Q3 2022 Vicarious Surgical Inc Earnings Call

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Good afternoon, and welcome to the carriage surgical third quarter 2022 earned.

<unk> Conference call. My name is Amber and I'll be your operator for today's call. At this time all participants are in a listen only mode. We will be facilitating a question and answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes, I would now like to turn the call over to.

Caitlin Bosco with vicarious Caitlin. Please proceed.

Example, thank you all for participating in today's call earlier today right here surgical released preliminary unaudited financial results for the three months ended September 32022, a copy of the press release is available on the company's website before we begin I'd like to remind you that management will make statements during this call.

That include forward looking statements within the meaning of federal Securities Law, which are made pursuant to the safe Harbor provision of the private Securities Litigation Reform Act of 995.

Any statements contained in this call that relate to expectations or predictions of future events results or performance are forward looking statements.

All forward looking statements, including without limitation those relating to our operating trends and future financial performance expense management market opportunity and commercialization are based upon our current estimates and various assumptions.

These statements involve material risks and uncertainties that could cause actual results.

Oregon materially materially differ from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements.

Lithium description.

A description of the risks and uncertainties.

Dated with our business. Please refer to the risk factors set forth in our annual report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission on March 31, 2022, and our other reports we may file with the SEC from time to time.

This conference call contains time sensitive information.

Current only as of the live broadcast today November seven 2022.

Gary surgical disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise with that I will turn the call over to Adam Saks Chief Executive Officer.

Thanks, Jay Good afternoon, everyone and thank you for joining us on today's call with me today is Bill Kelley, our Chief Financial Officer.

I'd like to start by sharing my excitement for the progress we made in the third quarter since our last call. We completed the integration phase of our <unk> system build.

As a reminder, beta two represents a significant milestone for the company given the strong positive beta one feedback on the robot itself. The enhancements incorporated in a beta to predominantly focus on the ergonomics surgeon and visualization aspect of the surgeon console.

Nonetheless improved imaging and enhanced sensing and motion capabilities were built in the beta to further expand the surgeons access and ability to move freely within the abdominal cavity and operate seamlessly.

And again, we see the clinical relevance of these feature in our cadaver labs and continued to be very encouraged by that.

Feedback from our preclinical testing.

Look forward to formally showcasing the beta Q system at our demonstration day in December .

I'd like to thank our partners at Uhm HCA for their invaluable input on the beta two design in July of this year, we formalized our work with these hospital systems through the execution of <unk> Center of Excellence agreement.

At the forefront of innovation in HCA healthcare and Uhm widely recognized leader in supporting and developing cutting edge technology that deliver improved patient outcomes and advances the field of health care.

Our work with each system extends far beyond post market surgeon training.

Our agreement outlined plan for extensive development clinical verification validation and launch phases of bringing our full product ecosystem to market.

In addition to these existing partnerships. We are pleased to share that we recently executed a strategic hospital system collaboration agreement with Pittsburgh create an innovation center that foster collaboration between surgeons and healthcare professionals with the expansive resources of the University of Pittsburgh.

And the University of Pittsburgh Medical Center.

PMT in Pittsburgh create offer unique access to collaborate with not only clinicians and hospital administrator, but also with the payer of the PMC insurance umbrella, helping to ensure that our initial product offering not just the need of <unk>.

Patients surgeons and hospitals, but payers as well.

With this agreement we also gain access to the advanced sensor for preclinical studies within the University of Pittsburgh.

This institution is a full service testing and training facility that supports exploratory in preclinical testing of medical devices and offers onsite capabilities for surgeon training and qualification.

The agreement further expands our access to surgeon and administrator expertise across testing training and regulatory processes and provides critical clinical insight and support as we advance the development and finalization of our system and progress toward regulatory submission.

In that regard, we continue to closely and routinely engage with the FDA agreed plan for our upcoming pre market IV clinical trial and are encouraged by our interactions with the agency to they.

Following our initial filing we intend to file for three additional indications inguinal hernia cholecystectomy and hysterectomy.

