Q2 2023 Vicarious Surgical Inc Earnings Call
Good afternoon, and welcome to the vicarious surgical second quarter 2023 earnings conference call.
My name is Sierra 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 Braskem with vicarious surgical for a few introductory comments.
Thank you Sarah and thank you all for participating in today's call earlier today like your surgical released financial results for the three months ended June 32023.
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 laws, which are made pursuant to the safe Harbor provision of the <unk>.
Securities Litigation Reform Act of 1995.
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 obtaining approval for the bike carrier surgical system and timing for any such approval, our operating trends and future financial performance expense management market opportunity on commercialization are based upon our current estimates and various assumptions.
Involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these eight months.
For a list and description of the risks and uncertainties associated with our business. Please refer to the risk factors set forth in our Securities and Exchange Commission filings, including our most recent Form 10-K and Form 10-Q.
This conference call contains time sensitive information that is accurate only as of the live broadcast today July 27th 2013.
23.
Like every physical disclaims any intention or obligation except 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'll now turn the call over to Adam Sun Chief Executive Officer.
Good afternoon, and thank you for joining us today, we've been looking forward to today's earnings call is we have a number of important updates to share.
First we are making strong progress as we advanced from design for.
Toward manufacturing and testing.
Our version one point I'll step back.
Sure.
Second based on a series of meetings with the FDA, we now have clarity and reinsurance on our path to complete both our clinical and regulatory submission plan.
With this clarity we are excited to announce that we intend to perform our first eventful hernia procedure in a patient in mid next year.
Finally, we are proud to have signed eight four major U S Hospital system as a partner, bringing the total number of hospitals represented by our partners to over 250.
Starting with system progress in April we froze design of our version one point I would say that the system, we anticipate deploying in our clinical trial next year.
Informed by surgeon and hospital system inside our V. One point, though design incorporates a number of enhancements relative to our previous version the beta accused system.
These changes enable a further refined motion profile higher image quality and optimized system safety for surgeons and patients.
Positive surgeon feedback from several members of our surgeon Luminary board over the recent months has reaffirmed our immense excitement around the potential of our system and the future ahead.
With our V. One point out system design freeze we are continuing to the next phase in our development cycle with a focus on manufacturing unit in preparation for verification and validation.
To ensure a coordinated and focused effort on deliverables for bnb in our clinical trial, we recently promoted John Mazola to Chief operating officer.
John joined our team in March of 'twenty, 'twenty, two and we'd previously SVP of operations and in the past year. He has led strategic manufacturing for our robotic system overseeing both the operations and quality organization.
In the newly created C. O overall, John scope has expanded to include product development and clinical and regulatory affairs.
With over 35 years of medical device industry experience in direct involvement in over 25 class two and class III medical device products launches. We know John is the right leader to drive our transition from an R&D organization to accompany prepared for clinical trial and.
Then commercial launch.
As such the integration and build of the version one point out system.
And on track for this fall.
Moving to regulatory clarity.
We are grateful for the collaboration with the FDA and as such we had several pre submission meeting where they have provided guidance and clarity on the authorization process based on direct guidance and input from the FDA. We plan to complete a clinical trial with 30 to 60 patients total including patients from outside.
The United States.
We are pleased with the agency's suggestion to include O U S. Clinical study data as this will allow us to capture clinical data across a larger population of meaningfully facilitate our ability to enroll patients in our study and be in a position to compete patient procedures within the next year.
With this clarity we plan to pursue our first ventral hernia procedure in a clinical patient mid next year and driven by our system progress and these developments and clinical plan. We now anticipate filing a de novo submission in early 2025.
As expected, we will need to show strong preclinical data prior to patient procedures. In addition to demonstrating our ability to safely and reliably manufacture our system as part of verification and validation testing.
This will be our guests over the coming quarters.
Additionally, we continue to work closely with our hospital system partners.
Firm surgeon and site participation in our clinical trial and establish the detailed clinical steps for use in the trial.
These plans are now informed by a clear understanding of the processes needed to meet our two clinical objective safety and efficacy.
After discussion with the FDA, our primary endpoint will be the ability of the surgeon to complete the intended ventral hernia repair and our safety endpoint will be adverse event rates.
