TransEnterix (NYSE:TRXC) said today that it’s being sued by a pair of shareholders over its failure to win FDA clearance for the SurgiBot robot-assisted surgery device.
Research Triangle Park, N.C.-based TransEnterix’s shares plunged during the spring, after it revealed in April that the FDA denied its 510(k) application for SurgiBot, saying that the platform didn’t meet the criteria for substantial equivalence. The company soon shelved SurgiBot and turned to the already-CE-Marked ALF-X device it bought in a $100 million deal with Italy’s Sofar last year.
TransEnterix CFO Joseph Slattery told analysts during a conference call May 10 that the company had already cut $4 million in annual salary costs from the SurgiBot program; according to the lawsuits filed in North Carolina federal courts, that meant layoffs for 50 workers, or about 40% of its workforce.
Both the complaints, Bankley vs. Transenterix (North Carolina’s Middle District) and Ravey vs. TransEnterix (North Carolina’s Eastern District), are securities class actions seeking to cover investors who owned TRXC shares between Feb. 10 and May 10. They allege that TransEnterix and its management “made materially false and misleading statements” about SurgiBot’s prospects with the FDA in press releases, conference calls and SEC filings.
TransEnterix said it plans to contest the lawsuits.
“The company is in the process of reviewing the complaints filed and believes that the plaintiffs’ allegations are without merit, and intends to vigorously defend against these claims,” TransEnterix said today in a regulatory filing.
In February, TransEnterix saw shares surge on speculation that the robot-assisted surgery company could be acquired by Johnson & Johnson (NYSE:JNJ), after J&J chairman & CEO Alex Gorsky said the healthcare conglomerate is back in the acquisition game now that valuations have come down. That fueled speculation that TransEnterix could be in J&J’s sights, even though the company is already in bed with Google‘s (NSDQ:GOOG) Verily Life Sciences to form robotic surgical venture Verb Surgical.
TransEnterix is battling with Titan Medical (CVE:TMD) in the race to challenge robot-assisted surgery’s dominant player, Intuitive Surgical (NSDQ:ISRG), and its da Vinci system. Titan is anticipating a mid-2017 debut for its Sport offering.
