My 2 cents on $TRXC > The world is becoming robotic!

Before you read on, please be aware that the analysis below is my opinion only and may include flawed assumptions and inaccuracy of logic; therefore, caveat emptor applies here.

Let’s start with an imagination game.  Close your eyes and look for an image of a future society you envisioned.  Do you see a future where everything is pretty much robotic?  It’s literally everywhere, right?  Not unlike the science fiction movies we keep seeing.  Do you realize the visions we saw in the sci-fi movies mostly resonated to our sense of belonging.  It’s like “Wow! COOL!“.  This is the type of expression you uttered when you resonated to the vision in the SciFi movies.  Human like to build things and there is nothing more challenging and fun than to build another copy of ourselves using metal, mechanic, computer and software.

Why are we so obsessed with ourselves?

It has nothing to do with obsession since it is a word created by our “thinking mind” to explain a very strong innate urge.  It is life itself.  It’s my 2 cents that EVERY living organism ever existed has only ONE top priority purpose once it is created into existence, it is to CREATE more of itself pronto.  Our ability to think allowed ourselves to be creative about fulfilling this innate urge by reaching out beyond natural procreation.  Robotic extension, in my opinion, is our natural path because it “fits” our life purpose.

What is all these mumbo jumbo coming from?  I thought you are talking about $TRXC here?

Ha! My point is that robotic technologies will ALWAYS be a part of where we are going and anything robotic is going to be adopted if it works.

Senhance WORKS!  Even FDA blessed the Senhance!  Now, we have TWO FDA approved surgical robotic assistants to choose and the whole world will still NOT get enough of it.  I don’t care what the bashers have to say about Senhance.  My opinion is that it will be adopted because we, as a human race, wanted robotic machinery to be an extension of ourselves.

The design of the Da Vinci satisfied a group of surgeons.  But there are also surgeons who disliked certain characteristics of the Da Vinci.  Senhance, a COMPLETELY different design from the Da Vinci, offers an EXCELLENT alternative for those surgeons who find the Da Vinci not fitting their needs.  Imagine for a moment that FDA approved another robotic assistant that look almost like the Da Vinci.  That would NOT be really an alternative for the surgeons who disliked the Da Vinci, wouldn’t it?.

In a nutshell, it is my opinion that Senhance is here to fulfill a completely different group of surgeons. CEO Pope preferred to call this group- Digital Laparoscopy.  To make the comparison more fun and easy to understand from a contextual point-of-view, I prefer to call this group the Mercedes Benz group.  I believe the surgical community has been SCREAMING for choice!  “GIVE ME SOMETHING THAT DOESN’T LOOK LIKE A DA VINCI PLEASE!”  Can you imagine a world where only Cadillac is driven because General Motor had monopoly of the automobile industry and it did not want to change the Cadillac design much and had no incentive to innovate to something totally different?  Our human race will have NONE of that!  Give us choice!

Let’s talk about connection.

When I saw the photo below, I resonated to the Senhance.  “Wow! Those are SOLID equipment!TRXC_BestPhotoThe guy who put his hand on top of the Senhance arm on the right provided a sense of scale to the Senhance equipment.  Sure, it’s huge! But it also exuded professionalism.  You can actually FEEL that you are in good hand under these RELIABLE, DEPENDABLE, and HEAVY DUTY arms.  We are talking about putting a LOT of muscle behind manipulating a much smaller instrument at the end.  By doing so, I can see the stability and accuracy in controlling the small instrument which included HAPTIC feedback.

From the photo, the Senhance reflected a quality like a well built luxury car.  And I am not even a surgeon.  I am willing to BET that there are MANY surgeons out there who LOVE the way Senhance is designed.  This sense of quality automatically removed the first layer of resistance. “Ok, very well-built but does it work well?”  I believe the FDA clearance pretty much removed this 2nd layer of resistance not only in the U.S. but in Europe as well.

Let’s jumped to the Q&As from the ER update.

“because the majority of robotic offerings up to this point have been 8-millimeter that’s actually kept some laparoscopic or minimally-invasive surgeons a little away from moving over to robotics. So they’ve been excited about our 5-millimeter basic platform. Launching 3-millimeter is really taking advantage of one of the trends in laparoscopic surgery. So this is actually generating an incredible amount of interest and excitement for us, and we’re starting to get some good cases done over in Europe with 3-millimeter.

I sensed that “last wall” of resistance to robotic adoption is crumbling down because of what Senhance has to offer.  Senhance’s 5-millimeter is getting attention and clinical data from Europe is tearing down the third layer of resistance and is helping surgeons make the leap.  I believe it is happening and momentum is growing.  Deep down, I believe everyone knows that using robotic surgical assistant will eventually be as common as driving a car.

Da Vinci will be like the Cadillac and the Senhance will be like the Mercedes Benz.  My 2 cents is that there will be more than enough surgeons out there who find the Senhance compatible enough to make TRXC a very successful company.

Those who bashed and doubted Senhance will be like those Cadillac lovers who hated the Mercedes Benz.  They think Da Vinci is the ONLY game in town and will remain so because it has attracted enough loyal Da Vinci users after 17 years in the market. They talked as if the Da Vinci will continue to be a monopoly despite the introduction of Senhance.  That, to me is the bashers’ biggest mistake.  As in any biased Cadillac lover who bashed the Mercedes Benz, their bashing can sometimes be very one-sided and close-minded.  Below is some examples of the bashing I pulled from the Stocktwits stream:

Bash #1: “reusable instrument means less revenues”

Rebuttal #1: This is a very narrow-minded statement because the basher only think in term of ISRG’ prowess that they forgot that TRXC does NOT need to have instrument revenues to be VERY SUCCESSFUL!  For crying out loud, if Senhance sold as many systems as the Da Vinci without the eye-gouging instruments and accessories charge, it can still be a very successful company giving that its market cap is only about 350 million right now. Can you imagine how much TRXC price will rise if it sells close to $1 billion dollars in system sales every year?  Senhance has no need to compare dick with the Da Vinci!  I opined that early buyers of  $TRXC at these dirt cheap price is going to win BIG!

