Robots are being utilized in just about every industry. From obvious industries such as manufacturing, construction, and defense, to agriculture, space exploration, science, medicine, and even toys. They've also been utilized in health care for many years.
Da Vinci Xi
I've been fortunate enough to have worked directly with the dominant player in the robotic laparoscopic surgery realm, Intuitive Surgical's (ISRG) Da Vinci Xi. Intuitive Surgical first began trading publicly in 2000 in the U.S. at $9.00 per share (split adjusted), and has enjoyed a large moat with a lack of competitors for many years. ISRG trades below $800 as of this post. They enjoy three large streams of revenue that include system sales, instruments and accessories, and annual service contracts. From what I recall, the Da Vinci Xi systems cost roughly $2-3 million depending on the setup a Hospital / Health System needs. Each instrument has a 10 time use before needing to be replaced at a cost of around $2,000 - $3,000 - many procedures utilizing at least 2 arms / instruments (typically a grasper or two, and a scissor instrument, all with cautery capability). The HD 1080p camera is reusable.
Overall, the patients I've worked with had great outcomes. For instance, many patients were able to go home after a Prostatectomy in just a couple or a few days post-op versus a week of hospital stay. The robot takes advantage of Laparoscopic Surgery, a form of Minimally Invasive Surgery (MIS) where a camera and long instruments are passed through small abdominal incisions and trochars (a hollow tube) that protect and maintain the incisions (see picture below). A long HD camera with built-in light and fiber optic connection is used for the surgeon and staff's visualization. And another port is utilized to inflate the abdomen with CO2 for adequate volume to operate and maneuver in.
Laparoscopic surgery can be performed by hand and without a robot. It has many advantages to an Open Procedure, one where a large incision is made to access the bowel or other areas. Advantages include a magnified and illuminated view of the anatomy of interest, and less trauma (and scars) to the patient by using a few tiny incisions. However, when an area is difficult to operate on because it's narrow, like the pubic area for instance, using a robot like the Da Vinci Xi can eliminate the surgeon's micro-tremors and maneuver instruments in a tight space creating many advantages. Advantages to the surgeon in that he or she can be more relaxed (mentally and physically) while operating, can visualize the anatomy better, and has less to worry about with less blood loss with the controlled micro-movements via the robot. This creates the least amount of trauma to the patient, the best probability for a positive outcome, a shorter hospital stay, and thus saved costs from a potentially extended hospital stay.
Enter the Transenterix (TRXC) Senhance Surgical Robotic System. Transenterix began trading in 2014 at $3 per share, has had highs of around $120 and $90, lows of around $0.30 in 2020, to above $5 today. Its Senhance system FDA approved in 2017, and has had difficulty gaining traction. Many believe it has had a great deal of difficulty gaining sales in the U.S. due to the fact that the Da Vinci already has a wide and well established user base in hospitals and teaching institutions. I've witnessed many Residents train using the Da Vinci Xi to go on and continue using the Xi once on their own. It's also difficult for hospitals to consider purchasing a new system after having invested millions towards an existing surgical robotic system with years of proven results.
In late 2019, Anthony Fernando was promoted to be CEO of Transenterix. He has been attempting a very different strategy by leasing (vs outright selling) the robot to health systems, and focusing more efforts to other countries such as Japan and European countries where Intuitive Surgical has less of a moat. The Senhance system also has some technological differences / advantages to the Da Vinci Xi. Some advantages include a more ergonomic seating position, the camera that's intuitively controlled by a pair of glasses the surgeon wears, haptic feedback for more sensory input during the procedure, and reusable instruments reducing the instrumentation replacement costs as with Intuitive Surgical's 10 time max use instrumentation. The Senhance robot has also added augmented vision and machine intelligence to automatically anticipate and move the camera for the surgeon based on analytics on what the system sees in real-time.
Transenterix has an Investor's Day presentation tomorrow, February 23rd, at 11:00am Eastern Time (click here for the link to presentation). I'm anxious to hear what progress they've made with their new leasing model of the Senhance robotic system. If they show they can effectively tap into the large addressable market of surgery, this may just be the opportunity to get in at the ground floor for this company.
I truly believe the use of robotics in surgery can provide great outcomes for patients while lowering costs over the mid to long-term. I'm a long-time fan of both companies, Intuitive Surgical (ISRG) and Transenterix (TRXC), and the world of surgery can accommodate more than one player. Infact, they will have to soon with companies like Medtronic (MDT) and Johnson & Johnson's (JNJ) Verb Surgical both coming-out with surgical robots of their own.
Disclaimer: This post represents my own opinion and is not a substitute for professional investment advice. It does not represent a solicitation to buy or sell any security. Investors should conduct their own due diligence and consult their tax and financial advisors before making any investment.
I currently hold a position in: ISRG, TRXC, with the intention of going Long, Long. I do not currently hold a position in MDT and JNJ.
I wrote this post myself, and it expresses my own opinions while sometimes quoting others. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Pictures used of Intuitive Surgical's Da Vinci Xi and Transenterix Senhance Surgical Robotics system belong to Intuitive Surgical Inc. and Transenterix Surgical, Inc., respectively.
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