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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Title of each class
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Name of each exchange on which registered
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$0.001 par value per share
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| (d) | Exhibit | |||
| Exhibit No. | Description | |||
| 99.1 | Press release dated August 5, 2021 | |||
| 99.2 | August 5, 2021 conference call transcript | |||
| 104 | Cover Page Interactive Data File (formatted in inline XBRL) |
| ASENSUS SURGICAL, INC. | |
| Date: August 6, 2021 | /s/ Shameze Rampertab |
| Shameze Rampertab | |
| Executive Vice President and Chief Financial Officer |
EXHIBIT 99.1
Asensus Surgical, Inc. Reports Operating and Financial Results for the Second Quarter 2021
August 5, 2021
RESEARCH TRIANGLE PARK, N.C.--(BUSINESS WIRE)-- Asensus Surgical, Inc. (NYSE American: ASXC), a medical device company that is digitizing the interface between the surgeon and the patient to pioneer a new era of Performance-Guided Surgery™, today announced its operating and financial results for the second quarter 2021.
Recent Highlights
|
● |
Signed two lease agreements with hospitals to install Senhance® Surgical Systems |
|
● |
Over 1,000 global procedures performed using Senhance during the first half of 2021, the highest first half performance achieved |
|
● |
Over 150 procedures have been performed utilizing the Intelligent Surgical Unit™(ISU™) |
|
● |
Published multiple clinical papers, including results from the first milestone study comparing health economic outcomes versus another robotic system as well as traditional laparoscopy |
|
● |
Submitted FDA 510(k) and received clearance for 5 mm articulating instruments |
|
● |
Made FDA 510(k) submission for expanded capabilities of the ISU |
|
● |
Appointed two new board members: Dr. Elizabeth Kwo and Kevin Hobert |
“During the quarter, we continued to drive strong adoption and utilization trends while making progress towards our strategic focus areas, including the expansion of clinical evidence, growth of our installed base, increased procedure volumes, the expansion of our portfolio and the continued technological development of Senhance . Importantly, I am encouraged by our procedure volumes in the United States which point to both a macro recovery in the business and an acceleration in adoption by surgeons,” said Anthony Fernando, President and CEO of Asensus Surgical. “Looking ahead, we plan to leverage this momentum, in conjunction with the progress made towards the ongoing development of Senhance, to drive increased global adoption.”
Commercial and Clinical Update
Thus far in 2021, the Company has signed agreements with two hospitals in Europe, both of which were previously announced. Inselspital, University Hospital Bern, Switzerland has entered into an agreement to lease a Senhance Surgical System and has initiated its clinical program. LAKUMED hospitals has entered into an agreement to lease and utilize a Senhance Surgical System. The system will be utilized at the Landshut-Achdorf hospital, just outside of Munich, Germany and is anticipated to begin its clinical program shortly.
During the second quarter of 2021, procedure volumes increased by over 175% over the prior year quarter, with growth across all geographies. For the second quarter in a row, over 500 procedures were completed, bringing total procedures completed during the first half of 2021 to over 1,000. To date, over 5,000 procedures have been performed globally.
Over 150 procedures have been performed utilizing the ISU on Senhance Systems. Feedback from initial pilot sites has been positive and the Company anticipates installing additional ISU units over the balance of the year.
A study was published in The International Journal of Medical Robotics and Computer Assisted Surgery comparing health economic outcomes of the Senhance System versus another robotic system, as well as traditional laparoscopy (https://pubmed.ncbi.nlm.nih.gov/33860631/). According to the study, Senhance was less than half the cost of procedures performed on another robotic platform and was comparable to the cost of traditional laparoscopically assisted vaginal hysterectomy. The study also found that case times for Senhance and the other robotic system were similar.
The Company previously submitted a 510(k) to the FDA for 5 mm articulating instruments to be utilized on the Senhance Surgical System technology platform. On July 28, 2021, the Company announced that it had received 510(k) clearance for these instruments, which offer better access to difficult-to-reach areas of the anatomy by providing two additional degrees of freedom.
On July 14, 2021, the Company submitted an FDA 510(k) for an expansion of capabilities on the ISU. The current features of the ISU enable machine vision driven control of the camera for a surgeon by responding to commands and recognizing certain objects and locations in the surgical field and allow a surgeon to change the field of view using instruments. The new features would expand the ISU’s augmented intelligence capabilities to include more advanced features to gather real time data during surgery based on the anatomical structures in the surgical field.
Second Quarter Financial Results
For the three months ended June 30, 2021, the Company reported revenue of $1.1 million as compared to revenue of $0.7 million in the three months ended June 30, 2020. Revenue in the second quarter of 2021 included $0.4 million in Senhance system revenue, $0.3 million in instruments and accessories, and $0.4 million in services.
