Asensus Surgical, Inc. (ASXC) on Q1 2021 Results - Earnings Call Transcript
Operator: Good afternoon, ladies and gentlemen. And welcome to the Asensus Surgical, Inc.’s First Quarter 2021 Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. I would now like to turn the call over to Mr. Mark Klausner of Westwicke. Please go ahead.
Mark Klausner: Thanks, Operator. Good afternoon, everyone, and thank you for joining us on today’s call. On the call with me today are Anthony Fernando, President and Chief Executive Officer; and Shameze Rampertab, Chief Financial Officer. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call, including any guidance provided, are forward-looking statements covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Anthony Fernando: Thanks, Mark, and thank you all for joining us today. On today’s call, I will provide a brief summary and asked Shameze to review our financial performance. After which I will discuss our performance during the first quarter, as well as our priorities for the rest of 2021, before turning to Q&A. Before turning the call over to Shameze, I would like to provide an overview of our recent performance. Overall, despite the continued headwinds from COVID impacting hospitals across the globe, we made significant progress towards a number of our goals for 2021. Subsequent to the end of the quarter, we signed two new lease agreements with hospitals in Europe. One of which we announced in a press release earlier this week, and the second, which will be announced upon installation later in the second quarter. We also had our first lease buyout occur during the quarter, with the high value of Senhance Hospital in Japan, opting to purchase the system after having leased for just over a year. We believe this shows the value we bring to hospitals and it’s an early proof point that our business model around pricing and flexible economics is working.
Shameze Rampertab: Thanks, Anthony. Turning to the first quarter for the three months ended March 31, 2021, the company reported revenue of $2.1 million as compared to revenue of $0.6 million in the three months ended March 31, 2020. Revenue in the first quarter of 2021 included $1.3 million in system revenue, $0.4 million in instruments and accessories and $0.4 million in services. For some lease arrangements the customers are provided with the right to purchase the lease Senhance System during or at the end of the lease term or at least buy it. System revenue consisted of one lease buyout and revenue from multiple lease arrangements. For the three months ended March 31, 2021, total operating expenses were $14.4 million, as compared to $16.0 million in the three months ended March 31, 2020. For the three months ended March 31, 2021, net loss attributable to common stockholders was $17.3 million or $0.08 per share, as compared to net loss attributable to common stockholders of $17 million or $0.59 per share in the three months ended March 31, 2020. For the three months ended March 31, 2021, the adjusted net loss attributable to common stockholders was $12.2 million or $0.06 per share, as compared to an adjusted net loss of $12 million or $0.41 per share in the three months ended March 31, 2020. Adjusted net loss is GAAP net loss adjusted for the following items, amortization of intangible assets, change in fair value of contingent consideration, change in fair value of warrant liabilities, and for 2020 restructuring and other charges and the deem dividend related to beneficial conversion feature of preferred stock, all of which are non-cash charges. Adjusted net loss attributable to common stockholders is a non-GAAP financial measure. Reconciliation from GAAP to non-GAAP measures can be found in our earnings release. Turning to the balance sheet, the company had cash and cash equivalents and restricted cash of approximately $166.4 million and working capital of $172.8 million as of March 31, 2021, which is expected to extend the cash runway into 2024.
Anthony Fernando: Thanks, Shameze. I will now provide an update on recent performance, as well as the progress we have made on the key areas that we are focusing on in 2021. As a reminder, these are, first, the continued market development for the Senhance System, and second, expanding our portfolio and continuing the technological advancement of Senhance. Starting with our market development efforts, it is crucial to a strategy that we continue to educate surgeons on the benefits of Senhance System and then follow up with clinical data to support them. At the beginning of the year, two clinical papers were published that were very important to us. The first paper compared health economic outcomes of the Senhance System versus another robotic system, as well as traditional laparoscopy and was published in The International Journal of Medical Robotics and Computer Assisted Surgery in April. The study indicated that for certain gynecology procedures, the Senhance System per procedure costs were less than half of the cost of comparable robotic procedures and in line with laparoscopically assisted vaginal hysterectomy case costs. The study also showed case times between Senhance and the other robotic system were comparable. In addition, a number of other papers were published both suggesting the safety and reproducibility of procedures utilizing the Senhance System, including a study on the first use of Senhance in laparoscopic local gastrectomy for gastrointestinal stromal tumor and a study focusing on European procedures in urology, abdominal, thoracic, and gynecologic surgery. We still expect to have a second milestone paper, which further analyzes clinical performance and economics in general surgery and gynecology, when utilizing the Senhance System will be completed during the first half of this year and published in the second half of 2021. As we continue to demonstrate real world evidence that we are delivering clinical and surgical benefits, as well as provide good surgical outcomes at a lower procedure costs, we believe these publications could be a tailwind to accelerate Senhance System adoption. The next segment of our market development effort is the growth of our global installed base. The acceleration of procedure volumes and the increase in the number of foundational sites, as we said last quarter, our goal for 2021 is to have another 10 to 12 new Senhance Systems installed. System installs were and continue to be negatively impacted by COVID-19. We saw various geographies in the quarter still struggling with third and fourth waves of COVID-19, specifically the Netherlands, Germany and Switzerland were effectively shut down for most of the quarter. Japan lifted its national state of emergency but still has local government restrictions in place.
