Q3 2022 Asensus Surgical Inc Earnings Call
Good day and welcome to the a sense of surgical incorporated 2022 third quarter financial and operating conference call.
All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
After today's presentation there'll be an opportunity to ask questions. Please note. This event is being recorded.
Now I'd like to turn the conference over to Mark Klausner. Please go ahead.
Good afternoon, everyone and thank you for joining us for the census, surgical third quarter, 2022 business and financial update conference call.
On the call with me today are Anthony Fernando President and Chief Executive Officer, and Chemise, Rember tab, 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 and other geopolitical factors beyond our control.
The company undertakes no obligation to update the information provided on this call.
For a discussion of risks and uncertainties associated with the census, surgical business I encourage you to review the company's filings with the Securities and Exchange Commission, including the 2021 and Form 10-K filed in February 2022, and.
And the Form 10-Q expected to be filed later today and any 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 the adjusted net loss per common share attributable to common stockholders management believes that these non-GAAP financial measures taken in conjunction with U S. GAAP financial measures provide useful information.
For both management and investors by excluding certain noncash and other expenses that are not indicative of the company's core operating results.
Management uses non-GAAP financial 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 U S. 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.
With that it's my pleasure to turn the call over to a census, surgical's, President and Chief Executive Officer, Anthony Fernando.
Thanks, Mark and thank you all for joining us today.
Today I will begin with discussing our recent performance and events that we will review our financials.
Following that I will go.
Our third quarter performance and priorities for the balance of 2022 before turning to Q&A.
Now I would like to provide an overview of our recent performance.
We are pleased to see an accelerated expansion off the same pad system installed base this quarter with four new system initiation.
Two in Germany, one in Japan, one in the region.
Subsequent to the end of the third quarter, we announced an additional system placements and gentlemen.
Bringing the year to date total to five system.
We remain focused on increasing of Atlas Corp, fin head and educating the community on <unk>.
By leveraging industry debate.
In September .
You've received the society of laparoscopic and robotic surgery.
If the last 2022 innovation off the young boy for our intelligent surgical unit Oh I see.
Sure.
Yeah, it's a less recognized as the most innovative products that have a lot of tightened it depends on the application.
Emily invasive.
We are incredibly proud of our team's commitment to enhancing clinical performance and very excited that the clinical community sees the tremendous value that <unk> brings to be a lot.
We also participated in the 12 European Society of pediatric Endoscopic Surgeons annual Congress in Barcelona, Spain in late September .
Okay.
A pediatric surgeon at Maastricht University Medical center in the Netherlands gave any insightful presentation dealing the robotics loss picks us focused on the success in pediatric procedures using center.
As we continue to seek to drive global adoption, we recently moved into our new office in the heart of Tokyo, Japan, with the new showroom and state of the art training facility.
This is very exciting as we have grown our installed base over the last few years in Japan and have seen great momentum with our clinical efforts in the country.
It's Japan, it's been number one laparoscopy market and the number two robotics market. We have seen that surgeons are eager to adopt digital laparoscopic technology, and we will continue to partner with New hospital facility.
Facilitate these innovative features at the same time system.
We have continued to add talent across our senior leadership team as he loves to drive development.
<unk> guided surgery and accelerate the adoption of sin has globally.
Following the addition of a new Vice President of Medical Affairs and professional education.
Recently appointed a new vice president of global marketing.
Uh huh.
To drive awareness the platform among surgeons and hospital administrators.
With that I will turn the call over to me for a financial update.
Thanks Anthony.
To the third quarter for the three months ended September 30th 2022, the company reported revenues of $2 $6 million as compared to revenue of $2 $6 million in the three months ended September 32021.
Revenue in the third quarter of 2022 included $1 $2 million in system revenue.
Zero point $3 million in lease revenue.
Zero point $8 million in instruments, and accessories, and zero point $3 million in services.
For the three months ended September 32022, total operating expenses were $17 $2 million as compared to $16 $7 million in the three months ended September 32021.
For the three months ended September 32022, net loss attributable to common stockholders was $18 9 million or eight cents per share as compared to net loss attributable to common stockholders of $16 $1 million or seven cents per share in the three months ended sept.
Timber 30th 2020.
For the three months ended September 30 of 2020 to the adjusted net loss attributable to common stockholders was $16 9 million or seven cents per share as compared to an adjusted net loss of $14 $3 million or six cents per share in the three months ended September 32020.
One.
Adjusted net loss as GAAP net loss adjusted for the following items Ameren.
Amortization of intangible assets.
Change in fair value of contingent consideration and employee retention tax credits all of which are noncash charges.
Adjusted net loss attributable to common stockholders is a non-GAAP financial measure.
Reconciliation from GAAP to non-GAAP measures can be found in our earnings release and is posted on our website.
Turning to the balance sheet.
Company had cash cash equivalents short term and long term investments, excluding restricted cash of approximately $88 $3 million.
Working capital of $93 $7 million as of September 32022.
I'd now like to turn the call back over to Anthony.
Thanks Denise.
I would like to provide an update on progress we have made towards our key focus areas for 2022.
Starting with market development.
We have mentioned in the past peer reviewed studies are lighter about providing real world data on how this thing has platform the ASU and all of the pieces of sinter, hence can benefit surgeons and patients across a wide variety of surgical specialties.
In the third quarter, we had three new publication, bringing the total for the year the 13th.
These publications highlighted San has those capabilities blood flow efficiency and cost effectiveness across multiple procedures, especially the team as well as the unique clinical benefits of Sen has haptic feedback.
This growing list of publication is lighter, but supporting the breadth of research that proves the benefits.
This enhanced system in real World data.
A reminder, all of these clinical publications can be found under the clinical resources section of our website.
As we continue to develop our list of clinical publication. We have also continued to leverage our growing real world clinical data through our clinical registry.
Trust registry, which we believe is the industry's largest drove button.
That pressure pumping registry continues to grow in size and scale with over 2000 patients enrolled to date.
The registered patients consists of approximately 67% general surgery, including abdominal interesting, 15% G by in an 18% urology procedures.
We remain focused on leveraging the data accumulated to facilitate studies and publication, which highlight the real world benefits of sinter.
Yeah.
In October .
A trust registry investigator meeting was held in Amsterdam, and was hosted by Professor <unk> of St. Marian Hospital in <unk>, Germany.
The meeting most of that opportunity for the key investigators who are participating in the registry to come together.
All of collaborating on upcoming opportunities to share the incredible data that has been collected thus far.
We are very excited about the data registry is accumulating and the opportunity. This research provides some validating the importance of this enhanced system and ultimately helping to improve surgical outcomes and efficiencies.
As we have mentioned in the past one of our focus is providing surgeons the opportunity to participate in training session at one of our six centers located in Europe , the United States and Japan.
We continue to work to drive increased volumes of surgeon through these centers on a regular basis.
The next segment of a market development effort is the expansion of our global footprint, including the growth of our installed base the acceleration of procedure volumes and the increase in the number of foundational sites.
Beginning with new program initiation this quarter, we had four new program initiation with one additional initiation since the end of the third quarter.
Evangelical hospital gotten beaten up but in Germany completed the installation of the Sen has system and became the seven San has hospital in Germany.
This system has been place within that general surgery Department and the hospital.
Tae Sik Shiga hospital in retail Japan has leased a tin has system similarly to be used in laparoscopic surgery.
Most recently the cleaning for general and with surgery at the same thing on hospital in Campbell input, Germany initiate that that's been his program and a fourth system in the quarter was sold to our distribution partners and placed in the hospital in the CIA.
Got it.
All of these sites are great opportunities for the <unk> system to deliver benefit to their practice and patients.
In November we had another German placement, bringing the total spend has programs initiated two nine in this region.
This system will be installed and up to one <unk> children's hospital and the Ludwig millions University of Munich located in Germany.
We are very excited to announce this will be the first atlas enhanced installation to be completely dedicated to pediatric procedures.
S. S. N has system is the only robotic assisted surgical system in the world to provide fully reusable three millimeter instruments as well as haptic feedback it is well positioned to help surgeons believe a better more predictable outcomes on smaller patient.
To enhance our digital fulcrum and tremor filtration can minimize dramatic forces exerted by instrument on depth.
The combination of these two feature creates and optima micro laparoscopic looking environment for the surgeon.
It's advanced minimally invasive instrumentation.
<unk> safety feature and all of the clinical intelligence capabilities help reduce invasiveness and surgical variability, especially in complex pediatric surgery.
With these new program initiation our year to date total is now at five.
Sure.
Japan, and Germany continue to expand into very important geographic area.
<unk> installed base and are the second and third largest market for medical devices in the world.
This validates our assumption that the more surgeons in an area and in person and saw an excess to ipsen has system.
The greater the adoption becomes.
We are excited to see these two driving areas continue to expand going forward.
Looking ahead, we continue to expect eight to 10, new system initiations for the year.
As we head into the final quarter of 2022, we remain confident in our ability to drive the adoption send him on a global scale over the long term based on the quality of our customer pipeline.
Now turning to procedure volumes.
We have continued to see very strong procedure volume trends at all.
