TransEnterix (NYSEARCA:TRXC) stock represents equity in a medical device company with explosive growth of late. TRXC shares traded at 63 cents on the last day of 2020. As of the day of this writing (Feb. 20), shares trade at $4.35. That 590.4% growth in such a short period has investors on alert.
TransEnterix is seeking to become an early leader in what it refers to as Digital Laparoscopy. The company focuses on minimally invasive surgery done robotically. The company previously developed the SPIDER device and the SurgiBot System.
The recent spike in TRXC stock is being driven by the company’s Senhance Surgical System. Investors who are attracted to the value in Intuitive Surgical (NASDAQ:ISRG) and its Da Vinci platform may want to give TransEnterix some consideration. Though the two are far apart in terms of achievement, the parallels exist.
The Senhance Surgical System is indicated for several procedures including gynecologic surgery, colorectal surgery, cholecystectomy, and hernia repair in the U.S. market. In markets outside of the United States the indications are not limited and delineated into such strict procedures.
According to one Fierce Biotech article, TransEnterix is looking for FDA clearance which would expand Senhance’s use to general surgery in 2021. Not to mention, TRXC shares would rise in that case as its revenue base would expand significantly on such news.
A nice catalyst for TransEnterix is that there is a sizable market for it to draw upon. The market for abdominal robotic surgeries stood at $3.7 billion in 2018. Fortunately for TransEnterix that market is anticipated to grow massively.
Analysts expect that it should reach $16 billion in value by 2023. So, assuming that the Senhance Surgical System is granted general surgery clearance it will be able to address even more of that $16 billion market.
Investors should also note that there is a big forward push toward artificial intelligence applications for robotic surgery. Many of Senhance’s AI features work to understand how a specific surgeon uses the device. It learns, adapts, and anticipates that user’s movements, improving experience and patient outcomes.
It is anticipated that databases for individual procedures will be uploaded into future devices such that a user will essentially have thousands of cases to guide it during a given procedure. TransEnterix is attractive from that perspective and conversations around
Results in 2020
In 2020, more than 1,450 procedures were performed using the Senhance system globally. TransEnterix installed 10 Senhance Systems during that period as well. Intuitive Surgical counted 5,582 installed Da Vinci systems worldwide at the end of 2019.
At the end of 2020 TransEnterix had $17.5 million of cash on hand. Entering 2021, the company has been issuing lots of stock in order to raise further funding. The company has a strong runway due to the activity it has undertaken of late.
TransEnterix ended 2020 with 116.2 million shares of common stock outstanding. In addition, less than 8 weeks later the company has 176 million shares outstanding.
It looks like TransEnterix raised roughly $180 million over three tranches of stock offerings in that short time. The first direct offering netted $31.25 million, the second, $69.25 million, with the latest netting $79.64 million.
The company assumes that this flurry of activity provides it a cash runway into 2024 with the largest and latest offering proceeds.
Investors may view this positively or negatively of course. There is the possibility of dilution occurring. However, with share prices as low as they are and the company pursuing a growth phase, I view this as an overall positive.
The company’s small size relative to industry giants means there’s simply a lot of potential to seize upon for investors. The company’s stock issuances allow it to focus upon business development, and much less on paying bills. That means TransEnterix has a real shot to increase revenues and reward investors.
When investors look at where TransEnterix is relative to its price and the addressable market in front of it, there’s a strong case for investment.
Lastly, the company has a strong runway, and could soon hear good news regarding FDA approval for Senhance in general surgery. Hence, I think TRXC stock is a strong bet for 2021.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article.