Vicarious Surgical has merged with a special purpose acquisition company (SPAC), giving it a stock exchange listing and $425 million from investors including BD to enter the robotic surgery market.
The money will support development of a breakthrough-designated robotic device designed to improve on current approaches to abdominal procedures, for example by enabling surgeons to access all of the cavity through a single 1.5cm incision.
- Vicarious is aiming to make a 510(k) submission in 2023 and grow sales to $1 billion by 2027 but will face competition from giants including Intuitive Surgical, Johnson & Johnson and Medtronic.
Vicarious raised money from a who’s who of Silicon Valley leaders in its early years, securing cash from the investors including the founders of Microsoft, Salesforce, Yahoo and a fund created by the former CEO of Google. A FDA breakthrough status followed late in 2019 but Vicarious continued to say little publicly about its technology.
Now, Vicarious has shared details of its plans in conjunction with its merger with D8 Holdings, a SPAC listed on the New York Stock Exchange that has $345 million in cash. A private placement backed by BD is set to generate a further $115 million.
Vicarious will use the money to develop its robotic system, initially for use in ventral hernia repair. CEO Adam Sachs contended in a Thursday conference call that open surgery is still common in abdominal procedures because of the limitations of minimally invasive surgery and existing single-port robots.
Early minimally invasive procedures required multiple incisions. Single-port robots ended the need to make multiple incisions and coordinate instruments inserted at each entry point but, Sachs argues, have "profound limitations, including at minimum a 2.5 cm length incision with complication rates approaching 10%, very little force capability, limited motion and even higher costs than multi-port robotics."
Vicarious is pitching its system as a way to overcome those shortcomings. Two robotic arms designed to replicate the motion of the surgeon's upper body are inserted through a 1.5 cm incision. Vicarious claims the arms have the dexterity to access more sites than legacy devices, including the ceiling of the abdominal cavity. The system is small enough to move from room to room.
Initially, Vicarious will target ventral hernia procedures. The company estimates 900,000 of the procedures are performed in the U.S. annually. After entering that market, Vicarious plans to develop its device in all other hernias, gallbladder procedures and hysterectomies, expanding its U.S. addressable market by more than 4 million cases. In the longer term, the company wants to muscle in on the gastrointestinal procedure market.
Vicarious forecasts the execution of the strategy will see it install 1,000 units and grow sales to $1 billion by 2027. However, Vicarious acknowledges in the risk section of its merger paperwork that it is trying to enter a market with an entrenched incumbent, Intuitive, and a clutch of well-resourced new entrants such as J&J and Medtronic. Simply connecting with abdominal surgeons could be hard.
"Many of these key surgeons and hospitals already have long-standing relationships with large, well-known companies that dominate the medical device industry," Vicarious wrote. "Because of these existing relationships, some of which may be contractually enforced, surgeons and hospitals may be reluctant to adopt the Vicarious System."
Vicarious named Intuitive, J&J and Medtronic as its primary competitors and noted that its larger rivals may "possess the ability to commercialize additional lines of products, bundle products or offer higher discounts and incentives to customers in order to gain a competitive advantage."