Exhibit 99.1

TransEnterix, Inc. Reports Operating and Financial Results for the Second Quarter 2018

RESEARCH TRIANGLE PARK, N.C.—(BUSINESS WIRE)—TransEnterix, Inc. (NYSE American:TRXC), a medical device company that is digitizing the interface between the surgeon and the patient to improve minimally invasive surgery, today announced its operating and financial results for the second quarter 2018.

Recent Highlights

 

   

Total revenue of $6.4 million, including the sale of four Senhance Systems

 

   

Received FDA clearance for expanded indications for use for Senhance System

 

   

Filed FDA 510(k) submission for additional Senhance System Instruments including 3mm diameter instruments

 

   

Entered into financing agreement providing the company with up to $40 million in term loans

“Our performance during the second quarter was solid as we continued to drive system sales both in the U.S. and abroad, while simultaneously making significant progress towards our 2018 goals, including the expansion of Senhance’s indications for use and broadening our portfolio of instruments,” said Todd M. Pope, President and CEO at TransEnterix. “We look forward to leveraging the significant progress we made during the first half of the year to drive increased global adoption of our Senhance System.”

Commercial and Clinical Update

In the quarter ended June 30, 2018, the Company sold four Senhance Systems, with one sold in the U.S. and three sold in the EMEA (Europe, Middle East, and Africa) region.

On May 29, 2018, the Company received FDA 510(k) clearance for expanded indications of its Senhance System for laparoscopic inguinal hernia and laparoscopic cholecystectomy (gallbladder removal) surgery. There are approximately 760,000 inguinal hernia and 1.2 million laparoscopic cholecystectomy procedures performed annually in the U.S. With this clearance, Senhance System’s total addressable annual procedures in the U.S. has more than doubled to over three million.

On June 7, 2018, the Company announced that it had filed an FDA 510(k) submission for additional Senhance System instruments, including 3 millimeter diameter instruments.


Second Quarter Financial Highlights

For the three months ended June 30, 2018, the Company reported revenue of $6.4 million as compared to revenue of $1.6 million in the three months ended June 30, 2017. Revenue in the second quarter of 2018 included $4.7 million in system sales, $1.5 million in instruments and accessories, and $200 thousand in services.

For the three months ended June 30, 2018, total net operating expenses were $18.5 million, as compared to $13.1 million in the three months ended June 30, 2017.

For the three months ended June 30, 2018, net loss was $34.2 million, or $0.17 per share, as compared to a net loss of $14.7 million, or $0.11 per share, in the three months ended June 30, 2017.

For the three months ended June 30, 2018, adjusted net loss was $11.7 million, or $0.06 per share, as compared to an adjusted net loss of $11.2 million, or $0.08 per share in the three months ended June 30, 2017, after adjusting for expenses related to the sale of SurgiBot assets, loss on extinguishment of debt, and non-cash charges for amortization of intangible assets, change in fair value of contingent consideration, and change in fair value of warrant liabilities.

On May 23, 2018, the Company entered into a loan and security agreement providing the company with up to $40.0 million in term loans. The initial tranche of the term loan, $20 million, was received at closing. 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. On the date of closing, the Company repaid all amounts owed under their previous loan provider.

The Company had cash and restricted cash of approximately $98.5 million as of June 30, 2018. The Company now anticipates that it has sufficient cash to fund the business into 2020, exclusive of the $20 million in potential future debt tranches.

Conference Call

TransEnterix, Inc. will host a conference call on Tuesday, August 7, 2018 at 8:30 AM ET to discuss its second quarter 2018 operating and financial results. To listen to the conference call on your telephone, please dial (844) 804-5261 for domestic callers or (612) 979-9885 for international callers and reference conference ID 4388237 approximately ten minutes prior to the start time. To access the live audio webcast or archived recording, use the following link http://ir.transenterix.com/events.cfm. The replay will be available on the Company’s website.

About TransEnterix

TransEnterix is a medical device company that is digitizing the interface between the surgeon and the patient to improve minimally invasive surgery by addressing the clinical and economic challenges associated with current laparoscopic and robotic options in today’s value-based healthcare environment. The Company is focused on the commercialization of the Senhance™ Surgical System, which digitizes laparoscopic minimally invasive surgery. The system allows for robotic precision, haptic feedback, surgeon camera control via eye sensing and improved ergonomics while offering responsible economics. The Senhance Surgical System is available for sale in the US, the EU and select other countries. For more information, visit www.transenterix.com.


Non-GAAP Measures

The adjusted net loss and adjusted net loss per share presented in this press release are non-GAAP measures. The adjustments relate to the gain from sale of SurgiBot assets, amortization of intangible assets, change in fair value of contingent consideration, change in fair value of warrant liabilities, and loss on extinguishment of debt. 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 2018 second quarter results and plans for 2018 and beyond. 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 we have made significant progress towards our 2018 goals, including the expansion of Senhance’s indications for use and broadening our portfolio of instruments; whether we can leverage the significant progress from the first half of the year to drive increased global adoption of our Senhance System and whether the Company has sufficient cash to fund the business into 2020, exclusive of the $20 million in potential future debt tranches. For a discussion of the risks and uncertainties associated with TransEnterix’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, 2017, filed with the SEC on March 8, 2018 and our other filings we make with the SEC. 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.


