Q4 2023 Vicarious Surgical Inc Earnings Call
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Good afternoon, and welcome to the carrier Surgical's fourth quarter 2023 earnings Conference call. My name is Matt and I'll be your operator for today's call. At this time all participants are in a listen only mode, we'll 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 bra.
Kaitlyn Brosco: We'll 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 will now have to turn the call over to Kaitlyn Brosco with Vicarious Surgical for a few introductory comments. Thanks, Matt, and thank you all for participating in today's call. Earlier today, Vicarious Surgical released financial results for the three months and full year ended December 31st, 2023. 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 are forward-looking statements within the meaning of federal security laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Good with the carrier surgical for a few introductory comments.
Okay.
Thanks, Matt and thank you all for participating in today's call.
Earlier today by Carrie surgical released financial results for the three months and full year ended December 31 2023.
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 provisions of the private Securities Litigation Reform Act of 1995.
Kaitlyn Brosco: Any statements contained in this call that relate to expectations or prediction of future events, results, or performance are forward-looking statements. All forward-looking statements, including without limitation those relating to obtaining approval for the vicarious surgical system and timing for any such approval, are 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 or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements.
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 vicarious surgical system.
Timing for any such approval, our operating trends and future financial performance management market opportunity and commercialization are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that would cause actual results or events to materially differ from those anticipated or implied by the.
These forward looking statements.
Accordingly, you should not place undue reliance on these statements.
Kaitlyn Brosco: 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 and is accurate only as of the live broadcast today, March 4th, 2024. Vicarious 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 Sachs, Chief Executive Officer. Thanks, Kate.
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 is accurate only as of the live broadcast today March four 2024.
Like your 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.
Adam David Sachs: Thank you, everyone, for joining us. 2023 was a meaningful year for Vicarious Surgical. We began the process of transforming our beta 2 surgical system into our version 1.0 product. With collaboration from our surgeons and hospital system partners, we meticulously shaped the design of our V1.0 system and then turned our focus on subsystem build out and integration in preparation for verification and validation testing. In our V1.0 system design, we incorporated enhancements for a further refined motion profile and higher image quality with increased system safety, all with the goal of delivering the best product possible for surgeons and hospitals. Considering that only a small fraction, approximately 4% of soft tissue surgeries currently employ robotics, there's a substantial opportunity to further alleviate the robotics value proposition for patients, surgeons, and healthcare.
Thanks, Okay. Thank you everyone for joining us.
2023 was that a meaningful year for vicarious circuit.
We began the process of transforming our beta two surgical sector.
Our version one <unk> product.
With collaboration from our surgeon and hospital partners.
Look we shape the design of our V. One point and then focus on sub system build out and integration in preparation for verification and validation testing.
In our view one point out of system design, we incorporated enhancements for further refined promotional profile and higher image quality with increased system safety all with the goal of delivering the best product possible for surgeons and hospitals.
Considering that only a small fraction approximately 4%.
Soft tissue surgeries currently employed.
There is a substantial opportunity to further their robotics value proposition perfectly.
Uh huh.
Surgeon and hospital.
Adam David Sachs: Our distinctive system architecture, founded on proprietary decoupled actuator technology, not only enables superior capability but also has the potential to streamline training, enhance OR workflow, and offer compelling economic advantages. Additionally, our architecture facilitates best-in-class visualization, sensing, and data collection, all crucial for deploying and integrating automated procedural safeguards into robotic-assisted procedures. We are confident that our innovative approach to surgical robotics, along with its array of distinctive advantages, is the cornerstone to unleashing the complete potential of this field. Throughout 2023, as we continue to press forward on product development, we made meaningful progress, particularly in the build of each individual subsystem. However, we also encountered external headwinds and met certain integration hurdles. Continuously challenging macroeconomic conditions throughout the year created an opaque market outlook with increased capital costs.
Our distinctive system architecture founded on proprietary decoupled actuator technology not only enable.
Your capabilities, but also has the potential to streamline training enhanced our workflow and to offer a compelling economic advantage.
Additionally, our architecture facilitated best in class and visualization and data collection, all crucial for deploying integrating automated procedural safeguards in robotic assisted procedures.
