Memic Innovative Stock: Robotic Surgery for Gynecology
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Last month, we profiled an interesting surgical robotics company for urology called PROCEPT BioRobotics (PRCT) shortly before it went public a couple of weeks ago. PROCEPT has developed the first and only image-guided, heat-free robotic platform for treating a type of prostate condition that affects the urinary tract. The company has been generating meaningful revenues and is chaired by the founder of the world’s most valuable robotic surgery company, Intuitive Surgical (ISRG). Now another niche surgical robotics company with a similar profile has announced its intention to go public by merging with a special purpose acquisition company (SPAC).
About Memic Innovative Stock
Founded in 2012, Memic Innovative Surgery is an Israeli company that has raised nearly $128 million from a small handful of investors, with most of the money coming just earlier this year in April from a $96 million Series D. While the investor names won’t necessarily wow anyone (Israeli firm OurCrowd is pretty active on its home turf), the names attached to the proposed company’s leadership team are noteworthy. Foremost is Dr. Maurice R. Ferré, who both serves as independent director on the SPAC, MedTech Acquisition Corporation (MTAC), and chairman of the board of Memic. Dr. Ferré is the co-founder of MAKO Surgical, a robotics platform focused on orthopedics surgery that medical device company Stryker (SYK) acquired back in 2013 for $1.65 billion.
If all goes as planned, Dr. F will become the executive chairman of the combined company with a valuation of $665 million and about $360 million in the bank to begin commercialization of its FDA-authorized surgical robot Hominis.
Hyping a Little-Used Hysterectomy Procedure
Where the PROCEPT robotic platform is focused on male health, Memic’s Hominis platform is first specializing in female reproductive health through a transvaginal surgical technique for several different types of procedures, especially hysterectomies. That’s perhaps some complicated and even uncomfortable terminology for our male-dominated audience, so let’s get close and personal with the female reproductive system (in a non-creepy way).
A hysterectomy is a surgical procedure to remove a woman’s womb or uterus. There are a number of reasons why this surgery is necessary, including heavy periods, long-term pelvic pain, non-cancerous tumors called fibroids, and various types of cancer. Most hysterectomies involve an abdominal procedure where the womb is removed through a cut in the lower tummy or laparoscopic surgery (including robotic) where the womb is removed through several small cuts in the stomach. A third option is a vaginal hysterectomy that involves a single incision in the vaginal canal.
A vaginal hysterectomy is apparently the least invasive of all the procedures, with less scarring, less pain, and better recovery times – but currently only accounts for about 16% of all hysterectomies. As you might imagine, it’s difficult for a surgeon to see what he or she is doing down there without any visualization techniques, requiring a lot of probing with fingers – basically feeling blindly for the right spot. (We know, ladies, what else is new.) Another challenge involves the anatomical aspects of certain uterine diseases that make it particularly difficult for manual transvaginal surgery.
Robotic Surgery for Gynecology
Robots can do it better, according to the MDs at Memic.
The table-mounted Hominis platform features miniature humanoid-shaped robotic arms with shoulder, elbow, and wrist joints that provide human-level dexterity and 360 degrees of articulation, which enable it to reach the entire surgical site, according to Memic. Both robotic instruments are multifunctional and can each be used for grasping, dissection, bipolar and monopolar coagulation, and cutting – so there’s no need to exchange robotic instruments during the operation. To us, it looks like Spiderman villain Dr. Octopus replaced the menacing claws at the end of his tentacles with roach clips:
A recent clinical study evaluating the Hominis system found that all 30 hysterectomies using the transvaginal approach were completed successfully, with no device-related adverse events or intraoperative complications. Apparently, the clinical evidence to date was good enough to get FDA authorization for transvaginal procedures, and Memic is pursuing similar market authorization in the European Union.
Eventually, the company plans to expand its robotic platform for procedures outside of gynecology and is developing AI-enabled features to support Hominis applications in the future.
Should You Buy Memic Innovative Stock?
We’re not your mother, so we never tell you what to do with your money. But here’s our breakdown of the Memic offering.
The good: Memic appears to be breaking into a new, untapped market in the United States, with an estimated one million transvaginal procedures per year. Regulatory authorization beyond the U.S. border potentially more than quadruples that number, with a total addressable market (TAM) of more than $4 billion, according to Memic. The TAM blows up to more than $10 billion if the company can make good on its goal to expand into other types of surgery.
Customers will be able to rent, lease, pay per use, or buy the platform outright. The company plans to sell its machine at about $600,000 – well below the gold standard $2 million da Vinci flagship robotic system from Intuitive Surgical. Memic estimates about 70% of its revenues will come from selling Hominis to hospitals and the company is “confident” it can sell as many as 400 by 2025, which would represent $240 million in sales. Also on the plus side is that Memic has a leadership team that knows how to market these machines to hospitals.
The bad: Let’s start at ground zero, as in zero revenues to date, and we don’t invest in companies without meaningful revenue, which we define minimally as $10 million per year. The $665 million valuation is also below our $1 billion threshold. While the leadership team has been successful in the past, that is not a guarantee of future success, as the saying goes. You can tell us that you’re going to sell 400 machines in four years, but that and $5 will buy you a latte at Starbucks. Memic has yet to prove it knows how to successfully commercialize a product that features a surgical procedure that few surgeons in the world regularly perform.
As we pointed out last year in our article on robotic surgery stocks, the market is becoming quite crowded, especially with large-cap medical device companies like Stryker and Medtronic (MDT) acquiring their way into the industry. Other upstarts like Memic that we covered in our previous robotic surgery stocks article have not fared well. TransEnterix has pivoted to focus on its AI and computer vision technologies for robotic surgical systems, along with a name change to Asensus Surgical (ASXC), with a market cap south of $500 million. And we’re not sure what’s happening with Titan Medical (TMDI), but the company’s value, such as it was, plunged by about half since a recent peak in early February. Titan now sports a market cap of about $180 million. We won’t even bother with the $50 million micro-cap Microbot Medical (MBOT) that hasn’t released much beyond a logo for its product.
Robotic surgery itself has become somewhat controversial over the years. A meta-analysis of other research studies found that robotic operations can have better outcomes than procedures performed laparoscopically. However, the authors weren’t too impressed with the quality of research and said in “light of the significant costs” associated with robotic surgery, manual laparoscopic procedures were still very competitive. A Nature News article last year went even further, saying that long-term outcomes are statistically identical, though it conceded that robotic-surgery patients experience reduced blood loss, less pain, and shorter recovery times. The main beef in the article, again, seemed to be over cost. Whether companies like Memic can gain enough traction to move the needle on price remains a big unknown.
Conclusion
And that’s our big hesitation with Memic Innovative stock: Too much is still unknown about this company, especially since it is going the SPAC route, which by definition is opaque. In fact, there’s so much information missing that we’re not even sure about what ticker symbol the combined company will trade under. If you’re interested, it will be somewhere on the Nasdaq by the end of the year.
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