TransEnterix's (TRXC) CEO Todd Pope on Q2 2016 Results - Earnings Call Transcript

| About: TransEnterix, Inc. (TRXC)

TransEnterix, Inc. (NYSEMKT:TRXC)

Q2 2016 Earnings Conference Call

August 05, 2016 08:30 AM ET

Executive

Mark Klausner - IR, Westwood Partners

Todd Pope - President and CEO

Analyst

Rick Wise - Stifel Nicolaus

Larry Keusch - Raymond James

Glenn Novarro - RBC Capita Markets

Sean Lavin - BTIG

Jeffrey Cohen - Ladenburg Thalmann

Bruce Jackson - Lake Street Capital Markets

Operator

Good morning, ladies and gentlemen, and welcome to the TransEnterix 2016 Second Quarter Financial and Operating Results Conference Call. This conference call is webcast live and recorded.

It is now my pleasure to introduce your host, Mr. Mark Klausner of Westwood Partners. Please go ahead, sir.

Mark Klausner

Good morning and thank you joining us for TransEnterix second quarter 2016 conference call. Joining us on today’s call is TransEnterix’s President and Chief Executive Officer, Todd Pope. Unfortunately Executive Vice President and Chief Financial Officer, Joe Slattery is unable to participate on today’s call due to a death in his immediate family.

I would like to remind you that this call is being webcast live and recorded. A replay of the event will be available following the call on our website. To access the webcast, please visit the events link in the IR section of our website, transenterix.com.

Before we begin, I would like to caution listeners that certain information discussed by management during this conference call are forward-looking statements covered under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company’s business. The company undertakes no obligation to update the information provided on this call.

For a discussion of risks and uncertainties associated with TransEnterix business, I encourage you to review the company’s filings with the Securities and Exchange Commission, including the Form 10-K for the year-ended December 31, 2015 and the Form 10-Q for the quarter ended June 30, 2016 expected to be filed shortly.

During this call, we may also present certain non-GAAP financial information, relating to adjusted operating expenses and adjusted net loss. Management believes that non-GAAP financial measures taken in conjunction with US GAAP financial measures provide useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of the company’s core operating results.

Management uses non-GAAP measures to compare our performance relative to forecast in strategic plans to benchmark our performance externally against competitors and for certain compensation decisions. Reconciliations between US GAAP and non-GAAP results are presented in tables accompanying our earnings release, which can be found in the investor relations section of our website.

With that, it’s my pleasure to turn the call over to TransEnterix’s President and Chief Executive Officer, Todd Pope.

Todd Pope

Thank you Mark, and welcome to our second quarter conference call. On today’s call, I’ll provide a commercial and regulatory update on ALF-X, followed by an update on our SurgiBot regulatory pathway. I will then provide a financial update, after which we will open the line for questions.

I’m excited to start the call today by discussing the key milestone we achieved this week. Our first global sale of an ALF-X system to Humanitas Hospital, a leading teaching and research hospital located in Milan, Italy. Humanitas chose ALF-X due to its unique combination of clinical capabilities and economic attractiveness. Our discussions with Humanitas focused on the potential of the ALF-X surgical robot to enable advanced laparoscopic surgery with robotic assistance at a cost similar to traditional laparoscopic procedures.

The multi-quadrant capability of the device, innovative eye tracking camera control and sense of haptic feedback were also cited as key advantages to our system. As we’ve stated before, the capital price for the ALF-X system is similar to our competitors most advanced offering, and this sale is in line with these pricing expectations.

I personally spent most of the past month in the field in Europe, meeting key pipeline accounts, observing surgery and talking to surgeons and hospital administrators. I came away from my time in the European market even more confident than the value proposition of the ALF-X, and in our ability to be successful in the market.

