Earnings Call Transcript - RBOT Q2 2025

Operator, Operator

Good afternoon. Thank you for attending the Vicarious Surgical's 2025 Second Quarter Earnings Call. My name is Cameron, and I'll be your moderator for today. I would now like to pass the conference over to your host, Marissa Bych from the Gilmartin Group. You may proceed.

Marissa Elizabeth Bych, Host

Good afternoon. Today, after market close, Vicarious Surgical released financial results for the 3 months ended June 30, 2025. 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 predictions 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, the timing of future clinical trials and FDA submissions, cash burn expectations, 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 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, August 12, 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 will now hand the call over to Adam Sachs, Co-Founder and President, to begin prepared remarks.

Adam David Sachs, Co-Founder and President

Thank you, Marissa. Good afternoon, everybody. It's been an incredible journey leading Vicarious Surgical since its founding. From our earliest days through product development and preclinical testing, I have been continually inspired by the dedication of our team and the strength of our mission. Today, I am proud of the foundation we have built, and I'm even more excited about what lies ahead. With that in mind, I am pleased to welcome Stephen From as our new Chief Executive Officer. Stephen brings a strong track record of leadership across the healthcare and medtech industries. And he joins us at a pivotal moment in our company's evolution. His experience and perspective will be invaluable as we continue progressing toward our long-term goals. As I step into the role of President, I look forward to partnering with Stephen and the rest of our leadership team to build on the momentum we have created. Together, we remain focused on developing our technology, advancing our clinical programs and fulfilling our mission to transform surgical care through groundbreaking robotic innovation. Stephen will share more on this topic. But we are also using the leadership transition to take a broader look at our development path, including both technical progress and program strategy. With that, I'd like to turn it over to Stephen to introduce himself and share an update on his approach.

Stephen From, Chief Executive Officer

Great. Thank you, Adam. So to begin, I'd like to express how excited I am to join the Vicarious Surgical team. We're at an important inflection point in the company's journey, and I believe we have an extraordinary opportunity to redefine what is possible in robotic surgery. I'm grateful for the warm welcome I've received in my first few days, and especially to Adam for his thoughtful support. While it's still early in my tenure, I have been deeply impressed by the caliber of talent, the clarity of purpose and the passion that exists throughout this organization. It's clear that a bold and inspiring mission has been built here, and I'm honored to help carry that vision forward. Over the past few days, I've begun to engage with the teams across all areas of business, listening, learning and gathering candid feedback on our product development, our clinical strategy, operations and organizational structure. These conversations have only strengthened my confidence in our platform, our people and the opportunity we have ahead of us. Our technology represents a meaningful advancement in minimally-invasive surgery. The single-port robotic market is still in the early stages, and we believe we are in a position to advance the development of our technology. With a differentiated platform and a strong technical foundation, we are focused on executing with discipline and aligning around the milestones that will drive long-term value. Before I pass the call to Sarah, I want to provide a brief update on system readiness and anticipated timelines. It is clear that Vicarious Surgical has an excellent dedicated team, and it has designed a great product with meaningful differentiation. My direction to the team is that the best use of company resources is to focus on completing a fully integrated production equivalent system, enabling design lock and initiating full system verification and validation. This will be our primary focus until completion with our first clinical patients to follow design lock. Through testing conducted during our ongoing build in preparation for our first clinical use trial, it became clear that proceeding now would require using a non-production equivalent system. While such a trial could provide some insights, it would divert our limited resources away from the higher priority goal of finalizing a production equivalent system. This strategic shift means removing the near-term target of a First Clinical Use by the end of 2025, and instead concentrating all efforts on completing system design and readiness for full verification on a system that is ready to commercialize. The expected timing of other future clinical trial milestones, including submission of a de novo filing, will in turn depend on FCU timing. So we'll conduct a deep dive into every aspect of our build to secure verification for a production-ready system. This effort is critical not only for ensuring technical readiness, but also for generating a clear picture of our progress and readiness over the next month. I anticipate this assessment could take approximately 4 to 6 weeks. And at that point, I expect to have greater clarity on our development status, timing to complete system integration and readiness to initiate full system verification. I will continue to work closely with our technical and strategic teams to refine our timelines, evaluate progress across our development programs and assess the resources needed to support our next phase. I also plan to continue engaging with our Board and our investor base as we evaluate the capital strategy that will best support our objectives. With that, I'll turn it over to Sarah Romano, our CFO, to walk you through the financials.

