Asensus Surgical, Inc. (NYSE American: ASXC), a medical device
company that is digitizing the interface between the surgeon and
the patient to pioneer a new era of Performance-Guided Surgery™,
today announced its operating and financial results for the third
quarter 2021.
Recent Highlights
- Record quarter for procedures performed using Senhance®
Surgical Systems, growing 47% over the prior year
- Four Senhance Surgical Programs recently initiated, three in
Japan and one in Russia
- Received FDA 510(k) clearance for expanded capabilities of the
Intelligent Surgical UnitTM (ISUTM), including first-of-its-kind 3D
measurement, digital tagging, image enhancement, and enhanced
camera control
- Received FDA 510(k) clearance for 5 mm articulating
instruments
- Six Senhance programs initiated year to date
“We are very proud of our recent performance as we continued to
make significant progress towards our strategic focus areas despite
the meaningful challenges we faced during the quarter as a result
of the most recent COVID spike which impacted all of our key
geographies. We have seen a recent acceleration of new system
installations as well as strong system utilization trends, which we
believe reinforces that there is strong demand in the market for an
innovative surgical platform that brings new capabilities to the
operating room, and that surgeons who have adopted Senhance are
finding its unique combination of surgical intelligence and
foundational laparoscopic movements both compelling and
advantageous for themselves and their patients,” said Anthony
Fernando, President and CEO of Asensus Surgical. “As we look to the
balance of 2021 and into 2022, we plan to continue this momentum to
drive increased global adoption and advance the capabilities of
Senhance to deliver on the promise of Performance-Guided
Surgery.”
Commercial and Clinical Update
Procedure Volume Trends
During the third quarter of 2021, procedure volumes increased by
over 47% compared to the prior year quarter, primarily driven by
growth in Europe and the United States. Sequentially, compared to
the second quarter of 2021, procedure volumes increased by 5%. Over
1,500 procedures have been completed year to date, bringing total
Senhance procedures to over 5,500 globally.
New Senhance Program Initiations
The Company recently announced four new Senhance Robotic Surgery
Program initiations. Three Japanese hospitals entered into
agreements to lease a Senhance Surgical System, bringing the total
number of Senhance programs in Japan to seven. The fourth program
initiation was in Russia, following a hospital’s purchase of a
Senhance Surgical System. This represents the first Senhance
Surgical System to be utilized in Russia.
Year to date, six new Senhance programs have been initiated. For
the full year 2021, the Company continues to expect to initiate 10
- 12 new Senhance programs.
Expanded Global ISU Machine Vision Capabilities
In September, the Company announced that it received 510(k)
clearance from the FDA for an expansion of machine vision
capabilities on the previously cleared Intelligent Surgical Unit
(ISU). The ISU is utilized with the Company’s Senhance Surgical
System which enables Digital Laparoscopy. The initial features of
the ISU enable machine vision-driven control of the camera for a
surgeon by responding to commands and recognizing certain objects
and locations in the surgical field, and allow a surgeon to change
the visualized field of view using the movement of their
instruments. The newest ISU features expand upon these capabilities
and introduce more advanced features including: 3D measurement,
digital tagging, image enhancement, and enhanced camera control
based on real-time data from anatomical structures while performing
surgery. This will be the first time any of these features will be
clinically available in soft-tissue abdominal surgery.
Articulating Instrument Clearance
In July, the Company announced that it had received 510(k)
clearance for 5 mm articulating instruments, which offer better
access to difficult-to-reach areas of the anatomy.
Third Quarter Financial Results
For the three months ended September 30, 2021, the Company
reported revenue of $2.6 million as compared to revenue of $0.8
million in the three months ended September 30, 2020. Revenue in
the third quarter of 2021 included $1.4 million in Senhance system
revenue, $0.8 million in instruments and accessories, and $0.4
million in services.
For the three months ended September 30, 2021, total operating
expenses were $16.7 million, as compared to $14.6 million in the
three months ended September 30, 2020.
For the three months ended September 30, 2021, net loss was
$16.1 million, or $0.07 per common share, as compared to a net loss
of $15.1 million, or $0.15 per common share, in the three months
ended September 30, 2020.
For the three months ended September 30, 2021, the adjusted net
loss of $14.3 million, or $0.06 per common share, as compared to an
adjusted net loss of $11.9 million, or $0.12 per common share in
the three months ended September 30, 2020, after adjusting for the
following charges: amortization of intangible assets, change in
fair value of contingent consideration, change in fair value of
warrant liabilities, and employee retention tax credit, all of
which are non-cash charges. Adjusted net loss is a non-GAAP
financial measure. See the reconciliation from GAAP to Non-GAAP
Measures below.