We are confident that our innovative approach to the surgical robotics, along because the rate of distinctive advantages is the cornerstone to unleashing the complete potential of this field.
Throughout 2023.
We continue to press forward on product development, we made meaningful progress for <unk>.
Particularly in the bill of each individual sub system.
However, we also encountered external headwinds and met certain integration hurdles.
Continuously challenging macroeconomic conditions throughout the year created an opaque market outlook with increased capital call.
Adam David Sachs: Consequently, last year, we made the difficult decision to downsize our team twice and reduce future planned expenditures, prioritizing capital efficiency, and ensuring our business is better positioned to navigate such conditions. Furthermore, in the latter part of the year, as we began the V1 planar subsystem integration, we identified certain software and hardware components requiring additional development efforts to ensure system compliance, reliability, and safety ahead of entering formal verification and validation tests. And while the culmination of these headwinds translated into an extensive timeline, I am incredibly proud of how our team adapted and what we were able to achieve nonetheless. To that end, I'd like to touch on some of our wins. 2020-23, and highlight the milestones we expect to achieve in the quarters ahead. Health
Consequently.
Last year, we made the difficult decision to downsize our team quite and reduce future planned expenditure prioritizing capital efficiency and ensuring our business is better positioned to navigate such conditions.
Furthermore, in the latter part of the year as we began the V. One point a subsystem integration, we identified certain software and hardware components, requiring additional development efforts.
Sure.
Reliability and safety ahead of accurately formal verification and validation.
And while the culmination of these headwinds translated into an extensive time mark I am incredibly proud of how our team adapted and what we were able to achieve nonetheless.
To that end.
I'd like to touch upon some of our wins in 2023 and highlight the milestones we expect to achieve in the quarters ahead.
Alright.
Adam David Sachs: We were successful in expanding our foundational partnership with leading hospital systems as we collect feedback on the vicarious surgical offering and lay the groundwork for commercialization. In the third quarter, we announced our partnership with Intermountain Health, a system of 33 hospitals and 385 clinics spread across the Mountain West region of the United States. This partnership adds to our existing relationships with three of the top health care networks in the country, HCA Healthcare, University Hospitals, and Pittsburgh Creative, by tapping into their wealth of expertise. These collaborations afford us exclusive insight, instrumental in refining our products to precisely match the surgeon and hospital needs to deliver the best possible care for patients, thus ensuring our readiness for commercial success. Second, we raised $47 million in an equity follow-on offering that meaningfully bolstered our balance sheet to support development, clinical, and regulatory efforts in the quarters ahead.
We were successful in expanding our foundational partnerships with leading hospital systems as we collect feedback on the vicarious surgical offering and laid the groundwork for commercialization.
The third quarter, we announced our partnership with Intermountain health.
System, 33, hospitals, and 385 clients spread across.
Out in the West region of the United States.
This partnership adds to our existing relationship with three of the top healthcare networks in the cockpit.
Healthcare universities hospitals and Pittsburgh create.
We're tapping into their wealth of expertise.
These collaboration about Florida exclusive insight instrumental and refining our product to precisely match the surgeon that hospital needs.
<unk>.
Best possible care for patients, thus, ensuring our readiness for commercial success.
Second we raised $47 million with equity follow on offering them meaningfully bolstered our balance sheet to support development clinical and regulatory efforts in the quarters ahead.
Adam David Sachs: And finally, through an extensive series of pre-submission meetings with the FDA, we received regulatory clarity. Not only did we receive reassurance that we are on our path to market, but we were also pleased with the agency's suggestion to include clinical data for patients outside the United States in our de novo submission. As OUS clinical data collection will meaningfully facilitate our ability to enroll patients in complete procedures.
And finally doing density series of pre submission meetings with the FDA, we received regulatory clarity not only did we receive reassurance that are on a path to market, but we were also pleased with the agency, suggesting to include clinical data from patients outside the United States and our de Novo submission.
As <unk> clinical data collection more meaningfully facilitate our ability to enroll patients in complete procedure.
