Transenterix Inc (NYSEAMERICAN:TRXC) shares thundered up 92% yesterday with momentum still firing to the spark of 51% today after the biotech firm’s Senhance Surgical Robotic System for colorectal and gynecology procedures got the exciting FDA nod- a go-ahead from the agency that was won ahead of the scheduled close of the year.
Stifel analyst Rick Wise sings the praises of Transenterix for sweeping “the first FDA surgical robotic system approval in two decades,” and believes the timing could not be better for the launch to kick off at the “very large and influential” American College of Surgeons (ACS) conference between October 22nd and 26th.
“Much work still needs to be done to build commercial scale, but with this initial approval in hand the company should have a steady cadence of additional indication and technology approvals over the next several years,” cheers Wise, who maintains a Buy rating on TRXC stock with a $3.75 price target. (To watch Wise’s track record, click here)
True, this marks a “highly positive milestone” for the surgical robot maker, but some of the work that Wise highlights includes “establishing and building hospital and surgeon champion relationships; navigating hospital purchasing committees and a typically lengthy capital purchasing cycle…all of which will be critical for the company to further expand the US robotic surgery market and drive increased ‘robotic’ penetration.” When looking at the company’s preliminary Senhance exposure in Europe, Wise cannot help asserting again: “all of this will take time.” However, reward waits for the patient long-term investor, as considering the robotics market in the U.S., one that is certainly “well-established,” the analyst contends, “there should be a large potential audience of interested physician and hospital customers.”
Already on the fresh heels of the FDA green light, domestic representatives are already in talks with prospective U.S. clinicians as well as institutional adopters. Additionally, the analyst notes that colorectal surgery can be loosely translated to specialized general surgery, which could make it easier for label expansion down the road should Transenterix have its eyes on a general surgery procedure market in a broader scope. Keep in mind, Wise writes, clinicians in Europe present-day “actively” utilize the biotech firm’s robot for procedures not strictly limited to gynecology or colorectal.
Overall, with 4 million open abdominal procedures undergone each year between the U.S. and the European Union and merely 600,000 relying on robots for assistance present-day, “A large commercial robotic opportunity still on tap,” surmises Wise.
Additionally, according to TipRanks, out of 3 analysts polled in the last 12 months, one is bullish on Transenterix stock while 2 remain sidelined. With a loss potential of 47%, the consensus target price stands at $2.23.