Q3 2024 Vicarious Surgical Inc Earnings Call

Robert Travers, Timothée Chalamet, and Cecily Sinclair.

Speaker Change: Hello everyone and thank you for your patience. Today's call will begin shortly.

Lydia: Hello everyone and welcome to Vicarious Surgical's third quarter 2024 earnings call. My name's Lydia and I'll be your operator today.

Lydia: At the end of the presentation there'll be an opportunity to ask questions. If you'd like to participate in the Q&A you can do so by pressing star followed by one on your telephone keypad. I'll now hand you over to Kate Brosco, Director of IR to begin. Please go ahead.

Kate Brosco: Thank you, Lydia, and thank you all for joining. With me today are Adam Sachs, co-founder and chief executive officer, Bill Kelly, chief financial officer, and Randy Clark, company president.

Kate Brosco: 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.

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

Kate Brosco: All forward-looking statements, including without limitation, those relating to obtaining approval for the Vicari Surgical System and timing for any such approval, or operating trends in future financial performance, expense management, market opportunity, and commercialization are based upon our current estimation and various assumptions.

Kate Brosco: These statements involve material risk and uncertainties that would cause actual results or events that materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place any undue reliance on these statements.

Kate 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.

Kate Brosco: This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 12, 2024.

Speaker Change: I carry 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. Now I'll hand the call over to Adam for prepared remarks.

Adam Sachs: Good afternoon, everyone. Thank you for taking the time to join us today.

Adam Sachs: At Vicarious Surgical, our mission is to improve lives by transforming robotic surgery. And we believe our unique single port platform will revolutionize surgery by enhancing patient outcomes.

Adam Sachs: improving the surgical experience, and increasing the efficiency of care delivery.

Adam Sachs: With its inherent advantages, SinglePort promises to unlock preoperative and interoperative efficiencies that intend to streamline procedures and increase surgical throughput where existing multiport devices fundamentally cannot.

Adam Sachs: Furthermore, there is a growing base of evidence that supports single-ports' ability to improve surgical outcomes for patients, such as reduced blood loss, shorter hospital length of stay, and minimized pain and opioid use.

Adam Sachs: During the third quarter, we made meaningful progress toward delivering the first version of our single-port platform. We are now weeks away from our year-end cadaver lab, which ultimately denotes the integration of the v1.0 system.

Adam Sachs: Following the completion of this milestone, our focus will shift to verification and validation and the manufacturing effort to support this rigorous testing program.

Adam Sachs: Starting early next year, the integrated V1.0 system and subsystems will undergo informal assessments related to durability, biocompatibility, and electromagnetic and environmental compatibility that will stimulate the formal verification and validation process.

Adam Sachs: We expect to make minor optimizations throughout this preliminary phase that will better ensure we meet all essential performance and safety standards required to treat our first clinical patients safely and confidently.

Adam Sachs: Upon the successful completion of each of these rigorous essential performance and safety tests, we anticipate treating our first patient in less than one year.

Adam Sachs: We look forward to this opportunity to showcase our single-port system's immense potential and the meaningful clinical value we can deliver to patients, surgeons, and hospital systems.

Adam Sachs: In preparation, our clinical and regulatory team have been hard at work preparing with our CRO to evaluate potential OUS clinical sites for both our first clinical patient and subsequent pivotal clinical trial.

Adam Sachs: Although no formal announcement has been made, we have narrowed our search down to a select few sites within the same country.

Adam Sachs: Conducting the first clinical patient ahead of our pivotal clinical trial will allow us to validate real-world performance at a clinical setting and gain valuable insights that can be used to optimize our pivotal trial design and protocol.

Thank you very much.

Adam Sachs: As a reminder, in order to expedite our time to market, our clinical trial will focus on one initial indication, central hernia repair.

Adam Sachs: With hundreds of thousands of procedures performed annually within the U.S. The ventral hernia repair is an attractive first indication for vicarious surgical and one where we believe our system's differentiated clinical capability is ideally suited.

Adam Sachs: From there, we plan to quickly expand to our other targeted indications, including inguinal hernia repair and procedures related to gynecology, gallbladder, and colorectal.