Adam David Sachs: Thanks to these achievements and our capacity to make the difficult but necessary decisions, we concluded 2023 with the completion of each individual subsystem built for our newly architected B1.0 system, the addition of another major hospital system partnership, a clearly defined regulatory strategy, and a more resilient business structure supported by our strengthened power. We are excited to drive our momentum into 2024 and execute on our objectives. Within the first month of this year, we made strides in subsystem integration, and today we are excited to affirm that we will conduct catalytic testing this spring as a means of evaluating our system ahead of final software and hardware refinements and ultimately complete the integration of our V1.0 system this fall.
Thanks to these achievements and our capacity to make the difficult but necessary decision.
We concluded 2023 with the completion of each individual sub system built for our newly Architected to be won.
The addition of another major hospital system partnership a clearly defined regulatory strategies and a more resilient business structure supported by our strengthened balance sheet.
We are excited to drive our momentum using 2024 and execute on our objectives.
Within the first month of this year, we have made strides in sub systems integrator and to date. We are excited to affirm that we will conduct how does their testing this spring as a means of evaluating our systemic.
Final software and hardware refinement and ultimately complete the integration of our <unk> system. This fall.
Adam David Sachs: I'd like to now turn to a few leadership developments. Earlier today, we filed an 8k disclosing David Syka's retirement as chairman of the board. David has played a pivotal role in our company's accomplishments over the last four years, and we'd like to extend our heartfelt gratitude to him for his guidance and support. With David's departure, we are evaluating our board composition and potential courses of action.
I'd like to now turn to a few.
Leadership development.
Earlier today, we filed an 8-K disclosing with David <unk> retirement as chairman of the board.
David.
It'll roll in our company's accomplishments over the last four years and we'd like to extend our heartfelt gratitude to him for his guidance and support.
With David Karcher, we are evaluating our board composition potential courses of action.
Adam David Sachs: Moreover, I'm thrilled to start 2024 with the appointment of Randy Clark as president of Vicarious Surgical. Randy brings over 20 years of medical device industry experience with a track record of leadership and development, manufacturing, and commercialization of innovative solutions. He most recently served as the Global President of the Health Solutions Business Unit at FLEX, and prior to that, he spent 15 years at Olympus, progressively assuming leadership roles across various business functions, ultimately culminating in his role as President.
Moreover, I'm thrilled to start 2024 with the appointment of Randy Clark as President of <unk> surgical.
Randy brings over 20 years of medical device industry experience with a track record of leadership and development manufacturing and commercialization of innovative solutions.
He most recently served as the global precedent that the health solutions business unit at <unk> and prior to that.
Mean geared at Olympus progressively assuming leadership roles across the various business functions ultimately, culminating in his role as president.
William J. Kelly: As we expected, Randy is already proving himself to be an invaluable leader and asset to Vicarious Surgical as we focus on achieving our 2024 milestone. Now, I will turn it over to Bill Kelly to review our financial performance. Thank you, Adam. Throughout 2023, we've proactively adjusted our planned spending to better align with the external environment. We implemented initiatives to streamline resources, optimize spending, and restructure the company for maximum efficiency. This included two rounds of downsizing and cost reductions, which we expect to benefit our 2024 Extended Profile. As a result, total operating expenses for the full year 2023 were $80.7 million, essentially flat compared with the prior year. R&D expenditures for the full year 2023 were $47.6 million compared to $43.9 million in 2022.
As we expected Randy is already proving himself to be an invaluable leader asset because if I carry it surgical as we focus on achieving our 2024 milestones.
Now I will turn it over to Bill Kelly to review our financial performance.
Thank you Adam.
Throughout 2023, we proactively adjusted our planned spending to better align with the external environment.
We implemented initiatives to streamline resources optimized spending and restructuring the company for maximum efficiency. This.
This included two rounds of downsizing and cost reductions, which we expect to benefit our 2024 expense profile.
As a result total operating expenses for the full year 2023 were $87 million essentially flat compared with the prior year.
R&D expenditures for the full year 2023 were $47 6 million compared to $43 9 million in 2022.
