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.
Well, well, well… What do you know! Profit-taking finally caught up to $TRXC after TEN DAYS of the rally. In the speculative world, profit-taking is as sure as death and taxes. In other words, it is PERFECTLY normal to see a dip due to “some” profit-taking after a strong rally. My 2 cents is that this is a healthy dip because there are not enough profit-takers to take the price down below $3 buck.
I believe TransEnterix has achieved the necessary interim goals to support price at $3 buck currently. As the company continues to build its relationship and sales infrastructure within the laparoscopy community, perhaps we may see more and more hospitals bypass the four to six quarters cycle to jump into the Senhance bandwagon. When this expectation becomes a reality, the $TRXC price may just keep on surging higher. No matter how you look at this, from the close at day 0 @.$1.79 to 10th day @ $3.43, $TRXC has made quite a significant increase of $91.62% in price appreciation. Alas, nothing goes up without some profit-taking along the way.
Recent news regarding the loan agreement with Hercules Capital will add more liquidity to the company as their sales continue to grow and meet the milestone for add’l tranche financing. Below is an excerpt from the news, “TransEnterix, Inc. Announces Loan Agreement with Hercules Capital“.
On May 23, 2018, the Company entered into a loan and security agreement (the “Loan Agreement”) with Hercules pursuant to which Hercules has agreed to make certain term loans in the aggregate principal amount of up to $40 million, with funding of the first $20 million tranche occurring on May 23, 2018. The Company will be eligible to draw on the second tranche of $10 million upon achievement of certain Senhance System revenue-related milestones for its 2018 fiscal year, and a third tranche of $10 million upon achievement of designated trailing six months GAAP net revenue from Senhance sales. The Company is entitled to make interest-only payments until December 1, 2020, and at the end of the interest-only period, the Company will be required to repay the term loans over an eighteen-month period based on an eighteen-month amortization schedule, with a final maturity date occurring on June 1, 2022. The Company repaid all amounts owed under their previous loan agreement with Innovatus Life Sciences Lending Fund on May 23, 2018.
Below is my interpretation of the above:
The loan balances of Innovatus Life Sciences were pulled from recent 1st Quarter 2018 10-Q report.
Here’s another excerpt below:
“We are pleased to partner with Hercules to refinance our debt and strengthen our balance sheet in a non-dilutive manner,” said Todd M. Pope, president and chief executive officer of TransEnterix. “Assuming the ability to borrow all tranches, we believe this refinancing, combined with cash on hand, provides us more than two years of cash runway and will support the continuing commercialization of our Senhance System.”
Basically, giving the current sales trend so far, it is highly possible that TransEnterix might not need to dilute anymore in the future. If we are right about the imminent adoption of Senhance, two years are more than enough time for us to confirm the adoption.
Apparently, the added benefit to this new financing is that it also helped allay the worry hospitals may have about TransEnterix’s cash position. In a way, this refinance is another solid move from CEO Pope.
In a nutshell, $TRXC is building sales momentum, and there will always be volatility after a period of strong up move. Profit-taking should be considered as healthy since it’s all part of the game. The most critical point at this moment is the ability of price to stay at a higher plateau before the next catalyst comes to take $TRXC to higher ground.
And when that happens, in a manner of speaking, $TRXC will just keep on stepping up the proverbial stairway.
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: