Q1 2023 Asensus Surgical Inc Earnings Call
Speaker 2: Good day and welcome to the Essentia Surgical First Quarter Financial and Operating Results Help and Scall.
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Speaker 2: I would now like to turn the conference over to Mark Klausner. Please go ahead.
Speaker 3: Good afternoon everyone and thank you for joining us for the Ascentis Surgical First Quarter 2023 Business and Financial Update Conference Call.
Speaker 3: On the call with me today are Anthony Fernando, President and Chief Executive Officer, and Shamiz Rampartab, 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.
Speaker 3: For discussion of risks and uncertainties associated with the Ascenta's surgical business, I encourage you to review the company's filings with the Securities and Exchange Commission, including the 2022 Form 10-K filed in March 2023 and the Form 10-Q expected to be filed later today, and any other filings we make with the SEC.
Speaker 3: 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 share attributable to common stockholders. Management believes that these non-GAAP financial measures taken in conjunction with U.S. GAAP financial measures
Speaker 3: 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.
Speaker 3: relative to four cast and strategic plans to benchmark out performance externally against competitors and for certain compensation decisions. That confiliations from US gap to non-GAP results are presented in the Pables accompanying our earnings release, which can be found in the investor relations section of our website.
Speaker 3: With that, it's my pleasure to turn the call over to a census surgical president and chief executive officer, Anthony Fernando.
Speaker 4: Thanks Mark and thank you all for joining us today.
Speaker 4: I will begin by discussing our recent performance and highlights. Then Shamith will review our financial results.
Speaker 4: Following that, I will go over our priorities for the balance of 2023 before turning to Q&A.
Speaker 4: The first quarter was highly productive at a census. We made significant progress across a number of our key areas of focus, including the expanded utilization of sandhands, the continued development of our clinical body of evidence.
Speaker 4: and the ongoing development of our portfolio. In addition, we had a number of very exciting announcements.
Speaker 4: In particular, the unveiling of our lunar surgical system that is in development. During the first quarter, we continue to see very positive procedure volume trends with over 900 procedures across multiple specialties and geographies delivering 20% year-over-year growth.
Speaker 4: Procedure volume is critical as we look to expand and optimize our digital surgery capabilities.
Speaker 4: The larger our collection of surgical data, the more effective our machine learning engine becomes, which will enable us to continue to deliver more clinical intelligence to surgeons through the ISU.
Speaker 4: Another benefit of increased procedure volumes is the expansion of our clinical registry.
Speaker 4: which now includes over 2400 patients.
Speaker 4: The primary purpose of this registry is to build a unique collection of interoperative and 12 month post-operative follow-up data, which will support an increased number of high quality clinical publications and further bolster our market development strategy.
Speaker 4: Moving to new program initiations. Here today we have initiated one new enhanced program which was in Japan.
Speaker 4: Japan continues to be one of our fastest growing regions and we are excited to be expanding our partnerships with some of the region's leading institutions.
Speaker 4: in Kasuga City. We are delighted to see positive feedback from customers and look forward to supporting the continued adoption throughout the region moving forward.
Speaker 4: On the portfolio development front, we had multiple achievements.
Speaker 4: Early in Q1 we obtained CE Mark Approver for the expanded machine vision capabilities with the ISU, which continues to receive high praise across the industry.
Speaker 4: The ISU was recently honored with two prestigious awards.
Speaker 4: The first from Medtech Breakthrough.
Speaker 4: where the ISU was named the best new technology solution.
Speaker 4: was named the best new technology solution in the surgical category.
Speaker 4: This is a remarkable achievement as we competed against nearly 4000 nominations from across the globe and it reflects our commitment to pushing the boundaries of innovation in the medical technology industry.
Speaker 4: The second comes from Juniper Research, Future Digital Awards for Excellence in Digital Health Innovation.
Speaker 4: where ISU has been honored as the best medical robotic solution.
Speaker 4: and awarded the Platinum Binat title. These recognitions are testament to the outstanding capabilities and potential of our ISU in revolutionizing the field of surgical robotics and digital surgery.
Speaker 4: The ISU integrated with the Sinhand system is the only real-time solution on the market today that provides surgeons with a suite of tools to use during their surgical procedures.
Speaker 4: which includes eye tracking camera control, haptic feedback, digital measurement and digital tags.
Speaker 4: Eye-tracking allows surgeons to seamlessly control the camera position without pausing the procedure. There are also digital tags that enhance the communication between the surgeon at the consult and the OR team bedside to further engage and support a seamless operating room experience. Digital measurement tools enabled by the ISU allow-
Speaker 4: with tremendous interest in send hands and the ISU.
Speaker 4: To kick off stages, we hosted a moderated broadcast of a live send-hand surgery performed in Germany by Dr. Viviane Damanca to a packed breakfast symposium from the conference in Montreal.
Speaker 4: This event demonstrated the capabilities of both our send-hand system and ISU as well as our teleprations capabilities with send-hands connect.
Speaker 4: We hosted an event with several US pediatric surgeons to better understand their needs for this unique specialty. We also attended the German Surgeons Congress, 2023 or DCK hosted in Munich, Germany. During this event, similar to Sager, we hosted a live surgery in which Senhans and the ISU drew a great deal of attention from more than 100 attendees. This led to a fully booked agenda of hands-on demonstration for surgeons to have individual dedicated time.
Speaker 4: To continue the focus on the pediatric market and expand on our learning from Sages, we hosted a group of key European pediatric surgeons to better understand their needs and how we can support further research for the specialty. We will continue this focus into next quarter at the IPEC and ESPEC, International Pediatric Endoscopic Group and European Society of Pediatric Endoscopic Surgeons, joined Global Meeting in Italy this summer.
Speaker 4: To continue the focus on the pediatric market and expand on our learning from Sages, we hosted a group of key European pediatric surgeons to better understand their needs and how we can support further research for this specialty. We will continue this focus into next quarter at the IPEC and ESPEC, International Pediatric Endoscopic Group and European Society of Pediatric Endoscopic Surgeons joined Global Meeting in Italy this summer. Turning to other recent developments.
Speaker 4: As we unveiled during our investor day in February , we are incredibly excited about our next generation Luna system, which is currently in development. Luna was developed over the course of nearly four years with input from surgeons, OR teams, strategic partners and hospital administration.
Speaker 4: In February , we disclosed we had signed a memorandum of understanding with Karl Stodz, a major player in the surgical device industry. The definitive agreements are progressing towards signing and will represent an important step, expanding our commercial reach and development capabilities. Upon completion, it will enable the sensors to bring the benefits of the ISU to Karl Stodz extensive global customer base. Both organizations are working diligently to finalize their agreements as quickly as possible. Before turning the call over to Sames, I wanted to highlight
Speaker 4: We now have the ability to help surgeons deliver better outcomes globally.
Speaker 4: We have also been hard at work to develop pediatric-specific real-world data. During the first quarter, a paper was published that detailed early experience utilizing our send-ins platform in pediatric procedures in the US.
Speaker 4: This study conducted with IRB approval prior to 510K clearance showcases the safety and feasibility of using send-hands in pediatric cases.
Speaker 4: The surgical team successfully performed surgeries on patients ranging from 4 months to 16 years of age. These procedures included gallbladder removal, cernia repair and other types of urological and GI procedures.orphopry bridegroom wedding chamomile called freshen wind crypto case gunsvideon telecast.
Speaker 4: These early results highlight the potential of our platform in the pediatric population and further validate its safety and effectiveness.
Speaker 4: We have continued to see increased interest in using sandhands.
Speaker 4: and the ISU specifically for pediatrics.
Speaker 4: As we announced during the fourth quarter, we installed a system in Germany to be used exclusively with their pediatric surgery department.
Speaker 4: We believe that there is a significant opportunity to bring all of the benefits of performance guided surgery to a largely underserved pediatric market, which will continue to be a focus of our expansion efforts to meet the increasing demand.
Speaker 4: In summary, I am thrilled with the breadth of our accomplishments during the first quarter and how we have positioned ourselves for long-term success. With that, I will turn the call over to Samesh for a financial update.
