E The Risks Behind TransEnterix

TM editors' note: This article discusses a penny stock and/or microcap. Such stocks are easily manipulated; do your own careful due diligence.

It's important to thoroughly understand all possible risks behind an investment that makes up a very large chunk of your portfolio, which in my case, is TransEnterix. It's especially important to reevaluate those risks on a day when the stock is poised to make a strong run in the midst of a positive news release and an analyst conference on the same day (TransEnterix traded up 57% after hours yesterday on minimal volume). In my opinion, here are the potential risks behind TransEnterix, and my rationale for each one.

#1. Perhaps the biggest, most obvious risk of them all: The FDA denies the SurgiBot approval.

Rationale:

  • TransEnterix formally received feedback from the FDA on its upcoming 510(k) filing in the summer of 2014 through a pre-submission filing, which was filed in March 2014. The company essentially submitted a rough draft of the SurgiBot 510(k) filing, the FDA told them what worked and what didn't, and TransEnterix is now acting accordingly and expects to submit the 510(k) filing by July 1.
  • The FDA desperately wants competition in the surgical robotic market. Nobody benefits from a monopoly except for the company in control, which in this case is Intuitive Surgical. Intuitive has been selling the Da Vinci since 2000. Competition brings lower pricing, faster innovation, and more choices for consumers. In the case of robotic surgery, it means hospitals won't be paying an arm and a leg for a surgical robot, surgeons will quickly adopt better technology that is constantly improving, and less patients will be subject to potentially life threatening complications during surgical procedures due to the inclusion of tactile feedback in the SurgiBot, among other features. Here's an excerpt from a law firm's website that specializes in robotic surgery lawsuits:
    Da Vinci robot surgical complications can occur because the surgeon is given no tactile feedback to gauge the grip of the robot probes. As a result, the manipulation arms can accidentally tear through body tissues, sever small blood vessels, or puncture organs. In some cases, these errors will not be discovered for hours or days after the operation has been completed, when the patient begins exhibiting symptoms that something has gone wrong.
  • TransEnterix's previous product, the SPIDER System, is considered a similar device to the SurgiBot, which means that TransEnterix is allowed to include human data from the 4,500+ surgical cases already performed with the SPIDER in the SurgiBot 510(k) submission. The SurgiBot System utilizes the same core technology found in the SPIDER System: a single incision operating platform that includes 4 channels where flexible or rigid instruments and a camera can be inserted at the operating site. The SPIDER received 510(k) approval in 2009, and European CE mark the following year.
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I am long TransEnterix and continue to add shares. Some friends/family are also long TransEnterix. This article solely represents my opinion and should not be viewed as financial advice. I am not a ...

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