Balance Sheet Updates
The Company had cash, cash equivalents, short-term and long-term
investments, excluding restricted cash of approximately $147.9
million as of September 30, 2021.
Conference Call
Asensus Surgical, Inc. will host a conference call on Wednesday,
November 3, 2021, at 4:30 PM ET to discuss its third quarter 2021
operating and financial results. To listen to the conference call
on your telephone, please dial 1-855-327-6837 for domestic callers
and 1-631-891-4304 for international callers, and reference
conference ID 10016621 approximately ten minutes prior to the start
time. To access the live audio webcast or archived recording, use
the following link https://ir.asensus.com/events-and-presentations.
The replay will be available on the Company’s website.
About Asensus Surgical, Inc.
Asensus Surgical, Inc. is digitizing the interface between the
surgeon and patient to pioneer a new era of Performance-Guided
Surgery by unlocking the clinical intelligence to enable
consistently superior outcomes and a new standard of surgery. This
builds upon the foundation of Digital Laparoscopy with the Senhance
Surgical System powered by the Intelligent Surgical Unit (ISU) to
increase surgeon control and reduce surgical variability. With the
addition of machine vision, augmented intelligence, and deep
learning capabilities throughout the surgical experience, we intend
to holistically address the current clinical, cognitive and
economic shortcomings that drive surgical outcomes and value-based
healthcare. Learn more about Performance-Guided Surgery and Digital
Laparoscopy with the Senhance Surgical System here:
www.senhance.com. Now available for sale in the US, EU, Japan,
Russia, and select other countries. For a complete list of
indications for use, visit: www.senhance.com/indications. For more
information, visit www.asensus.com.
Non-GAAP Measures
The adjusted net loss and adjusted net loss per share presented
in this press release are non-GAAP financial measures. The
adjustments relate to amortization of intangible assets, change in
fair value of contingent consideration, change in fair value of
warrant liabilities, gain on extinguishment of debt, employee
retention tax credit and for 2020, restructuring and other charges,
deemed dividend related to beneficial conversion feature of
preferred stock, and deemed dividend relating to conversion of
preferred stock into common stock. These financial measures are
presented on a basis other than in accordance with U.S. generally
accepted accounting principles ("Non-GAAP Measures"). In the tables
that follow under "Reconciliation of Non-GAAP Measures,” we present
adjusted net loss and adjusted net loss per share, reconciled to
their comparable GAAP measures. These items are adjusted because
they are not operational or because these charges are non-cash or
non-recurring and management believes these adjustments are
meaningful to understanding the Company's performance during the
periods presented. These Non-GAAP Measures should be considered a
supplement to, not a substitute for, or superior to, the
corresponding financial measures calculated in accordance with
GAAP.
Forward-Looking Statements
This press release includes statements relating to the current
market development and operational plans for the Senhance Surgical
System, as well as 2021 third quarter results and plans for the
balance of 2021 and into 2022. These statements and other
statements regarding our future plans and goals constitute
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, and are intended to qualify for the safe
harbor from liability established by the Private Securities
Litigation Reform Act of 1995. Such statements are subject to risks
and uncertainties that are often difficult to predict, are beyond
our control and which may cause results to differ materially from
expectations and include whether the recent acceleration of new
system installations, as well as strong utilization trends
reinforces that there is strong demand in the market for an
innovative surgical platform that brings new capabilities to the
operating room, whether we can continue with our current momentum
to drive increased global adoption and advance capabilities of the
Senhance Surgical System to deliver on the promise of
Performance-Guided Surgery and whether we are able install 10-12
new Senhance Surgical Systems for the full year 2021. For a
discussion of the risks and uncertainties associated with Asensus
Surgical's business, please review our filings with the Securities
and Exchange Commission (SEC), including our Annual Report on Form
10-K for the year ended December 31, 2020, which we filed with the
SEC on March 11, 2021. You are cautioned not to place undue
reliance on these forward-looking statements, which are based on
our expectations as of the date of this press release and speak
only as of the origination date of this press release. We undertake
no obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise.
Asensus Surgical, Inc.
Condensed Consolidated
Statements of Operations and Comprehensive Loss
(in thousands except per share
amounts)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Revenue:
Product
$
2,176
$
436
$
4,576
$
992
Service
395
378
1,180
1,076
Total revenue
2,571
814
5,756
2,068
Cost of revenue:
Product
2,659
720
6,517
2,353
Service
691
703
2,292
2,220
Total cost of revenue
3,350
1,423
8,809
4,573
Gross loss
(779
)
(609
)
(3,053
)
(2,505
)
Operating Expenses:
Research and development
4,469
4,673
12,773
12,867
Sales and marketing
3,551
3,136
10,166
10,291
General and administrative
5,557
3,462
13,397
10,426
Amortization of intangible assets
2,804
2,780
8,533
7,964
Change in fair value of contingent
consideration
278
502
1,013
1,770
Restructuring and other charges
—
—
—
858
Total Operating Expenses
16,659
14,553
45,882
44,176
Operating Loss
(17,438
)
(15,162
)
(48,935
)
(46,681
)
Other Income (Expense):
Gain on extinguishment of debt
—
—
2,847
—
Change in fair value of warrant
liabilities
—
63
(1,981
)
(206
)
Interest income
122
3
253
34
Interest expense
(65
)
—
(77
)
—
Employee retention tax credit
1,311
—
1,311
—
Other income (expense), net
33
16
(3
)
(54
)
Total Other Income (Expense), net
1,401
82
2,350
(226
)
Loss before income taxes
(16,037
)
(15,080
)
(46,585
)
(46,907
)
Income tax (expense) benefit
(32
)
(2)
4
1,386
Net loss
(16,069
)
(15,082
)
(46,581
)
(45,521
)
Deemed dividend related to beneficial
conversion feature of preferred stock
—
—
—
(412
)
Deemed dividend related to conversion of
preferred stock into common stock
—
—
—
(299
)
Net loss attributable to common
stockholders
(16,069
)
(15,082
)
(46,581
)
(46,232
)
Comprehensive loss:
Net loss
(16,069
)
(15,082
)
(46,581
)
(45,521
)
Foreign currency translation
(loss) gain
(931)
2,101
(2,397
)
2,191
Unrealized loss on available-for-sale
investments
(53)
—
(53
)
—
Comprehensive loss
$
(17,053
)
$
(12,981
)
$
(49,031
)
$
(43,330
)
Net loss per common share attributable to
common stockholders – basic and diluted
$
(0.07
)
$
(0.15
)
$
(0.21
)
$
(0.77
)
Weighted average number of shares used in
computing net loss per common share – basic and diluted
234,337
97,538
224,300
59,737
Asensus Surgical, Inc.
Condensed Consolidated Balance
Sheets
(in thousands, except share
amounts)
(Unaudited)
September 30,
December 31,
2021
2020
Assets
Current Assets:
Cash and cash equivalents
$
59,779
$
16,363
Short-term investments,
available-for-sale
57,972
—
Accounts receivable, net
955
1,115
Inventories
11,954
10,034
Prepaid expenses
2,209
3,535
Employee retention tax credit
receivable
1,311
—
Other current assets
627
2,966
Total Current Assets
134,807
34,013
Restricted cash
1,153
1,166
Long-term investments,
available-for-sale
30,142
—
Inventories, net of current portion
5,963
8,813
Property and equipment, net
9,911
10,342
Intellectual property, net
12,820
22,267
Net deferred tax assets
287
307
Operating lease right-of-use assets,
net
4,328
1,164
Other long-term assets
348
186
Total Assets
$
199,759
$
78,258
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable
$
3,231
$
1,965
Accrued expenses
4,841
5,615
Operating lease liabilities – current
portion
671
686
Deferred revenue
678
789
Notes payable – current portion, net of
debt discount
—
1,228
Total Current Liabilities
9,421
10,283
Long Term Liabilities:
Contingent consideration
4,949
3,936
Noncurrent operating lease liabilities
3,888
628
Notes payable, less current portion
—
1,587
Warrant liabilities
—
255
Total Liabilities
18,258
16,689
Commitments and Contingencies
Stockholders’ Equity
Common stock $0.001 par value, 750,000,000
shares authorized at September 30, 2021 and December 31, 2020;
234,370,083 and 116,231,072 shares issued and outstanding at
September 30, 2021 and December 31, 2020, respectively
234
116
Preferred stock, $0.01 par value,
25,000,000 shares authorized, no shares issued and outstanding at
September 30, 2021 and December 31, 2020, respectively
—
—
Additional paid-in capital
950,242
781,397
Accumulated deficit
(769,493
)
(722,912
)
Accumulated other comprehensive income
518
2,968
Total Stockholders’ Equity
181,501
61,569
Total Liabilities and Stockholders’
Equity
$
199,759
$
78,258
Asensus Surgical, Inc.
