Sponsored Content - Intuitive Surgical (ISRG) holds a near-monopoly on the robotic surgery market since its da Vinci robotic surgery platform was approved by the FDA over 20 years ago. The barriers to entry are significant and to date have severely limited competition. But in this article, we discuss some recent developments that could help SS Innovations International (SSII) challenge it, writes John McCamant, special to MoneyShow.
These developments should help SSII position itself for significant approvals in both the US and Europe in 2024 and 2025. We also discuss ISRG’s recent quarterly call to examine potential opportunities for competitors.
Lastly, we will take a peek at three formerly high-flying robotic surgery companies that have fallen substantially. One reason: They have been unable to penetrate ISRG’s vise-grip lock on the highly lucrative robotic surgery business.
SSII has been busy building out their C-suite team as they prepare for major growth with FDA and European approvals right around the corner, in 2024 and 2025, respectively. Colin Eke has been hired as Senior Vice President of Global Business Development. Mr. Eke brings more than 30 years’ industry experience to the role, including time spent at Intuitive Surgical and CMR Surgical.
Mr. Eke previously served as Global Head of New Business at CMR Surgical, Ltd with a focus on early adopting users and identifying potential customer sites to foster continued company growth. He served as an Independent Tele-Mentoring Expert for CE Medical & Omnitivity, Ltd and was Head of Commercial Europe for CMR Surgical.
Previously Mr. Eke also managed Clinical and Capital Sales for Intuitive Surgical in the UK and Europe. Mr. Eke is an experienced medical technology team leader who could work for virtually any med tech company with his outstanding resume. That being said, his coming to work for SSII is a major vote of confidence for SSII’s prospects going forward.
It is well known in the high tech/med tech world that the best assets wear “tennis shoes,” and may work for whomever they wish. In our view, Mr. Eke represents a significant hiring coup for SSII given his breadth and experience within the robotic surgery space.
SSII added another important player to their C-suite recently with the appointment of Dr. Sonia Shokeen as Head of Quality and Regulatory Affairs. Dr. Shokeen will lead SS Innovations’ Product Lifecycle Management, Quality System Management, regulatory strategy, and international submissions.
Dr. Shokeen holds a doctorate degree in biomedical science from the University of South Dakota. She is also a Registered Microbiologist (American Society of Microbiology) and holds a Sterilization Specialist certificate in Ethylene oxide (AAMI).
Prior to joining SS Innovations, Dr. Shokeen led Quality Function in senior management roles at Johnson and Johnson (Auris Health) in its Robotics and Digital Solutions franchise. Dr. Shokeen has over 15 years of medical device experience at organizations including Medtronic and BSI Group. She has worked extensively with Class II and Class III devices, with a focus on Restorative, Stroke, and minimally invasive therapies.
Dr. Shokeen is also voting with her feet to help contribute to new and exciting developments at SSII as they prepare for a worldwide rollout of their SSi Mantra robotic surgical system. Both of these important hires foreshadow potential FDA and European approvals.
SSII has also announced that the Government of Guatemala Ministry of Health will make available the SSi Mantra surgical robotic system for clinical use in Guatemala. This is the first country in Central America to have gained official access to the innovative and cost-effective surgical platform since its launch in India last year.
It is important for Guatemala to have robotic surgery technology so patients can receive the same quality of medical care that people in other, more developed countries receive with better-quality surgery. Importantly, this is not due to the quality or training of Guatemalan surgeons. Rather it is because of the lack of access to high-tech tools that perform more exact surgeries.
The approval in Guatemala for the SSi Mantra robotic surgery system was driven by Vishwa Pascual Srivastava, President, and Chief Operating Officer. He said:
“After traveling to Guatemala in July 2023, and giving multiple presentations to both the Social Security Hospital and Military Hospital, the largest institutions in the region, I was met with great enthusiasm and support for the mission we had started on the other side of the world in India.
“Keeping in mind that India is not the only price-sensitive market when it comes to providing gold-standard healthcare at an affordable cost, Guatemala would serve as yet another example of how the vision at SS Innovations falls in line with much of the ‘forgotten world’ today. I feel that Guatemala will also geographically be an ideal training center for surgeons from throughout Central America once the Guatemalan clinical programs have been successfully launched.”
This is an important part of SSII’s strategy as their hands-on training approach leads to more and broader approvals, particularly in smaller forgotten countries like Guatemala. The strategy is already coming to fruition as SSII is currently working on approvals for two additional Latin American countries, Ecuador and Argentina.
As for ISRG, it recently reported its third-quarter earnings and held an interesting conference call with analysts. The company reported strong Q3 2023 revenue of $1.74 billion, an increase of 12% compared with $1.56 billion in Q3 2022. The higher Q3 revenue was driven by growth in da Vinci procedure volume and an increase in the installed base of systems.
Instruments and accessories (consumables) revenue increased by 23% to $1.07 billion, compared with $0.87 billion in Q3 2022. The increase in instruments and accessories revenue was primarily driven by approximately 19% growth in da Vinci procedure volume and higher pricing.
Q3 2023 systems revenue was $379 million, compared with $426 million in Q3 2022. The Company placed 312 da Vinci surgical systems in the most recent quarter, compared with 305 systems in the same period a year ago.