While the sales cycle for capital equipment remains 4 to 6 quarters, I continue to be pleased with how our pipeline is building and believe that it will provide a solid foundation for the business in 2017 and beyond. The feedback we continue to receive is that robotics can potentially add value in a wide variety of surgeries. However, in Europe it is primarily been utilized in [neurology] due to the high cost of the instruments and accessories of the competitive robotic system. Hospitals want to move robotics in to other specialties, but prior to the availability of the ALF-X the trade-offs have been too steep.

When hospitals learned that the ALF-X platform offers advanced robotics that works within the hospitals own ecosystem, they are keenly interested. Specifically the ALF-X leverages surgeons extensive laparoscopic expertise, utilizes the hospitals existing operating in beds and trocars and is specifically designed to perform multi-quadrant surgeries, all of this, at a per procedure cost similar to laparoscopy.

I’ve had numerous hospital executives and surgeons tell me they are thrilled to finally have a choice in robotics that delivers meaningful clinical benefits with responsible economics.

We continue to work on building out our direct sales force and clinical support staff. We have direct capital sales professionals in France, the United Kingdom, Belgium, the Netherlands, Germany, Switzerland, Middle East and Asia. We will continue to add direct sales reps to this team as needed.

Now that we have our initial capital sales leadership team in place, we have begun shifting our hiring to clinical and training staff to support anticipated placements. Of note, our training and clinical team is led by a 30 years veteran of the medical device space, and also includes a doctor of veterinary medicine Ph. D and a full-time general surgeon.

In addition to developing our direct sales force and training team, we’ve been very active in adding distributors. We’ve made particular progress during the quarter signing up distributors in Asia and in the Middle East. Our strategy continues to be going direct in Western Europe and in the United States, selectively using distributors in southern and eastern European markets, and utilizing distributors in Asia, Latin America and the Middle East.

We are very encouraged by the quality of the distributors we’ve already signed on, as well as those as we’re currently engaged in discussions with. One of the key areas of focus of our commercial team has been driving hospital participation and hands-on demonstrations.

In the second quarter of 2016, 59 surgeons from 21 target hospitals participated in at least one complete hands-on evaluation of the ALF-X robot, led by our clinical staff. We continue to believe in the importance of our demonstration and training capabilities, and during the quarter we expanded this capability with the building of a new training site centrally located in Milan, Italy. This site will serve as the central location for training new surgeons and surgical staff, and also as an internal training and development site for our organization.

To this end, we will be relocating our engineers, clinical development and commercial team to this facility in the third quarter.

Now shifting gears to our ALF-X regulatory process. We continue to work diligently on our 510(k) submission for ALF-X. As part of preparing for this filing, we have already begun our official dialog with the FDA regarding the submission. This dialog has been highly collaborative and very productive to this point. We submitted our first pre-submission to the FDA in early June.

I would remind you that we are in the initial steps of the regulatory process, and while our goal remains to make our 510(k) submission before year end, our ultimate timing will be guided by feedback from the FDA as we seek to make the strongest submission possible.

Before turning to SurgiBot, I want to reiterate my confidence with the opportunity that lies ahead for the ALF-X. Based on our first commercial sale, our progress in developing a commercial and clinical infrastructure, the direct feedback we are receiving from surgeons and hospital executives and our interactions with the FDA, I’m confident in our ability to be successful in commercializing the ALF-X in CE Mark countries and in achieving regulatory clearance in the United States.

Moving to the SurgiBot front, on our last call we discussed the FDAs NSE letter regarding our SurgiBot 510(k) submission. Since receiving the letter, we have made it a priority to gain insight in to the aspects of our submission that the FDA found to be unsatisfactory to help guide our future regulatory strategy and pathway for SurgiBot.

Since we last spoke, we’ve had a number of highly collaborative interactions with the FDA. We’ve participated in three separate meeting including one in-person meeting which I attended along with our senior surgical officer, Dr. Tedd Pappas and our Vice President of RAQA, Clinical and Compliance, Dr. Stephanie Fitts.

Coming out of these meetings, we not had the benefit of personal interaction with the agency to hear their feedback and observations. Based on these discussions we continue to believe that the SurgiBot can be cleared for sale in the US and that the clearance will require a new 510(k) submission.

We’re still working closely with the FDA to determine the scope of any additional work required to file that submission, which then will allow us to estimate a filing date. Upon SurgiBot clearance in the US, we would still have to consider the best way to deploy our capital resources. As we’ve discussed in our last call, we currently intend to focus our resources on commercializing the ALF-X outside the US and preparing for its 510(k) submission.

With that I’d like to turn our attention to the financial review. For the three months ended June 30, 2016, the company reported total operating expenses of 80.7 million. These results included one-time restructuring charges of 5.6 million, of which 5.2 million were non-cash, as well as a non-cash charge for goodwill impairment of 61.8 million, related to the strategic prioritization of the ALF-X following the FDA NSE on our SurgiBot 510(k) submission.

Adjusted operating expenses excluding these charges were 13.3 million as compared to 9.1 million during the three months ended June 30, 2015. Total operating expenses increased primarily as a result of increased investment in to the commercialization of the ALF-X. Adjusted operating expenses in the second quarter of 2016 included research and development expense of 6.4 million, sales and marketing expense of 1.3 million, general and administrative expenses of 2.9 million, amortization of intangible assets of 1.8 million, and changing contingent consideration of 0.9 million.

Turning to the balance sheet, on June 30, 2016 the company’s cash and cash equivalents totaled $64.6 million, and as of July 31, 2016 we had approximately $61 million of cash. Based on our current cash position, we have adequate cash on hand to fund our operations and working capital needs through the third quarter of 2017.

Overall, I’m very encouraged about the future for TransEnterix. We’re thrilled to have achieved the major milestone with our first commercial sale. Our sales pipeline is developing in line with our expectations, we’ve established key distributor relationships, and we’re seeing significant interest from additional distributors in key markets.

We will now open up the line for questions.

Question-and-Answer Session

Operator

[Operator Instructions] And we’ll take our first caller Rick Wise of Stifel.

Rick Wise

Let me start with the FDA. I think execution it sounds like in general in your mind whether its FDA or commercialization, but with the FDA just help us think through in a little more detail, what you’ve learned from the SurgiBot experience. Obviously the major focus here is on ALF-X, what did you learn, what are you learning as you’ve had these three extended discussions with the FDA that gives you confidence that you’re going to be able to have a successful submission and approval for ALF-X and sort of why should we have confidence that you can make it happen here.

Todd Pope

To take your question in two parts, first of all with the SurgiBot, obviously our discussions have provided a lot more clarity around some of the issues they raised in the NSE. Already in these interactions we’ve been able to resolve many of those issues, and the few that are remaining will really help us determine what the content and timing of our SurgiBot submission will be.

With the ALF-X regulatory we don’t intend to go in to too much detail on that on this call for competitive reasons, but I would remind you that the ALF-X is a CE Mark product. It has a very good body to publish clinical data and we certainly have not only begun the process with ALF-X already filing our first pre-submission which always gives you good learning’s with the FDA thinking, but to your point we’ve certainly garnered a lot of observations in learning from our SurgiBot interactions.

So I think between both of those, we’ve had good interactions with the FDA. We think we probably know more than anyone else right now of what the FDA is thinking as far as robotics and we feel like its put us in a good position, both to address the issues of SurgiBot and as you said; our priority is really filing our 510(k) with the ALF-X.

Rick Wise

Turning to commercialization in Europe Todd, again it’s a huge milestone this first sale, but to - and I don’t know how to phrase this, but not to be cynical about it, but this was to a Milan center I’m guessing that we could view up a bit later as a champion in the technology early believer, yes they competitively demoed it. But help us think about now as we look across Europe, you have senior management team, you have I think if I accounted correctly six sales folks, you’ve have clinical team in place.

You mentioned the selling cycle of four to six quarters. How realistic is that and maybe talk about where you are these sales folks are in that early process. And I guess we should assume just to ask a complex question that this, it’s a selling cycle of four to six quarters, they were sort of thinking. We’re going to see meaningful impact of all this very late in ’17, but probably more dramatically in ’18, is that the right way to think about all those things.

Todd Pope

Yeah, well let’s try to address each of those points Rick. First of all, as far as the humanatized deal, I don’t think there was anything special about this, and the way we think about it is, they had this system and for four quarters. It was a system that was in place before we acquired the company.

So just as we’ve been saying that typically the capital sales cycle in Europe is four to six quarters, that’s typical. This was a typical deal, they were interested in technology, they put it in, they evaluated it for four quarters and they deemed it what was best for them and they decided to purchase it.

So every deal is different. We don’t expect every deal to require a trial process for sure, but I would remind you that our direct sales force is actually nine not six and these people have been coming on in place in the first and second quarter. So as our pipeline is been building, when you take a look at four quarters out, that’s in the first half of next year. So, I don’t think your thesis is incorrect, but I would just say timing.

You know we just kind of alerted you to some of those statistics. We’ve had 59 surgeons from 21 hospitals complete visits in the Q2 to get a hands-on demonstration of the device. So, when you start thinking about that’s more than just a sales presentation, and as you project that out four to six quarters, I think you can see some meaningful productivity from the pipeline four quarters out as the first half of next year end and then beyond it just grows from there.

So, I think you roughly are right. I just think the timing, I just think would be a little bit different in the way you characterized it.

Rick Wise

And just last from me, you’re moving the engineering R&D team, it sounds like to Milan if I heard that correctly. May be just help us, just a little more color on why you’re doing it? I’m guessing it’s to bring them even closer to your customers there as you left off. But may be a little more color on just thinking longer term. The ALF-X R&D and development side of things.

Will we see incremental, should we expect incremental enhancements for the European and/or US market either in form factor or functionality. Just do you want to set some expectations or give us some color on that thought?

Todd Pope

Sure. Just to be clear, the consolidation of R&D talent in Milan is for the European group. We still have a large and robust R&D group here in the United States and we’re going to continue to maintain that. We just had the team over there and in other facility and now we’ve created our own facility and we’ll be moving them off so they can be co-located together. That’s not a transfer of talent from the US there. We’re going to have two strong R&D teams on both continents.

And then to your question, obviously when you’re filing a system that has a CE Mark, there is an expectation of consistency, so we’re going to maintain that consistency through filing. But I would say, after our approval in the US, we have a robust pipeline of technology that we’re bringing in both internally developed and externally partnered and I think you’re going to be hearing more and more about that on our coming calls.

Operator

For our next question we go to Larry Keusch with Raymond James.

Larry Keusch

Just wanted to follow-up on Rick’s question regarding the R&D and your comments around both the European and US team. I just want to make sure I’m clear on this, is the European team exclusively focused on ALF-X and if that is the case what is the US team doing, and I guess conversely if both teams are working on ALF-X does that not just create some natural barriers by significant geographic separation.

Todd Pope

Yes, it’s a good question. The European team is exclusively working on the ALF-X. As you can imagine as we work through some of the FDA conversations on SurgiBot, we still have a team here that’s got a lot of core knowledge that continues to address some of the issues that come up with the SurgiBot on the regulatory side. But we also have a strong group here in the United States that have depth in software and many other areas that can really compliment what’s going on in Europe.

And then as you can imagine, some of our R&D development will be with external third parties and some of those relationships are being managed here from the State. So actually its quite easy to work together and it’s kind of a situation that we’ve seen where one plus one is equaling three, as far as benefits for us. So those teams work very closely together and it really allows us greater reach as we think about our R&D going in to the future.

Larry Keusch

And then two other questions, I heard you loud and clear on the things were the feature set I should say that are resonating with surgeons including the eye-tracking and the haptic feedback, multi-quadrant capability of ALF-X. But conversely what feedback are you getting where surgeons are sensing some potential limitation that you have to sell against, whether it be selling price the way the system is configured with the individual arms and perhaps taking up space. What’s on the other side that you guys are having to educate through this (inaudible)?

Todd Pope

Well that’s a good question. I certainly don’t want to come across is a utopia. Right now we’ve really not had any consistent pushback on features. I think there’s a combination of things. As we said in our comments earlier in the call in Europe and I’m sure the US will present different opportunities, but in Europe the robotic utilization is primarily been a urology phenomenon, and there’s not been hardly any proliferation of the technology from deep in the pelvis to the abdomen.

So when the hospital sees a system that has four individual arms and they can set it up similar to the way they setup their laparoscopic surgery, when they see that they can have robotics and actually have haptic feedback. When they see they can control three robotic arms simultaneously, one with eye-sensing and the other two with their hands, they’ve never been able to do that. They realize how much easier it is to operate multi-quadrant.

When they see all these things and then you add on the benefit of not escalating their cost unrealistically on a per procedure basis, it has been a lot of positive feedback. Now, I’m sure and time will get things that people want change, but I think the form factor the way it set up the individual arms in these meaningful benefits have really resonated loudly.

As I said I spent the last month over in Europe, and we really haven’t seen any pushback yet. I’m sure the more we talk you’re not going to be able to be the ideal solution for everyone. But right now overwhelmingly been able to have another robot on the market and some of the benefits that are been highlighted have really dominated the conversation in a positive manner.

Larry Keusch

And then last one for you, you mentioned the 59 surgeons from the 21 hospitals that were, if you will, introduced to the system in the 2Q. I guess one thing I want to follow-up on coming back to your earlier comments around urology and prostatectomy specifically being the dominant procedure in Europe. Of those surgeons that were coming to check this thing out, are you seeing interest from other specialties.

Todd Pope

That’s a great question Larry. The way I would just answer that a little more holistically, I would say what we’ve seen in Europe is if a hospital today still has a strong urology practice that they’ve not acquired a robot pretty much in the late adopter stage, and they are looking at potentially acquiring a robot just to do urology that’s one target market that’s really not our target.

I would say that every one of the 21 hospitals that have come on board have all been strong, multispecialty interest. A hospital that’s just looking to do urology and prostate is not our target market. So every one of the hospitals that have come in to answer your question have strong interest from multiple specialties including urology, but certainly a general foregut, colon and rectal, GYN and even some thoracic. So that’s what really identifies a target for us. So all of those have been very representative about multi-specialties.

Operator

We’ll move now to Glenn Novarro with RBC Capita Markets.

Glenn Novarro

My first question has to deal with the FDA discussion post the SurgiBot letter. In your discussions with the FDA, were there any discussions regarding the need for human clinical data associated with SurgiBot, and the reason I’m asking is because I’m wondering if that is the case will you be required to submit human data on ALF-X, and you mentioned on the call, there’s been plenty of clinical papers published on ALF-X and will not be enough to satisfy the FDA. I know it’s a multi-part question, but I think you get where I’m going.

Todd Pope

Yeah, the way I would answer the question is with SurgiBot, I would say that the basic premise of our submission has not changed. They’ve had lots of questions around different test map as results, wanting more granularity for their data, but the basic premise of what’s required of the SurgiBot has not changed.

Now when you look at the ALF-X, you rightly point out that we have papers that have been published and those papers had data behind them. So one of the benefits of the ALF-X from the regulatory outlook is one, it has a broad CE Mark, two it has papers and three, it has clinical data. So that’s obviously going to be able to bolster ours as it would anyone’s 510(k) submission when you have clinical data, you would turn that in if you have it and we do.