Speaker 3: Thanks Anthony. Turning to the first quarter, where the three months ended March 31, 2023, the company reported revenue of $1 million as compared to revenue of $1.1 million and the three months ended March 31, 2022.
Speaker 3: Revenue in the first quarter of 2023 included $0.5 million in lease revenue, $0.3 million in instruments and accessories, and $0.2 million in services.
Speaker 3: For the three months ended March 31, 2023, total operating expenses were $20.4 million as compared to $18.2 million.
Speaker 3: For the three months ended March 31, 2023, NetLoss attributable to common stockholders was $22.2 million or $9 per share as compared to a NetLoss attributable to common stockholders of $19.1 million or $8 per share.
Speaker 3: In the three months ended March 31, 2022. So, the three months ended March 31, 2023. The adjusted net loss attributable to common stockholders was $22 million. Or...
Speaker 3: $0.09 per share as compared to an adjusted net loss of $16.6 million or $0.07 per share in the three months ended March 31, 2022. Adjusted net loss is GAAP net loss adjusted for the following items. Intangible assets and change in fair value of contingent consideration.
Speaker 3: both of which are non-cash charges. Adjusted net loss attributable to common stockholders is a non- GAAP financial measure. Reconciliation from gap to non- GAAP measures can be found in our earnings release.
Speaker 3: balance sheet, the company had cash, cash equivalents, short-term and long-term investments, excluding restricted cash of approximately $57.4 million as of March 31, 2023. I'll turn the call back over to Anthony. Thanks, Yamiche.
Speaker 4: Turning to the balance of 2023 and what we expect to achieve during the back half of the year. Starting with the Lunar Programme, we have completed much of the R&D over the last few years and are moving quickly into testing and evaluation a head-up regulatory filings. In the second half of 2023, we will have surgeons perform system tests to provide feedback before completing pre-clinical evaluations of the fully built system by the end of the year.
Speaker 4: We'll freeze the system's design, complete verification and validation testing, and ramp up our manufacturing capabilities. By the end of 2024, we intend to submit to the FDA and other regulatory bodies in Europe and Japan with the expectation of receiving FDA clearance in mid-2025. We will then move into a commercial pilot launch during the second half of 2025. We are confident in our progress towards the commercial launch of these systems and will continue to provide updates as we move forward. As it relates to SenHANs, we continue to expect to initiate 10 to 12 new SenHANs programs during 2023. Additionally, we expect procedure volume growth.
Speaker 4: for the rest of 2023 to track similarly to what we saw in the first quarter. The data collected through these procedures.
Speaker 4: has been instrumental and as additional sites utilize the ISU in the coming month, it will increase the data we can leverage.
Speaker 4: The data collection nearly tripled sequentially and we hope to have more than half of our sites using the ISU by the fourth quarter.
Speaker 4: With this level of data collection, we will be able to continue to drive innovation and make significant advancements in performance guided surgery.
Speaker 4: These are exciting times at a census. We have continued to push the boundaries of what's possible in robotic surgery.
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your recognitions and progress and thanks for taking my questions. So starting off, you know, is there any more feedback on a pediatric launch you could provide and do you think this could drive an inflection in your system placement?
and progress and thanks for taking my questions. So starting off, you know, is there any more feedback on the pediatric launch you could provide? And do you think this can drive an inflection in your system placement? There are. Thank you.
So just to talk about pediatrics, we have been speaking with US accounts for some time now. And we couldn't...
We were not very active until we got the approval. But since then there's definitely interest which we saw at Sages and we've been following up on those to see how we might be able to start additional progress.
And then also in Japan, there's been interest. So definitely there's no shortage of interest. It's about trying to get the sites organized and some of the early adopters of this technology connected so that they can speak to each other before they start their program. So overall, I think there is an opportunity. And it is a unique solution because there is given the instrumentation and the haptic feedback that we offer. I think it will truly be differentiated in within robotics.
and to have some meaningful share for this enhanced system in pediatrics.
