Company Update: Transenterix Inc (TRXC) Announces 3Q:17 Financial Results


TRXC logoTransenterix Inc (NYSEAMERICAN:TRXC) announced its operating and financial results for the third quarter of 2017.

“We are very excited about the progress we made during the third quarter and the 510(k) clearance of the Senhance in October,” said Todd M. Pope, President and Chief Executive Officer of TransEnterix. “There is a significant opportunity for the Senhance in the U.S., with millions of laparoscopic procedures done each year using basic manual tools. As we look to 2018, we are focused on the clinical and commercial success of Senhance in the U.S. while continuing to build on our commercial momentum in Europe and Asia.”

Commercial and Clinical Update

On October 13, 2017, the Company received U.S. FDA 510(k) clearance for the Senhance Surgical System, with indications for use in laparoscopic colorectalsurgery and laparoscopic gynecologic surgery. The Company’s U.S. sales team currently includes 17 professionals.

During the third quarter, the Company sold one Senhance system in Taiwan. The system is under a special import process into Taiwan, and does not yet have approval for clinical use. A submission has been sent to Taiwanese authorities for regulatory review, and clearance is expected in 2018. Revenues associated with this sale will be deferred until clinical use of the system commences.

Financial Highlights

For the three months ended September 30, 2017, the Company reported revenue of $0.2 million, primarily related to the recognition of deferred service revenue from previous system sales.

For the three months ended September 30, 2017, total operating expenses were $37.8 million, as compared to $14.0 million in the three months ended September 30, 2016. Operating expenses during the quarter included a $22.9 million non-cash charge for change in fair value of warrant liabilities related to the Company’s April 2017 equity financing.

For the three months ended September 30, 2017, net loss was $38.5 million, or $0.26 per share, as compared to $12.9 million, or $0.11 per share, in the three months ended September 30, 2016.

For the three months ended September 30, 2017, adjusted net loss was $13.0 million, or $0.09 per share, as compared to $11.3 million, or $0.10 per share in the three months ended September 30, 2016, after adjusting for non-cash charges related to amortization of intangible assets, change in fair value of contingent consideration, and change in fair value of warrant liabilities.

The Company had cash and restricted cash of approximately $30.9 million as of September 30, 2017, of which $6.4 million was restricted. As of October 31, 2017, the Company had cash and restricted cash totaling $100.7 million. The increase in October was primarily the result of proceeds obtained from the at-the-market equity offering established in August 2017 and the proceeds from warrant exercises, offset by operating cash flows.

Shares of Transenterix are up nearly 3% to $2.99 in after-hours trading Thursday. TRXC has a 1-year high of $5 and a 1-year low of $0.45. The stock’s 50-day moving average is $2.20 and its 200-day moving average is $1.11.

On the ratings front, TRXC stock has been the subject of a number of recent research reports. In a report issued on October 30, Stifel Nicolaus analyst Rick Wise reiterated a Buy rating on TRXC, with a price target of $4.00, which represents a potential upside of 38% from where the stock is currently trading. On October 24, RBC’s Glenn Novarro reiterated a Buy rating on the stock and has a price target of $5.00.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Rick Wise and Glenn Novarro have a yearly average return of 10% and 10.2% respectively. Wise has a success rate of 67% and is ranked #432 out of 4707 analysts, while Novarro has a success rate of 69% and is ranked #272.

Sentiment on the street is mostly bullish on TRXC stock. Out of 4 analysts who cover the stock, 3 suggest a Buy rating and one recommends to Hold the stock. The 12-month average price target assigned to the stock is $4.50, which represents a potential upside of 56% from where the stock is currently trading.

TransEnterix operates as a development stage medical device company. It focuses on research, development and sale of medical device robotics to improve minimally invasive surgery. It offers the Senhance Surgical Robotic System, which offers robotic surgery for laparoscopic abdominal and pelvic surgery, as well as limited thoracic operations excluding cardiac and vascular surgery, and the SurgiBot System which refers to the a single-port, robotically enhanced laparoscopic surgical platform.