Sarah Romano, Chief Financial Officer

Thank you, Stephen. Total operating expenses for the second quarter of 2025 were $13.5 million, a 24% decrease compared to $17.7 million in the second quarter of 2024. Our research and development expenses for the second quarter 2025 were $9.1 million compared to $10.9 million in the second quarter 2024. General and administrative expenses for the second quarter 2025 were $4.1 million compared to $5.6 million in the second quarter 2024. And finally, second quarter 2025 sales and marketing expenses were $300,000 compared to $1.2 million in the second quarter of 2024. Our GAAP net loss for the second quarter 2025 was $13.2 million or $2.23 per share. This compares to a net loss of $15.2 million or $2.59 per share in the second quarter of 2024. Non-GAAP adjusted net loss for the second quarter 2025 was $13.3 million or $2.23 per share as compared to $16.8 million or $2.86 per share in the second quarter 2024. For a reconciliation of all non-GAAP measures to GAAP, please review our earnings press release. We ended the second quarter of this year with approximately $24 million of cash, cash equivalents and short-term investments on our balance sheet. This represents a second quarter cash burn rate of approximately $13.4 million. We continue to expect full year 2025 cash burn to be approximately $50 million, and we remain committed to disciplined capital allocation. We look forward to continuing to drive progress on our financial and clinical goals in the coming quarters. And with that, I'll turn the call back over to Stephen for closing remarks.

Stephen From, Chief Executive Officer

Thank you, Sarah. So I'd like to conclude by reiterating how deeply impressed I am by the strength of the technology, the caliber of the team and the company's clear commitment to transforming surgical care. While it's still early in my tenure, I look forward to thoroughly reviewing the company's work streams and processes to ensure we're aligned for long-term success. I'd like to express my gratitude to our dedicated team, supportive investors and valuable partners. And thank you all for your continued support and interest in Vicarious Surgical. Operator, we are now ready to take questions.

Operator, Operator

And the first question is from the line of Ryan Zimmerman with BTIG.

Ryan Benjamin Zimmerman, Analyst

Can you hear me okay?

Adam David Sachs, Co-Founder and President

Yes.

Ryan Benjamin Zimmerman, Analyst

So I appreciate, Stephen, you have to come in and kind of prioritize what's important and so forth. Maybe talk to us about kind of how you guys have gone about that process of deciding getting a system ready for use and needing to push back those timelines around clinical trials. And just how much money, I mean, has gone into preparing for those clinical trials and maybe either what's lost or what's saved as a result of some of those shifting timelines to extend your cash runway?

Stephen From, Chief Executive Officer

Thank you for the questions, Ryan. I appreciate you bringing them up. I want to be candid; I just started here four days ago. I've been spending time with the team to understand our current status and direction. We've decided to establish a process to thoroughly assess what is still needed to achieve a fully operational system and what we have accomplished so far. While I recognize your concerns about adjusting timelines, the First Clinical Use is crucial for us. However, it's essential that we conduct this on the appropriate system. As we test the integrated system, we may identify areas that require further work. We can either hastily proceed with a system needing additional testing and development or pause to ensure we complete all necessary developments based on our testing so that we can transition smoothly to commercialization. Being a small company with limited resources, we can't afford to have multiple systems being tested in the clinic. Regarding finances, there has been minimal spending on preparations for clinical trials; any groundwork needed does not necessarily incur significant costs. The resources involved are more labor-intensive than monetary, so we haven't wasted any funds in that aspect.

Ryan Benjamin Zimmerman, Analyst

Okay. Well, fair enough. I guess, what was anticipated to be spent on those clinical trials? And how does that factor into your cash burn guidance or the runway you have with the existing cash?

Stephen From, Chief Executive Officer

Well, look, again, I'm 4 days into this. So I've got a lot that I've got to get my head around that I need to right now learn and focus on.

Ryan Benjamin Zimmerman, Analyst

Maybe let's ask Sarah.

Sarah Romano, Chief Financial Officer

Yes. So budgeted costs around clinical trials, it's actually not overly material to our budget, believe it or not. So a lot of the cost for this First Clinical Use, it's not going to make a major change in our overall 2025 budget. I think going forward, that may change as we continue to evaluate. But currently, in this year, it won't be materially different.

Operator, Operator

Our next question comes from Josh Jennings with TD Cowen.

Eric Evan Anderson, Analyst

This is Eric on for Josh. I appreciate the update on the strategy and new development targets. And I understand it might take some time to work with the team before you have a better idea of exact timing. But in terms of milestones that investors should expect for this year, are you able to share which of the development and system milestones you think you could have achieved, say, by the end of this year?

Stephen From, Chief Executive Officer

I think it's still early to specify any exact dates, except for the initial phase, which is crucial for our objectives. I need complete clarity on this, and it will take some time to reach that point. What we will complete by the end of this year will become clearer once I finish this phase. I want to be honest and not mislead anyone; I'm not trying to postpone things but rather avoid giving inaccurate guidance. I want to ensure that when I offer insights, you can trust them. We're not putting anything on hold to carry out this work. Most of the needed information is already available; I just need to gather it and clarify the right questions. This exercise will be beneficial for the investors I've been engaging with recently. It's crucial for them to have reliable guidance, so I appreciate your patience while I gather all the necessary details to provide that.

Eric Evan Anderson, Analyst

Sure. Understood. That makes sense. And then maybe just on the balance sheet with the cash and investments that you have on hand now, I was hoping you could talk about how you feel about your ability to continue funding development and some of the other work that is ahead of the company.

