenue – current portion | 1,270 | 1,088 | ||||||
| Deferred gain from sale of SurgiBot assets | — | 7,500 | ||||||
| Contingent consideration – current portion | 555 | 719 | ||||||
| Notes payable - current portion, net of debt discount | — | 4,788 | ||||||
| Total Current Liabilities | 12,042 | 28,840 | ||||||
| Long Term Liabilities | ||||||||
| Deferred revenue – less current portion | 131 | — | ||||||
| Contingent consideration – less current portion | 11,549 | 11,699 | ||||||
| Notes payable - less current portion, net of debt discount | 19,106 | 8,385 | ||||||
| Warrant liabilities | 15,044 | 14,090 | ||||||
| Net deferred tax liabilities | 5,624 | 8,389 | ||||||
| Total Liabilities | 63,496 | 71,403 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity | ||||||||
|
Common stock $0.001 par value, 750,000,000 shares authorized at
September 30, 2018 and December 31, 2017; 212,631,801 and 199,282,003 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively |
212 | 199 | ||||||
| Additional paid-in capital | 664,439 | 621,261 | ||||||
| Accumulated deficit | (502,965 | ) | (447,640 | ) | ||||
| Accumulated other comprehensive income | 2,377 | 5,028 | ||||||
| Total Stockholders’ Equity | 164,063 | 178,848 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 227,559 | $ | 250,251 | ||||
| TransEnterix, Inc. | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| (in thousands) | ||||||||
| (Unaudited) | ||||||||
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2018 | 2017 | |||||||
| Operating Activities | ||||||||
| Net loss | $ | (55,336 | ) | $ | (68,640 | ) | ||
|
Adjustments to reconcile net loss to net cash and cash equivalents
used in
operating activities: |
||||||||
| Gain from sale of SurgiBot assets, net | (11,915 | ) | — | |||||
| Depreciation | 1,876 | 1,816 | ||||||
| Amortization of intangible assets | 8,244 | 5,144 | ||||||
| Amortization of debt discount and debt issuance costs | 575 | 212 | ||||||
| Amortization of held to maturity investment discount | (51) | — | ||||||
| Stock-based compensation | 6,694 | 5,321 | ||||||
| Non-employee warrant awards | — | 571 | ||||||
| Deferred tax benefit | (2,572 | ) | (2,320 | ) | ||||
| Loss on extinguishment of debt | 1,400 | 308 | ||||||
| Change in fair value of warrant liabilities | 24,438 | 25,213 | ||||||
| Change in fair value of contingent consideration | 81 | 1,226 | ||||||
| Reversal of transfer fee accrual | (2,994 | ) | — | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (4,262 | ) | 886 | |||||
| Interest receivable | 28 | 79 | ||||||
| Inventories | (1,276 | ) | (3,519 | ) | ||||
| Other current and long term assets | 27 | (2,454 | ) | |||||
| Accounts payable | (903 | ) | (1,599 | ) | ||||
| Accrued expenses | (56 | ) | 207 | |||||
| Deferred revenue | 361 | — | ||||||
| Net cash and cash equivalents used in operating activities | (35,641 | ) | (37,549 | ) | ||||
| Investing Activities | ||||||||
| Purchase of short-term investments | (39,619 | ) | — | |||||
| Proceeds related to sale of SurgiBot assets, net | 4,496 | — | ||||||
| Purchase of property and equipment | (490 | ) | (1,488 | ) | ||||
| Purchase of intellectual property | — | (418 | ) | |||||
| Proceeds from sale of property and equipment | 32 | — | ||||||
| Net cash and cash equivalents used in investing activities | (35,581 | ) | (1,906 | ) | ||||
| Financing Activities | ||||||||
| Payment of notes payable | (15,305 | ) | (13,343 | ) | ||||
| Proceeds from issuance of debt and warrants, net of issuance costs | 18,828 | 12,956 | ||||||
| Payment of contingent consideration | (395 | ) | (395 | ) | ||||
| Proceeds from issuance of common stock and warrants, net of issuance costs | 279 | 31,546 | ||||||
| Taxes paid related to net share settlement of vesting of restricted stock units | (1,662 | ) | (168 | ) | ||||
