Shares of Hansen Medical (NSDQ:HNSN) slid last week after an analyst at Morgan Stanley said he would stop covering the robot-assisted surgery device maker, citing competitive issues and a capitalization problem.
“We expect Hansen to underperform our coverage and the broader market largely due to our view that Hansen’s penetration into endovascular procedures will have a much slower ramp than consensus appreciates,” Morgan Stanley analyst David Lewis wrote in a Jan. 8 note to investors. “We question the clinical utility of the technology in the endovascular space as the Magellan system does not drive a faster, better and less expensive procedure, in our view.”
HNSN shares closed down -1.4% Dec. 8, at $2.07 apiece, off -83.2% from a 52-week high of $12.30 per share. Last November, the Mountain View, Calif.-based company posted 3rd-quarter losses of -$10.2 million, or -54¢ per share, on sales of $3.2 million, paring losses by 34.4% despite a -17.9% top-line slide. The results beat Wall Street’s consensus forecast on the bottom line but missed sales expectations of $4.2 million.
At the time Hansen said it planned to lay off an unspecified number of non-R&D workers, aiming to lower its break-even point to about $40 million. Morgan Stanley’s Lewis said that might not be enough to right the ship.
“Without a path towards adoption or profitability, cash burn and dilution remains a significant concern, as the company has averaged $10mn in free cash flow burn per quarter over the past 4 years and has more than tripled its shares outstanding since the end of 2012. Moving forward, the company only has $30mn in cash on hand, suggesting further financing and additional dilution are likely,” he wrote.
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