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. Furthermore, all emphasis (color-coded, boldness, and underlined) on the excerpts are my own.
Applause all around would be the perfect way to kick off this week on $TRXC. I bet I’m not the only one who is pleasantly surprised that Senhance has been taken up by another U.S. buyer. Most of us probably are quite happy to expect U.S. sales to come in from the 2nd half of 2018, but to receive an order in the 2nd quarter exceeded my expectation. Hence, a pleasant surprise!
Starting with the United States. We sold our first system in the fourth quarter of last year, and I am pleased that we have recently signed a contract for our second U.S. sale. This Senhance will install at a large academic medical center located in the South Central United States. We expect to deliver this system and recognize revenue in the second quarter.
Let’s go over the two U.S. orders so far:
- Florida Hospital Center Orlando, one of the largest hospitals in the country and a leader in the integration and utilization of surgical robotics, was the first hospital in the U.S. to purchase the Senhance
- Second U.S. purchase was from a large academic medical center in South Central United States
In essence, Senhance has been “blessed” by a large hospital and a large academic medical center.
Per my 2 cents, teaching hospitals are the best places for any new medical technologies to have a chance to shine and show proof-of-concept. Up and coming young surgeons will have an opportunity to become familiar with the latest robotically assisted surgical device (RASD). I think the timing is perfect for RASD to become more relevant when there is a chance that the increasing aging population may create a demand that far exceeds the availability of surgeons.
Below are more excerpts from ER updates reflecting a keen interest in the Senhance:
We continue to generate substantial interest in the market due to Senhance’s haptic feedback, the ability to control three robotic arms simultaneously, open source video capability, 5-millimeter and three millimeter instrumentation, open console and attractive per procedure economics.
This combination of steadily increasing clinical experience with increased engagement of surgeons with the system at major congresses and hospital-based events is supporting our building commercial momentum.
During the first quarter, the United Kingdom and NHS trust hospital systems established a framework process to allow hospitals to procure robotics or related services from approved vendors without the need for a burdensome and costly tender process.
We are pleased to announce that the Senhance has been awarded a place in this framework as one of only two existing systems for soft tissue robotics. The program, which includes all types of surgical robotics, consumables and related services, is valued at over $400 million and runs through early 2023.
In the Asia-Pacific region, we continue to make meaningful progress. In the first quarter, we received regulatory approval from the Taiwanese Food and Drug Administration for the Senhance system.
We’re also pleased to announce that we have begun clinical cases with the Senhance in Japan. As a reminder, Japan is the second largest robotics market in the world, behind the United States. Clinicians and administrators are very impressed with the highly differentiated features and the cost per procedure that Senhance offers.
By 2019, Senhance will have 5-millimeter articulating instruments, 3mm instruments, and ultrasonic energy instrument available which make Senhance a powerful RASD that is user-friendly to the seasoned laparoscopic surgeons.
Overall, I believe the best selling point of the Senhance, besides haptic and eyes sensing control, is that it is a robot designed specifically for the laparoscopy market. Even the Senhance’s trocar is compatible with existing manual lap tools. In my humble opinion, Hybrid surgery (easy switching from Senhance to manual lap surgery) is Senhance most under-rated secret weapon.
Try this imaginery scene for size. You’re a surgeon looking to join the wave in using robotically assisted surgical device (RASD). Being a cautious and careful person that you are, you want to know how quickly it is to switch back to manual lap access if something goes wrong using the RASD. And you want a backup plan. So, you take a look at the Da Vinci. “Hmmm, how am I going to switch to manual lap surgery with that huge octopus of arms spreading all over the patient?” Time passed and Senhance received clearance. So you decided to take a look at Senhance. “Whoa! Finally! I can surround the patient with my support team AND the Senhance arms. I can switch to manual lap tools as easy as changing my shoes!”
Here are my two cents, when a surgeon who has yet to try a RASD, the ability to fall back on what he knows best, manual lap surgery, is an essential factor in shifting the balance in favor of using RASD.
Before I conclude my blog post, I like to include a surprise piece of information offered by one of the callers in the Q&A from the ER update:
Glenn Novarro (of RBC Capital Markets)
Okay. Then just lastly, Todd. What is your opinion on the competitive landscape? We know eventually, J&J and Medtronic are going to come to the market. Brandon published some pictures of the J&J – potential J&J robot, which was bed mounted.
So I’m curious of your view on a robot that would be bed mounted. Our research tells us that that’s not going to be appreciated by surgeons. But based on what we know that’s coming out, J&J with a bed mounted system, what’s your view of that? And is that going to be a real competitor to you?
Here is the real BONUS: “Our research tells us that that’s not going to be appreciated by surgeons.”
The statement above coming from the research performed by RBC Capital Markets is another strong tailwind supporting the adoption of the Senhance. There is simply no better way to increase flexibility and versatility without an independent arms concept. Even as a layman, I can see the bed-mounted RASD weak point being that it takes up too much precious space from the supporting staffs such that it is very difficult to exercise human intervention when the RASD fails for whatever reason. IMHO, Senhance independent arms layout offers an unlimited layout option that allows both the surgeons and supporting staffs to access the patient quickly and to perform emergency manual lap surgery without the bed-mounted robotic arms getting in the way.
Since pictures can show a thousand words, here are two pictures I posted before:
See how the Senhance RASD is entirely out of the way for the surgeons and supporting staffs to be around the patient? For a picture of the Da Vinci, you can click here to see the google image of the Da Vinci’s Octopus arms surrounding the patient which make it practically impossible for the surgeon to fall back on manual lap surgery.
Technically speaking:I believe the weekly chart is showing a potential breakout to the upside. See how the Bollinger band narrowed down this week to where the price is now bouncing off the weekly magical 79 & 89 MA supports. When Bollinger band came close together, there is a better than 50/50 for a break out to occur in the direction of the current price movement which is UP.
In conclusion, once CEO Pope issues a press release when Senhance is installed in the large academic medical center, the wave of Senhance may begin to flow to the vast open sea where in good time will transform into a tsunami that will hit the shores around the world.
In other words, the Senhance seed has sprouted!
Don’t forget; all the above are my opinions only!
Good Luck and may fortune blesses all TRXC investors.
My 2 cents.
From my camera: