Vicarious Surgical Inc

NYSE:RBOT

Earnings Call Transcript 2024-Q3

[Operator]

Hello, everyone, and welcome to Vicarious Surgical's Third Quarter 2024 Earnings Call. My name is Lydia, and I'll be your operator today.

[Operator Instructions]

I'll now hand you over to Kate Brosco, Director of IR to begin. Please go ahead.

[Kaitlyn Brosco, executive]

Thank you, Lydia, and thank you all for joining. With me today are Adam Sachs, Co-Founder and Chief Executive Officer; Bill Kelly, Chief Financial Officer; and Randy Clark, Company President.

Today, after market closed, Vicarious Surgical released financial results for the 3 months ended September 30, 2024. A copy of the press release is available on the company website.

Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking statements.

All forward-looking statements, including, without limitation, those relating to obtaining approval for the Vicarious Surgical System and timing for any such approval, our operating trends and future financial performance, expense management, market opportunity and commercialization are based upon our current estimations and various assumptions. These statements involve material risks and uncertainties that would cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place any undue reliance on these statements.

For a list and description of the risks and uncertainties associated with our business, please refer to the risk factors set forth in our Securities and Exchange Commission filings, including our most recent Form 10-K and Form 10-Q. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 12, 2024. Vicarious Surgical disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise.

Now I'll hand the call over to Adam for prepared remarks.

[Adam Sachs, executive]

Good afternoon, everyone. Thank you for taking the time to join us today. At Vicarious Surgical, our mission is to improve lives by transforming robotic surgery. And we believe our unique single-port platform will revolutionize surgery by enhancing patient outcomes, improving the surgical experience and increasing the efficiency of care delivery. Just as multiport robotics advanced minimally invasive surgery beyond traditional open and laparoscopic techniques over 2 decades ago, single-port robotics is set to redefine the field once more.

With its inherent advantages, single-port promises to unlock preoperative and interoperative efficiencies that intend to streamline procedures and increase surgical throughput where existing multiport devices fundamentally cannot. Furthermore, there is a growing base of evidence that supports single-port's ability to improve surgical outcomes for patients such as reduced blood loss, shorter hospital length of stay and minimize pain and opioid use. Not only do we see single-port surgery becoming a cornerstone of the surgical market for these reasons, but we also believe the unique feature set and clinical value of our single-port platform will further amplify these benefits and meaningfully expand upon them to set a new standard for minimally invasive care.

During the third quarter, we made meaningful progress toward delivering the first version of our single-port platform. We are now weeks away from our year-end cadaver lab, which ultimately denotes the integration of the V1.0 System. Following the completion of this milestone, our focus will shift to verification and validation and the manufacturing effort to support this rigorous testing program. Starting early next year, the integrated V1.0 System and subsystems will undergo informal assessments related to durability, biocompatibility and electromagnetic and environmental compatibility that will stimulate the formal verification and validation process.

We expect to make minor optimizations throughout this preliminary phase that will better ensure we meet all essential performance and safety standards required to treat our first clinical patients safely and confidently. Upon the successful completion of each of these rigorous essential performance and safety tests, we anticipate treating our first patient in less than 1 year. We look forward to this opportunity to showcase our single-port system's immense potential and the meaningful clinical value we can deliver to patients, surgeons and hospital systems.

In preparation, our clinical and regulatory teams have been hard at work preparing with our CRO to evaluate potential OUS clinical sites for both our first clinical patient and subsequent pivotal clinical trial. Although no formal announcement has been made, we have narrowed our search down to a select few sites within the same country.

Conducting the first clinical patient ahead of our pivotal clinical trial will allow us to validate real-world performance in a clinical setting and gain valuable insights that can be used to optimize our pivotal trial design and protocol. As a reminder, in order to expedite our time to market, our clinical trial will focus on one initial indication, ventral hernia repair. With hundreds of thousands of procedures performed annually within the U.S., ventral hernia repair is an attractive first indication for Vicarious Surgical and one where we believe our system's differentiated clinical capability is ideally suited.

From there, we plan to quickly expand out to our other targeted indications, including inguinal hernia repair and procedures related to gynecology, gallbladder and colorectal. Our clinical trial's primary performance endpoint will be the ability of the surgeon to complete the intended ventral hernia repair, and our safety endpoint will be adverse event rates through a 30-day post-surgery follow-up as compared to existing laparoscopic data.

Following guidance from our pre-submission meetings with the FDA, including the most recent one last month, we plan to enroll and treat approximately 30 to 60 subjects from outside the United States. We believe this approach will allow us to treat subjects and gather clinical data to demonstrate the safety and efficacy of our technology in the most efficient and timely manner. Additionally, numerous precedents, including recent FDA surgical robotic clearances, give us further confidence in our regulatory pathway to market. I'll now turn the call over to Bill for a review of our third quarter financial performance.

[William Kelly, executive]

Thank you, Adam. As we enter the second half of the year, we continue to see the positive impact of our cost reduction initiatives taken last year. In the third quarter, total operating expenses fell 17% year-over-year to $17.8 million. R&D expenses for the third quarter of 2024 were $10.8 million compared to $13 million in the third quarter of 2023. General and administrative expenses for the third quarter of 2024 were $5.7 million, down from $6.9 million in the third quarter of 2023.

And third quarter 2024 sales and marketing expenses were $1.2 million versus $1.4 million in the third quarter of 2023. Adjusted net loss for the third quarter of 2024 was $17 million, equating to an adjusted net loss of $2.87 per share as compared to an adjusted net loss of $20.4 million or $3.95 per share in the third quarter of 2023. GAAP net loss for the third quarter of 2024 was $17.1 million, equating to a net loss of $2.90 per share. This compares to a net loss of $15.7 million or $3.04 per share in the third quarter of 2023.