By maintaining a close cadence of regulatory submission we plan to offer an extensive set of use cases relatively early on in our commercial launch.

We're all we remain focused on our number one priority system Finalization as we look forward to sharing more of our clinical trial strategy over the coming quarters.

In October we announced the appointment of Beverly Hot to our board of directors that is a respected industry veteran with an impressive background in decades of broad medical device experience ranging across R&D regulatory affairs and commercial we welcomed the vicarious surgical team and look for.

Forward to leveraging her expertise and insights.

Before I turn the call over to Bill I'd like to say, how proud I am of our team's successful execution, while remaining uncompromising in our approach we are intentional in our development with a focus on collaboration between our teams and the healthcare systems, who will ultimately institute our final product into their practice.

With that.

I'll hand, it over to bill for a discussion of our third quarter financial results.

Thank you Adam and thank you all for joining us today.

Total operating expenses for the third quarter of 2022 from $22 2 million inclusive of R&D expenses of $12 1 million general and administrative expenses of $8 $1 million and another one.

$9 billion in sales and marketing expenses.

Operating expenses in the third quarter increased from $8 6 million in the prior year period, primarily due to continued investment in the development related to platform and necessary expansion within our internal teams.

Adjusted net loss, which excludes a $3 million adjustment for changes in the fair value of our warrant liabilities was 21 7 million for the third quarter equating to an adjusted net loss of <unk> 18 per share.

As compared to an adjusted net loss of $8 $6 million or.

Or an adjusted net loss of $9 per share.

Ain't period in the prior year.

GAAP net loss for the third quarter was $24 $7 million equating to a basic and diluted net loss of 20 per share respectively.

As compared to a net loss of $45 million or a basic and diluted net loss of 49 per share for the same period of the prior year.

For additional detail regarding our third quarter 2022 financial results and a reconciliation of all non-GAAP measures to GAAP. Please review our earnings press release.

Our cash burn for the third quarter of 2022 was $14 $5 million and we ended the quarter with $127 million of cash and cash equivalents.

We continue to execute on our development pipeline, while maintaining strong fiscal discipline as we enter the fourth quarter. We now expect full year 2022 cash burn of approximately 65.

To $70 million.

Compared to $65 million to $75 million as previously communicated.

As such we anticipate Indonesia with more than $100 million in cash and cash equivalents on our balance sheet.

We are excited by the progress we've made to date and we look forward to sharing further progress in the quarters to come.

With that I will turn the call back to Adam Adam.

Thank you Bill.

I'd like to close by reminding everyone of our analysts and investors system demonstration day coming up on December 6th.

We'll showcase our finalized beta two system and host the conversation with surgical Luminary and hospital partners, we hope to see many of you there.

With that I will turn the call back to the operator for Q&A operator.

Of course, thank you we will now begin the Q&A session.

It's a bit for a question. Please press star followed by one on your telephone keypad.

Any reason you would like to remove that question. Please press star followed by two again disciplined for a question Thats Star one.

As a reminder, if you were using a speaker phone. Please remember to pick up your handset before asking your question. We will pause here briefly ask questions are registered.

Our first question comes from Josh Jennings with Cowen.

Josh Your line is now open.

Hi, This is Eric on for Josh Thanks for taking the question.

Aside from the functional benefits that Youre system offers during surgery. There is also a compelling economic argument for hospital customers to adopt.

Some of the cost savings that you're integrating with disposable components and other features.

I was just wondering now that you've had early engagement with surgeons and hospitals can you talk a little bit about how receptive they've been to the potential economic benefits you are providing.

Yeah.

Thank you so much for the question. It's a really good question. So there's a few different pieces to the answer here.

And the punch line, though is that they've been incredibly receptive, but it's been a significant portion of how we're able to gain.

Such engaged mentioned such incredible collaboration with so many hospitals across three different systems now.

All of which we're incredibly proud of so I would say that these hospital systems first and foremost our focus on patient outcomes and patient care. They are all in it because they believe in in patient care and that's what they're there to do that.

