Q2 2023 Asensus Surgical Inc Earnings Call
Good afternoon, and welcome to the census, surgical second quarter 'twenty to 'twenty three.
And financial update call all participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on.
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Please note. This event is being recorded I would now like to turn the conference over to Mark Klausner. Please go ahead.
Good afternoon, everyone and thank you for joining us for the U S census, surgical second quarter, 2023 business and financial update conference call.
On the call with me today are Anthony Fernando President and Chief Executive Officer, and Chemise ramp a cab 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 geopolitical risk 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 2022 Form 10-K filed in March 2023.
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 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 outperformance 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 everyone for joining us today.
To kick off I'll provide an overview of our recent performance and key achievements after which <unk> will detail our financial results.
Next I'll update you on our priorities for the rest of 2023 before we open the line for questions.
During the second quarter, we made good progress across all our key areas our.
Our focus remains on expanding the adoption of self help driving broader utilization of our intelligent surgical unit or I assume.
U S.
Advancing our clinical body of evidence and refining our portfolio to further enhance the capability of Syn <unk>.
Looking ahead, we are excited about the future with plans in place for the development of our new will do in that surgical system.
Procedure volumes remain a key factor in our ability to expand.
And digital capability.
As we continue to collect critical data machine learning engine becomes more effective.
Allowing us to provide valuable clinical intelligence to surgeon through <unk>.
During the second quarter, we continued to see robust positive trends delivering 27% year over year growth and over 11% equates to a growth with over 1010 has procedures performed across a variety of <unk>.
<unk> globally.
Over the past quarter, we have maintained a consistent 10% sequence so growth rate, reflecting our commitment to progress and stability.
Another positive aspect of increase procedure volumes.
The expansion of our clinical registry.
Our trust registry now includes data from over 2500 patients with.
We've been growing number of cases across gynecology and general surgery, and urology, which has been aided by the continued expansion of sites participating in the registry.
The primary goal for this registry is to create a collection of intra operative and 12 month postoperative follow up data.
Data will be used to support an increased number of quality clinical publication and contribute to our market development strategy.
Moving to new program and use cases.
We initiated two new sand has programs year to date.
The first bus Fukuoka push of Chi Hospital in Carson City, which we highlighted in our previous earnings call.
In Japan growth continue as we enter into agreements with prominent institution.
We are pleased with the positive momentum in the country and are looking forward to supporting further adoption in the region.
The second is a leading U S hospital that has initiated a fantastic program exclusively within that pediatric surgery Department.
Highlighting to enhance his unique suitability for pediatric applications.
This marks an important milestone.
Is the first system to be exclusively utilized by pediatric surgeon at a U S based hospital.
We continue to be active at key investor meetings to generate excitement about <unk>.
<unk> and ultimately Luna.
In July we participated in the society of robotic surgery.
Annual meeting held in Melbourne, Australia et.
As far as to say unique event, yes, all robotic.
So do you kind of technologies from various specialties.
Weather.
During the event, we had several podium presentations and symposium featured.
Featuring both company representative and surgeons, providing an excellent opportunity to showcase the unique capabilities of Santana.
And you see.
The substantial interest and engagement, we received regarding our usu and Luna, but particularly encouraging.
At this event signifies our commitment to driving innovation in robotics and digital.
Additionally, we attended the first joint meeting of the international Pediatric Endo surgery group.
I think and the European Society of pediatric endoscopic surgery.
With me.
We hosted a number of key events, including sponsored <unk> robotic Master class, which allows surgeons from around the globe to explore robotics in pediatric surgery.
The Master class received positive feedback and our hands on training sessions showcase the precision and efficiency of the Cintas system in pediatric procedures.
After attending several of these conferences over the past few quarters, we've seen strong validation of sand has potential.
The influx of new systems planning to be on the market.
Our understanding of market needs.
The real world experience and valuable user input sets us apart.
The unique offering of real time augmented intelligence has generated excitement from surgeons and hospital administrators the light.
We are confident we hold an edge.