Adam Sachs: Our clinical trial's primary performance endpoint will be the ability of the surgeon to complete the intended ventral hernia repair, and our safety endpoint will be adverse event rates through a 30-day post-surgery follow-up, as compared to existing laparoscopic data.

Adam Sachs: Following guidance from our pre-submission meetings with the FDA, including the most recent one last month, we plan to enroll and treat approximately 30 to 60 subjects from outside the United States.

Adam Sachs: We believe this approach will allow us to treat subjects and gather clinical data to demonstrate the safety and efficacy of our technology in the most efficient and timely manner.

Adam Sachs: Additionally, numerous precedents, including recent FDA surgical robotic clearances, give us further confidence in our regulatory pathway to market.

Speaker Change: I'll now turn the call over to Bill for a review of our third quarter financial performance.

Bill Kelly: In the third quarter, total operating expenses fell 17% year-over-year to $17.8 million.

Bill Kelly: R&D expenses for the third quarter of 2024 were $10.8 million compared to $13 million in the third quarter of 2023.

Bill Kelly: General and administrative expenses for the third quarter of 2024 were $5.7 million, down from $6.9 million in the third quarter of 2023.

Bill Kelly: and third quarter 2024 sales and marketing expenses were 1.2 million dollars versus 1.4 million dollars in the third quarter of 2023.

Bill Kelly: Adjusted net loss for the third quarter of 2024 was $17 million.

Bill Kelly: equating to an adjusted net loss of $2.87 per share as compared to an adjusted net loss of $20.4 million or $3.95 per share in the third quarter of 2023.

Bill Kelly: Gap, net loss of the third quarter of 2024 was $17.1 million, equated to a net loss of $2.90 per share.

Bill Kelly: This compares to a net loss of $15.7 million, or $3.04 per share, in the third quarter of 2023.

Bill Kelly: For a reconciliation of all non-GAAP measures to GAAP, please review our earnings press release.

Bill Kelly: We close the third quarter with $61 million in cash, cash equivalents, and short-term investments.

Bill Kelly: This translates to a cash burn of approximately $12 million for the quarter.

Bill Kelly: keeping us on track with our projected full year 2024 cash burn of roughly 50 million dollars.

Bill Kelly: Well, we are laser-focused on executing our development strategy and achieving our first clinical milestone next year.

Bill Kelly: We are equally committed to disciplined resource allocation and maintaining a strong balance sheet to ensure we are appropriately capitalized to reach these critical landmarks and deliver on our mission.

Speaker Change: And with that, I will turn the call back to Adam for closing remarks. Adam?

Adam Sachs: Thanks, Bill. In this final quarter of 2024, we are making the final push to complete the integration of our Version 1 finite system.

Adam Sachs: This significant development milestone has been our main objective and guiding focus throughout the year and achieving it will be a testament to the dedication and incredible effort of our entire team.

Adam Sachs: I want to express my sincere gratitude to our dedicated employees for their tireless efforts and unwavering commitment.

Adam Sachs: I also want to extend a heartfelt thank you to our hospital system partners who have generously dedicated countless hours to providing invaluable feedback that has helped us shape our version 1.0 system.

The integration ...

Adam Sachs: of our first version platform will set the stage for 2025. The year will we transition to a clinical stage company. In less than a year, we intend to treat our first patient and have a critical opportunity to validate the clinical value of our single port system and its potential to further robotic surgery.

Adam Sachs: We are incredibly excited for the future of vicarious surgical and for our potential to positively impact lives by transforming robotic surgery.

Speaker Change: Thank you to everyone who joined the call today. We appreciate your support and look forward to updating you on our continued progress in the quarters to come. Operator, we are now ready to take any questions.

Speaker Change: Our first question today comes from Josh Jennings with TD Cowan. Please go ahead your line is open.

Speaker Change: Hi, this is Eric on for Josh. Thank you for taking the question. Maybe thinking about the first clinical patient, which is going to be treated in less than a year. I was wondering if you could give us any color on the expected time between treatment of that first clinical patient and

Speaker Change: the time in which the pivotal trial will actually be getting underway. Is that something that is going to be following in pretty short order? I just wanted to get a sense of where things stand there.

Yeah, thanks for the question. It's a good question.

