Q4 2023 Vicarious Surgical Inc Earnings Call

Participants

Kaitlyn Brosco; IR; Vicarious Surgical Inc

Adam Sachs; CO-Founder & CEO; Vicarious Surgical Inc

Bill Kelly; CFO; Vicarious Surgical Inc

Ryan Zimmerman; Analyst; BTIG LLC

Presentation

Operator

Good afternoon and welcome to the Vicarious Surgical's fourth quarter 2023 earnings conference call. My name is Kate, and I'll be your operator for today's call. At this time, all participants are in a listen only mode. We will be facilitating a question and answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes.
I would now like to turn the call over to Kaitlyn Brosco with Vicarious Surgical for a few introductory comments.

Kaitlyn Brosco

Thanks, Matt, and thank you all for participating in today's call. Earlier today by Vicarious Surgical released financial results for the three months and full year ended December 31st, 2023. A copy of the press release is available on the company's website.
Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking statements, all forward-looking statements, including without limitation, those relating to obtaining approval for the Vitaros surgical system and timing for any such approval.
Our operating trends and future financial performance, expense management, market opportunity and commercialization are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements.
Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the risk factors set forth in our Securities and Exchange Commission filings, including our most recent Form 10-K and Form 10-Q.
This conference call contains time-sensitive information and is accurate only as of the live broadcast today, March fourth, 2024. By care surgical disclaims any intention or obligation except as required by law to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise.
With that, I will turn the call over to Adam Sachs, Chief Executive Officer.

Adam Sachs

Thanks, Kate, and thank you everyone for joining 2020. Great was a meaningful year for by carrier surgical. We began the process of transforming our beta to surgical system into our version 1.0 product with collaboration from our surgeon and hospital system partners. We meticulously shaped the design of our V. 1.0 system and then turn focus on sub system build-out and integration in preparation for verification and validation?
Yes, in our view, 1.0 system design, we incorporated enhancements for further refinement motion profile at higher image quality with increased system SafeBoot, all with the goal of delivering the best product possible for surgeons and hospitals. Considering that only a small fraction of approximately 4% of soft tissue surgeries currently imported robotics, there's a substantial opportunity to further alleviate the robotics value proposition for patients, surgeons and hospitals.
Our distinctive system architecture founded on proprietary decoupled actuator technology not only enables superior capability, but also has the potential to streamline training, enhance our workflow and offer compelling economic advantages. Additionally, our architecture facilitates best in class visualization, sensing and data collection, all crucial for deploying and integrating automated procedural safeguards into robotic-assisted procedures.
We are confident that our innovative approach to surgical robotics, along with a rate of distinctive advantages is the cornerstone to unleashing the complete potential of this field throughout 2023. As we continued to press forward on product development, we made meaningful progress, particularly in the sale of each individual concept. However, we also encountered external headwinds and mix.
Certain integration hurdles continuously challenging macro economic conditions throughout the year created an opaque market outlook with increased capital costs. Consequently, last year we made the difficult decision to downsize our team twice and reduced future planned expenditure, prioritizing capital efficiency and ensuring our business is better positioned to navigate such conditions.
Furthermore, in the latter part of the year, as we began the v. 1.0 subsystem integration, we identified certain software and hardware components requiring additional development efforts to ensure system compliance, reliability and safety. Ahead of us are in formal verification and validation process.
And while the culmination of these headwinds translated into an extensive time line, I am incredibly proud and how our team adapted and what we were able to achieve nonetheless, to that end, I'd like to touch upon form of our wins in 2023 and highlight the milestones we expect to achieve in the quarters ahead.
First, we were successful in expanding our foundational partnership with leading hospital systems as we collect feedback on the bike carrier surgical offering and laid the groundwork for commercialization.
In the third quarter, we announced our partnership with Intermountain Health, a system of 33 hospitals and 385 clinics spread across the Mountain West region of the United States. This partnership adds to our existing relationships with three of the top health care networks in the country. It's VA healthcare, University Hospital and Pittsburgh create. We're tapping into their wealth of expertise.
These collaborations are for exclusive insight, instrumental or finding our product. We precisely match the surgeon that hospital needs to deliver the best possible care for patients, thus ensuring our readiness for commercial success.
Second we raised $47 million with equity follow-on offering them meaningfully bolster our balance sheet to support development, clinical and regulatory efforts in the quarters ahead. And finally, through an extensive series of pre-submission meetings with the FDA. We received regulatory clarity. Not only did we repeat reinsurance that are on our path to market.
We were also pleased with the agency's suggestion to include clinical data for patients outside the United States in our de novo submission as OUS clinical data collection will meaningfully facilitate our ability to enroll patients and complete procedures.
Thanks to these achievements and our capacity to make the difficult but necessary decision.
We concluded 2023 with the completion of each individual subsystem built for our newly architected. The 1.0, the addition of on another major hospital system partnership, a clearly-defined regulatory strategy and a more resilient business structure supported by our strengthened balance sheet. We are excited to drive our momentum into 2024 and execute on our objectives.
Within the 1st month of this year, we have made strides in subsystem integration. And to date, we are excited to affirm that we will conduct a very testing this spring as a means of evaluating our system ahead of final software and hardware refinements and ultimately complete the integration of our V. 1.0 system this fall.
I'd like to now turn to a new leadership development. Earlier today, we filed an eight K disclosing that David cited retirement as Chairman of the Board. Stephen played a pivotal role in our company's accomplishments over the last four years, and we'd like to extend our heartfelt gratitude to him for his guidance and support with David's departure, we are evaluating our Board composition and potential courses of action.
Moreover, I'm thrilled to start 2024 with the appointment of Randy Clark as President of bike carrier surgical RANDY brings over 20 years of medical device industry experience with a track record of leadership in development, manufacturing and commercialization of innovative solutions.
He most recently served as the Global President of the Health Solutions business unit at Flint and prior to that 15 years at Olympic progressively, assuming leadership role across the various business functions, ultimately culminating in his role as President. As we expected, Randy has already proven himself to be an invaluable leader asset to buy carrier surgical as we focus on achieving our 2020 fourth milestone.
Now I'll turn it over to Bill Kelly to review our financial performance.

Bill Kelly

Thank you, Adam. Throughout 2023, we've proactively adjusted our planned spending to better align with the external environment we implemented initiatives to streamline resources, optimize spending and restructure the company for maximum efficiency. This included two rounds of downsizing and cost reductions, which we expect to benefit our 2024 expense profile.
As a result, total operating expenses for the full year 2023 were $80.7 million, essentially flat compared with the prior year. R&D expenditures for the full year 2023 were $47.6 million compared to $43.9 million in 2022. General and administrative expenses for the full year were $26.9 million, down compared to $29.7 million in 2022.
And full year 2023, sales and marketing expenses of $6.2 million were comparable to the prior year. Adjusted net loss for the full year was $76.3 million, equating to an adjusted net loss of $0.52 per share as compared to an adjusted net loss of $78.8 million or an adjusted net loss of $0.65 per share for the prior year. GAAP net loss for the full year was $71.1 million, equating to a net loss of $0.49 per share.
For a reconciliation of all non-GAAP measures to GAAP, please review our earnings press release. We ended 2023 with approximately $98 million of cash, cash equivalents and short-term investments on our balance sheet. As a result of our disciplined spending during the year, we are pleased to have executed on our full year 2023 cash burn guidance with a burn rate of $63.4 million for the year, in line with our original full year and updated Q3 guidance.
Turning to our 2024 outlook. We expect cash burn of approximately $50 million for the full year in line with our initially provided 2024 cash burn guidance of $40 million to $55 million. With the resources at our disposal and our disciplined fiscal approach, we are confident in our ability to execute on our spring cadaver lab, integrate our version 1.0 system by this fall and achieved other important milestones. We look forward to updating you as we progress with our business initiatives in the coming quarters.
And with that, I'll turn the call back to Adam.

Adam Sachs

Thank you, Bill. 2023 brought about meaningful milestones and strategic decisions that firmly positions by Carrie surgical sales achieved our 2024 goal objective and advanced our long-term vision of delivering innovative surgical robotic solutions to patients, surgeons and hospitals. We maintain that confidence in the potential of our unique technology and the opportunity to generate substantial value for all stakeholders.
I'd also like to express my gratitude to all by Vicarious Surgical employees for their unwavering hard work and dedication I eagerly anticipate our continued collaboration and progress throughout 2024.
Thank you, everybody, for joining today's call. We're now happy to take any questions. Operator?

Question and Answer Session

Operator

(Operator Instructions)
Ryan Zimmerman, BTIG.

Ryan Zimmerman

Good afternoon. Thanks for taking my question. Maybe just to start on the milestones, Adam, Bill, what do you expect to get out of the cadaver lab in the spring, how much can you use for your regulatory submission and just kind of the expectations there? And then once you get the v. 1.0 established again, kind of what's the process from A. to B. In terms using that to then get to the next step towards regulatory submission?

Adam Sachs

So thanks, so much for the questions, Ryan. First of all, we're really pretty pleased with the progress we've made so far. On the 1.0 system. The spring cadaver lab is really about testing that fully integrated v. 1.0 system. Our overall the purpose of the v. 1.0 system in the cadaver lab is to prove out that all of that functionality that surgeons and hospitals really loved that within the beta two prototype is now in our V. 1.0 product works as effectively. And all of it is being conducted and documented appropriately to be a part of our process for the regulatory submission.
Then the next step after that, I think was your second question, and that really is about taking any of the challenges that we unearth during this kind of Canterbury process as well as any bugs resolving those over the rest of the spring, the summer and the fall into our final the one system.

Ryan Zimmerman

Okay, got it. Thank you. And I guess just to follow up on that. So so just to be clear, then the v. one point is the v. 1.0, what you're going to the agency with her? We expect to about the 2.0. I just want to make sure I'm clear, but kind of that pathway to clearance?

Adam Sachs

Yes, it's a fair question. So the v. 1.0 system is what we intend to take to the agency. But I do want to set expectations that there's a reason that it's not finalized at this point. I do expect to have some things that are going to be tweaked or adjusted overall over the course of the summer and the fall, and we are on track for the fall milestones.

Ryan Zimmerman

Okay. I'll hop back in queue and there's probably some others I want to ask questions. And if I have others. I'll hop back in. Thanks.

Adam Sachs

Sounds good.

Operator

Thank you for your question. (Operator Instructions) There are no additional questions waiting at this time, so I will now end the call. Thank you for joining. You may now disconnect your lines.