The future market entrants.
Turning to other recent developments.
As we stated earlier during the quarter, we made progress in expanding our presence in the pediatric space since.
Since having received FDA clearance in March 2023, we have seen strong interest from pediatric surgery.
Efforts to develop pediatric specific real world data have shown promising results demonstrating the safety and feasibility of using sand has in pediatric cases.
The combination of <unk> handsets features such as three millimetre instrumentation and haptic feedback.
Along with the IAC was clinical intelligence may.
It makes it highly effective for pediatric procedure.
We have obtained the necessary clearances and approvals, including CE, Mark and FDA, five 10-K clearance, allowing us to support surgeons globally and improve outcomes.
We continue to see increased interest in sand hills, and I assume for pediatrics.
Committed to meeting the growing demand in the market.
In conclusion, I am happy with the progress we've made in the second quarter and our strategic positioning for long term success.
Now I will hand over the call over to <unk>, who will provide a financial update.
Thanks Anthony.
Turning to the second quarter for the three months ended June 30th 2023, the company reported revenue of $1 1 million as compared to revenue of $1 million in the three months ended June 30th 2022.
Revenue in the second quarter of 2023 included.
Zero point $5 million in lease revenue.
$3 million in instruments, and accessories, and zero point $3 million in services.
For the three months ended June 30th 2023, total operating expenses were $18 $9 million as compared to $18 $2 million in the three months ended June 32022.
For the three months ended June 30th 2023, net loss attributable to common stockholders was $27 million or <unk> <unk> per share as compared to a net loss attributable to common stockholders of $19 $6 million or <unk> <unk> per share in the three months ended June 30th.
2022.
For the three months ended June 32023, the adjusted net loss attributable to common stockholders was $23 million or <unk> <unk> per share as compared to an adjusted net loss of $17.3 million or <unk> 70 per share in the three months ended June 30th 2022.
Adjusted net loss as GAAP net loss adjusted for the following items amortization of intangible assets.
<unk> in fair value of contingent consideration.
And the impairment of property and equipment 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.
Turning to the balance sheet the company had cash cash equivalents and short term investments excluding restricted cash of approximately $40 million has a June 32023.
In July subsequent to the end of the second quarter, we completed a registered direct offering bringing in gross proceeds of approximately $10 million.
We plan to allocate these funds to reinforce our working capital and contribute to research and development.
Based on the recent financing and our current operating plan. We project our cash runway has been extended through late second quarter of 2024.
I'll turn the call back over to Anthony.
Thank you so much.
Turning to the balance of 2023, and what we expect to achieve during the back half of the year.
With regard to the lunar program, we have made significant progress in R&D and are now focused on testing and evaluation ahead of preparing for regulatory filings in 2024.
By the end of the third quarter 'twenty to 'twenty, three we intend to complete full system integration.
And system testing and finalize our manufacturing strategy.
Preclinical evaluation, which include surgeons performing several procedures with Illumina system on a foreseen model is scheduled for completion by the end of the fourth quarter of this year.
Looking ahead beyond 2023, our plan is to freeze the system's design in Q1 of 2020 full conduct verification and validation testing and ramp up pilot manufacturing.
By the end of 2020 full we aim to submit to the FDA and other regulatory bodies in Europe and Japan.
With the expectation of receiving FDA clearance in mid 2025.
Following this milestone we will proceed with a commercial pilot launch during the second half of 2025.
As it relates to our lunar go to market effort, two key advantages I would like to highlight.
First we believe that we have a clear regulatory pathway outlined for Luna.
In the U S based on our continued communications with the FDA significant in house regulatory expertise and a series of successful regulatory submissions for <unk> <unk>.
We expect to be able to leverage a time and cost effective traditional 500 10-K pathway in the U S rather than a more intensive de novo path.
We believe this streamline regulatory strategy applies not only to the United States, but also to the European Union, Japan, and other parts of the world.
This derisked regulatory process will significantly contribute to time to market advantages compared to other new entrants to this space.