| Proceeds from issuance of common stock related to sale of SurgiBot assets | 3,000 | — | ||||||
| Proceeds from exercise of stock options and warrants | 11,396 | 5,449 | ||||||
| Net cash and cash equivalents provided by financing activities | 16,141 | 36,045 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (114 | ) | (311 | ) | ||||
| Net decrease in cash, cash equivalents and restricted cash | (55,195 | ) | (3,721 | ) | ||||
| Cash, cash equivalents and restricted cash, beginning of period | 97,606 | 34,590 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 42,411 | $ | 30,869 | ||||
| Supplemental Disclosure for Cash Flow Information | ||||||||
| Interest paid | $ | 1,135 | $ | 597 | ||||
| Supplemental Schedule of Noncash Investing and Financing Activities | ||||||||
| Transfer of inventories to property and equipment | $ | 2,160 | $ | — | ||||
| Transfer of property and equipment to inventories | $ | 648 | $ | — | ||||
| Issuance of common stock as contingent consideration | $ | — | $ | 5,227 | ||||
| Relative fair value of warrants issued with debt | $ | — | $ | 300 | ||||
| Reclass of warrant liability to common stock and additional paid-in capital | $ | 23,484 | $ | 2,289 | ||||
| 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, | |||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||
| (Unaudited, U.S. Dollars, in thousands) | ||||||||||||
| Net loss | $ | (20,206) | $ | (38,513) | $ | (55,336) | $ | (68,640) | ||||
| Adjustments | ||||||||||||
| Gain from sale of SurgiBot assets, net | 44 | — | (11,915) | — | ||||||||
| Amortization of intangible assets | 2,674 | 1,821 | 8,244 | 5,144 | ||||||||
| Change in fair value of contingent consideration | (1,358) | 773 | 81 | 1,226 | ||||||||
|
Acquisition related costs |
345 | — | 345 | — | ||||||||
|
Reversal of transfer fee accrual |
(2,994) | — | (2,994) | — | ||||||||
| Change in fair value of warrant liabilities | 8,760 | 22,887 | 24,438 | 25,213 | ||||||||
| Loss on extinguishment of debt | — | — | 1,400 | 308 | ||||||||
| Adjusted net loss | $ | (12,735) | $ | (13,032) | $ | (35,737) | $ | (36,749) | ||||
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| (Unaudited, per diluted share) | 2018 | 2017 | 2018 | 2017 | ||||||||
| Net loss per share | $ | (0.10) | $ | (0.26) | $ | (0.27) | $ | (0.51) | ||||
| Adjustments | ||||||||||||
| Gain from sale of SurgiBot assets | 0.00 | — | (0.06) | — | ||||||||
| Amortization of intangible assets | 0.01 | 0.01 | 0.04 | 0.04 | ||||||||
| Change in fair value of contingent consideration | (0.01) | 0.01 | 0.00 | 0.01 | ||||||||
|
Acquisition related costs |
0.00 | — | 0.00 | — | ||||||||
|
Reversal of transfer fee accrual |
(0.01) | — | (0.01) | — | ||||||||
| Change in fair value of warrant liabilities | 0.05 | 0.15 | 0.12 | 0.19 | ||||||||
| Loss on extinguishment of debt | — | — | 0.01 | 0.00 | ||||||||
| Adjusted net loss per share | $ | (0.06) | $ | (0.09) | $ | (0.17) | $ | (0.27) | ||||
The non-GAAP financial measures for the three and nine months ended
a) Gain from sale of SurgiBot assets relates to amounts received from
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) In connection with the Senhance acquisition, the Company recorded an
accrual in 2015 third quarter for potential assessment of additional
transfer fees. In
f) 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 and changes in fair value are recognized in the consolidated statements of operations and comprehensive loss.
g) In
View source version on businesswire.com: https://www.businesswire.com/news/home/20181108005898/en/
Source:
For TransEnterix, Inc.
Investors:
Mark Klausner, +1
443-213-0501
invest@transenterix.com
or
Media:
Joanna
Rice, +1 951-751-1858
joanna@greymattermarketing.com