For the three months ended June 30, 2021, total net operating expenses were $14.8 million, as compared to $13.6 million in the three months ended June 30, 2020.
For the three months ended June 30, 2021, net loss was $13.2 million, or $0.06 per common share, as compared to a net loss of $14.1 million, or $0.27 per common share, in the three months ended June 30, 2020.
For the three months ended June 30, 2021, the adjusted net loss was $12.7 million, or $0.05 per common share, as compared to an adjusted net loss of $10.9 million, or $0.21 per common share in the three months ended June 30, 2020, after adjusting for the following charges: amortization of intangible assets, change in fair value of contingent consideration, change in fair value of warrant liabilities, gain on extinguishment of debt, and deemed dividend related to beneficial conversion feature of preferred stock, all of which are non-cash charges. Adjusted net loss is a non-GAAP financial measure. See the reconciliation from GAAP to Non-GAAP Measures below.
Balance Sheet Updates
The Company had cash and cash equivalents and restricted cash of approximately $158.1 million as of June 30, 2021.
Board of Directors Expansion and New Board Member Appointments
On July 26, 2021, the Company announced the expansion of its Board of Directors, and the appointment of two new board members, Dr. Elizabeth Kwo, and Kevin Hobert. In addition to bringing the Payor and Provider perspectives to the Board, these new Directors bring predictive analytics, big data, and digital imaging experience, which are valuable skills that will help realize the vision of Performance-Guided Surgery. Subsequent to these additions, the Company has nine members of its Board of Directors.
Upcoming 2021 Milestones
For the full year 2021, the Company continues to expect to install 10 - 12 new Senhance Surgical Systems.
During the second half of 2021, the Company expects to publish multiple clinical papers in peer reviewed journals highlighting health economic evidence comparing Senhance, robotics and laparoscopy in General Surgery and Gynecology across multiple procedures, specialties and hospitals.
Conference Call
Asensus Surgical, Inc. will host a conference call on Thursday, August 5, 2021, at 4:30 PM ET to discuss its second quarter 2021 operating and financial results. To listen to the conference call on your telephone, please dial 1-800-736-4610 for domestic callers and 1-212-231-2910 for international callers, and reference conference ID 21995990 approximately ten minutes prior to the start time. To access the live audio webcast or archived recording, use the following link https://ir.asensus.com/events-and-presentations. The replay will be available on the Company’s website.
About Asensus Surgical, Inc.
Asensus Surgical, Inc. is digitizing the interface between the surgeon and patient to pioneer a new era of Performance-Guided Surgery by unlocking clinical intelligence for surgeons to enable consistently superior outcomes and a new standard of surgery. This builds upon the foundation of Digital Laparoscopy with the Senhance Surgical System powered by the Intelligent Surgical Unit (ISU) to increase surgeon control and reduce surgical variability. With the addition of machine vision, augmented intelligence, and deep learning capabilities throughout the surgical experience, we intend to holistically address the current clinical, cognitive and economic shortcomings that drive surgical outcomes and value-based healthcare. Learn more about Performance-Guided Surgery and Digital Laparoscopy with the Senhance Surgical System here: www.senhance.com. Now available for sale in the US, EU, Japan, Russia, and select other countries. For a complete list of indications for use, visit: www.senhance.com/indications. For more information, visit www.asensus.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 amortization of intangible assets, change in fair value of contingent consideration, change in fair value of warrant liabilities, gain on extinguishment of debt, and for 2020, restructuring and other charges, and deemed dividend relating to 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 2021 second quarter results and plans for 2021. 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 increased procedure volumes in the United States, along with leveraging our current momentum, in conjunction with the progress towards the ongoing development of Senhance, will drive increased global adoption of the Senhance Surgical System, whether we will install additional ISU units over the balance of 2021, whether we are able install 10-12 new Senhance Surgical Systems for the full year 2021, whether we can manage the continuing impact of the COVID-19 pandemic on our business and whether during the second half of 2021, we will publish multiple clinical papers in peer reviewed journals highlighting health economic evidence comparing Senhance, robotics and General Surgery and Gynecology across multiple procedures, specialties and hospitals. For a discussion of the risks and uncertainties associated with Asensus Surgical'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, 2020, which we filed with the SEC on March 11, 2021. 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.
Asensus Surgical, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands except per share amounts)
(Unaudited)
|
Three Months Ended |
Six Months Ended |
|||||||||||||||
|
June 30, |
June 30, |
|||||||||||||||
|
2021 |
2020 |
2021 |
2020 |
|||||||||||||
|
Revenue: |
||||||||||||||||
|
Product |
$ | 696 | $ | 315 | $ | 2,400 | $ | 557 | ||||||||
|
Service |
406 | 340 | 785 | 698 | ||||||||||||
|
Total revenue |
1,102 | 655 | 3,185 | 1,255 | ||||||||||||
|
Cost of revenue: |
||||||||||||||||
|
Product |
1,478 | 720 | 3,858 | 1,633 | ||||||||||||
|
Service |
869 | 693 | 1,601 | 1,518 | ||||||||||||
|
Total cost of revenue |
2,347 | 1,413 | 5,459 | 3,151 | ||||||||||||
|
Gross loss |
(1,245 |
) |
(758 |
) |
(2,274 |
) |
(1,896 |
) |
||||||||
|
Operating Expenses: |
||||||||||||||||
|
Research and development |
4,089 | 4,257 | 8,304 | 8,191 | ||||||||||||
|
Sales and marketing |
3,562 | 2,901 | 6,615 | 7,154 | ||||||||||||
|
General and administrative |
3,848 | 3,619 | 7,840 | 6,968 | ||||||||||||
|
Amortization of intangible assets |
2,862 | 2,619 | 5,729 | 5,183 | ||||||||||||
|
Change in fair value of contingent consideration |
478 | 212 | 735 | 1,268 | ||||||||||||
|
Restructuring and other charges |
— | — | — | 858 | ||||||||||||
|
Total Operating Expenses |
14,839 | 13,608 | 29,223 | 29,622 | ||||||||||||
|
Operating Loss |
(16,084 |
) |
(14,366 |
) |
(31,497 |
) |
(31,518 |
) |
||||||||
|
Other Income (Expense): |
||||||||||||||||
|
Gain on extinguishment of debt |
2,847 | — | 2,847 | — | ||||||||||||
|
Change in fair value of warrant liabilities |
— | (114 |
) |
(1,981 |
) |
(269 |
) |
|||||||||
|
Interest income |
79 | 4 | 131 | 31 | ||||||||||||
|
Interest expense |
(5 |
) |
— | (12 |
) |
— | ||||||||||
|
Other expense, net |
(7 |
) |
(55 |
) |
(36 |
) |
(70 |
) |
||||||||
|
Total Other Income (Expense), net |
2,914 | (165 |
) |
949 | (308 |
) |
||||||||||
|
Loss before income taxes |
(13,170 |
) |
(14,531 |
) |
(30,548 |
) |
(31,826 |
) |
||||||||
|
Income tax (expense) benefit |
(2 |
) |
691 | 36 | 1,388 | |||||||||||
|
Net loss |
(13,172 |
) |
(13,840 |
) |
(30,512 |
) |
(30,438 |
) |
||||||||
|
Deemed dividend related to beneficial conversion feature of preferred stock |
— | — | — | (412 |
) |
|||||||||||
|
Deemed dividend related to conversion of preferred stock into common stock |
— | (299 |
) |
— | (299 |
) |
||||||||||
|
Net loss attributable to common stockholders |
(13,172 |
) |
(14,139 |
) |
(30,512 |
) |
(31,149 |
) |
||||||||
|
Comprehensive loss: |
||||||||||||||||
|
Net loss |
(13,172 |
) |
(13,840 |
) |
(30,512 |
) |
(30,438 |
) |
||||||||
|
Foreign currency translation gain (loss) |
472 | 962 | (1,466 |
) |
90 | |||||||||||
|
Comprehensive loss |
$ | (12,700 |
) |
$ | (12,878 |
) |
$ | (31,978 |
) |
$ | (30,348 |
) |
||||
|
Net loss per common share attributable to common stockholders – basic and diluted |
$ | (0.06 |
) |
$ | (0.27 |
) |
$ | (0.14 |
) |
$ | (0.77 |
) |
||||
|
Weighted average number of shares used in computing net loss per common share – basic and diluted |
233,250 | 52,351 | 219,199 | 40,628 | ||||||||||||
Asensus Surgical, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share amounts)
(Unaudited)
|
June 30, |
December 31, |
|||||||
|
2021 |
2020 |
|||||||
|
Assets |
||||||||
|
Current Assets: |
||||||||
|
Cash and cash equivalents |
$ | 157,078 | $ | 16,363 | ||||
|
Accounts receivable, net |
960 | 1,115 | ||||||
|
Inventories |
12,523 | 10,034 | ||||||
|
Other current assets |
3,446 | 6,501 | ||||||
|
Total Current Assets |
174,007 | 34,013 | ||||||
|
Restricted cash |
1,045 | 1,166 | ||||||
|
Inventories, net of current portion |
6,590 | 8,813 | ||||||
|
Property and equipment, net |
9,876 | 10,342 | ||||||
|
Intellectual property, net |
15,943 | 22,267 | ||||||
|
Net deferred tax assets |
288 | 307 | ||||||
|
Operating lease right-of-use assets, net |
4,099 | 1,164 | ||||||
|
Other long term assets |
156 | 186 | ||||||
|
Total Assets |
$ | 212,004 | $ | 78,258 | ||||
|
Liabilities and Stockholders’ Equity |
||||||||
|
Current Liabilities: |
||||||||
|
Accounts payable |
$ | 2,653 | $ | 1,965 | ||||
|
Accrued expenses |
4,007 | 5,615 | ||||||