This approach positions us favorably by expanding Luna market presence globally.
Second we believe Luna disruptive economic model, which when combined with the platform's innovative clinical performance will allow us to drive strong commercial adoption.
In addition to our current leasing model and capital purchase model. There is the potential for Luna to be available to hospitals through a subscription based model.
This innovative approach aims to provide a greater level of economic flexibility for our customers offering increased accessibility, thereby paving the way for broader adoption of the Lula system without a significant increase in procedure costs compared to laparoscopy.
Turning to our ongoing development efforts.
We anticipate reaching two milestones during 2023.
The first being entering into an agreement with a strategic graphics hardware provider in the second half.
And second to finalize and ramp up pilot manufacturing for the future I assume by the end of the fourth quarter.
These developments are crucial steps in advancing our lunar program and expanding our digital capabilities will be I assume as it relates to send hence we continue to expect to initiate a 10 to 12 new programs throughout 2023.
Additionally, we are optimistic that procedure volume growth will follow a similar trajectory as seen in the first and second quarter of the remainder of this year.
The data collected from these procedures has been crucial and we anticipate even more valuable insights as additional sites adopt the ISC in the coming months.
Lastly, we are excited to make progress with Luna, particularly in the preclinical evaluation, which we aim to complete by year end.
These are exciting times at a sensitive we have continued to push the boundaries of what is possible in robotics and digital surgery.
And we will keep pushing to deliver the tools and capabilities that surgeons need to deliver better more consistent outcomes for their patients.
With that I would like to open the line for questions.
We will now begin the question and answer session.
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At this time, we would like to pause momentarily to assemble our roster.
First question comes from RK at H C Wainwright.
Please go ahead, Mr Rama Com.
Thank you this is RK from here.
Right.
Good afternoon, Anthony and she needs.
So.
Couple of questions from me.
Suddenly, it's really encouraging to see that 9% sequential growth in the procedure volume.
And also seeing that.
We're growing at least 10%.
Quarter over quarter until a few quarters now.
What is driving.
That's gone on.
Hum.
What what have you when I say you what does hum.
Well since its done too.
I assure yourselves that sustained growth of 10% on a boat.
Hi, Okay. Thanks for the question.
So I think the.
How how we see this is the more familiarity that the hospitals gain and also.
Gain familiarity.
As you know when you start we start with the few number of surgeons.
But as time passes that are more surgeons that at the same hospital.
That tried to use the system. So the procedures have been growing so that's one area that we have seen growth coming from existing.
Hospitals.
Doing more cases with the addition of surgeons and the second is.
Remember that in the back half of last year, we placed a significant amount of systems.
Majority of our place in the second half. So that also is playing in now because they've done the installations and getting up to speed and coming up the learning curve. So they have begun to produce so I think those are the two factors that are.
Turning to <unk>.
<unk> contribute and you know when you look at it on that.
Year to date basis.
They've grown procedure volume 27%.
Compared to last year, and I think that's kind of lumpy, but we think we can.
Continue given these two factors coming together.
Thanks for that.
In terms of the installations itself.
Hum.
Yeah.
The last couple of years, we have been watching more installations happen in the second half rather than in the first half.
It probably is going to be some situations this year what.
What drives it to be a second half event.
Is it is it because these.
These things take longer.
Sure Tycho.
Cycle.
I know you know doesn't have to be an outright sale anymore you folks are.
Scripts.
The lease model, which helps but still it seems like.
It is taking a bit long I'm, not saying a bit longer but longer.
I'm just trying to understand the dynamics of the sales cycle.
Yeah.
Sure. Okay. So again I think the.
Yeah.
The interest in the pipeline exists it is trying to convert the pipeline into a play in the placement of our system, whether it's a sale.
Operating.
Lease in that decision.
<unk> is one part of that decision.
But also the hospital and the staff. They also have to be ready and trying to.
It will be willing to do their training and get up to speed and start using the system. So.
He is kind of I know just looking at last year and this year.
