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Analyzing the SurgiBot System Assets Sale by TransEnterix

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Sale of SurgiBot assets

In December 2017, TransEnterix (TRXC) entered into an agreement with Great Belief International Limited (or GBIL) to advance the former’s SurgiBot system toward global commercialization. The SurgiBot system is a single-port, robotically enhanced laparoscopic surgical platform. 

Under the agreement, TransEnterix transferred ownership of the SurgiBot assets to Great Belief. However, it retained the option to distribute or co-distribute it outside China.

GBIL plans to manufacture the system in China and obtain clearance from the China Food and Drug Administration (or CFDA). GBIL plans to enter into a pan-China distribution agreement with China National Scientific and Instruments and Material Company (or CSMIC), targeted at the Chinese market.

In consideration, TransEnterix is expected to receive at least $29.0 million. Of this, the company received $7.5 million in December 2017 and an additional $7.5 million in March. 

The second installment included an equity investment of $3.0 million at $2.33 per common share. The remaining $14.0 million represents minimum royalties and is expected to be paid to TransEnterix at the earlier of regulatory approval in China or five years after the second closing date.

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Valuations

TransEnterix’s enterprise value stands at ~$686.7 million, and its enterprise-value-to-revenue ratio is ~69.1. The company’s price-to-book ratio is ~5.2. Its assets-to-equity ratio stands at ~1.3 compared with the industry mean of ~1.7.

In the next part of this series, we’ll look at TransEnterix’s financial performance.

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