How Many Senhance Systems Will TransEnterix Sell in Q4?
In October of 2017, TransEnterix received 510(k) clearance for their Senhance robotic surgery system, becoming the first new entrant in the field of abdominal surgical robotics in nearly 20 years.
Through the end of the third quarter in 2018, TransEnterix has sold 15 Senhance systems worldwide and announced during their third quarter earnings call they had already received two orders in the 4th quarter.
Going back to October 2017, Todd Pope shared that it would take the company four to six quarters to ramp up the closing of capital sales. With Senhance now being FDA approved for over a year, TransEnterix is technically getting to that sweet spot.
As to the company’s fourth quarter guidance, the company expects to sell between four and five Senhance systems, with total worldwide revenue in the range of $6.4 million to $7.7 million. This implies full-year revenues of between $23 million and $24.4 million, representing growth of over 200% versus the prior year.
The company has confirmed the ASP of a Senhance system is $1.3 million.
The numbers are impressive but is it enough? In August, we shared our concerns that TransEnterix hasn’t closed more US Senhance systems, but also reiterated it’s important to give the company the full four to six quarters to get their capital sales selling legs under them.
Here we are though. While TransEnterix hasn’t announced where the two Q4 Senhance sales are from, would it be disappointing if those sales didn’t come from the US?
Not penetrating the US is a thing, it’s not just us. In the Q&A during the Q3 Earnings call, an analyst had this question for TransEnterix CEO, Todd Pope:
Hi, Todd and Joe. It’s Drew Ranieri on for Rick tonight. Thanks for taking the question. But, first, let me just start on the US Senhance commercialization. With Senhance being FDA cleared for about a year now, you're getting to that four to six quarter sweet spot for capital sales. Can you just touch on that a little bit more? I know that you said you had a couple orders in hand already. Were they US or O-US? And how should we be thinking about 2019? What do you need to do to accelerate US growth?
Yup. Drew, thanks for the question. We feel great about the pipeline. As you said, we’ve talked a lot about pipeline really getting going after four to six quarters. We're coming into that. And we feel like we’re right on track.
There is not any one specific catalyst for our pipeline. I think when your selling capital, there's a lot of blocking and tackling. As we look at our pipeline in the US, we have a lot of activity that’s getting closer, working its way through admin, the administration side of the hospital, after a lot of the clinical advocacy has been validated, which is very helpful for us. It means that’s getting a little bit toward the back end of the pipeline. And I think when you're talking about conversations with hospitals, anytime you are able to add instruments and talk about where we’re going with new technology, it always helps the clinical interest and the clinical conviction.
3 mm helps. We just got that approved about a month ago and are starting to roll that out clinically later this month. We’re excited about ultrasonic. As we talked about, we got that approval in Europe and are beginning those cases now. And the US is excited about getting that. We think that’s going to be continuing to be enabling.
And even though we don't like talking too much about future, the MST technology, I think, our pipeline is really excited to see a company, even though we’re emerging revenue company, making acquisitions in the space that really solidifies our future product pipeline.
So, I would say the last thing I would say is we’ve found that when people are going to buy a piece of capital, like the Senhance, with that type of commitment, sometimes with the latter part of the pipeline discussions, they want to go and watch surgery being done. And up to this point, we've been taking our US pipeline over to Europe because that’s where we’ve had the majority of our placements and the majority of our surgeries, and that’s not really scalable for the long-term.
So, now that we have multiple systems up and running in the US and we’ll continue to add to those, we think that will be another catalyst to get the sales pipeline going in 2019.
So, all those things cumulatively add up to putting us in a really good position. We’re not going to really talk about mix for 2019 because we've not done that in the past as far as geography, but suffice to say we’ve got a lot of activity in all the areas that we’re working in – US, EMEA and Asia-Pacific.
So, appreciate the question, Drew.
There is little doubt the TransEnterix management team has stuck to their processes in 2018, which is commendable considering all of the moving pieces involved in growing a robotic surgery platform like Senhance.
With that said, the clock is ticking.
How would you rate their performance now that we are coming up on the end of the four to six quarter timeline management set in October 2017?
Share your thoughts over on the thread we created on our TransEnterix company forum.