Beginning to see like somewhat of a pattern, but it's a.
It takes time and it is continuing to take time for the hospitals to come to that decision to say, okay. Now let's stop this.
Program, but from a pipeline, but I can say that.
We're very bullish about the pipeline.
And know that we can.
To deliver on.
This commitment of 10 to 12.
Systems, but the decision cycle is a long run because hospitals are doing the diligence and.
Trying to get as much.
Consensus internally as they can.
Surgeons, so that they can make the program successfully.
Thanks for that and then on the on.
On the pediatric installed up to you.
Oh no.
I'm trying.
Trying to kind of expand.
Hum.
And then beyond.
The other indications.
Sure.
How attractive is it just some of these hospitals and also too you know.
Are there any conversations in the hospitals that already have some ups.
Some of it.
Initial adopters.
The thinking about you know when you came to the pediatric.
Surgical suites.
Sweeps as well.
Yes.
So RK I think you know great points.
Yeah.
Talk about two things one talk about the existing sites.
There are I would say a few existing sites.
That happened to have a pediatric specialty within the hospital.
In cases like that obviously, we can consider it.
But many sites did you consider.
Second has before for pediatrics, because pediatrics is somewhat separated.
<unk> looked at CIT enhance for.
Other procedures, but now with the pediatric I think it is somewhat of an underserved.
Pace.
And then given the unique nature of sin, hence the pediatrics.
Surgical units and the surgeons.
Looking to it saying, okay, yes device that has a significantly smaller instruments and have certain features like haptic feedback and the digital capabilities and they're seeing the value of what it could do in a pediatric especially in the U S. Because we've been doing pediatric cases in Europe for some time.
I'm now and.
The movie share the data from some of these congresses and surgeons presenting about their case.
<unk> performance those get that's also influencing especially the U S.
James.
To start our pediatric program. So we just announced one and we are continuing to build on that but we've had.
Pretty good inbound interest.
From pediatric surgeons from different hospitals, saying that.
They are seeing.
Seeing interest in the smaller instruments and they feel that this is something that they can adopt so we're having those conversations now but pediatrics in general tend to be.
The space between pediatrics and the other surgical.
Decisions and choices and surgical centers. So that's the reason why all.
All in one.
So this is my last question talking about feedback.
You said that Luna.
It was demonstrated in Melbourne at a conference works the feedback you received.
This was done and how much of the.
The learnings from that.
Presentation.
Are you include on your incorporating.
To your frequent studies and also future studies that you need to do.
As you get.
Yep.
Our poor from marketing alumina.
Yes, RK so.
What we.
We meant by sharing Luna It was a video presentation of the Luna system.
A lot of physical system presentation, I just wanted to clarify.
In Melbourne, but the team is making extremely good progress.
On the R&D front.
And you know our goal is to perform.
This animal lab, a preclinical lab.
At the end of this year of our surgeons could do a complete.
Procedure.
I would kind of be the key gating milestone.
Where we can get a surgeon to do a complete procedure in wireless that milestone is met then we would start to proceed to.
Doing all the final validation verification pilot tests to prepare.
Our regulatory submission, but overall it is feedback from.
So did I have you been engaging its agents for the past I would say a couple of areas.
Specifically on the lunar program and continuing to eat.
All of the system.
But I think when.
<unk> look at the system.
What it can deliver.
And how it's going to help them perform surgery with five millimeter.
Instruments, and having the ability to use five millimeter fully listed instruments and straight instrument.
<unk> three millimeter, so that kind of options and also some other things they like.
<unk> had its very much you know.
By tracking and haptic feedback and independent et cetera, So when they see that's already been done and they can also see the improvement.
That's kind of what's driving a high level of interest there.
Thanks, Anthony and thanks for taking all my questions.
Thank you RK.
This concludes our question and answer session I would like to turn the conference back over to Anthony Fernando for any closing remarks.
Thank you operator, and thanks again for joining us today and for your support of our Sensus, we look forward to updating you on our next quarterly call.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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Yes.
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