That being said they do need to make money or at least make sufficient money in order to provide that care and to pay to people.

In order to complete the surgery that they are therefore, so at the end of the day economics is an incredibly important part of our value proposition.

They've been very receptive to the to our general pricing.

We have to offer as well as to the total procedural economics and the potential of saving significant time on procedures that many of them have witnessed in our cadaver labs to date.

As I'm sure you know, it's saving procedural time doesn't just save cost it actually increases our revenue.

Sure.

Sure Jeff.

It gives me for the hospital system, which at the end of the day, increasing top line. It is.

Number one priority from an economic perspective.

That's great that makes a lot of sense and then I was just wondering if you are a little more of a preview for the beta two demonstration day. What are you really looking to showcase their and what is your hope for folks walking away from that event.

Yeah.

The beta two demonstration day, which I'm, obviously incredibly excited about is really there frankly to showcase our beta two system and to show it off to all of you and to the world.

We will be showing the beta two system in our lab as well as walking through some video of recent cadaver procedures with surgeon luminaries in some of our partners and we'll get.

Get everybody there the opportunity for Q&A, both with the surgeons and to the partners. So we think it'll be a really valuable experience.

Okay, Yeah that sounds great. Thank you for taking the questions.

Thank you.

Yes.

Thank you. Our next question comes from the lineup.

Brian Zimmerman with P. T I G. Ryan Your line is now open.

Hi, This is Sam on for Ryan and Thank you for taking my question today could you elaborate on what you may or may not learn with the University of Pittsburgh agreement relative to the other agreements with the UHC in HCA health systems. Thank you.

Yeah really good question I think as I've mentioned.

On previous earnings call. We're obviously very excited about HCA and UAE and both of those center of excellence agreements and partnerships really provide.

Much if not all of what we need from the perspective of learning what the clinicians and hospital administrators need but you can't see include something additional which is the P&C insurance umbrella. So we're really excited about leveraging that relationship and being able to dive deep which will make sure that our system doesn't just meet.

The needs of patients of surgeons, and a hospital, but meets the need the payers as well ensuring that it really holistically meets the needs of the entire health care system.

Thank you and I have one follow up.

Given the University of Pittsburgh Medical Center agreement and Doctor Devreese focus on robotic teeth are you seeing other opportunities to change how you think about the indication cadence. Thank you again.

Yes.

It's a good question I would say that there are.

A number of really interesting opportunities.

Frankly that at Youre, probably picking up on here, but outside of just the abdominal surgical space.

That being said there is not anything that we're ready to talk about publicly I would frankly phrase it more as opportunity.

Then plant.

Yeah.

Yeah.

Thank you that's all for me today.

Thanks.

Thank you.

Our next question comes from the line of <unk>.

Kyle Rose with Canaccord.

Your line is now open.

Yeah.

Hello, everyone. This is Caitlin on Chicago.

Just a quick question for me last quarter, you noted certain supply constraints, such as semiconductor chip in hardware shortages and have these challenges really continued into the Q3 and Q4 and if so how are you mitigating the risk. Thanks a lot.

Yeah.

Yes, a very good question.

I'd say overall, we do still see some challenges we're as I mentioned, we're not immune to these challenges.

Similar to a lot of our peers for example, we absolutely do see delayed shipments of semiconductors.

That being said, we've been able to fairly effectively plan and mitigate because then we continue to do that I will say, though similar to my messaging last quarter. It comes with significant.

Time and effort and frankly distraction for our team and that being said.

All of our mitigation to date have been affected.

Yeah.

Okay awesome. Thank you.

Thank you.

Thank you.

There are currently no further questions in queue. So again as a reminder to submit for a question Thats Star one.

There are currently no further questions in queue. So I will pass the conference back over to Adam for any additional or closing remarks.

Yeah. Thank you so much for the questions and thank you for taking the time to join US today that concludes todays call.

Okay.

This concludes today's the carrier Surgical's 2022 third quarter earnings call. Thank you for your participation you may now disconnect your line.