|
Operating lease liabilities – current portion |
861 | 686 | ||||||
|
Deferred revenue |
786 | 789 | ||||||
|
Notes payable – current portion, net of debt discount |
— | 1,228 | ||||||
|
Total Current Liabilities |
8,307 | 10,283 | ||||||
|
Long Term Liabilities: |
||||||||
|
Contingent consideration |
4,671 | 3,936 | ||||||
|
Noncurrent operating lease liabilities |
3,465 | 628 | ||||||
|
Notes payable, less current portion |
— | 1,587 | ||||||
|
Warrant liabilities |
— | 255 | ||||||
|
Total Liabilities |
16,443 | 16,689 | ||||||
|
Commitments and Contingencies |
||||||||
|
Stockholders’ Equity |
||||||||
|
Common stock $0.001 par value, 750,000,000 shares authorized at June 30, 2021 and December 31, 2020; 234,231,132 and 116,231,072 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively |
234 | 116 | ||||||
|
Preferred stock, $0.01 par value, 25,000,000 shares authorized, no shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively |
— | — | ||||||
|
Additional paid-in capital |
947,249 | 781,397 | ||||||
|
Accumulated deficit |
(753,424 |
) |
(722,912 |
) |
||||
|
Accumulated other comprehensive income |
1,502 | 2,968 | ||||||
|
Total Stockholders’ Equity |
195,561 | 61,569 | ||||||
|
Total Liabilities and Stockholders’ Equity |
$ | 212,004 | $ | 78,258 | ||||
Asensus Surgical, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
|
Six Months Ended |
||||||||
|
June 30, |
||||||||
|
2021 |
2020 |
|||||||
|
Operating Activities: |
||||||||
|
Net loss |
$ | (30,512 |
) |
$ | (30,438 |
) |
||
|
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities: |
||||||||
|
Depreciation |
1,585 | 1,162 | ||||||
|
Amortization of intangible assets |
5,729 | 5,183 | ||||||
|
Stock-based compensation |
3,628 | 3,856 | ||||||
|
Gain on extinguishment of debt |
(2,847 |
) |
— | |||||
|
Deferred tax benefit |
(36 |
) |
(1,388 |
) |
||||
|
Write down of inventory |
288 | — | ||||||
|
Change in fair value of warrant liabilities |
1,981 | 269 | ||||||
|
Change in fair value of contingent consideration |
735 | 1,268 | ||||||
|
Changes in operating assets and liabilities: |
||||||||
|
Accounts receivable |
127 | (350 |
) |
|||||
|
Inventories |
(1,687 |
) |
(2,332 |
) |
||||
|
Operating lease right-of-use assets |
(2,970 |
) |
546 | |||||
|
Other current and long term assets |
3,177 | 281 | ||||||
|
Accounts payable |
679 | (1,221 |
) |
|||||
|
Accrued expenses |
(1,428 |
) |
(1,451 |
) |
||||
|
Deferred revenue |
14 | 22 | ||||||
|
Operating lease liabilities |
3,052 | (608 |
) |
|||||
|
Other long term liabilities |
— | 65 | ||||||
|
Net cash and cash equivalents used in operating activities |
(18,485 |
) |
(25,136 |
) |
||||
|
Investing Activities: |
||||||||
|
Purchase of property and equipment |
(700 |
) |
(3 |
) |
||||
|
Net cash and cash equivalents used in investing activities |
(700 |
) |
(3 |
) |
||||
|
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 |
130,314 | 11,212 | ||||||
|
Proceeds from notes payable, net of issuance costs |
— | 2,815 | ||||||
|
Taxes paid related to net share settlement of vesting of restricted stock units |
(1,041 |
) |
(33 |
) |
||||
|
Payment of contingent consideration |
— | (74 |
) |
|||||
|
Proceeds from exercise of stock options and warrants |
30,835 | 3,340 | ||||||
|
Net cash and cash equivalents provided by financing activities |
160,108 | 30,785 | ||||||
|
Effect of exchange rate changes on cash and cash equivalents |
(329 |
) |
17 | |||||
|
Net increase in cash, cash equivalents and restricted cash |
140,594 | 5,663 | ||||||
|
Cash, cash equivalents and restricted cash, beginning of period |
17,529 | 10,567 | ||||||
|
Cash, cash equivalents and restricted cash, end of period |
$ | 158,123 | $ | 16,230 | ||||
|
Supplemental Schedule of Non-cash Investing and Financing Activities |
||||||||
|
Transfer of inventories to property and equipment |
$ | 1,243 | $ | 3,403 | ||||
|
Acquisition of property and equipment in accounts payable |
$ | 67 | $ | — | ||||
|
Reclass of warrant liability to common stock and additional paid-in-capital |
$ | 2,236 | $ | — | ||||
|
Lease liabilities arising from obtaining right-of-use assets |