William J. Kelly: General and Administrative expenses for the full year were $26.9 million, down compared to $29.7 million in 2022. And full year 2023 sales and marketing expenses of $6.2 million were comparable to the prior year. Adjusted net loss for the full year was $76.3 million, according to an adjusted net loss of $0.52 per share, as compared to an adjusted net loss of $78.8 million or an adjusted net loss of $0.65 per share for the prior year. The adjusted net loss for the full year was $71.1 million.
General and administrative expenses for the full year were $26 $9 million down compared to $29 $7 million in 2022, and full year 2023 sales and marketing expenses of $6 2 million or.
Were comparable to the prior year.
Adjusted net loss for the full year was $76 3 million.
Equating to an adjusted net loss of 52 per share as compared to an adjusted net loss of $78 $8 million on an adjusted net loss of <unk> 65 per share for the prior year.
GAAP net loss for the full year was $71 1 million.
William J. Kelly: Acquitted to a net loss of 49 cents per share. For a reconciliation of all non-GAAP measures to GAP, please review our earnings pressure. We ended 2023 with approximately $98 million of cash, cash equivalents, and short-term endowments on our balance. As a result of our disciplined spending during the year, we are pleased to have executed on our full year 2023 cash burn guidance with a burn rate of $63.4 million for the year, in line with our original full year and updated Q3 guidance. Turning to our 2024 outlook, we expect cash burn of approximately $50 million for the full year, in line with our initially provided 2024 cash burn guidance of $40 to $55 million.
<unk> to a net loss of 49 seven per chip.
For a reconciliation of all non.
non-GAAP measures to GAAP. Please review our earnings press release.
We ended 2023 with approximately $98 million of cash cash equivalents and short term investments on our balance sheet.
As a result of our disciplined spending during the year. We are pleased to have executed on our full year 2023 cash burn guidance with a burn rate of $63 4 million for the year in line with our original full year and updated Q3 guidance.
Turning to our 2024 outlook, we expect cash burn of approximately $50 million for the full year in line with our initially provided 2020 for cash burn guidance of $40 million to $55 million.
Adam David Sachs: With the resources at our disposal and our disciplined fiscal approach, we are confident in our ability to execute on our spring cadaver lab, integrate our version 1.0 system by this fall, and achieve other important milestones. We look forward to updating you as we progress with our business initiatives in the coming quarters.
With the resources at our disposal and our disciplined fiscal approach we are confident in our ability to execute on our spring cadaver lab integrate our version 1.0 system by this fall and achieved other important milestones. We look forward to updating you as we progress with our business initiatives in the coming quarters.
I will turn the call back to Adam Adam.
Adam David Sachs: Thank you, Bill. 2023 brought about meaningful milestones and strategic decisions that firmly position Vicarious Surgical to achieve its 2024 objectives and advance its long-term vision of delivering innovative surgical robotic solutions to patients, surgeons, and hospitals. We maintain steadfast confidence in the potential of our unique technology and the opportunity to generate substantial value for all stakeholders.
Thank you Bill.
2023 brought about meaningful milestones and strategic decisions that firmly positions by Terry surgical to achieve our 2020 core objectives and advance our long term vision of delivering innovative surgical robotic solution to patients surgeons and hospitals we.
We maintain steadfast confidence in the potential of our unique technology and the opportunity to generate substantial value for all stakeholders.
Operator: I'd also like to express my gratitude to all Vicarious Surgical employees for their unwavering hard work and dedication. I eagerly anticipate our continued collaboration and progress throughout 2020. Thank you, everybody, for joining today's call. We're now happy to take any questions. Operator.
I'd also like to express my gratitude to all vicarious surgical employees for their unwavering hard work and dedication.
I E can we anticipate our continued collaboration and progress throughout 2024.
Thank you everybody for joining today's call.
We're now happy to take any questions.
Operator.
Operator: If you would like to ask a question, please press star followed by one on your telephone keypad. If, for any reason, you'd like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered. The first question is from the line of Ryan Zimmerman with BTIG.
If you would like to ask a question. Please press star followed by one on your telephone keypad. If for any reason you would like to removed a question. Please press star followed by two.
To ask a question press star one.
