Vicarious Surgical - Earnings Call - Q4 2024

Executive Summary

• Version 1.0 system integration complete; first-in-human procedures now expected later in 2025, and de novo submission timing reset to late 2026, reflecting supply chain and inventory build realities.
• Q4 OpEx of $15.0M fell 3% YoY; adjusted EPS improved to $(2.43) from $(2.50) YoY, while GAAP net loss rose slightly to $13.9M from $13.1M YoY.
• Cash and investments ended 2024 at $49.1M; full-year cash burn was $49.1M, achieving ~50M guidance; 2025 cash burn guided to ~$50M (maintained discipline focus).
• Strategic hospital partnerships expanded (LSU Health New Orleans, Temple Health, UI Health), reinforcing clinical training and ecosystem positioning ahead of first clinical use.
• Potential stock reaction catalysts: later first-in-human and 2026 de novo timeline; supply chain gating now resolved; CFO transition with new CFO starting April 1, 2025.

What Went Well and What Went Wrong

What Went Well

• Completed Version 1.0 system integration, validated via year-end cadaveric lab; “We eagerly anticipate the opportunity to demonstrate the value of the Vicarious Surgical System in a live clinical setting” (Adam Sachs).
• Expanded strategic hospital partnerships with LSU Health New Orleans, Temple Health, and University of Illinois Health to strengthen training and clinical readiness.
• Achieved 2024 cash burn guidance: $49.1M burn vs guidance of approximately $50M; issued 2025 cash burn guidance of ~$50M, underscoring cost control.

What Went Wrong

• Supply chain delays (“golden screws”/critical parts) and sub-tier supplier financial issues slowed inventory buildup, pushing first-in-human to later 2025 and de novo submission to late 2026.
• GAAP net loss increased YoY in Q4 to $13.9M vs $13.1M despite OpEx improvements; GAAP EPS $(2.36) vs $(2.25) YoY.
• Liquidity declined sequentially: cash and investments $73.2M (Q2) → $60.9M (Q3) → $49.1M (Q4), reflecting continued burn into clinical preparation.

Transcript

Moderator (participant)

Good afternoon. Thank you for attending the Vicarious Surgical's 2024 Fourth Quarter and Full Year Earnings Call. My name is Cameron, and I'll be your moderator for today. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by 1 on your telephone keypad. I would now like to pass the conference over to your host, Kaitlyn Brosco, Director of IR. You may proceed.

Kaitlyn Brosco (Director of Investor Relations)

Thank you, Cameron, and thank you all for joining. With me on today's call is Adam Sachs, Co-founder and Chief Executive Officer, and Randy Clark, Company President. Today, after market close, Vicarious Surgical released financial results for the three months and full year ended December 31, 2024. A copy of the press release is available on the company website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or prediction of future events, results, or performance are forward-looking statements.

All forward-looking statements, including without limitation, those relating to obtaining approval for the Vicarious Surgical System and timing for any such approval, our operating trends and future financial performance, expense management, market opportunity, and commercialization are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place any undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the risk factors set forth in our Securities and Exchange Commission filings, including our most recent Form 10-K and Form 10-Q. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, March 17th, 2025.

Vicarious Surgical disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. I'll now hand the call over to Adam for prepared remarks.

Adam Sachs (Co-founder and CEO)

Thanks, Kate. Good morning, everyone, and welcome—excuse me, good afternoon, everyone, and welcome to our fourth quarter and full year 2024 earnings call. We appreciate you joining us today. At Vicarious Surgical, our mission is to improve lives by transforming robotic surgery, and 2024 was a pivotal year in advancing that mission. Throughout the past year, we achieved a number of key development, regulatory, and commercial milestones that have positioned us incredibly well for continued success in 2025. As we will discuss in more detail today, these accomplishments have laid the groundwork for what we believe will be a truly transformative year ahead, as 2025 marks our transition into a clinical stage company. Our most anticipated milestone in 2024 was the successful completion of our Version 1.0 System integration.

As you may recall from our last earnings call, we were just weeks away from our year-end cadaver lab, a critical event that would signify the achievement of this key development milestone. We're thrilled to share that this cadaver lab was a success, demonstrating the functionality and performance of our Version 1.0 System in a cadaveric preclinical setting. This achievement represents a significant step forward in bringing our innovative robotic surgery platform to market and validates the hard work and dedication of our entire team. The Version 1.0 System, the platform we intend to use in our first clinical use, is uniquely architected to deliver differentiated value to patients, surgeons, and hospitals. Our proprietary decoupled actuators provide a novel mechanism of action, separating it apart from anything currently available.

This innovative design allows our system to achieve minimally invasive outcomes through a single small 18-millimeter incision, while still generating the high forces necessary to address a broad range of soft tissue indications. Furthermore, the decoupled actuators enable additional intra-abdominal joints, eliminating the need for complex instrument triangulation and providing surgeons with 13 degrees of freedom per instrument for advanced dexterity and near 360-degree visualization and anatomical access. We are incredibly excited about the potential of our first-generation platform, not only to make a meaningful impact in our initial target indication of ventral hernia repair, but also across a wide range of soft tissue procedures. Beyond its core surgical capabilities, Version 1.0 lays the foundation for future advanced AI features that leverage sensing technologies such as multimodal fluorescent wavelengths, LiDAR, and dot projection, essentially the same suite of technologies used in self-driving cars today.

It is our unique approach to surgical robotics that has garnered significant interest from leading U.S. hospital systems. In 2024, we continue to expand our community of top-tier hospital system partners. We announced an agreement with Louisiana's premier academic health institution, LSU Health New Orleans, and toward the end of the year, we officially inked partnerships with two other major academic health networks: Temple Health and University of Illinois Health. Like LSU Health New Orleans, Temple Health and UI Health are ideal regional partners with renowned academic and training programs. Temple Health, a leading Philadelphia academic medical center, offers comprehensive care through its network of hospitals, clinics, and research institutions. Their robust research infrastructure will be invaluable for post-market system evaluation and validation. UI Health, anchored by the University of Illinois at Chicago, is a major regional referral center with a distinguished robotics program.

Their integrated network of hospitals and clinics, combined with a strong focus on research and medical education, provides access to a diverse patient population and extensive clinical and robotic expertise. Our newest hospital system partners will be instrumental in developing and refining our medical education and training protocols, equipping healthcare professionals to effectively utilize our technology once on market. We are excited to partner with these esteemed experts to advance our shared mission of improving patient care and look forward to demonstrating this real-world clinical value starting later this year with our first human cases. In preparation for this important milestone, our regulatory and clinical team dedicated 2024 to developing necessary clinical protocols and evaluating potential international clinical sites. With their diligent efforts, we have narrowed down our search to a few state-of-the-art sites and are now in the process of securing institutional ethics committee approval for each respective site.

Once all IEC approvals are granted, the next step in the regulatory process is to submit a comprehensive package to the Ministry of Health, often referred to as a technical dossier. This dossier will provide a thorough review of our system, addressing the key performance and safety requirements such as biocompatibility, sterility, electrical safety, functional testing, and supporting cadaveric and animal data. Now that the Version 1.0 System integration is complete, our development team has initiated the manufacturing build-out of the instrument arms, camera, and capital equipment required to support the rigorous testing schedule leading to our Ministry of Health technical dossier submission. Throughout 2024, we've made significant strides in establishing a robust, scalable manufacturing foundation. We strategically built out and streamlined our internal manufacturing capabilities while simultaneously selecting key manufacturing partners to provide additional capacity and expertise.

This has strengthened our supply chain and built certain redundancies to mitigate potential disruption. We've prioritized establishing relationships with trusted partners who share our commitment to quality and precision, ensuring we have the resources and expertise needed to meet our production goals. While we've made significant progress in our procurement and build efforts during the first months of this year, we've also encountered some instances of gating components and clear-to-build hurdles, with a select few suppliers impacting the pace of inventory build-up. We escalated these challenges with those suppliers while also leveraging our other suppliers and internal resources to mitigate the effort. Given the large quantities of inventory required, our schedules have experienced a limited impact. We still expect to treat our first clinical patients this year. However, it'll be closer to year-end. Consequently, we now expect our de novo submission to be late in 2026.

We're focused on controlling what we're able, mitigating risks where possible, and maintaining our commitment to delivering a safe and effective product. Now, before we turn to our 2024 financial results, I want to reiterate our excitement about our new CFO. As we announced last week, Sarah Romano will officially join us on April 1. Sarah brings decades of financial leadership, including significant experience in capital markets and driving growth through fundraising and strategic corporate transactions, most recently at Entero Therapeutics and Kira Pharmaceuticals. We're thrilled to welcome Sarah to the Vicarious Surgical team. For today, however, Randy will review our 2024 financials. I'll now turn the call over to him.

Randy Clark (President)

Thank you, Adam. Jumping into the financials, starting with total operating expenses for full year 2024, they were $66.6 million, down 17% year over year. R&D expenses for the full year 2024 were $40.2 million, down from $47.6 million in 2023. General and administrative expenses totaled $21.9 million in the full year 2024, down from $26.9 million in 2023. In full year 2024, sales and marketing expenses were $4.5 million compared to $6.2 million in the prior year. Adjusted net loss for the full year 2024 was $63.3 million, equating to an adjusted net loss of $10.75 per share as compared to an adjusted net loss of $76.3 million or an adjusted net loss of $15.67 per share for the prior year.

GAAP net loss for full year 2024 was $63.2 million, equating to a net loss of $10.74 per share as compared to a GAAP net loss of $71.1 million or $14.60 per share for the full year 2023. For a reconciliation of all non-GAAP measures to GAAP, please review our earnings press release. Our 2024 cash burn rate was $49 million, achieving a favorable variance from our original guidance of approximately $50 million. This resulted in a year-end balance of approximately $49 million in cash, cash equivalents, and short-term investments, and underscoring our commitment to financial discipline. Looking ahead to 2025, we again anticipate a cash burn of approximately $50 million and will continue to actively monitor and evaluate market conditions and strategically reinforce our balance sheet at the appropriate time. We look forward to updating you in the quarters to come as we execute on our business initiatives.

With that, I'll turn the call back to Adam for closing remarks. Adam.

Adam Sachs (Co-founder and CEO)

Thanks, Randy. I'd like to close out by reiterating the significant progress we've made throughout 2024. We successfully integrated our Version 1.0 System, built a robust supply chain and manufacturing foundation, forged new key partnerships with leading hospital systems, and took meaningful steps toward treating our first patients this year. As of today, we've assembled instruments that are coming off the cleanroom production line ready for testing, with our capital system scheduled to be completed later this week. The excitement internally is palpable. We eagerly look forward to proving out the value of our Version 1.0 System in the clinic later this year. A huge thanks to our dedicated team for their hard work and commitment, and to our investors and other stakeholders for their continued support. Thank you to everyone who joined the call today.

We appreciate your support and look forward to updating you on our continued progress. With that, Cameron, we're ready for questions.

Moderator (participant)

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question, and we will pause here briefly as questions are registered. The first question is from the line of Ryan Zimmerman with BTIG. You may proceed.

Ryan Zimmerman (Managing Director and Medical Technology Analyst)

Good afternoon. Thanks for taking my question. Can you hear me okay, Adam?

Adam Sachs (Co-founder and CEO)

Yeah, we can hear you.

Ryan Zimmerman (Managing Director and Medical Technology Analyst)

Okay, cool. Maybe just on the supplier dynamic, just want to understand what specifically is being held up and how is that impacting your ability to manufacture specifically systems for the clinical trial? If you could talk about kind of what it does or doesn't do for your clinical trial activities this year, start there.