$ | 3,461 | $ | — | ||||
|
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 |
$ | — | $ | 79 | ||||
|
Asensus Surgical, Inc. |
|
Reconciliation of Non-GAAP Measures |
|
Adjusted Net Loss and Net Loss per Share |
|
(in thousands except per share amounts) |
|
(Unaudited) |
|
Three Months Ended |
Six Months Ended |
|||||||||||||||
|
June 30, |
June 30, |
|||||||||||||||
|
2021 |
2020 |
2021 |
2020 |
|||||||||||||
|
Net loss attributable to common stockholders (GAAP) |
$ | (13,172 | ) | $ | (14,139 | ) | $ | (30,512 | ) | $ | (31,149 | ) | ||||
|
Adjustments |
||||||||||||||||
|
Amortization of intangible assets |
2,862 | 2,619 | 5,729 | 5,183 | ||||||||||||
|
Change in fair value of contingent consideration |
478 | 212 | 735 | 1,268 | ||||||||||||
|
Change in fair value of warrant liabilities |
— | 114 | 1,981 | 269 | ||||||||||||
|
Restructuring and other charges |
— | — | — | 858 | ||||||||||||
|
Gain on extinguishment of debt |
(2,847 | ) | — | (2,847 | ) | — | ||||||||||
|
Deemed dividend related to beneficial conversion feature of preferred stock |
— | — | — | 412 | ||||||||||||
|
Deemed dividend related to conversion of preferred stock into common stock |
— | 299 | — | 299 | ||||||||||||
|
Adjusted net loss attributable to common stockholders (Non-GAAP) |
$ | (12,679 | ) | $ | (10,895 | ) | $ | (24,914 | ) | $ | (22,860 | ) | ||||
|
Three Months Ended |
Six Months Ended |
|||||||||||||||
|
June 30, |
June 30, |
|||||||||||||||
|
2021 |
2020 |
2021 |
2020 |
|||||||||||||
|
Net loss per share attributable to common stockholders (GAAP) |
$ | (0.06 | ) | $ | (0.27 | ) | $ | (0.14 | ) | $ | (0.77 | ) | ||||
|
Adjustments |
||||||||||||||||
|
Amortization of intangible assets |
0.02 | 0.05 | 0.03 | 0.13 | ||||||||||||
|
Change in fair value of contingent consideration |
0.00 | 0.00 | 0.00 | 0.03 | ||||||||||||
|
Change in fair value of warrant liabilities |
— | 0.00 | 0.01 | 0.01 | ||||||||||||
|
Restructuring and other charges |
— | — | — | 0.02 | ||||||||||||
|
Gain on extinguishment of debt |
(0.01 | ) | — | (0.01 | ) | — | ||||||||||
|
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 | — | 0.01 | ||||||||||||
|
Adjusted net loss per share attributable to common stockholders (Non-GAAP) |
$ | (0.05 | ) | $ | (0.21 | ) | $ | (0.11 | ) | $ | (0.56 | ) | ||||
The non-GAAP financial measures for the three and six months ended June 30, 2021 and 2020 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) Intangible assets that are amortized consist of developed technology and purchased patent rights recorded at cost and amortized over 5 to 10 years.
b) 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, an estimated discount rate associated with the risks of the expected cash flows attributable to the various milestones, and volatility. 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.
c) 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.
d) During the second quarter of 2021, the Company received notification from the U.S. Small Business Administration (the “SBA”) that the principal amount of its Paycheck Protection Program loan (“PPP loan”) of $2.8 million and related interest had been forgiven. Gain on extinguishment of debt of $2.8 million was recognized for the three and six months ended June 30, 2021 in the condensed consolidated statement of operations and comprehensive loss.
e) Beginning in the fourth quarter of 2019 and continuing into the first quarter of 2020, we implemented a restructuring plan to reduce operating expenses as we continue the global market development of the Senhance platform. During the first quarter of 2020, the Company continued the restructuring efforts with additional headcount reductions, which resulted in $0.9 million in severance costs in the six months ended June 30, 2020.
f) 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 Series A 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 loss available to common stockholders for the six months ended June 30, 2020. Upon conversion of the Series A 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 loss available to common stockholders for the three and six months ended June 30, 2020.