Glenn Novarro

And it sounds to me like SurgiBot, you’ll still pursue SurgiBot, but is it fair to say that ALF-X is the number one priority and SurgiBot doesn’t get filed until ALF-X gets through the FDA.

Todd Pope

Well I would say that you’re half correct on that. The ALF-X is our top priority both in commercialization where it was approval and for its US 510(k). And we’re certainly continuing to work with the FDA. I don’t want to make a claim of exactly when we will or won’t file SurgiBot, but it certainly comes in the queue after priorities 1A and 1B which are ALF-X commercialization and ALF-X filing of 510(k).

Glenn Novarro

The only reason I was thinking that is just from a bandwidth and personnel point of view. The trends in turn have the ability to submit two filings and work with the FDA on two filings. That was my only thinking why ALF-X would go first and then SurgiBot at a much later date.

Todd Pope

It’s a good assumption. Our resources right now are focused on the ALF-X, if all the timing on the SurgiBot would really be based on any remaining issues and what’s required of us. But your assumption is good.

Glenn Novarro

And then my last question is just, can you maybe put some numbers around your lead funnel and how its developing in Europe. I know you mentioned on the call just this quarter you brought in 59 surgeons, 21 hospitals. But maybe talk about the numbers since the beginning of the year up to now in terms of lead generation, how many and what percentage are kind of late stage leads where you’ve actually brought in surgeons and maybe had some solid dialog with CFOs and senior hospital administrators.

Todd Pope

Sure. Obviously as we get our hands around our pipeline in our sales process, it will be easier for us to provide better clarity going forward. We are still pretty early in our process and capital sales still has the process that we talked about a little earlier.

But to specifically answer your question numbers throughout the year, as you remember in our call in March we had said 65 hospitals had actually received a sales presentation, and that’s us going out presenting at the hospital, usually one-on-one or to a group of surgeons or to a group of executives.

And in our May 10th call; where we really talked about that we had brought 10 hospitals actually in to have a hands-on training event. So you can see how those early calls and presentation at the beginning of the year generated 10 hospitals actually visiting us again on a hands-on demo.

Now today we’ve talked about in the second quarter, we had 59 surgeons from 21 hospitals actually come in and get a hands-on demo. So you can see how its building from originally going out and doing sales presentations, and bringing 10 in the prior quarter and now bringing 21 hospitals in.

So I just think that that natural progression will continue to build as soon as we get more sales under our belt, we’ll be able to more accurately predict kind of a close ratio and give any more data. But I think that progression that I just outlined over the last three quarters is fair representation of our momentum and it will just continue on.

Operator

We move on to Sean Lavin with BTIG.

Unidentified Analyst

This is actually Ryan on for Sean. So a lot of questions have been asked previously. But I just want to ask a little bit on the sales and marketing spend in the quarter. It was down a little bit below what we’re looking for and just kind of want to get your thoughts around how you build that out going forward, given the commentary that you have direct distribution already in place in numerous countries in Europe.

Todd Pope

Yes, it’s a good question. I mean for us we’ve kind of outlined the nine heads that we have over there and the countries that they are really focused on. And we’re able to add now a lot of it rest for the countries through distribution which doesn’t require as much investment. On our part we’ve been able to bring on some distributors and we’re certainly in the latter stages of bringing on several more in key areas.

So, that doesn’t require as much upfront investment on our part which is good. But it certainly gives us access to sales organization and those distributors that can reach a little further, a little quicker. So for us most of our near-term investment now as we talked about on the call will be to bring on clinical representation and training because as we bring new sites on and get new sales and institutions installed, you need those people there for training and early support. So that’s where our spends will go here in the near term to support some of the upcoming placements.

Unidentified Analyst

And then one of the comments last quarter was around the competitive dynamics in the market place. And just curious to get your thoughts on that, now you’re obviously gaining some successes in the market there. But just want to hear your thoughts around competitive dynamics that’d be great.