Randy Clark (President)

Yeah, I'll be happy to jump in, Ryan, and then I'll see if Adam has any comments to add as well. I'd say within our supply chain, we encountered material procurement challenges with a few key suppliers. This led to delays in component deliverables, which gated our build. To provide an example, one of our partner's sub-tier suppliers had unforeseen financial issues, creating a cascading effect and disrupting the flow of essential materials. These delayed gated items directly hindered our manufacturing progress as several of these components were referred—we refer to them as golden screws or critical parts—that we need to complete production. As Adam indicated, our team literally at all levels did a great job in escalating with these suppliers and in leveraging our other suppliers and internal resources to minimize the impact to our timeline.

The good news is, because I wanted to per the beginning part of your question, we currently have no gated items and have resumed capital and disposable production.

Adam Sachs (Co-founder and CEO)

I'll just kind of come on top a little bit here and say that one positive of this is that we've been able to flush out every one of these challenges during this earlier build for all the essential performance and safety and can use all of those learnings and already are in the next build for the clinical.

Ryan Zimmerman (Managing Director and Medical Technology Analyst)

Okay. I guess that dovetails into the next question, Adam. When do you anticipate—I know you're narrowing down the sites now—when do you anticipate the clinical trial beginning? I think we kind of assumed maybe mid-year this year. Is that still the plan? As you go through the IRB process and at some of these sites, as you talk to the clinical sites, what kind of questions are they asking? What's their comfort level with the system as you kind of get rolling here to move into this clinical stage?

Adam Sachs (Co-founder and CEO)

Yeah, it's a good question. First, I'll say that it's going to be later in the year that we're going to be doing our first patients. Just as a reminder, these will be outside of the pivotal. As quickly as we can after that, we'll kick off the pivotal, but leaving room for us to have any necessary changes that we need, especially to the clinical protocol and trial protocol. As far as feedback from the site, it's a great question. The feedback from the site has been, first of all, generally incredibly excited and engaged. I think these sites, especially in outside the U.S. countries, are eagerly looking forward to not only getting to try our system in a clinical setting, but also have been talking about our plans for in-country approvals as well, even while our first approval will be in the U.S.

They want to be able to buy and use these, which is incredibly exciting for us to hear. I will say that I personally visited a number of these sites, and the engagement and reception has been incredible.

Ryan Zimmerman (Managing Director and Medical Technology Analyst)

Okay. I'll hop back in queue. Thanks, guys.

Adam Sachs (Co-founder and CEO)

Thanks for the question.

Moderator (participant)

The next question is from the line of Adam Maeder with Piper Sandler. You may proceed.

Adam Maeder (Managing Director and Senior Research Analyst)

Hey, Adam, Randy, Kate, thanks for taking the questions and congrats on the progress and 1.0 integration. Just a couple to follow on here to Ryan's line of questioning. I just wanted to make sure I'm thinking about this right in terms of supply chain. It sounds like you had some gating instances that were impacting supply chain. That's now largely behind you. Did I hear that correct? Still, the result of that is starting the first in-human later in 2025. Is that a fair characterization?

Randy Clark (President)

Yes, absolutely.

Adam Maeder (Managing Director and Senior Research Analyst)

Okay. Okay, perfect. I guess just in terms of the dossier submission, are you able to kind of put any timing around that when we should expect you guys to submit the dossier?

Adam Sachs (Co-founder and CEO)

Yeah, it'll be somewhere right around the middle of this year. That makes the, frankly, the first patient timing usually takes a few months to approve. Following that approval, we're going to, as quickly as humanly possible, start those cases.

Adam Maeder (Managing Director and Senior Research Analyst)

Okay. Fantastic. Thank you for that. Just for the follow-up, I guess maybe would love to hear just a little bit more about the Version 1.0 integration, exactly kind of what that exercise entailed and what that means kind of in the grand scheme of things, number of cadaver procedures, who was driving the machine. Does this mean that you have kind of officially design lock? Just would love to hear a little bit more about kind of that exercise and the confidence that gives you going forward in 2025. Thank you.

Adam Sachs (Co-founder and CEO)

Yeah. True kind of final design lock will come after all the preliminary testing and all the essential performance and safety. The process was a handful of cadavers and a large number of bench tests through a series that essentially allowed us to gain confidence in the system, know if there were any changes or tweaks that we wanted to make as we ramp up manufacturing in order to do all of this testing. I'd say the results were gaining a ton of confidence in the reliability of the systems, especially if the disposable instruments were very good, especially compared to previous builds and had cost of goods improvements as well that we brought in. I'd say overall, it's something that we're really excited about.