INVESTOR CONTACT:
Mark Klausner or Mike Vallie, 443-213-0499
invest@asensus.com
or
MEDIA CONTACT:
Kristin Schaeffer
CG Life
kschaeffer@cglife.com
Exhibit 99.2
Company: Asensus Surgical, Inc.
Conference Title: Q2 2021 Asensus Surgical, Inc. Earnings Call
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Moderator: |
Mark Klausner, Westwicke Partners, Investor Relations |
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Anthony Fernando, President and Chief Executive Officer |
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Shameze Rampertab, Chief Financial Officer |
Date: August 6, 2021
P R E S E N T A T I O N
Operator: Good afternoon, ladies and gentlemen, and welcome to the Asensus Surgical Inc.’s Second Quarter 2021 Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you have a question, please press the “1” followed by the “4” on your telephone. If at any time during the conference you need to reach an operator, please press “*” and “0”. As a reminder, this conference is being recorded.
I would now like to turn the call over to Mr. Mark Klausner of Westwicke. Please go ahead.
Mark Klausner: Good afternoon, everyone, and thank you for joining us for Asensus’ second quarter 2021 conference call. On the call with me today are Anthony Fernando, President and Chief Executive Officer; and Shameze Rampertab, Chief Financial Officer.
Before we begin, I would like to caution listeners that certain information discussed by management during this conference call, including any guidance provided, are forward-looking statements covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business, including any impact from the COVID-19 pandemic.
The company undertakes no obligation to update the information provided on this call. For a discussion of risks and uncertainties associated with the Asensus Surgical business, I encourage you to review the company's filings with the Securities and Exchange Commission, including the 2020 Form 10-K filed in March 2021 and the Form 10-Q expected to be filed later today and other filings we make with the SEC.
During this call, we will also present certain non-GAAP financial information related to adjusted net loss attributable to common stockholders and adjusted net loss per common share attributable to common stockholders. Management believes that these non-GAAP financial measures, taken in conjunction with US GAAP financial measures, provide useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of the company's core operating results.
Management uses non-GAAP measures to compare our performance relative to forecast and strategic plans to benchmark our performance externally against competitors and for certain compensation decisions. Reconciliations from US GAAP to non-GAAP results are presented in the tables accompanying our earnings release, which can be found in the Investor Relations section of our website.
It is now my pleasure to turn the call over to Asensus Surgical's President and Chief Executive Officer, Anthony Fernando.
Anthony Fernando - Thanks, Mark, and thank you all for joining us today. On today's call, I will provide a brief summary of our recent accomplishments and then ask Shameze to review our financial performance, after which I will discuss our performance during the second quarter as well as our priorities for the rest of 2021 before turning to Q&A.
Before turning the call over to Shameze, I would like to provide an overview of our recent performance. Since our last call, we have made significant progress towards a number of our goals for 2021. We signed lease agreements with two hospitals, both previously announced, one of which has already begun performing cases with their Senhance during the quarter. We reached two key regulatory milestones with the filing of our FDA 510(k) submission and subsequent clearance for 5 mm Articulating Instruments and filing our FDA 510(k) submission for the expanded capabilities of the Intelligent Surgical Unit, or ISU. In addition, we continued to see strong global procedure volume trends during the quarter, with particularly strong growth in the U.S.
We also strengthened the organization's leadership with the introduction of two new board members, Dr. Elizabeth Kwo and Kevin Hobert. Both Liz and Kevin have significant experience bringing innovative digital technologies that leverage AI to the market. Liz has highly specialized expertise in utilizing predictive analytics and big data to improve patient outcomes through digital solutions, and Kevin was an integral part in the early development of innovative digital imaging technology that leveraged AI and proprietary algorithms. We look forward to tapping into their combined talents as we continue to work to realize the vision of Performance-Guided Surgery.
We are very proud of what we were able to accomplish and look forward to continuing this momentum throughout 2021. With that, I will turn the call over to Shameze for a financial update.
Shameze Rampertab - Thanks, Anthony. Turning to the second quarter, for the three months ended June 30, 2021, the company reported revenue of $1.1 million as compared to revenue of $0.7 million in the three months ended June 30, 2020. Revenue in the second quarter of 2021 included $0.4 million in system revenue, $0.3 million in instruments and accessories, and $0.4 million in services.