TransEnterix, Inc.

Consolidated Statements of Operations and Comprehensive Loss

(in thousands except per share amounts)

(Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2018     2017     2018     2017  

Revenue

   $ 6,389     $ 1,584     $ 11,156     $ 3,530  

Cost of revenue

     3,732       972       6,287       2,306  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     2,657       612       4,869       1,224  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Expenses (Income)

        

Research and development

     5,281       5,070       10,546       11,925  

Sales and marketing

     6,046       3,749       12,016       7,472  

General and administrative

     3,627       2,719       6,303       5,768  

Amortization of intangible assets

     2,743       1,687       5,570       3,323  

Change in fair value of contingent consideration

     812       (774     1,439       453  

Issuance costs for warrants

           627             627  

Gain from sale of SurgiBot assets, net

     37             (11,959      
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Operating Expenses (Income)

     18,546       13,078       23,915       29,568  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Loss

     (15,889     (12,466     (19,046     (28,344
  

 

 

   

 

 

   

 

 

   

 

 

 

Other Income (Expense)

        

Change in fair value of warrant liabilities

     (17,507     (2,326     (15,678     (2,326

Interest expense, net

     (1,736     (622     (2,122     (956

Other income (expense)

     1       (40     (57     (100
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Other Income (Expense), net

     (19,242     (2,988     (17,857     (3,382
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

   $ (35,131   $ (15,454   $ (36,903   $ (31,726

Income tax benefit

     883       741       1,773       1,599  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (34,248   $ (14,713   $ (35,130   $ (30,127
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive loss

        

Foreign currency translation (loss) gain

     (4,398     5,430       (2,090     6,563  
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive loss

   $ (38,646   $ (9,283   $ (37,220   $ (23,564
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share – basic and diluted

   $ (0.17   $ (0.11   $ (0.17   $ (0.24
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding – basic and diluted

     204,504       132,386       202,214       127,052  
  

 

 

   

 

 

   

 

 

   

 

 

 


TransEnterix, Inc.

Consolidated Balance Sheets

(in thousands, except share amounts)

 

     June 30,
2018
    December 31,
2017
 
     (unaudited)        

Assets

    

Current Assets

    

Cash and cash equivalents

   $ 97,743     $ 91,217  

Accounts receivable, net

     2,210       1,536  

Inventories

     11,040       10,817  

Interest receivable

     104       80  

Other current assets

     7,243       9,344  
  

 

 

   

 

 

 

Total Current Assets

     118,340       112,994  
  

 

 

   

 

 

 

Restricted cash

     750       6,389  

Property and equipment, net

     6,676       6,670  

Intellectual property, net

     45,909       52,638  

Goodwill

     70,813       71,368  

Other long term assets

     259       192  
  

 

 

   

 

 

 

Total Assets

   $ 242,747     $ 250,251  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current Liabilities

    

Accounts payable

   $ 4,108     $ 3,771  

Accrued expenses

     10,270       10,974  

Deferred revenue

     1,083       1,088  

Deferred gain from sale of SurgiBot assets

           7,500  

Contingent consideration – current portion

     547       719  

Notes payable – current portion, net of debt discount

           4,788  
  

 

 

   

 

 

 

Total Current Liabilities

     16,008       28,840  

Long Term Liabilities

    

Contingent consideration – less current portion

     12,915       11,699  

Notes payable – less current portion, net of debt discount

     18,952       8,385  

Warrant liabilities

     22,708       14,090  

Net deferred tax liabilities

     6,446       8,389  
  

 

 

   

 

 

 

Total Liabilities

     77,029       71,403  

Commitments and Contingencies

    

Stockholders’ Equity

    

Common stock $0.001 par value, 750,000,000 shares authorized at June 30, 2018 and December 31, 2017; 207,712,291 and 199,282,003 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively

     207       199  

Additional paid-in capital

     645,332       621,261  

Accumulated deficit

     (482,759     (447,640

Accumulated other comprehensive income

     2,938       5,028  
  

 

 

   

 

 

 

Total Stockholders’ Equity

     165,718       178,848  
  

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 242,747     $ 250,251  
  

 

 

   

 

 

 


TransEnterix, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

     Six Months Ended
June 30,
 
     2018     2017  

Operating Activities

    

Net loss

   $ (35,130   $ (30,127

Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities:

    

Gain from sale of SurgiBot assets, net

     (11,959      

Depreciation

     1,277       1,142  

Amortization of intangible assets

     5,570       3,323  

Amortization of debt discount and debt issuance costs

     495       43  

Stock-based compensation

     4,204       3,679  

Deferred tax benefit

     (1,799     (1,580

Loss on extinguishment of debt

     1,400       308  

Change in fair value of warrant liabilities

     15,678       2,326  

Change in fair value of contingent consideration

     1,439       453  

Changes in operating assets and liabilities:

