Vicarious Surgical Inc. Q1 FY2024 earnings call

• Adam Sachs reported progress in finalizing the V1.0 system, with the spring cadaver lab completed in March to validate the system's capabilities and identify refinements needed. - Highlighted the surgical robotics market is in infancy with 96% of the $150 billion market as white space, and Vicarious's technology using decoupled actuator tech addresses legacy systems' limitations. - Bill Kelly discussed cost reductions, cash burn management, and progress towards completing the V1.0 System build and integration by fall 2024, with a focus on disciplined capital allocation.

Total operating expenses for the first quarter of 2024 were $16.1 million, a 28% decrease compared to $22.3 million in the first quarter of 2023. R&D expenses for Q1 2024 were $10 million vs $13.4 million in Q1 2023. General and administrative expenses were $5 million vs $7 million in Q1 2023. Sales and marketing expenses were $1.1 million vs $2 million in Q1 2023. Adjusted net loss for Q1 2024 was $15.1 million vs $20.8 million in Q1 2023. GAAP net loss was $17 million vs $26.9 million in Q1 2023. Ended Q1 2024 with approximately $84 million in cash, cash equivalents, and short-term investments, with a Q1 cash burn rate of ~$14 million. Full-year 2024 cash burn is expected to be approximately $50 million.

• Full-year 2024 cash burn is expected to be approximately $50 million. - V1.0 System build and integration to be completed in fall 2024. - Clinical trial slated for mid to late 2025 after V1.0 verification and validation testing.

• Forward-looking statements involve material risks and uncertainties from SEC filings, including risks related to obtaining approval for the Vicarious Surgical System, operating trends, future financial performance, expense management, market opportunity, and commercialization.

Q: Just maybe a few for me. Your R&D expenses came in a little higher. SG&A was certainly lower than I think we expected. But overall, really good expense management this quarter. Just kind of help us understand kind of how you're balancing the needs on kind of both sides of that P&L as you think about your progress and kind of what you have planned for the balance of this year?

A: Great question. Obviously, as we've made a number of cost reductions year-over-year, the focus has really been on building a quality robot and getting it to market as fast as possible and such really where we try and draw the line there and focus and prioritize spending there. As noted in the call, our burn rate was probably a little bit higher than otherwise, the run rate would be, but that was really due to the seasonality of certain spending, as you can imagine, certain material expenses and things like that, they happen in one period versus another. That's why you're seeing that. But we still remain committed to $50 million cash burn for the year.

Q: And then correct me if I'm wrong here, Adam, but V1.0 wraps up in the fall of this year, talk to us about kind of next steps from there, how that dovetails into potentially the establishment of a clinical trial. I think slated for maybe mid to late '25 if I'm not mistaken, and kind of what you need to do once we get all the design and testing done for V 1.0.

A: Yes. I think that's a really important question. So as we finalize our V1.0 System and go into more sort of preliminary verification and validation casting, we're going to then roll that into all of the formal testing that's required. As I'm sure you'll recall, we're focused primarily on outside the U.S. data collection in our clinical trial. And one of the advantages of that is in the verification and validation process. We need to do primarily the -- all of the essential performance and safety testing rather than all verification and validation testing. So once essential performance and safety testing is complete for our system, we'll then be able to start up our clinical trial in 2025.

Q: Adam, Bill, Randy, congrats on the progress. I wanted to start with the spring cadaver lab experience and just ask a little bit more color there. So I guess the first question, would be multipart here. How many cadavers were performed. Who is doing the procedure? Was it surgeons that you guys partner with talk about kind of setting of care. And then just bigger picture, maybe just what were the learnings from the spring cadaver lab what went better than planned and what were some of the challenges, if any, that may have arisen.

A: Yes. Super fair question. So overall, it was the very first cadaver that we performed. This was a single cadaver and will be the first of a number that we do over the course of this year. Overall, the procedure was designed to really test out the core functionality of our system and burn down and evaluate any potential issues and risks with it as early as possible, which is one of the reasons that we did it, frankly, on the earlier side of the spring. It was done by internal surgeons and surgeon partners and with a collaboration between 2 physicians. And overall, there were a number of things across, frankly, each subsystem that came up that we needed to focus on revising over the next 2 to 3 quarters. And that is why we've scheduled in this time over the next couple of quarters to make those revisions before we actually lock our V1.0 System.

Q: I wanted to just get an update on the plans for the OUS clinical trial to support the De Novo submission. Any -- I know it's only been 2 months since the last call and the last update and less than that since our health care conference. But any further communications with the FDA on that trial design? And just, I guess, the second part of the question is thinking about international sites? And how do you go about -- I know we're not until next year, but how do you go about establishing those relationships or maybe they're already in hand in terms of finding investigator sites and finding the right ones and developing those surgeon relationships or center relationships with Vicarious.

A: Yes. Thanks, Josh, and 2 great questions there. So I'll start with the FDA side. So nothing that we have to share on that front directly. But what I will say is as we're seeing the broader robotics space continue to develop. We are seeing other filings and quite frankly, other approvals come through, many of which are occurring with entirely outside the U.S. data as well as with about 30 patients each in each trial. So this is further confirming that unsurprisingly, the guidance and support that the FDA is giving to us is being given in exactly the same way to the other new entrants in the space, and they are following through on their commitments there. So that is very reassuring for us to see it. As far as specific site selection and country selection, we are in conversations with a number of different locations. We do have time, but we are well on the way to working through this already. And one of the goals here is to maintain optionality for as long as we can. We actually view that as a distinct advantage, especially when, frankly, regulatory environment in specific countries do change and we'd like to maintain that optionality to choose the specific sites and even the specific countries out of a few that we're working with at the latest point that, that wouldn't impact our schedule.