For a reconciliation of all non-GAAP measures to GAAP, please review our earnings press release. We closed the third quarter with $61 million in cash, cash equivalents and short-term investments. This translates to a cash burn of approximately $12 million for the quarter, keeping us on track with our projected full year 2024 cash burn of roughly $50 million. While we are laser-focused on executing our development strategy and achieving our first clinical milestone next year, we are equally committed to disciplined resource allocation and maintaining a strong balance sheet to ensure we are appropriately capitalized to reach these critical landmarks and deliver on our mission.

And with that, I will turn the call back to Adam for closing remarks. Adam?

[Adam Sachs, executive]

Thanks, Bill. In this final quarter of 2024, we are making the final push to complete the integration of our Version 1.0 System. This significant development milestone has been our main objective and guiding focus throughout the year and achieving it will be a testament to the dedication and incredible effort of our entire team. I want to express my sincere gratitude to our dedicated employees for their tireless efforts and unwavering commitment. I also want to extend a heartfelt thank you to our hospital system partners who have generously dedicated countless hours to providing invaluable feedback that has helped us shape our Version 1.0 System.

The integration of our first version platform will set the stage for 2025, the year where we transition to a clinical stage company. In less than a year, we intend to treat our first patient and have a critical opportunity to validate the clinical value of our single-port system and its potential to further robotic surgery. We are incredibly excited for the future of Vicarious Surgical and for our potential to positively impact lives by transforming robotic surgery.

Thank you to everyone who joined the call today. We appreciate your support and look forward to updating you on our continued progress in the quarters to come.

Operator, we are now ready to take any questions.

[Operator]

[Operator Instructions]

Our first question today comes from Josh Jennings with TD Cowen.

[Joshua Jennings, analyst]

Maybe thinking about the first clinical patient, which is going to be treated in less than a year. I was wondering if you could give us any color on just the expected time between treatment of that first clinical patient and the time in which the pivotal trial will actually be getting underway. Is that something that is going to be following in pretty short order? Just wanted to get a sense of where things stand there.

[Adam Sachs, executive]

Yes, Eric, thanks for the question. It's a good question. We are going to follow the first clinical patient as quickly as we can with our pivotal clinical trial. We've seen a number of pivotal trials in surgical robotics conducted outside the United States, recently, including some that have been conducted quite quickly.

[Joshua Jennings, analyst]

Understood. And then it sounds like you've identified a country for the OUS clinical sites. I was wondering if you could just talk a little bit about the criteria that you've been using in evaluating those site locations and how many -- in particular, how many sites you think you'd need to activate for the trial?

[Adam Sachs, executive]

Yes. So we're looking at doing the trial at just a few sites. We don't want to go with too many. There are a number of criteria that we've been working with, with our CROs outside the U.S. to help us select specific countries and specific sites. I'd say the top clinical criteria here really starts with the regulatory pathway and -- in addition to that, it's about patients in need of the procedure and total patient volume, which would be highly indicative of our ability to enroll patients quickly at each of those.

[Joshua Jennings, analyst]

I could squeeze just one more in -- just with the final integration of the Version 1.0 system coming in a few weeks, are you able to specify what items remain outstanding?

[Adam Sachs, executive]

Yes. So the next couple of weeks are really more than anything about getting the system up and running and really doing lab after lab in order to allow us to gain confidence in the functionality of the system and our ability to pass all of that validation testing that is going to require essentially cadaver and animal labs in order to pass. So it really is about just increased confidence shaking out any bugs and bringing everything together.

[Operator]

Our next question comes from Adam Maeder with Piper Sandler.

[Adam Maeder, analyst]

Congrats on the progress. That's actually a good segue into my first question. I just wanted to kind of better understand B&B next year and kind of what that process -- so just maybe double-click on that for a minute. And then just one quick clarification on the first-in-human studies that you're going to do -- the first-in-human study that you can do outside the U.S. next year, how many patients is that? Is that a single patient? Or is it multiple patients? And then I had a follow-up.

[Adam Sachs, executive]

Yes. So I'll answer the easy one first. It's going to be up to 5 patients for that first clinical patient study. It will likely be all at 1 site or 2 sites that are very close together. As far as what's included in verification and validation, it is a whole sort of tree of activities where you go through manufacture everything and split the units into everything from verification, which includes taking all of our requirements and making sure that our system is actually able to meet the system requirements that are set for that system. So this includes everything from our own motion performance requirements, sterilization requirements. Think of it much more as bench testing.

And then there's validation and validation is all about the user needs. So the hospital system partners that we've worked with have really helped us set our user needs to make sure that our device, frankly, delivers on the needs of the users. And validation is sort of the final check to ensure exactly that.

[Adam Maeder, analyst]

Got it. That's helpful color. And maybe just one for Bill. As we look ahead to 2025, just any early thoughts in terms of kind of cash burn for next year? And just remind us how you're thinking about current cash runway.

[William Kelly, executive]

Yes. No, I appreciate it, obviously, in terms of your current cash runway, we're pleased to be able to announce today that we remain on track with our $50 million -- approximately $50 million cash burn guidance for this year. You'll recall last year, as part of the year-end earnings release, we formalized our cash burn guidance for this year, and we'll look to do so at the same time at the next earnings call.

That being said, I think our cash burn, while the nature of some of that expenditures might change as we go from development expenditures to more material purchases and first clinical patient type expenditures. We believe they'll be in the ballpark of 2024 spending. We have cash runway through into 2026.

[Operator]

We have no further questions. So this concludes today's call. Thank you all for joining. You may now disconnect your lines.