Stephen From, Chief Executive Officer

That's an insightful question, and there are indeed many factors involved. As a microcap company, we face a challenging environment. However, there is a significant reason for my joining this company. We are developing a system to address a genuine need—one that has never been attempted before. The existence of this need puts me in a favorable position since we can envision our goals. Once we reach the point of having a fully integrated production equivalent system ready for verification and validation, the process will become much smoother due to the system we are creating. I am fortunate that much of the difficult groundwork has already been laid, and many major issues have been resolved. I recognize the current landscape dominated by a single player, with various others merely trying to replicate their success. What attracted me to this team is their focus on solving real problems rather than mimicking an already successful model. Over the past few days, I’ve come to appreciate the remarkable individuals here—people capable of building and implementing our system. Now, my priority is to provide investors with guidance about when these developments will take place. While I could offer tentative dates, they wouldn’t be meaningful without the proper groundwork. Therefore, I need time to ensure we can deliver on our plans. Once our system is operational, it is positioned to capture market share due to its unique offerings. The markets are indeed difficult, but I'm advocating for this project—this system and company—as a worthwhile long-term investment. It’s not just another imitation; this system is addressing a significant current problem that no one else is tackling. First and foremost, we need to create something that people truly want. If there is demand, this presents a market opportunity that I can communicate to investors. It’s essential for investors to have confidence in our ability to deliver. I need time to build that confidence and establish a realistic timeline for delivery. However, I'm not suggesting an indefinite timeline; as I mentioned, we can already see our goal ahead and it's a matter of completing the remaining tasks to reach it.

Operator, Operator

Our last question comes from the line of Adam Maeder with Piper Sandler.

Adam Carl Maeder, Analyst

Just a couple from me, and I kind of wanted to pull a little bit on the same thread as Ryan was asking about. And I guess, the first question that I have is, it's clear based on the prepared remarks, you don't feel that the system is ready to kind of push forward to first-in-human at this point. But I just wanted to, I guess, kind of better understand what led you to that conclusion. Is it something on the hardware? Is it instruments? Is it software? Just general bugs that you're seeing in the system that need to be worked out? Just help us understand kind of what you're looking to troubleshoot going forward? And then I had a follow-up.

Adam David Sachs, Co-Founder and President

Yes, I'll address that, Adam, and I appreciate your question. The previous strategy I outlined aimed to integrate our system and conduct preliminary verification and validation testing to facilitate our first clinical use. We acknowledged that while several issues could arise, as long as they did not compromise safety or efficacy and could be managed in a controlled clinical trial, we could still proceed to the clinic safely. However, Stephen's guidance, particularly through recent discussions with the team, has highlighted that the effort required for this may be somewhat redundant. With our limited resources, focusing on fixing the issues that arose and testing them for safety to justify their use in the clinic represents a significant workload. For instance, our surgeon console underwent TUV testing and passed all but the EMC tests, where excessive emissions were detected from the ergonomic components designed for surgeon comfort. This is manageable; we can rectify it in a couple of months. To proceed to First Clinical Use by year-end, we need to deactivate those ergonomic features, assure their safety in the clinical environment, and conduct further testing to confirm that they do not need adjustments during procedures. While these issues aren't individually deal-breaking, they collectively detract from our progress towards our pivotal study and the verification of the full production equivalent system. Stephen has been clear that we should prioritize reaching this endpoint rather than rushing into the clinic.

Adam Carl Maeder, Analyst

Okay. I got it. That's really helpful color, Adam. I appreciate all that. And I guess, for the follow-up, I realize you're not giving specific dates in terms of clinical milestones, first-in-human, etc. But I guess, I'm just trying to understand the messaging around how we should think about a potential shift to the timelines. So you have the 4 to 6 weeks of kind of review assessment. In the best case scenario, do you get moving pretty quickly after that review period and potentially still get into first-in-human later this year? Or should we assume that it's going to be a little bit more of kind of like a heavy lift, potential parts of the system have to be redesigned and a more significant push out? I'm just trying to understand if this is something that's going to slide by a couple of months or if it's going to be more dramatic than that.

Stephen From, Chief Executive Officer

Yes, I appreciate it. It's Stephen here, and I find myself asking the same question. I wish I could provide guidance, but I can't answer that question accurately right now. However, I can see the end goal. I don’t want to speculate too much, but let me assess the situation first. Once I have a clearer understanding, I can give you a better idea of our timeline. I need to evaluate whether this pushes things back by a month or three months, or if it has greater implications. That's why I'm here—to take a snapshot of our current progress and what remains to be done, which will help indicate our timeline.

Operator, Operator

That was our final question. I would now like to pass the conference back to management for any closing remarks.

Stephen From, Chief Executive Officer

Yes, those are all important questions, and I appreciate them. Interestingly, those are the same questions I'm grappling with. They are also the questions the Board is considering. That's why I'm here. I wish I could provide an answer this early in my tenure, but I'm still gathering information. It will take some time to complete this evaluation. However, I'm genuinely excited. During my due diligence, I thought I was eager, but now, after four intensive days filled with meetings and discussions, I'm really looking forward to seeing a clearer picture as I understand more about our current position in the system. That's all from me. Thank you, everyone.

Adam David Sachs, Co-Founder and President

Yes. Thank you, everybody, for joining. That concludes the call.

Operator, Operator

That concludes today's call. Thank you for your participation, and enjoy the rest of your day.