Many bashers think of the massive instruments and accessories fee ISRG charged to hospitals collectively as a trophy to be adored.  But I see this as an expense hospitals HATE to pay but have no choice because of the monopoly. Thus, it is conceivable that with Senhance as a choice, ISRG ability to gouge on instruments and accessories fee to be over. Slowly, ISRG may be forced to lower their instruments replacement fee to remain competitive.

Bash #2: “Haptic isn’t on instrument jaw but on the shaft”

Rubuttal #2: I can see that having haptic at the instrument jaw will provide the surgeons a direct feel of how tight they are gripping the tissue.  But this is nowhere more important than the ability to feel the resistance of the instrument against ANY tissues and organs because it will help surgeon avoid nicking nearby tissues/organs by accident. The instrument’s point-of-contact will transfer the force of resistance to the shaft; thus the instrument’s point-of-contact and the shaft are considered as one piece for the purpose of transfer of haptic energy to the Senhance sensor.  Without a direct experience of trying the Senhance haptic feedback myself, I can only imagine that this transfer of haptic energy from the instrument point-of-contact to the shaft can still provide some feel for the gripping and cutting despite not having haptic on the instrument jaw.

There is no way the basher can discredit the importance of haptic feedback on Senhance.  Da Vinci doesn’t have it yet and that is THAT!

Bash #3: “Senhance twice the size”

Rebuttal #3: Ok.  This one does “sound like” it has legs; but it is a matter of CHOICE.  Some people simply prefer the stability of the huge size.  And stability allows superior control over the small instrument attached to the end point.  It also allows haptic!

Bash #4: “Operating room (OR) is too small for Senhance”

Rebuttal #4: Really?  Let’s take a look at the standard OR size by starting with the article titled,

Trends in Surgery-Suite Design, Part One; May 31, 2007″

Below is an excerpt:

“The increase in size of the Operating Room (OR) to the point that most surgical suites built now in hospitals have an average OR size of at least 600 square feet versus the former standard of 400 square feet.”

That is about 20 ft by 30 ft (20′ x 30′ = 600′).  That is one mighty big room with more than enough space to put a Senhance in, don’t you think?

This article was written back in 2007, so OR could be at least 600 sq ft if not bigger by now.

Bash #5, “hospital has no dedicated OR room for robotic”

Rebuttal #5: This basher has no vision. Since I’m a betting man, I bet that in ten years all OR will have a robotic assistant inside.

Basically, I could go on and on and the bashers could only bash from the point of Da Vinci’s “former” superiority without even considering what the available alternatives could be.

In my version of a simple truth, Da Vinci will still have a place because it is a 17 years old “Cadillac” that a lot of people are used to; but the Mercedes Benz is going to attract a new generation of drivers who want something that is NOT a Cadillac.  BUT in the end BOTH Intuitive Surgical Inc. and TransEnterix, Inc. will prosper as long as innovation is progressing healthily.

Let’s take a quick look at the numbers…

10K came out and I was pretty close in estimating $90 million of cash starting in 2018.  If I added the upfront cash of $7.5 million related to the SurgiBot agreement, it would be right on the spot.  I’m glad to see Net cash and cash equivalents used in operating activities for 2017 = $39.8 million.  This is $13.2 million less than my estimated 2017 $53 million total cash used.

Let’s go through the numbers (with new assumptions) in logical order below:

Just to be conservative, I slapped another 10% to the 2017 total operating cash used of $39.8M to estimate 2018 total operating cash used to be $44M (39.8 x 1.1 = 43.78 rounded up to 44).

  • $97.6M >Actual beginning cash balance in 2018
  • $44M    >subtracted estimated cash for operating activities in 2018 (see above assumption)
  • $6.4M   >subtracted restricted cash
  • $47.2M >cash balance before cash from sales of Senhance
  • $1.2M   >added cash from selling 2 units in 1st QTR 2018 ($600K x 2 units)
  • $7.5M   >added cash from 2nd installment of SurgiBot payment from China
  • 55.9M   >estimated ending cash balance in 2018

$55.9 million is still larger than $44 million in estimated cash used in operating activities for 2018. And there are nine more months for TRXC to sell more Senhance before the year is up; so it is my 2 cents that TRXC are in excellent shape to start 2019 with a healthy cash balance and the prospect of taking multitude of orders for Senhance.

Let’s take a look at the technical:TRXC_dailyI see a potential double-bottom on the daily chart (see blue up arrows).  Furthermore, the double-bottom support are directly on top of the Fib 50% retracement level.  Friday closed with a small spinning top candlestick; from my observation, spinning top candlestick near support has high probability of a bounce.

From a weekly perspective:TRXC_weeklyYou can see price is now sitting on the magical 89 MA support. From my years of observation, price has a high probability of bouncing off the 79 & 89 supports.

Folks. the world is going robotic and Senhance has permission from the FDA to participate in populating the medical community with surgical robotic assistant besides the Da Vinci.  It has been a long time coming for surgeons to have a choice and we are the early birds riding the $TRXC train!

Don’t forget, all the above are my vision based off on my opinion only!

Good Luck and may fortune blesses all TRXC investors.

My 2 cents.

From my camera:

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Categories: Daily trading Journal, trading journal

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  1. Weekly thought on $AEMD, $DFFN, $IBIO, $LRAD, TRXC – Trading my two cents

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