Great, thank you. And then maybe one for Shameez. So there's a large step on an R&D sequentially in year over year. Could you just walk through some of the drivers there? You know, I imagine part of it's due to Luna, but I had thought that I'd already come into the model during the fourth quarter.
Thanks for your question Ross. With regards to Q1, Q1 tends to be a heavier quarter for us in terms of burn in general when you look at the seasonality year over year. And in Q1 of this year we did spend a lot of effort in terms of getting ready with our investor event and making sure Luna was ready for the unveil which we have. And in the end we did spend a lot of effort in terms of getting ready for the unveil which we have.
to fend hands. So this would be a standalone ISU. So a lot of great projects that we're working towards. But Q1 should not be indicative of the rest of the quarter in terms of that burn rate.
Thanks for taking my questions.
Thank you. And our next question today comes from Lee Chen with HD WaveRite. Please go ahead. Hello Anthony and Shenez. Can you hear me?
Yeah, go ahead, Lee. Yes, thanks for taking my question. I just want to get a few of the potential work in size in the pediatric patient. Is it like one tens of the about surgery volume or was percentage there?
I can tell you approximately it's somewhere between three and four million procedures. If you just look at the US. And it's kind of hard to give you a definite number because it's not a whole lot of data available. But in terms of scale, I would say three to four million is a reasonable assumption with respect to market size.
Then with respect to the sales force, I think before we really push hard on the commercial front, I think the goal for us is to really get a few pilot sites up and running and get some early data published. So I think we will use some.
and also we will be developing this in Japan, but there are some clinical support staff that have performed a lot more on the pediatric side who tend to focus more on pediatric support of hospitals. So, there is a little bit of specialisation, but
For the most part, it will be the existing team that will support expansion and integrity yet. Thanks for the answer.
Thank you. And our next question comes from R.K. Remicamp with H.C. Wainwright. Please go ahead. Okay. Thank you. Let's do it.
Thank you. Good afternoon, Shamiz and Anthony. I apologize if some of these questions have been already asked. Just trying to get a sense of where you are with the lunar surgical system, particularly in terms of preclinical evaluation.
and also some of the testing that you plan to do for the, you know, during this year. Sure. Okay. So I think the goal for this year we, like I stated, we kind of have two milestones. The year-end milestone is really trying to do a full system test.
in a preclinical setting so that we can make sure that end-to-end the system is delivering on the performance criteria. And throughout the year...
We intend to bring in surgeons and perform some work using either tissue models or even it could even be small scale preclinical to gather feedback and also make it more of a testing kind of a platform for, you know, goes both ways, right? We need to know what the surgeons think and also.
from a developed point of view, we know that the solution is robust. So I would say, you know, that towards the middle of the year would...
be one milestone where we get surgeons and get feedback to further develop and that will help us lead into the ERN milestone of doing a full system preclinical evaluation.
And then, when do you need to do any sort of clinical testing as such before or basically what is the regulatory pathway? I think that's the question I have. Okay.
So for us, we intend to follow traditional 510K because we are the only predicate. So that's the current path you follow.
this relationship. Can you give any additional color as to how close you are or what else needs to get done before both parties can sign on the dotted line?
Yeah, so I think a great question. It's an extremely complicated agreement as you can imagine, you know, there's IP involved, there's R&D component, there's manufacturing.
and then there's a whole business commercial aspect and regulatory, all being discussed on a global scale. It's not just for the US, it's the US, Europe and Asia. So there are a lot of complexities and a lot of conversations going on. So both companies are very diligently working to try to wrap it up as soon as possible.
But I'd say that progress is made and as soon as we get it finalized we'll make sure we
progress is made and as soon as we get it finalized we will make sure we communicate that.
Perfect. Thank you very much, Anthony. Good luck and take you soon. Thanks, okay. Thank you. Ladies and gentlemen, this concludes our question of the intercession. I'd like to turn the conference back over to the management team for the final remarks.
Perfect. Thank you very much, Anthony. Good luck and take you soon. Thank you. Ladies and gentlemen, this concludes our question of the intercession. I'd like to turn the conference back over to the management team for the world works. Thank you, operator.