For the three months ended June 30, 2021, total operating expenses were $14.8 million as compared to $13.6 million in the three months ended June 30, 2020.
For the three months ended June 30, 2021, net loss attributable to common stockholders was $13.2 million or $0.06 per share as compared to net loss attributable to common stockholders of $14.1 million or $0.27 per share in the three months that ended June 30, 2020. For the three months ended June 30, 2021, the adjusted net loss attributable to common stockholders was $12.7 million or $0.05 per share as compared to an adjusted net loss of $10.9 million or $0.21 per share in the three months ended June 30, 2020.
Adjusted net loss is GAAP net loss adjusted for the following items: amortization of intangible assets, change in fair value of contingent consideration, gain on extinguishment of debt; and for 2020, change in fair value of warrant liabilities, and the deemed dividend related to conversion of preferred stock into common stock, all of which are non-cash charges. Adjusted net loss attributable to common stockholders is a non-GAAP financial measure. A reconciliation from GAAP to non-GAAP measures can be found in our earnings release.
Turning to the balance sheet, the company had cash and cash equivalents and restricted cash of approximately $158.1 million and working capital of $165.7 million as of June 30, 2021.
I'll turn the call back over to Anthony.
Anthony Fernando - Thanks, Shameze.
I will now provide an update on recent performance as well as the progress we have made on the key focus areas for 2021. As a reminder, these are: First, the continued market development for the Senhance System, and second expanding our portfolio and continuing the technological advancement of Senhance.
Starting with our market development efforts. It is crucial to our strategy that we continue to educate surgeons on the benefits of the Senhance System and then follow up with clinical data to support them. As mentioned in the beginning of 2021, we expected to have a number of key clinical papers published this year. To date, there has been one paper published that covers the health economic benefits of Senhance. We still expect to have additional papers published this year which further analyze clinical performance and economics in general surgery and gynecology when utilizing the Senhance System.
In an effort to accelerate the compilation and utilization of real world clinical data, we have increased our focus on the growth of our TRUST Outcomes Registry, which includes procedural data that spans across multiple geographies and surgical specialties. To date, we have over 1,200 patients enrolled in this registry. Data from this registry has already proven to be impactful on our clinical data development efforts. In the first quarter, a study was published that analyzed the outcomes of over 800 Senhance procedures across multiple specialties. As we continue to expand our installed base and ramp up procedure volumes, we would expect to see more studies published utilizing this growing data set to demonstrate real-world evidence that we are delivering clinical and surgical benefits.
Another key tool in our market development strategy is leveraging industry events, such as conferences and congresses to engage with industry thought leaders and potential customers. While these efforts have been generally limited over the last 15 months as a result of pandemic-related restrictions, In June we attended the SAGES Surgical Disruptive Technology Summit and we will also have a presence at this year’s SAGES annual meeting which kicks off at the end of August. At this meeting we will be hosting a Breakfast symposium at which two surgeons will discuss their experience using Senhance in general surgery.
The next segment of our market development effort is the growth of our global installed base, the acceleration of procedure volumes, and the increase in the number of foundational sites.
During the quarter, we continued to experience headwinds associated with COVID given that the majority of our existing installed base, and a large proportion of our commercial development efforts, are within some of the most impacted geographies, including certain countries in Europe as well as Japan. Despite all of this, we were able to expand our installed base and deliver strong continued procedure volume growth. As it relates to the balance of the year, we are optimistic about the macro environment and expect to see growth in procedure volumes, and expect that new system installations will become less challenging as our commercial team has broader access to hospitals.
In the second quarter, we announced two new European installations of the Senhance Systems:
In May, we announced that LAKUMED hospitals had entered into an agreement to lease and utilize a Senhance Surgical System. The system will be utilized at the Landshut-Achdorf hospital, just outside of Munich, Germany. Germany is one of the largest surgical markets in Europe, and has grown into the largest European country for Senhance in terms of users, surgeries, and hospitals.
In June, we announced that Inselspital, University Hospital Bern, Switzerland had initiated its Senhance Surgical program. Bern is the largest University hospital group in Switzerland, and the surgical department focused on upper gastrointestinal and bariatric procedures is implementing Senhance into their daily surgical practice. The team at Bern ramped up extremely quickly after installation, with seven cases being performed during their first week with the system.
We currently have multiple installation agreements in late-stage negotiations with hospitals which we would expect to close over the near term and we continue to expect to have 10 - 12 total new system installations during the year.