Adam Maeder (Managing Director and Senior Research Analyst)

Thanks, Adam.

Moderator (participant)

The next question is from the line of Josh Jennings with Cowen. You may proceed.

Josh Jennings (Managing Director and Senior Analyst)

Hi, good afternoon. Thanks for taking the question. Nice to hear about all the progress. I wanted to just ask about the cadaver lab results and the success that you reported. I mean, were ventral hernia maneuvers performed in the cadaver lab? Any other details you can just share and how important those results are in terms of this future submission to the Ministry of Health and moving forward into the clinical trial?

Adam Sachs (Co-founder and CEO)

Yeah. These cadaver labs are performed by Dr. Belyansky and Dr. Barry Greene, our Chief Medical Officer. They were to perform ventral hernia repairs with both defect closure and mesh implantation. Overall, certainly the initial tests are not without some hiccups, but we were incredibly impressed, especially how smoothly mesh fixation went and the ability to sew all the way around that mesh in multiple quadrants in a very short amount of time. It is something that we're all incredibly excited and proud of.

Josh Jennings (Managing Director and Senior Analyst)

Excellent. Just on the clinical trial design and when that gets locked in, any updates there just in terms of how many patients are expected? Are there any changes to your outlook in terms of discussion, recent discussion with the FDA or any updates?

Adam Sachs (Co-founder and CEO)

Yeah. We have done multiple pre-submissions with the FDA leveraging the Safer Technologies Program that we are a part of. They have been very collaborative with us. We have gone through full detailed trial design. As far as when it truly gets locked and finalized, it will be after these first patients, which is a big chunk of the point of them, to be able to evaluate outside of a clinical trial. Of course, you still have to report anything, but it is not evaluated as part of the actual submission package, which gives us the flexibility to make changes after our first clinical patients and before the first pivotal trial patients.

Josh Jennings (Managing Director and Senior Analyst)

Great. Just lastly, I think you spoke about the need to build inventory in front of the clinical trial. Maybe can you just help us quantify kind of the inventory build and how challenging or straightforward that process is? Thanks for taking all the questions.

Randy Clark (President)

Yeah. Happy to jump in there. Just to reiterate some of the prior remarks as well. Again, our team has done a great job in escalating the procurement challenges that we spoke to, leveraging our internal capabilities. Again, want to reiterate at this point in time, we do not have any gated components. We have really focused on scaling up our testing inventory and have literally finished instruments coming off of our clean room lines. As Adam mentioned as well, our first unit of surgeon console and patient console are expected to be completed at the end of this week. For our testing and our first clinical patients, I believe we stated previously, but just to reiterate, we are anticipating only needing a few capital systems and then larger amounts of the instruments correlated to that tech submission or technical dossier as well.

Adam Sachs (Co-founder and CEO)

If I can come on top just because it's, I mean, this has been one of the most exciting things internally for us. Coming, seeing the clean room and instruments being manufactured in quantities and coming off the line, being packaged, ready for sterilization, and the capital equipment getting built up with all of the cosmetic covers, all of the internal wiring. Everything is coming together. It is the single most exciting time that I've ever had in this company.

Josh Jennings (Managing Director and Senior Analyst)

That's good to hear. Thanks for all the answers. Appreciate it.

Moderator (participant)

There are currently no questions registered. As a brief reminder, it is star one to ask a question. There are no further questions waiting at this time. I would like to pass the conference back to the management team for any closing remarks.

Adam Sachs (Co-founder and CEO)

Yeah. With that, I'd just like to say thank you so much to everybody. Thank you, Cameron, for being the operator on this call. With that, we can end.

Moderator (participant)

That concludes the Vicarious Surgical's 2024 Fourth Quarter and Full Year Earnings Call. Thank you for your participation and enjoy the rest of your day.