A reminder, if youre using a speakerphone. Please remember to pick up your handset before asking a question, we'll pause briefly as questions are registered.
First question is from the line of Ryan Zimmerman with <unk>. Your line is now open.
Ryan Benjamin Zimmerman: Your line is now open. All right. Good afternoon.
Hi, good afternoon, thanks for taking my questions.
Ryan Benjamin Zimmerman: Thanks for taking my question. Maybe just to start on the milestones, Adam and Bill, what do you expect to get out of the cadaver lab in the spring? How much can you use it?
Maybe just start on the milestones Adam Bill.
What do you expect to get out of the cadaver lab in the spring how much can you use for your regulatory submission.
Ryan Benjamin Zimmerman: for your regulatory submission, and... You know, just kind of the expectations there. And then once you get V1.0 established, you know again, kind of what's the process from, you know, A to B in terms of using that to then get to the next step.
And just kind of the expectations there and then once you get the V. One point now established.
Again kind of what's the process from a to b in terms of using that to then get to the next step towards regulatory submission.
Adam David Sachs: Right. So, thanks so much for the questions, Ryan. First of all, we're really pleased with the progress we've made so far on the V1.0 system. The Spring Cadaver Lab is really about testing that fully integrated V1.0 system. Overall, the purpose of the V1.0 system in the Cadaver Lab is to prove that all of that functionality that surgeons and hospitals really loved that was in the Beta 2 prototype is now in our V1.0 product, works as effectively, and all of it is being conducted and documented appropriately to be a part of our process for the regulatory system.
So.
Thanks, so much for the question Brian.
First of all we're really pleased with the progress we've made so far on the D. One playing out at them. This.
As the spring today ever lab is really about testing that fully integrated the one system.
Overall, the purpose of the B one cleanup system in the cadaver lab is to prove out that all of that functionality that surgeons and hospitals really loved that within the beta two prototypes.
Now in our <unk> product works as effectively and all of it is being conducted and documented appropriately to be part of our process for the regulatory system and then the next steps after that I think with your second question and that really is about taking any of the challenges.
Adam David Sachs: Then the next step after that, I think, was your second question, and that really is about taking any of the challenges that we unearthed during this cadaveric process, as well as any bugs, resolving those over the rest of the spring, the summer, and the fall into our final V1.0 system. OK. Thank you. And, well, I guess just to follow up on that. So, just to be clear, then the V1 point, but is the V1.0, what you're going to the agency with or not? For more information, call 1-866-933-7800. I just want to make sure I'm clear about kind of that path. It's a fair question.
But we are during the <unk> process as well as any bugs resolving those over the rest of the spring in the summer and the fall into our final will be one point access them.
Okay.
Got it thank you.
I guess just to follow up on that so so just to be clear then the B. One point is the V. One point no.
What youre going to the agency with or do you expect to.
<unk> two point I, just wanted to make sure I'm clear about kind of that pathway to clearance.
It's a fair question. So the <unk> system is what we intend to take to the agency.
Adam David Sachs: So the V1.0 system is what we intend to take to the agency, but you know, I do want to set expectations that there's a reason that it's not finalized this spring. I do expect to have some things that are going to be tweaked or adjusted overall over the course of the summer and the fall, and we are on track for the fall milestone. I'll hop back in queue and probably some others that want to ask questions, and five others. I'll hop back in. Thanks. It sounds good.
I don't want to set expectations that there is a reason that it's not finalized.
Frankly, I do expect to have some things that are going to be tweaked or adjusted overall over the course of the summer and the fall and we are on track for a fall milestone.
Okay.
I'll hop back in queue.
Probably some others I wanted to ask questions and five others I'll hop back in thanks.
Sounds good.
Operator: Thank you for your question. There are currently no further questions registered, so as a reminder, it is star 1 on your telephone keypad. There are no additional questions waiting at this time, so I will now end the call. Thank you for joining us. You may now disconnect your line.
Thank you for your question.
There are currently no further questions registered so as a reminder, the star one on your telephone keypad.
There are no additional questions waiting at this time, so I don't know in the call. Thank you for joining you may now disconnect your lines.