Operator: Thank you. Our first question comes from RK (sic) of H. C. Wainwright. Please go ahead.
RK: Thank you. Good afternoon, Anthony and Shameze. A couple of…
Anthony Fernando: Hi, RK.
RK: Actually it’s fantastic to note that there was one buyout in the -- in Japan especially in this environment and it looks like that happens to be a foundation site as well, which is fantastic. So could you -- I remember you telling us, telling me that Japan is a place where laparoscopy is used to a large extent. Just so that we understand a little bit more, what are the dynamics in play for this center to decide to go and do the buyout and what drove them to make a decision, obviously, it looks like they used this system for about a year at best?
Anthony Fernando: Sure, RK. Okay. So with respect to this buyout, as I said, you’re correct, Japan has a very broad the skill base of laparoscopy. And also remember that the Japan healthcare system is very conscious about cost and it goes to speak to this hospital as well. So they enter into this lease agreement and use the system for about an hour, they performed well over 100 cases and prove to themselves that the economics work, the per procedure cost is significantly lower compared to other robotic platforms. And therefore, they decided that because this was something that they wanted to purchase and expand into other specialties as well. So I think it’s really the proof that when they have the system and they have surgeons using it, just significantly increases their confidence and they know what they’re getting.
RK: Very good. And then, you’ve talked, I think, in the press release, I saw that, there were about 500 procedures that were performed during the first quarter. Is there any way we can get some more granularity on these procedures, just trying to figure out whether these are, that the typical hernia closure kind of procedures or they’re more complicated than that, just so that, we have an idea as if they’re more complicated, do they help on the cost efficiency better? I’m just trying to understand how that…
Anthony Fernando: Yeah.
RK: Is there the linkage between those two are not?
Anthony Fernando: So, RK, I think, for -- what I can say is, I think, these procedures are spread across gynecology, general surgery and even within general surgery to a very good extent into the colorectal space and then there are some pediatric cases as well. So if you think about all of these cases, I wouldn’t say, they’re just simple procedures, they are pretty broad spectrum of simple complex cases. And I don’t quite have the breakdown with me right now. But that’s something that we can try to provide in little bit more granularity offline.
RK: Thank you. One last question, on the number of foundational sites, it’s good to see that there is a growth from 11 to 13 by the end of the first quarter. I think at some point you had stated how many foundational sites you would like to see in 2021? I don’t remember that number. But, in general, do you see this as a start of a much bigger number that you would get to by the end of the year, because if you talk to people at least in the United States, they seem to be feeling comfortable that we are coming to the end of -- we’re seeing the light at the end of the COVID tunnel, but what is your expectations as the -- as you progress through the year?
Anthony Fernando: Yeah. So, RK, I think, the thing is it’s -- there’s still a lot of uncertainty, whether it’s in Japan, Europe or the U.S. about case volumes that definitely interest and the fact that we were able to get two more sites on track for the year to be at a foundational level. That’s a good sign and a positive sign. Obviously, our goal is to keep increasing that, but it’s very difficult to predict how things are going to turn out. I mean, U.S. definitely I agree with you. We are seeing some positive momentum and Europe and Japan, I couldn’t quite say that yet. So from our point of view, the goal is to keep increasing that number, so that we get majority of our sites performing at that level, so that we can improve adoption systematically. And that’s pretty much what we can say for now, given the uncertainty…
RK: Okay.
Anthony Fernando: I think once we come out of this, we’ll be able to be more committed about the numbers there.
RK: Perfect. Thank you very much. Good luck to you and Shameze and talk to you soon.
Anthony Fernando: Thank you, RK.
Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Anthony Fernando for any closing remarks.
Anthony Fernando: Thank you again for your interest in Asensus Surgical and we look forward to updating you on our progress on our next quarterly call. Thank you.
Operator: This concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