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(Unaudited)
Nine Months Ended
September 30,
2021
2020
Operating Activities:
Net loss
$
(46,581
)
$
(45,521
)
Adjustments to reconcile net loss to net
cash and cash equivalents used in operating activities:
Depreciation
2,416
2,015
Amortization of intangible assets
8,533
7,964
Amortization of discounts and premiums on
investments, net
65
—
Stock-based compensation
6,589
5,800
Gain on extinguishment of debt
(2,847
)
—
Deferred tax benefit
(4
)
(1,386
)
Write down of inventory
377
—
Change in fair value of warrant
liabilities
1,981
206
Change in fair value of contingent
consideration
1,013
1,770
Changes in operating assets and
liabilities:
Accounts receivable
113
(252
)
Inventories
(1,941
)
(4,410
)
Operating lease right-of-use assets
(3,174
)
(1,045
)
Prepaid expenses
1,220
1,269
Employee retention tax credit
receivable
(1,311)
—
Other current and long term assets
2,098
2,009
Accounts payable
1,376
(706
)
Accrued expenses
(588
)
(1,772
)
Deferred revenue
(81)
(56
)
Operating lease liabilities
3,259
1,115
Other long term liabilities
—
(910
)
Net cash and cash equivalents used in
operating activities
(27,487
)
(33,910
)
Investing Activities:
Purchase of available-for-sale
investments
(88,232
)
—
Purchase of property and equipment
(838
)
(3
)
Net cash and cash equivalents used in
investing activities
(89,070
)
(3
)
Financing Activities:
Proceeds from issuance of common stock,
preferred stock and warrants under 2020 financing, net of issuance
costs
—
13,525
Proceeds from issuance of common stock,
net of issuance costs
130,361
24,861
Proceeds from notes payable, net of
issuance costs
—
2,815
Taxes paid related to net share settlement
of vesting of restricted stock units
(1,058
)
(33
)
Payment of contingent consideration
—
(74
)
Proceeds from exercise of stock options
and warrants
30,838
3,340
Net cash and cash equivalents provided by
financing activities
160,141
44,434
Effect of exchange rate changes on cash
and cash equivalents
(181
)
30
Net increase in cash, cash equivalents and
restricted cash
43,403
10,551
Cash, cash equivalents and restricted
cash, beginning of period
17,529
10,567
Cash, cash equivalents and restricted
cash, end of period
$
60,932
$
21,118
Supplemental Schedule of Non-cash
Investing and Financing Activities
Transfer of inventories to property and
equipment
$
2,156
$
5,839
Reclass of warrant liability to common
stock and additional paid-in-capital
$
2,236
$
—
Lease liabilities arising from obtaining
right-of-use assets
$
3,857
$
—
Exchange of common stock for Series B
Warrants
$
—
$
2,470
Transfer of in-process research and
development to intellectual property
$
—
$
2,425
Conversion of preferred stock to common
stock
$
—
$
79
Asensus Surgical, Inc.
Reconciliation of Non-GAAP
Measures
Adjusted Net Loss and Net Loss
per Share
(in thousands except per share
amounts)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Net loss attributable to common
stockholders (GAAP)
$
(16,069)
$
(15,082)
$
(46,581)
$
(46,232)
Adjustments
Amortization of intangible assets
2,804
2,780
8,533
7,964
Change in fair value of contingent consideration
278
502
1,013
1,770
Change in fair value of warrant liabilities
—
(63)
1,981
206
Restructuring and other charges
—
—
—
858
Gain on extinguishment of debt
—
—
(2,847)
—
Employee retention tax credit
(1,311)
—
(1,311)
—
Deemed dividend related to beneficial
conversion feature of preferred stock
—
—
—
412
Deemed dividend related to conversion of preferred stock into
common stock
—
—
—
299
Adjusted net loss attributable to
common stockholders (Non-GAAP)
$
(14,298)
$
(11,863)
$
(39,212)
$
(34,723)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Net loss per share attributable to
common stockholders (GAAP)
$
(0.07)
$
(0.15)
$
(0.21)
$
(0.77)
Adjustments
Amortization of intangible assets
0.01
0.03
0.04
0.13
Change in fair value of contingent consideration
0.01
0.00
0.01
0.03
Change in fair value of warrant liabilities
—
0.00
0.01
0.00
Restructuring and other charges
—
—
—
0.01
Gain on extinguishment of debt
—
—
(0.01)
—
Employee retention tax credit
(0.01)
—
(0.01)
—
Deemed dividend related to beneficial
conversion feature of preferred stock
—
—
—
0.01
Deemed dividend related to conversion of preferred stock into
common stock
—
—
—
0.01
Adjusted net loss per share
attributable to common stockholders (Non-GAAP)
$
(0.06)
$
(0.12)
$
(0.17)
$
(0.58)
The non-GAAP financial measures for the three and nine months
ended September 30, 2021 and 2020 provide management with
additional insight into the Company’s results of operations from
period to period without non-recurring and non-cash charges, and
are calculated using the following adjustments:
a) Intangible assets that are amortized consist of developed
technology and purchased patent rights recorded at cost and
amortized over 5 to 10 years.