30 day post surgery follow up.
Compared to existing laparoscopic data.
Given the design of our device is focused on patient outcomes and search and usability.
And given our preclinical success to date, we believe that we can meet these objectives and clearly prove the safety and efficacy of the vicarious surgical system.
Needless to say, we are thrilled to enter the next transformational phase of our company with the necessary clarity to best position ourselves to capitalize on the numerous milestones along our pathway to market.
With that I will turn the call over to Bill Kelley, Our Chief Financial Officer Bill.
Thank you Adam and thank you all for joining us today.
Total operating expenses for the second quarter of 2023, or 21 $5 million, a 12% increase from $19 $1 million in the second quarter of 2022.
R&D expenses for the second quarter of 2023 were $12 7 million compared.
Compared to $10 1 million in the prior year Jeff.
General and administrative expenses were $7 $1 billion in the second quarter of 2023 compared to seven $8 million in the second quarter of 2022.
Sales and marketing expenses for the second quarter of 2023 or $1 $7 million compared to 1 million.
In the prior year.
GAAP net loss for the second quarter of 2023 was $15 $3 million equating to a net loss of <unk> 12 per share.
This compares to a net loss of $1 5 million or a net loss of one cents per share respectively for the same period in the prior year.
Adjusted net loss for the second quarter of 2023 was $24 million equating to an adjusted net loss of <unk> 16 per share.
As compared to an adjusted net loss of $19 $1 million or an adjusted net loss of <unk> 16 per share for the same period in the prior year.
For a reconciliation of all non-GAAP measures to GAAP. Please refer to our earnings press release.
At the end of the second quarter cash cash equivalents and short term investments were approximately $83 million, representing a cash burn of $14 $9 million as.
As we move into the second half of the year.
It's just the building clinical system units, we expect certain design and development costs to drop off and be replaced by increases in manufacturing and preclinical expenses.
As such we believe the Q2 cash burn rate is fairly indicative run rate for the remainder of the year and.
And we continue to expect our full year cash 2023 cash burn to be between $55 million to $65 million.
As always we remain committed to disciplined spending and investments in only high value generating initiatives that advance our development and regulatory processes.
And with that I'll turn the call back over to Adam for closing remarks.
Thank you Bill.
Harry at surgical we envision a future where exceptional surgical outcomes are possible for every patient and every surgeon.
So far this year, we've taken several important development and regulatory step toward realizing that vision and we remain confident in the potential that our innovative approach will allow us to transform the standard of care in surgical robotics.
We look forward to providing meaningful updates in the quarters to come as we continue to work to achieve this vision through integration of our V. One point out system. This fall our first patient procedures next summer and filing of our de Novo submission in early 2025.
With that I will turn the call over to our operator for questions.
Sarah.
Thank you.
If you'd like to ask a question. Please press star followed by one on your telephone keypad.
To remove your question press Star followed by two.
And if you're using a speaker phone. Please remember that pick up your handset before asking your question.
Our first question.
Comes from Adam meter with Piper Sandler.
Please proceed.
Hi, Adam Hi, Bill this system run on for Adam and Thank you for taking the questions.
It was good to hear the update with regards to the F. D. A in your clinical trials, So I guess I'll start off there.
Are you able to share the number of sites that.
That you are planning to activate for the trial and whether or not you're able to leverage your centers of excellence.
As a part of that trial and then have you identified them.
And our centers for your O U S patients.
And then just wrapping up thoughts there or any initial thoughts on trial cost.
Yeah I'll take the first two questions. So yeah.
We're incredibly pleased with the ability to include O U S clinical data it'll meaningfully provide a huge tailwind to enrollment.
<unk>, giving us the ability to test work and in a country, where they have good clinical practices and at the same time don't have the same access to frankly to health care and an excellent surgical services and we would be able to fill an unmet need and therefore to have tailwind for patient enrollment that simply.
In the U S.
<unk> said, we absolutely are able to use our centers of excellence.
Our agreement with HCA, you H and U P. M. C. M. This fourth hospital system are.
All I'll provide for access and we are in the process of working with our hospital system partners to select surgeons and specific site based on patient and surgeon criteria.