Todd Pope

I would just say that the competitive dynamics continue to exist. The way I would describe them is, there’s a company out there that’s not had competition since the beginning of their organization, and they’re reacting as you would expect. It’s a big market, it’s a growing market, and us being the first company in the world in this space to have another approved robot it’s got their full attention.

But we continue to be bolstered by it seems like customers out there are excited about choice and not only choice but the things that we bring both clinically and economically. So we expect a strong competition and strong competitive response, and we’re getting that, but we’re certainly prepared for that and look forward to move them forward.

Operator

Our next call comes from Jeffrey Cohen with Ladenburg Thalmann.

Jeffrey Cohen

Just two if I may, could you talk about the footprint in Europe and the US and how that looks in to the end of this year and then secondly if you could discuss any ALF-X studies underway or publications that you’re aware of.

Todd Pope

Sure. With our footprint, I could say that most of our footprint to the rest of the year in Europe will be to build out clinical heads. These are people that are necessarily driving capital revenue everyday but they’re going in behind installations, they’re working with the accounts that are interested to come over do hands-on demos, dry labs, wet labs and certainly when institutions put a system in they need people there early in often to bring them up to speed on training.

That’s what we’ll be really increasing as far as our footprint. As far as in the United States, we really want to focus on our regulatory efforts with the ALF-X, but we are getting inbound interest, so we’ll be building out some market development resources over the near term. We’ll be able to go out and just understand the market, understand the needs, so we can be better educated as we prepare for an approval hopefully in 2017 for the ALF-X.

As far as studies, we now have a nice library of studies for the ALF-X and different specialties and that are in peer reviewed journals. So I think those would just continue to come online. There’s always studies being worked on and certainly with categories exciting and as robotics we have a lot of interest in that. And as we bring on new accounts there is an high interest right now of being able to publish, because of the interest in the robotic space. So we’ll be seeing more and more of those as we go through the end of this year and certainly in the next year.

Operator

We move now to Bruce Jackson of Lake Street Capital Markets.

Bruce Jackson

Looking at the Humanitas sale, a couple of questions there, did it follow the four to six quarter sales cycle that you mentioned earlier?

Todd Pope

Yes. They’ve got this system and evaluated it, and it was a four quarter process, right out four quarters.

Bruce Jackson

And then you said it was a competitive tender, I believe they’re already using some other robotic equipment, was the ALF-X in addition to what they already had or did it replace something.

Todd Pope

Yeah, it was not a tender just to be clear. It was a tender, but they do have another robot there and where it wanted to add a second one and they evaluated that decision versus adding ALF-X and chose ALF-X.

Bruce Jackson

And then moving over to the FDA, can you tell us a little bit about how the SurgiBot is informing your approach with the ALF-X?

Todd Pope

Well certainly we’ve discussed that a little bit. I think that even though there are different types of systems, I think the FDA is clearly putting a lot of attention on how they want to evaluate new submissions for the robotically assisted surgical device category. So since we have pretty in-depth discussions going on with both platforms right now of the FDA, I would say in multiple facets were being informed. And I think they’re continuing to evolve how they look at these and think about them. So I think we benefit from going through two processes right now in conversations concurrently, and it’s been very helpful to us.

Bruce Jackson

And then is this with the ALF-X, is this the same team of reviewers that were working on the SurgiBot?

Todd Pope

Yeah, we are not going to really comment on the staffing from the FDA, don’t really think that’s appropriate, but suffice to say there’s good cross pollination between all teams that I’m sure are going to be looking at our systems and other in the future.

Operator

That concludes our question-and-answer session. I would now like to turn the call back to Todd Pope for closing remarks.

Todd Pope

I just want to conclude by saying, we’re very excited about the future here at TransEnterix. We’re continuing to invest, to put the pieces in place to drive long term success for the business. We certainly look forward to updating you and our progress in our next quarterly call. Thank you, and have a great day.

Operator

Ladies and gentlemen that does conclude today’s conference. Again we thank everyone for joining us.

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