Q3 2023 da Vinci surgical system placements included 163 systems placed under operating lease arrangements, of which 93 systems were placed under usage-based operating lease arrangements. ISRG’s clinical installed base now stands at 8,127 multi-port da Vinci systems, 490 Ion systems, and 158 single-port da Vinci systems.
On their recent conference call, ISRG officials discussed problems with both China and bariatric surgery. The bariatric issues are easily explained by the publicity and subsequent use of GLP-1 drugs for weight loss. In our view, China is more problematic and foreshadows the opportunity for SSII.
ISRG says that Chinese government policy has been putting a little bit of a chill in the market. Some of that is economic pressure for price caps and value-based pricing. There is also an ongoing anti-corruption probe that is giving hospitals some pause at moving forward with installing new systems. In our view, ISRG remains vulnerable to competition outside of its core markets in the US, Europe, and Japan.
At the recent MoneyShow in Orlando, SSII had a very interesting slide they used to close their PowerPoint presentation. It showed three of their current competitors in relation to ISRG. The slide included Asensus Surgical, Vicarious Surgical, and Titan Medical.
Interestingly, all three companies were formerly promising high-flyers in the robotic surgery space with valuations in the billions. But they have all come crashing back to earth, leaving a significant opportunity for SSII to finally challenge ISRG’s global monopoly on the robotic surgery sector.
Asensus Surgical is digitizing the interface for Performance-Guided Surgery by unlocking clinical intelligence for surgeons to enable consistently superior outcomes and a new standard of laparoscope surgery. The Company is developing the LUNA™ Surgical System, a next generation robotic and instrument system as a foundation of its digital surgery solution.
These systems are and will be powered by the Intelligent Surgical Unit to increase surgeon control and reduce surgical variability. Their goal is to add machine vision, augmented intelligence, and deep learning capabilities throughout the surgical experience. But the Senhance Surgical System is suffering from very slow sales, with just two systems sold in recent quarters despite being available in the US, EU, Japan, Russia, and select other countries.
The company is currently valued at $75 million after having a significantly larger valuation previously of over $1.5 billion. The company appears to be floundering with only two systems placed in the recent quarter.
Asensus has been unable to develop a truly innovative robotic surgery platform after earlier promise and now mostly specializes in improving digital laparoscopy procedures. The company has also had to delay their introduction of the LUNA system as they have run into regulatory issues with the agency. In sum, Asensus Surgical has gone from a promising high-flyer robotic surgery player with a valuation north of $1.5 billion to a struggling micro-cap selling two systems a quarter.
Vicarious Surgical Inc. is another formerly high-flying, next-generation surgical robotics company that has also crashed to earth after disappointing investors multiple times. The firm’s goal is to expand the access of robotic minimally invasive surgery while reducing the cost to treat surgical patients. The Company's surgical approach uses a combination of proprietary decoupled actuators and immersive reality to transport surgeons inside the patient through one incision to perform minimally invasive surgery.
Vicarious Surgical is currently valued at $53 million after crashing from a valuation of more than $2 billion. The company has recently augmented its cash runway through an equity follow-on offering as it continues to burn through cash. The company is also suffering from delays as recent market-driven, cost-cutting initiatives combined with certain integration challenges have pushed back their development schedule.
They now expect to complete the Version 1.0 System build and integration during the fall of 2024, and consequently anticipate a De Novo submission around early to mid-2026. These are significant delays, and in our view, the company has been poorly managed and will likely have to dilute shareholders with another discounted stock offering before their De Novo submission in 2026.
Titan Medical Inc. is a medical technology company headquartered in Toronto, Ontario that was also a high-flying robotic surgery company that crashed to earth after a promising start. Admitting their inability to develop their robotic surgery system, the company has recently transitioned to an IP licensing company. To this end, the company has developed an expansive patent portfolio related to the enhancement of robotic assisted surgery, including through a single access point.
Titan has terminated its R&D operations and has substantially cut operating expenses, including management compensation and G&A expenses. The company has signed licensing agreements with two major players in the surgical robotic industry for total upfront payments of $15.5 million; the asset purchase and license agreement with Medtronic and the non-exclusive license agreement with Intuitive Surgical.
The Company most recently announced a licensing agreement with Auris Health, Inc., a Johnson & Johnson MedTech Company. Titan’s valuation currently stands at $7.3 million, a far cry from its previous highs as the company has hugely disappointed investors.
SSII is clearly setting the company up for success via both their new C-suite hires and the approval in Guatemala. With current sales in India poised for significant growth and the upcoming approvals in both the US and Europe next year and in 2025, the time is now to prepare for what could be very large growth in both SSi Mantra robotic surgery systems and consumables, which offer both huge margins and long-term profits.
Supplanting Intuitive Surgical’s long-held dominance is clearly not an easy task, as witnessed by the three companies discussed above flaming out in the pursuit. While it appears that the robotic surgery market will be hard to penetrate, SSII’s approach may be the one that succeeds.
The company’s core market in India will provide initial success. Plus, its much lower price point and experience in India will allow it to penetrate other world markets that ISRG has ignored or made inaccessible by overpricing da Vinci.
Disclosure: SSII is a paid advertiser of MoneyShow.