Haven't selected the O U S site that at that time.
So we're not quite ready to share the exact number of sites that will be using in this clinical trial that bill do you want to touch on cost yeah in terms of cost obviously, we're not disclosing.
Actual cost, but I will say I think first of all at 30% to 60 patient sample sizes as well within the expectations that we had.
Planning these steps for a long time.
So it's within our cash burn guidance again to reiterate that keeping our cash burn guidance of $55 million to $65 million and we're excited about the next steps and looking forward to the next phase.
Okay perfect.
And then maybe just a follow up.
It sounds like so the initial manufacturing and production process will begin in the fall it it hasn't started yet.
Can you just walk us through what the step from now to the final stages of initial manufacturing look like and are.
Are you able to share how many systems you need to build for the clinical trial.
Hi, so so we actually are.
Well under way for initial manufacturing it it'll be the first systems are fully integrated tested and.
And used internally in the fall.
Rather than will be starting in the fall.
For the total number of systems that will need for the clinical trial.
It'll depend on the exact number of sites, it's in the ballpark of a thousand.
Yeah.
Okay perfect. That's it for me thank you.
Our next question comes from Ryan Zimmerman with B T I G.
Please proceed.
Hey, good afternoon, thanks for taking the questions.
Nice to hear that you guys got the car.
Alrighty here so.
I guess I'm curious.
As we think about a de novo application at them.
And the submission in 'twenty five I I don't want to put the cart before the horse here, but I guess I'm just trying to think about the timelines that.
You're thinking about.
The FDA has about 15 days to accept the submission and then I think there was about 180 day period. After that so just trying to put some timelines around when commercialization.
Can occur can begin.
Assuming everything goes well with the trial and so forth.
Yeah.
Question. So that number is off our de Novo submission of 150 days.
And it is statutory limit the key to ensuring that we hit that is that we work with our with the agency really closely are part of why we had.
Frankly, a pretty drawn out process over the last year and will continue to work closely with the agency to make sure that you know.
We're not messing around at all we're providing them simply exactly what theyre asking for so that there are not that many questions. During that review period and that we can get a swift clearance. So I don't want to provide especially at this time formal guidance, especially on when the agency is.
Is going to respond to us.
But we're pretty optimistic on the timing.
Okay.
Fair enough and.
And.
Two.
The trial design.
Again, it's nice to see it's pretty in line with I think what people are expecting in terms of patient size and follow up and all that but just give us a little color about the F. Your discussions with the FDA, if you're if you're comfortable.
In terms of their comfort with the system things that you feel like you really have nailed down.
Where do you see risks I mean, this was kind of a discussion we had last quarter around kind of <unk>.
Including risks in our thinking.
Based on the Fda's comments, and what you get back and so you'll know that we have that clarity kind of.
Where do you see risks now between now and <unk>.
While completion and just what things we need to consider between now and then.
Yeah I.
I think that's kind of two separate questions.
Where there's risk off from now until the trial and commentary along the way at least that's how I'm hearing it hum.
As far as the conversation back and forth with the agency and we've really just been digging as deep as we can and taking full advantage of their willingness to spend a lot of time on this.
And to provide us feedback so that they can understand where the risks are across our system. So that we don't have any surprises during the approval process or it would be absolutely minimize the chance that we have any surprises in that.
How we got to the O U S opportunity because we were working together with the agency to be able to prove you know looking at the question of how can we thoroughly prove safety and efficacy of our system. While also truly following that least burdensome standard and minimizing risk and timeline throughout the <unk>.
And that's how we ended up at <unk> two.
Thoroughly derisked the patient enrollment process is often one of the bigger risks of our clinical trial.
As far as from now to the clinical trial, it really comes down to the verification and validation process.
So through that process, there's a lot of rigorous testing and standards that we have to meet and you know any.
Any hiccups, along the way and that will require some remediation we have.
A decent amount of time planned in there for that remediation.
But that being said anything beyond that.
Would would be.
Be an issue that would come out.
I do want to clarify, though that we are doing a ton of pre testing. We've designed our system to meet those standards and do a lot of work in that area. So we're confident in our system and the process.