b) Contingent consideration in connection with the acquisition
of the Senhance System in 2015 is recorded as a liability and is
the estimate of the fair value of potential milestone payments
related to business acquisitions. Contingent consideration is
measured at fair value using a discounted cash flow model utilizing
significant unobservable inputs including the probability of
achieving each of the potential milestones, an estimated discount
rate associated with the risks of the expected cash flows
attributable to the various milestones, and volatility. Significant
increases or decreases in any of the probabilities of success or
changes in expected timelines for achievement of any of these
milestones would result in a significantly higher or lower fair
value of these milestones, respectively, and commensurate changes
to the associated liability. The contingent consideration is
revalued at each reporting period and changes in fair value are
recognized in the consolidated statements of operations and
comprehensive loss.
c) The Company’s Series B Warrants are measured at fair value
using a simulation model which takes into account, as of the
valuation date, factors including the current exercise price, the
expected life of the warrant, the current price of the underlying
stock, its expected volatility, holding cost and the risk-free
interest rate for the term of the warrant. The warrant liability is
revalued at each reporting period or upon exercise and changes in
fair value are recognized in the consolidated statements of
operations and comprehensive loss.
d) Beginning in the fourth quarter of 2019 and continuing into
the first quarter of 2020, we implemented a restructuring plan to
reduce operating expenses as we continue the global market
development of the Senhance platform. During the first quarter of
2020, the Company continued the restructuring efforts with
additional headcount reductions, which resulted in $0.9 million in
severance costs in the nine months ended September 30, 2020.
e) During the second quarter of 2021, the Company received
notification from the U.S. Small Business Administration (the
“SBA”) that the principal amount of its Paycheck Protection Program
loan (“PPP loan”) of $2.8 million and related interest had been
forgiven. Gain on extinguishment of debt of $2.8 million was
recognized for the three and nine months ended September 30, 2021
in the condensed consolidated statement of operations and
comprehensive loss.
f) During the third quarter of 2021, the Company submitted a
refund for incurred employee payroll taxes of $1.3 million under
the Employee Retention Tax Credit provision as part of the
Coronavirus Aid, Relief, and Economic Security Act (the “CARES
Act”). A corresponding tax credit receivable of $1.3 million was
recorded on the condensed consolidated balance sheet at September
30, 2021.
g) During the first quarter of 2020, the Company closed an
underwritten public offering under which it issued, as part of
units and the exercise of an over-allotment option, 25,367,646
Series C Warrants, each to acquire one share of Common Stock at an
exercise price of $0.68 per share, and 25,367,646 Series D
Warrants, each to acquire one share of Common Stock at an exercise
price of $0.68 per share. The Company concluded that the Series C
Warrants and Series D Warrants are considered equity instruments.
The fair value of the Series C and Series D Warrants on the
issuance date was determined using a Black-Scholes Merton model.
The unit proceeds were then allocated to the Series A preferred
stock, Series C Warrants, and Series D Warrants, respectively,
based on their relative fair values. As a result, the Company
determined that a beneficial conversion feature was created by the
difference between the effective conversion price of the Series A
preferred stock of $0.37 and the fair value of the Company's common
stock as of the issuance date of $0.42. The Company therefore
recorded a beneficial conversion charge of $0.4 million as an
immediate charge to loss available to common stockholders for the
nine months ended September 30, 2020. Upon conversion of the Series
A preferred stock to common stock during the three months ended
September 30, 2020, an additional deemed dividend of $0.3 million
was recorded as an immediate charge to loss available to common
stockholders for the three and nine months ended September 30,
2020.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211103006101/en/
INVESTOR CONTACT: Mark Klausner or Mike Vallie,
443-213-0499 invest@asensus.com or MEDIA CONTACT: Kristin
Schaeffer, 858-354-8850 CG Life kschaeffer@cglife.com
Asensus Surgical, Inc. (NYSE:ASXC)
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