TransEnterix goes where Intuitive cannot
Intuitive Surgical has dominated the robotic surgery space so thoroughly and for so long that no other company has tried to take it on – until now. TransEnterix submitted a 510(k) application two weeks ago, and has just sold $50m of shares to fund the launch of the world’s second full-scale surgical robot.
The SurgiBot system could achieve approval in late 2015, and TransEnterix has at least one good reason for thinking that it can succeed in this space: the price of the SurgiBot is around a quarter of that of the da Vinci.
The share sale – done at $3, or a 4% discount to Thursday's close – drove the company’s stock down 4% on Friday, but the cash raised ought to fund TransEnterix through SurgiBot’s launch in the next few months and out to 2016.
There are a number of other companies that offer robotic surgery devices, such as Hansen Medical and Stryker, through its purchase of Mako Surgical in 2013. But these are much smaller systems capable of aiding endovascular procedures such as the placement of aneurysm grafts, and performing orthopaedic operations such as knee resurfacing, respectively.
The da Vinci is an entirely different prospect, being much larger, more expensive and used to perform keyhole surgery within the patient’s body cavity, such as colectomy and hysterectomy. The systems cost around $2m, and this is where TransEnterix could have an opportunity.
The company has told analysts that SurgiBot could perform gallbladder, bariatric and colorectal surgeries, among others. The company is seeking a broad label along the lines of its non-robotic Spider system, which is approved in the US for the establishment of a path of entry for laparoscopic instruments during minimally invasive abdominal laparoscopic surgery.
Crucially, TransEnterix plans to expand the market rather than take share from Intuitive. The da Vinci is used to perform upwards of 80,000 procedures a year but around 3,000 of the nearly 6,000 US hospitals do not have any robotic surgery capability at all thanks to the high cost of these machines. TransEnterix believes that at $500,000 SurgiBot will be more easily purchased.
Expanding the market
Offering a cheaper, more basic system is a smart move in a time of squeezed hospital budgets. But TransEnterix might not have things all its own way.
For a start there is another company that also has its eyes on this market. The Canadian group Titan Medical is developing the Sport surgical system – the name stands for single port orifice robotic technology – which is expected to be commercially available by mid-2017. The Sport device will be priced at around $1m, between da Vinci and the SurgiBot.
Secondly, there is another element of risk to TransEnterix’s strategy: it has stopped selling the Spider, and is throwing all its efforts into SurgiBot. If approval does not materialise on time, the company could be in trouble.