Moving on to procedures. We continued to see positive volume trends through the first half of the year, with over 500 Senhance procedures being completed for the second quarter in a row. We saw strong year over year growth in all geographies, with total procedure volumes increasing by over 175% over the second quarter of 2020. Volume trends were strongest in the U.S., which were up significantly over 2020, but also up 32% sequentially compared to the first quarter of 2021. Procedure volumes in both Asia and EMEA were strong, however we did experience a slight headwind associated with lingering negative impacts of COVID on procedure volumes after three consecutive quarters of growth, particularly in major European and Asian markets. During the quarter, we were excited to see one of our busiest hospitals in Europe hit a milestone of completing their 500th case using Senhance. This is a tremendous achievement that speaks to the value Senhance brings to surgeons, hospitals, and their patients. We expect a number of other high volume installations to reach similar procedure volume milestones in the near future. Overall we are very pleased with how our installed base is being utilized, as it speaks to the applicability of Senhance across multiple surgical specialties, as well as the positive clinical utility being realized by surgeons across the globe.
Now turning to our second initiative for the year, the continued portfolio expansion and technological advancement of the Senhance System. We recently achieved two key regulatory milestones. First, we filed our FDA 510(k) submission for articulating instruments in May, and at the end of July, we received clearance. Adding articulation widens the clinical utility and value of our platform technology by offering better access to difficult-to-reach areas of the anatomy by providing two additional degrees of freedom.
Second, we submitted a FDA 510(k) for an expansion of capabilities with the ISU which also took place in the second quarter.The current features of the ISU enable machine vision driven control of the camera for a surgeon by responding to commands and recognizing certain objects and locations in the surgical field and allows a surgeon to change the field of view using instruments. The new feature set would expand to include more advanced features to gather real time data during surgery based on the anatomical structures in the surgical field.
Early utilization of the ISU has been strong and the three initial launch sites in the US, Europe and Japan have completed over 150 cases. Thus far, surgeon feedback indicates an appreciation for the foundational improvements in surgeon control and enthusiasm around where Senhance's Augmented Intelligence will go in the future.
In particular, surgeons have commented on the benefits of the camera control tools which rely on machine vision to digitally recognize an instrument's tip and effectively direct the laparoscopic camera towards an intended target and also allows for the automatic reorientation of an angled laparoscope during zooming to maintain visibility of a surgical target.
Given the strong interest and feedback from the surgeons, we anticipate implementing the ISU on a greater number of installed Senhance Systems over the balance of the year.
As we mentioned last quarter, we developed an independent product called Senhance Connect, a mobile, in-OR surgeon communication system, which represents another step forward in our efforts to bring the benefits of Performance Guided Surgery to the market. With Senhance Connect, up to six clinical and product specialists can remotely interact, observe, and communicate with the clinical team in the OR throughout a surgical procedure via the system’s encrypted virtual video capabilities. As an example of how this can be beneficial, we have recently performed several remote case observations in the US and Europe and provided assistance in setting up the Senhance for surgery and also been available to surgeons for any intra operative system assistance that they needed. Being able to get the assistance the OR team needs on-demand without crowding the OR has been viewed favorably by hospitals. Currently the technology is being piloted at a small number of installations, and we continue to expect to bring Senhance Connect to a greater number of accounts in the second half of 2021.
In summary, we are pleased with the progress we have made in the second quarter of 2021. Looking to the back half of the year, I believe we are incredibly well positioned to take advantage of the opportunity that lies ahead, not only to bring the benefits of Senhance to more surgeons and patients globally, but also to deliver a new era of Performance-Guided Surgery. We are one of the only two soft tissue abdominal surgical platforms on the market in the United States, and our footprint continues to grow. To date, over 5,000 cases have been performed using Senhance globally, with over 1,000 cases having been performed during the first half of 2021 alone. Importantly, the Senhance System has been utilized across multiple specialties including, general surgery, gynecology, colorectal, bariatric, pediatric and urology, highlighting its broad applicability. We now have over 30 hospitals with a Senhance installed with over 100 surgeons actively performing procedures utilizing the platform. I want to thank our entire organization for their tireless efforts and we are more confident than ever in our long-term vision for the company and our technology.
With that, I would like to open the line for questions.
Operator - Thank you. If you would like to register for a question, please press the “1” followed by the “4” on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the “1” followed by the “3”. Again, to register for a question that is “1” “4” on your telephone keypad. One moment please. As a reminder, to register for a question that is “1” “4” on your telephone keypad. One moment please. We have no questions at this time, I’ll turn it back to your Mr. Fernando for closing remarks.
Anthony Fernando - Thank you again for your interest in Asensus Surgical, and we look forward to updating you on our progress on our next quarterly call. Thank you.