TransEnterix has laid off a third of its staff in the aftermath of the Food and Drug Administration’s rejection of the company’s SurgiBot robotics technology, the company reported late Tuesday.
The Morrisville device maker said it is now throwing all its resources behind a different robot, the ALF-X, which the company will try to get approved for hospital use in the U.S. by next year.
The layoffs took place in Morrisville, where the company now employs 75 people, down from 136 last month. TransEnterix’s staff in Europe has grown from 20 to 30 as the company redoubles its efforts to sell its ALF-X robot in Europe and later in the Middle East and Asia.
The headcount reductions were all related to the development and commercialization of the SurgiBot system, which the FDA rejected in April for reasons that remain unclear. TransEnterix is scheduling a meeting with FDA officials to learn why SurgiBot was not approved.
“This week we’ve taken significant actions to reduce infrastructure in these areas of the business,” Joseph Slattery, TransEnterix’s chief financial officer, told analysts Tuesday.
The staff cuts will save an estimated $4 million a year, the company said. TransEnterix has about $75 million on hand to finance operations through the third quarter of 2017.
The decade-old startup is striving to introduce a second robotics option into the general surgery field that has been dominated by a single robot, the da Vinci system, for the past 15 years.
TransEnterix executives said they are aiming to file an FDA submission this year to win regulatory approval of the ALF-X robot for commercial sale as early as next year in the U.S. The ALF-X, which TransEnterix acquired last year for $100 million, is already approved in Europe and is now the company’s only option in the U.S.
Slattery told analysts that the company made an aggressive effort to sell an ALF-X in Europe in the first quarter, but was thwarted in its attempt to achieve that goal.
Instead, TransEnterix executives said, the world’s dominant robotics company, Intuitive Surgical, undercut their efforts by luring hospitals with highly discounted versions of the da Vinci robot that were 7 or 8 years old and refurbished.
“The company views this as Intuitive Surgical trying to keep the ALF-X off the market,” Sterne Agee analyst Gregory Chodaczek wrote in a Wednesday research note.
TransEnterix executives say the ALF-X, which is expected to cost about between $1.5 million and $2 million, remains competitive with the da Vinci model because, among other things, the ALF-X instruments are reusable and will save hospitals money in the long run.
“We’ve got clinical data,” Pope said. “We’ve got several systems out in clinical use. We have multiple publications from multiple specialties. So we just think we are going into the ALF-X filing in a different and stronger position than we were with SurgiBot.”
The number of hospitals that have participated in hands-on training on the ALF-X this year in Italy has risen to 18, all seen as potential customers of the robotics system.
TransEnterix, which has yet to generate revenue from sales of its robots, also reported first-quarter earnings Tuesday. The company posted a net loss or $15 million in the quarter, compared with a net loss of $9.8 million during the same period last year.
The company’s shares fell 22 cents, or 11 percent, to close at $1.84 Wednesday. The stock is down 26 percent this year.