Transanterix

FROM MOTLEY FOOL.....Robotic-surgery upstart TransEnterix (NYSEMKT:TRXC) thinks it has a good shot at challenging industry Goliath Intuitive Surgical (NASDAQ:ISRG), but to do that it may have to overcome one big problem: Its spending pace puts it at risk of running out of cash.

First, a bit of background
TransEnterix has two robotic surgery systems that it hopes to launch this year. The first is the ALF-X system that it acquired from SOFAR S.P.A. recently. The ALF-X system is similar to Intuitive Surgical's da Vinci system, but it offers additional features such as haptic feedback that surgeons may prefer. ALF-X got the CE Mark of approval for use in Europe back in December 2011, but its previous owner was unable to establish it in the marketplace. TransEnterix is relaunching the ALF-X with a dedicated sales force that's currently conducting a road show to build up interest in the system.

The company is also nearing an important milestone in America. TransEnterix's SurgiBot system could get the FDA nod of approval this month, and if so, then a marketing team led by former Intuitive Surgical salespeople will pitch it as a more flexible, feature-rich, and cheaper alternative to da Vinci.

Unlike the da Vinci, the SurgiBot system is mobile, so it can be moved from operating room to operating room. SurgiBot also comes with features that could win sway with surgeons, including haptic feedback and an articulating camera to provide surgeons with better insight. Importantly, SurgiBot is expected to cost around $500,000, and that's far south of da Vinci's $1.5 million average cost.

Big headwind creates risk
Assuming TransEnterix's C-suite has the talent and products necessary to chip away at Intuitive Surgical's dominance, the biggest challenge facing the company could be its cash burn rate.

In 2015, the company reports that it spent $29.7 million on R&D, $2.9 million on sales and marketing, and $7.8 million on general and administrative expenses. Overall, TransEnterix spent $46.4 million last year, and that spending pace is quickening.

In Q4, total expenses were $13.9 million, or a $55.6 million annualized run rate, and sales and marketing efforts supporting the launch of ALF-X and SurgiBot mean that the company is likely to spend even more that that this year. Given the company has $47.1 million on hand as of Feb. 29, there's reason for concern.