Okay. No that's very helpful. Adam I appreciate the color and good to have the update today. Thank you.
Thanks for the question.
Our next question comes from Josh Jennings with TD Cowen. Please.
Please proceed.
Hi, This is Eric on for Josh. Thanks for taking the question was hoping to ask about the robotic system itself.
Since you've had design freeze a version one point now in place.
What level of surgeon experimentation or trailing have you had on that fine line system and what sort of feedback have you received from those folks.
So yes.
<unk> come in and use.
Various sub components of the system.
And we've done a ton of beta two testing along the way, but the full the one point out of system is still in are actually kind of the final integration stages right now so.
So we haven't been able to do any cadbury testing with it quite that way.
We're really excited to bring it in this fall and overall you know this year, we've had a ton of surgeons give total feedback on the system overall, including two dozen in just Q1 alone.
Okay understood and then maybe just another one on the New hospital partners that you're announcing here I was just hoping to hear a little bit more about how that opportunity came about and any chance that your program could expand even further.
Yeah. So every one of these potential new partners.
We evaluate these relationships based on frankly, a combination of things, including you know what it will provide to US. Both in you know system development and V N B clinical trials and when we're on market and commercial that particular system provides.
Pretty significant additional footprints that we're really excited about.
And then the other thing that we really carefully look at is our own bandwidth. So that's why we've been taking these kind of.
Since the original Q1 by one really thoughtfully and carefully and making sure that we can actually support these relationships because they are a potential incredible positive for our company that's really unprecedented in the industry, but of course, if we don't have the bandwidth to work with the system partners.
Positive could turn into a negative and we want to ensure that that doesn't happen. So it's not really an answer to your second.
Second question there is I'd say.
An opportunity for it but we do it really thoughtfully and carefully.
Okay.
Okay, Yeah that makes sense. Thank you for taking the questions.
Our next question comes from Colorado with Canaccord Genuity. Please proceed.
Hey, this is George on for Kyle Congrats on the progress you guys had made just a couple from me. The first one you guys mentioned that the Q2 run rate should be indicative of.
Kind of the cash burn for the rest of the year.
So how many units just.
Around rough figures show that convert to in terms of systems.
A much leeway does it give you guys because I think you said, we're looking at about a 1000 systems for the clinical trials right now.
Wondering your thoughts.
Have you set a dozen systems really couldn't couldn't close yeah, no I'd say one of the things to keep in mind, obviously, given the decoupled actuators and the design of our system.
The cost to build.
Such systems is probably amongst lower burden.
Others might have so we will be looking to.
I'll start.
The build of about a dozen systems through this year and into next year as we kick off the clinical trial next year.
And so.
I hope that answers your question.
Okay, Great and then I was just wondering in terms of like a hospital partners.
Kind of touched on this.
The question, but I'm just wondering if you guys are trying to proactively look for tech data onto your.
Hospital partners or you're kind of in a comfortable spot in terms of where you are.
And getting the clinical without unnecessary in the trial sites.
I'd say.
Same same answer to the kind.
Previous question there from Eric.
For adding hospital system partners, you know the way, we think about it as just being really sure that they provide additional value add.
And that we can actively support those partners. So am I is there something I'm missing in and the question there.
Yeah.
So I was just wondering if.
I think you guys have sort of.
Well I was just wondering if you guys are still like proactively looking or you're complacent with the amount of partners you have right now and going to the next.
2024.
Yeah, I mean, we're certainly happy with the number that we have right now we've been receiving a lot of inbound interest.
For potential partners, but that's how we really think about it cautiously.
As we move forward with any potential partner, because we want to make sure that we can really support that.
Hospital systems like partners to make sure that the relationships are a positive as positive as they can be rather than not.
Not having the bandwidth to support it as a small company.
That's why we take that sort of so thoughtfully and one step at a time.
Okay. Thanks.
Thank you for your questions.
There are currently no questions registered so as a reminder, it is star one to ask the question.
There are currently no questions waiting in queue. So I will pass the conference back to the management team for any further remarks.
Thank you everybody so much for joining today's call.
That concludes the call.
Have a good evening.
That will conclude today's conference call.
Thank you all for your participation you may now disconnect your line.