Transenterix Inc (TRXC) Deal to Sell SurgiBot Outside of China Seems Like a Win-Win, Says Sean Lavin

Cautiously optimistic on Transenterix, BTIG's Sean Lavin believes the sale of SurgiBot assets was a strategic play "forward."


Transenterix Inc (NYSE:TRXC) shares rose nearly 10% in Monday’s trading session after the surgical robot maker unveiled a collaboration that sells ownership of SurgiBot System assets for proceeds of at least $29 million to Chinese firm Great Believe International Limited (GBIL).

In a deal that could be a real game changer for the healthcare player’s commercial evolution worldwide, GBIL will gain rights to apply for regulatory approval in China, manufacture SurgiBot System assets, and sell the system. In turn, Transenterix can distribute the system beyond China, a deal that has sent the market into full celebration today.

BTIG analyst Sean Lavin believes this was “a smart move forward,” cheering that this transaction, one that “brings in cash and puts the SurgiBot assets to use” is advantageous: a real “plus for TRXC.”

Though the analyst commends the deal as one both “positive for cash” as well as with a potential to “accelerate global commercialization,” for now, Lavin reiterates a Neutral rating on TRXC stock without listing a price target. (To watch Lavin’s track record, click here)

“With the focus now on clearance and sale in China, SurgiBot could be re-routed around the FDA roadblock to consideration for CFDA clearance. If GBIL successfully attains CFDA clearance, sales could begin earlier than otherwise possible. Looking farther down the road, real-world use could potentially encourage other regulatory clearances, which would be a positive for TRXC,” writes the analyst.

Lavin concludes, “We believe investors were assigning little, if any, value to SurgiBot. Following FDA’s denial of the SurgiBot 510(k) in April 2016, attention turned toward Senhance. While we think Senhance sales remain the key driver for TRXC, attaining cash for these assets while holding on to the opportunity to eventually sell the SurgiBot outside of China (after proper clearances) seems like a win-win to us.”

TipRanks highlights this medical device maker as one that has earned a strong bullish analyst consensus, with 3 out of 4 analysts in the last 3 months rating a Buy on Transenterix stock and just 1 maintaining a Hold. The 12-month average price target stands at $4.560, marking a whopping almost 101% upside from where the stock is currently trading.

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