The 1900 <unk> procedures completed as of September 30th across multiple geographies and specialties with a 27% increase over 2021.
The quarter procedure volumes increased 18% year over year.
We remain focused on increasing procedure volumes across a wide variety of surgical specialty.
When a cases performed with the St has system, we have the ability to collect system data and surgical video.
As we continue to accumulate a rich digital library of surgical data, we have the ability to generate powerful clinical insights that will enable performance guided surgery to help surgeons reduce surgical variability and dry consistently superior outcome.
Our procedures.
In the United States, we saw accelerated utilization trends and adoption rates as hospitals appear to have returned to more normalized volumes in a difficult operating environment.
In addition, we continue to see an increased number of surgeons using thin.
Importantly, during the quarter, we saw multiple existing hospital customers expand from a single surgeon user to multiple trades and use it which points to the clinical value that bought the surgeons and hospitals are seeing from Santander.
Despite some slowdowns due to European holiday seasonality, we continue to see expansion of the installed base driving high procedure volumes and expect to see more installations in Europe in the coming quarters.
In Asia, we have seen some COVID-19 related headwinds, resulting in a slower rebound in procedure volumes than in other geographies.
We expect to see these sites recover no ethical we'd circumstances appear to be improving and we continue to see more hospitals in the region seek to install Nielsen and system.
We have also seen some of our systems reached significant milestones this quarter.
Dr. Larry montage similar yes, and his team at Klaipeda University Hospital in Lithuania completed that 750 in case, we can defend it has such a system.
Turning to our portfolio expansion efforts.
We are excited to continue to build upon our recent accomplishments and achieve additional regulatory milestones that will further develop the santana system and broaden its applicability.
We have recently submitted our five 10-K application a pediatric clearance in the U S. Following strong early clinical utilization in Europe , and increasing demand from U S surgeon and we look forward to providing you updates regarding a potential clearance in 2023.
We believe this trend has systems a combination of 3 million maintain instrumentation and advanced safety features including haptic feedback make it uniquely optimized for pediatric patients.
At this point.
Have not been able to benefit from the capabilities of robotics with five millimeter and three millimeter instruments.
We continue to expand the utilization and applicability of the intelligent surgical unit. So I guess, you globally and expect to receive CE Mark approval for expanded machine, we send capabilities in Europe by the end of the year.
Importantly, this filing through the new European M. D. Our pathway included a review of the entire platform.
If successful this enhanced platform will be run off the early robotic surgical system to be approved through the new more rigorous M D. Our process.
Difficult achievement, which speaks to the quality of the platform and our organization as expertise in regulatory processes across the globe.
We continue to expect the commercial launch of five millimeter articulating instruments in the final months of this year.
Yeah happy to announce that we recently received Japanese P. M. D M prove up a thoracic laparoscopic procedure bid center in.
In 2019, the San has said you've got system was first approved by the Ministry of Health Labor and Belfast, All image W for use in laparoscopy, but general surgery gynecology and urology.
Now with additional 19 thoracic procedures. The systemic is approved for a total of 126 procedures in Japan with reimbursement.
This is a meaningful umbrella as it expands our already bite indications, including general surgery, gynecology and urology in adult and pediatric.
This approval for the use of enhancing Japan to mirror that of our CE Mark indication makes and has more broadly applicable to hospitals surgeons and patients in that region.
We are very excited for this expansion of sand Hill system.
And seeing surgeons and hospitals benefit from the breadth of fantastic.
Applicability.
We are very pleased with the progress we have made this past quarter.
Towards our goals and further advancing the development of performance guided surgery.
And its advanced intelligence capabilities.
As we head into the final quarter off the year, we remain committed to increasing system utilization and growing our install base even further.
I'm very proud of the work since his team has done so far this year and we'd like to take a moment to thank them for their consistent dedication to innovation and ultimately driving safer and more reliable outcomes surgeon hospital and patient.
With that I would like to open the line for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question comes from Ross Osborne from Cantor Fitzgerald. Please go ahead.
Hi, Congrats on the progress made during the quarter.
Hey, Ross starting off.
You installed four systems during the three to you you've announced one post the corner. So you get three more to hit the bottom end of your guidance.
What level of comfort do you have in hitting your target or stated otherwise you know how far along are you in conversations with hospitals to achieve your reiterated guidance.
Yeah. So I think you know good question.
Yes.
They did before the pipeline has been developing over a relatively long period of time.
And we do have the pipeline to hit the guidance numbers. So I think we are in relatively.
What stages of conversations.
And then it's more about timing.
Due to various reasons some debt.
No cause to the hospital that they have certain criteria in timing and and.