Speaker Change: We are going to follow the first clinical patient as quickly as we can with our pivotal clinical trial. We've seen a number of pivotal trials in surgical robotics conducted outside the United States.

Speaker Change: recently, including some that have been conducted quite, quite quickly, which would give us some time to be able to make modifications to our protocol based on the actual first clinical patients that we

Speaker Change: are able to treat and then enroll in our clinical trial as quickly as we can.

Speaker Change: Understood. And then it sounds like you've identified a country for the OUS clinical sites. I was wondering if you could just talk a little bit about the criteria that you've been using in evaluating those site locations and how many in particular, how many sites you think you'd need to activate for the trial. Thank you for the questions.

Speaker Change: Yeah, so we're looking at doing the trial at just a few sites. We don't want to go with too many.

Speaker Change: There are a number of criteria that we've been working with our CROs outside the U.S. to help us select.

Speaker Change: Specific Countries and Specific Sites. I'd say the top crop will criteria here.

Speaker Change: It really starts with the regulatory pathway and timeline more than the actual requirements for what we need to do. Rather, it's about the country's ability to quickly review a regulatory package and get back to us, and the consistency of that review.

Speaker Change: In addition to that, you know, it's about patients in need of the procedure and total patient volume, which would be highly indicative of our ability to enroll patients quickly at each of those potential sites.

Speaker Change: Understood. And if I could squeeze just one more in, just with the final integration of the version 1.0 system coming in a few weeks, are you able to specify what items remain outstanding? Thank you.

Speaker Change: And so the next couple of weeks are really more than anything about, you know,

Speaker Change: Getting the system up and running and really doing lab after lab in order to allow us to gain confidence in the functionality of the system.

Speaker Change: and our ability to pass all of that validation testing that is going to require essentially cadaver and animal labs in order to pass. So, you know, it really is about just increased confidence.

shaking out any bugs and bringing everything together.

That's great. Thank you.

Yeah, thank you for the question. Thank you.

Speaker Change: Our next question comes from Adam Maida with Piper Sandler. Your line is open.

Adam Maida: Hi, good afternoon, Adam, Bill, Andy. Thank you for taking the questions and congrats on the progress. That's actually a good segue into my first question. I just wanted to kind of better understand B&B next year and kind of, you know, what that process.

Adam Maida: So just maybe double click on that for a minute and then just one quick clarification on the first in human studies That you're going to do The first in human study that you can do outside the US next year. How many patients is that? Is that a single patient or is it multiple patients? And then I had a follow-up. Thanks

Speaker Change: Yeah, so I'll answer the easy one first. It's going to be up to five patients for that first clinical patient study.

at all.

Speaker Change: likely be all at one site or two sites that are very close together.

Speaker Change: Tree of Activities, where you know, go through, manufacture everything.

Speaker Change: split the unit into everything from verification, which includes, you know, taking all of our requirements and making sure that our system is actually able to meet the system requirements that are set for that system. So this includes everything from our own motion performance requirements.

Speaker Change: Sterilization requirements. Think of it much more as bench testing. And then there's validation. Validation is all about the user needs.

Speaker Change: So the, you know, the hospital system partners that we've worked with have really helped us set our user needs to make sure that our device frankly delivers on the needs of users and validation is sort of the final check to ensure exactly that.

Speaker Change: Got it. That's helpful, Culler. Thanks for that, Adam. And maybe just one for Bill, you know, as we look ahead to 2025, you know, just any early thoughts in terms of kind of cash burn for next year. And just remind us how you're thinking about current cash runway. Thanks again for taking the questions.

Bill Kelly: Yeah, no, I appreciate it. You know, in terms of your current cash runway, you know, we're pleased to be able to announce today that we remain on track with our, you know, $50 million, approximately $50 million cash burn guidance.

Bill Kelly: for this year. You'll recall last year as part of the year-end earnings release, we formalized our cash burn guidance for this year and we'll look to do so at the same time.

Bill Kelly: at the next earnings call. That being said, I think our cash burn, while the nature of some of that expenditure might change as we go from development expenditures to more material purchases.

William Kelly, Adam Sachs William Kelly, Adam Sachs

That's helpful. Thanks, Bill.

Speaker Change: We have no further questions, so this concludes today's call. Thank you all for joining. You may now disconnect your line.

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