    

Accounts receivable

     (762     (487

Interest receivable

     (24     39  

Inventories

     (1,560     (862

Other current and long term assets

     1,905       (1,473

Accounts payable

     404       (1,909

Accrued expenses

     (359     (390

Deferred revenue

     31        
  

 

 

   

 

 

 

Net cash and cash equivalents used in operating activities

     (19,190     (25,515
  

 

 

   

 

 

 

Investing Activities

    

Proceeds related to sale of SurgiBot assets, net

     4,496        

Purchase of property and equipment

     (358     (1,397

Purchase of intellectual property

           (398

Proceeds from sale of property and equipment

     32        
  

 

 

   

 

 

 

Net cash and cash equivalents provided by (used in) investing activities

     4,170       (1,795
  

 

 

   

 

 

 

Financing Activities

    

Payment of notes payable

     (15,305     (13,343

Proceeds from issuance of debt and warrants, net of issuance costs

     18,870       13,196  

Payment of contingent consideration

     (395      

Proceeds from issuance of common stock and warrants, net of issuance costs

     2       29,193  

Taxes paid related to net share settlement of vesting of restricted stock units

           (168

Proceeds from issuance of common stock related to sale of SurgiBot assets

     3,000        

Proceeds from exercise of stock options and warrants

     9,813        
  

 

 

   

 

 

 

Net cash and cash equivalents provided by financing activities

     15,985       28,878  
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (78     2  
  

 

 

   

 

 

 

Net increase in cash, cash equivalents and restricted cash

     887       1,570  

Cash, cash equivalents and restricted cash, beginning of period

     97,606       34,590  
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash, end of period

   $ 98,493     $ 36,160  
  

 

 

   

 

 

 

Supplemental Disclosure for Cash Flow Information

    

Interest paid

   $ 599     $ 368  

Supplemental Schedule of Noncash Investing and Financing Activities

    

Transfer of inventories to property and equipment

   $ 1,055     $  

Issuance of common stock as contingent consideration

   $     $ 5,227  

Relative fair value of warrants issued with debt

   $     $ 300  

Reclass of warrant liability to common stock and additional paid-in capital

   $ 7,060     $  


TransEnterix, Inc.

Reconciliation of Non-GAAP Measures

Adjusted Net Loss and Net Loss per Share

(in thousands except per share amounts)

(Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2018     2017     2018     2017  

(Unaudited, U.S. Dollars, in thousands)

        

Net loss

   $ (34,248   $ (14,713   $ (35,130   $ (30,127

Adjustments

        

Gain from sale of SurgiBot assets, net

     37             (11,959      

Amortization of intangible assets

     2,743       1,687       5,570       3,323  

Change in fair value of contingent consideration

     812       (774     1,439       453  

Change in fair value of warrant liabilities

     17,507       2,326       15,678       2,326  

Loss on extinguishment of debt

     1,400       308       1,400       308  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net loss

   $ (11,749   $ (11,166   $ (23,002   $ (23,717
  

 

 

   

 

 

   

 

 

   

 

 

 
     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2018     2017     2018     2017  

(Unaudited, per diluted share)

        

Net loss per share

   $ (0.17   $ (0.11   $ (0.17   $ (0.24

Adjustments

        

Gain from sale of SurgiBot assets

     0.00             (0.06      

Amortization of intangible assets

     0.01       0.02       0.03       0.03  

Change in fair value of contingent consideration

     0.00       (0.01     0.00       0.00  

Change in fair value of warrant liabilities

     0.09       0.02       0.08       0.02  

Loss on extinguishment of debt

     0.01       0.00       0.01       0.00  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net loss per share

   $ (0.06   $ (0.08   $ (0.11   $ (0.19
  

 

 

   

 

 

   

 

 

   

 

 

 


The non-GAAP financial measures for the three and six months ended June 30, 2018 and 2017 provide management with additional insight into its results of operations and are calculated using the following adjustments:

 

  a)

Gain from sale of SurgiBot assets relates to amounts received from Great Belief International Limited in excess of the carrying amount of the assets sold.

  b)

Intangible assets that are amortized consist of developed technology and purchased patent rights recorded at cost and amortized over 5 to 10 years.

  c)

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 and an estimated discount rate associated with the risks of the expected cash flows attributable to the various milestones. 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.

  d)

The Company’s Series A and 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 and changes in fair value are recognized in the consolidated statements of operations and comprehensive loss.

  e)

In May 2018 in connection with its entrance into the Hercules Loan Agreement, the Company repaid its existing loan and security agreement with Innovatus Life Sciences Lending Fund I, LP. The Company recognized a loss of $1.4 million on the extinguishment of notes payable which is included in interest expense on the consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2018. In May 2017 in connection with its entrance into the Innovatus Loan Agreement, the Company repaid its then-existing credit facility with Silicon Valley Bank and Oxford Finance LLC. The Company recognized a loss of $308,000 on the extinguishment of notes payable which is included in interest expense on the consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2017.

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