The market for robotic surgery is healthy, but as with treating patients, some participants are doing better than others.
The medical robotics market will have a compound annual growth rate of 19 percent and reach $7.6 billion by 2020, predicts an IndustryARC report.
Government support and a worker shortage are also contributing to the increase in spending on healthcare robotics, found market researchers at Technavio.
In addition, some Hansen shareholders will invest $49 million in Auris in return, for a total of up to $129 million.
Mountain View, Calif.-based Hansen Medical’s Magellan and Sensei robotic systems use 3D controls to guide catheters for cardiac procedures.
San Carlos, Calif.-based Auris is working on a robot for procedures such as eye surgery, and it will sell all three systems.
Last year, Auris raised $150 million from investors including Lux Capital, Mithril Capital Management, and NaviMed Capital, but it declined at the time to say what it would do with that money.
The companies share a co-founder, Frederic Moll, who is currently CEO of Auris. “There remains a significant opportunity in flexible robotics, and I am excited to combine with Hansen Medical to advance this market,” he said.
Robotic surgery setbacks
Despite approval from the U.S. Food and Drug Administration (FDA) for some of its products, Hansen had been losing money. Its stock had declined by 69 percent in the past year, according to The Wall Street Journal.
Hansen was forced to admit an accounting error, noting that it had lost $48.9 million in the second quarter rather than the $33.5 million it had previously announced. Hansen’s shares did rebound a bit with the news of the acquisition.
Auris’ purchase of Hansen is expected to close in the middle of 2016. PJT Partners Inc. and Perella Weinberg Partners served as financial advisors, while Morrison & Foerster LLP, Sidley Austin LLP, and Morris, Nichols, Arsht & Tunnell LLP were legal advisors.
While 65.4 percent of shareholders have approved the transaction, others could challenge it. Brodsky & Smith LLC, Brower Piven, Johnson & Weaver LLP, and Rigrodsky & Long PA are investigating the deal’s process to see whether it represented a fair price.
In another setback, the FDA rejected TransEnterix Inc.’s application for its SurgiBot system, which would cost $500,000, about a quarter of what Intuitive Surgical Inc.’s da Vinci system costs.
“The FDA’s decision is extremely disappointing,” said TransEnterix CEO Todd Pope.
TransEnterix also plans to submit its ALF-X surgical robot, which it bought for $100 million last year and has received European approval.
The company had raised $52 million in its initial public offering, plus an additional $50 million. There had been speculation that it could be acquired by Johnson & Johnson. However Johnson & Johnson has partnered with Google parent Alphabet Inc. on joint venture Verb Surgical Inc.
Intuitive Surgical rides high
By contrast, Intuitive Surgical’s stock price has increased in reaction to the news that the number of minimally invasive procedures conducted using its da Vinci system has increased by 17 percent, beyond expectations of 12 percent.
About 3,600 da Vinci systems have been used for 3 million operations worldwide, and Intuitive’s sales have increased to 110 units last year, helping its revenue grow by 11.8 percent. The Sunnyvale, Calif.-based company also sells service contracts and disposable instruments to go with its surgical robots.
Intuitive Surgical also settled a lawsuit with a woman who claimed that she suffered from infection after a 2009 hysterectomy because of burns inflicted by the da Vinci’s robotic arms.
Another case is still pending regarding the lack of insulation in early versions of the arms.
Hansen Medical has licensed some of its patents to Intuitive for $20 million. The robotic surgery industry is likely to experience more mergers, safety scrutiny, and stock fluctuations even as it grows.