Others are find and so related but I believe that the pipeline is very robust.
And we hope to hit.
Hit the guidance are doing between the coming.
And a half after the close to close out the year.
It sounds great and then I guess switching to articulating instruments can you help us quantify what the transition from pilot to full commercial watching tables, just curious to hear kind of what that acceleration looks like.
So I guess, it's a making the making the instruments available and the system compatible with those articulated instruments. So we have to go through a certain upgrade pathway.
For the for the system and also make sure that the hospitals understand the use of the new instrumentation. So we are in that.
Fish in a process now of making sure that the instruments are compatible with the systems.
And getting more sites up and running so I think very soon.
Before the end of this year, that's how we talked about the.
The upcoming full commercial launch.
I start to see a ramp up of our clinical usage of these systems are starting in the U S. Initially.
Initially and then moving to Europe once we.
We get a final approval.
Approval.
After the system changes in Europe , So I think that.
Getting very close to seeing that ramp up and once we do a bunch of you launched it now the customer has the kind of the choice of saying, Okay, what kind of instruments do they want to use who they want to use the straight instrument or do they want to use the articulated instruments, but we should be ready EBIT are sites that are up and running and.
Combating boat.
To stop using these instruments here.
Coming weeks.
Weeks and month.
Okay, Perfect and then last one from me you touched on this in your prepared remarks, but it is an important part of the story.
Would you be able to provide a little bit more color on your clinical data development and publication efforts during the quarter and what we can expect to see going forward any key takeaways from the three published studies.
Yeah. So there are.
Good takeaways for us, especially when you have a sizable registry and actively engaged.
Investigators.
The whole slew of data. So they are looking at this data and just say you know what are you seeing what trends are you seeing and what more do we need to.
Focus on.
And the areas are.
That you can see you know days.
You can see our track bad they're looking at you know how fast can they get to get that case times to be equal or better than laparoscopy.
And we have seen some of that come to play.
And also the other piece is looking at the cost, saying, how how close in terms of costs.
Avi in.
Comparing laparoscopy and to enhance and then also looking at the clinical outcomes.
That's the clinical outcome spot I would say that our books Dream is just beginning because you need a good number a good volume of data in order to stop comparing.
San has clinical outcomes.
Well it says laparoscopy and in this case, so it's coming along I think there's two tracks of this one leveraging the data and the trust registry and the other are investigator led a well that's ongoing.
Continuous basis.
To further investigate benefits.
And the opportunity for further improving the clinical outcomes. So it is a very big part for us and for US the goal really is to.
Use real world evidence now that would be.
Have 40 plus systems are installed.
<unk> tried to work with the high volume sites to be able to generate data and produce.
Real World evidence.
We can use for getting other sites interested in leveraging the benefits of that system.
Great. Thank you for taking my questions and congrats again on the progress.
Thank you Ross.
The next question comes for from Jennifer <unk> from H C. Wainwright. Please go ahead.
Hi, This is Jennifer from H C. Wainwright on prior calls thank you for taking our questions and congratulations on your recent announcement of the submission of the five phone calls for pediatric clearance in the U S as well as a nice hospital in Germany poised to utilize the central system I understand this program will be the first dedicated to the utilization of Sun hamster not exclusively pediatric.
Population I was wondering if you could just get some additional color on this new indication maybe on some of the timelines and expectations going forward.
Those would be appreciated thanks.
Hi, Jennifer Thanks for the question.
So as you know we've had pediatric approval in Europe and we currently are in.
You know a few hospitals.
Performing pediatric cases, and what we recently announced.
It was a very unique oh spittle because that they acquired.
System and partner with us to primarily focus on pediatrics.
Cases, so that that's really exciting for us to.
See that and it is the first time that we are seeing one hospital that just are engaged with us just to focus on pediatrics.
With respect to the FDA submission.
We submitted this are about a month ago.
And the timelines are somewhat variable I couldnt give you exact timeline, but I would think in the first half of 'twenty three is about to be able to.
Expect.
To hear back.
But it's hard for me to give you a very specific timeline, but I would say in the first half is that reasonable.
Assumption.
So seeking clearance.
Great. Thank you so much for the additional color and I'll put myself back on the queue.
Thank you Jennifer.
There are no more questions in the queue. This concludes.
A question and answer session I would like to turn the conference back over to Anthony Fernando census, Surgical's, President and CEO for any closing remarks.
Thank you again for your interest in the sensor surgical and we look forward to updating you on our progress on our next quarterly call.
Thank you for joining.
Yes.
Conference is now concluded.
Thank you for attending today's presentation you may now disconnect.
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