Unfortunately for Vicarious Surgical, the robotic surgery system developer is ending the year the same way it began: with a round of layoffs.
During a call with investors Monday afternoon to discuss the company’s third-quarter results, CEO Adam Sachs announced the workforce reduction without specifying exactly how many employees would be affected.
Alongside “several successes” for the business, he said, “we also experienced some setbacks, challenging market conditions, and their resulting pressure on our business drove us to make the difficult decision to once again downsize our team and reduce future planned spending in order to prioritize capital efficiency and better ensure our long-term success.”
MassDevice was first to report the layoffs.
Earlier this year, during Vicarious’ full-year 2022 earnings call in February, William Kelly, the company’s chief financial officer, announced layoffs of 14% of the workforce. The cuts were aimed at reducing administrative, sales and marketing costs, while spending on research and development work was actually slated to increase.
But the R&D department is no longer safe from the chopping block. The latest round of layoffs “significantly” affects R&D, Sachs said on the call, with additional cuts to “significant outsourced R&D spending that was throughout the budget.”
“Most of the functions that we’ve cut are functions that are parallel effort, functions where we’re working on remediating things that we expect to come up—taking the top 10 issues or areas like that and coming up with remediation in anticipation of challenges,” he explained. “Instead, we’re going to do this in a much more serial, more capital-efficient, but slower method: waiting till the issues come up and then remediating them at that time.”
And, while the company refrained from giving exact numbers on the latest round of cuts, Sachs said that after starting the year with around 230 employees, Vicarious is now down to about 130.
Those R&D cuts, combined with a handful of recently identified issues in the process of building the first version of its flagship robotic surgery system, have now set back the system’s development timeline by 12 to 18 months, Sachs said on Monday’s call.
Until the announcement this week, Vicarious had planned to finish the building and integration process by the end of this year, followed by clinical trials in 2024 and a de novo submission to the FDA in 2025. Now, however, the company isn’t expecting to wrap up development of the system until next fall, meaning the first human trials won’t begin until “mid-to-late 2025,” Sachs said, and pushing back the FDA submission to “early-to-mid 2026.”
Part of the delay comes from Vicarious’ discovery that certain hardware and software components of the technology “will require additional development efforts in order to ensure system compliance, reliability and safety ahead of formal verification and validation testing,” according to the CEO.
The surgical robot combines several different components—including surgical arms, a camera, a surgeon console and more—all of which were designed by separate subsystem teams and are now being integrated into a single system, a process that’s uncovering “some bugs and some issues across the system,” he said.
“Overall, most components are functioning effectively, but we’re starting to encounter some software challenges which are then, as things come up, uncovering some hardware challenges,” Sachs continued. “So, really, just a one- or probably two-quarter delay there, and the rest being the anticipated impact of reduced spending and our inability to preemptively resolve challenges that may come up.”
News of the R&D cuts and delayed development timeline sent Vicarious’ already precarious stock price even lower. After closing at 39 cents on Monday afternoon, the shares took a steep nosedive Tuesday morning to reach an all-time low of 29 cents.
After spending almost every day since the beginning of August with its shares below the $1 mark, Vicarious earned a warning from the New York Stock Exchange in September. The company now has six months—in this case, until late March—to regain compliance with the NYSE’s rules by getting its stock price to an average closing price of at least $1 for a 30-day period or risk being delisted from the exchange.