Mark Klausner - Investor Relations, Managing Partner at Westwood Partners Todd Pope - President and Chief Executive Officer Joseph Slattery - Executive Vice President and Chief Financial Officer

Frederick Wise - Stifel Financial Corp Greg Chodaczek - Sterne Agee CRT Jeffrey Cohen - Ladenburg Thalmann & Co. Inc.

Bruce Jackson - Lake Street Capital Markets

Good morning and thanks for joining us for TransEnterix third quarter conference call. Joining us on today’s call are TransEnterix’s President and Chief Executive Officer, Todd Pope and its Executive Vice President and Chief Financial Officer, Joe Slattery.

I would like to remind you that this call is being webcast live and recorded. A replay of the event will be available following the call on our website.

To access the webcast, please visit the events link in the IR section of our website, transenterix.com. In addition on today’s call management will be referring to a presentation that is available for download in the investor relations section of the company’s website.

Before I begin, I would like to caution listeners that certain information discussed by management during this conference call are forward-looking statements covered under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company’s businesses.

The company undertakes no obligation to update information provided on this call. For a discussion of risks or uncertainties associated with TransEnterix business, I encourage you to review the company’s filings with the Securities and Exchange Commission, including the Quarterly Report on Form 10-Q filed on August 6, 2015 and the Form 10-Q for the quarter ended September 30, 2015 expected to be filed shortly.

With that, it’s my pleasure to turn the call over to TransEnterix’s President and Chief Executive Officer, Todd Pope.

Thank you, Mark, and welcome to our third quarter call. We make tremendous progress this quarter.

We completed the acquisition of the surgical robotics division of SOFAR. We now have two compelling platforms and we want to talk to you about today both the ALF-X and the SurgiBot.

So follow me on Slide 5, I want to talk to you for a moment about what we believe is the robotic surgery growth drivers in the future. We talk to Surgeons, Administrators around the world, we constantly ask what will unlock the next way of growth in robotics.

There are three common themes that come back to us. First, build platforms that Mimic laparoscopy.

Second, bring technology to bear they can address some of the trade-offs, surgeons are required to make, when they used current robotics. And thirdly, bring compelling economic value to hospitals both with capital and per-procedure costs.

We certainly believe that SurgiBot and ALF-X are both design to meet this need. I want to go a little deeper and need one of those growth drivers on Slide 6, building on the success of laparoscopy.

Today, traditional laparoscopy certainly remains a dominant form of minimally invasive surgery, there are 6 million laparoscopic procedures done, each year between U.S. and Europe.

And in Europe alone there are 30 times more laparoscopic surgeries done each year than robotics surgery. Surgeons are experienced with the approach where to put their trocars and how to move their instrument.

Both of our platforms are ALF-X and SurgiBot Mimic laparoscopy. Next slide, there are some trade-offs to that are still require, when it comes to using laparoscopy, talked about each one of those and how our platforms address those.

First and foremost, surgeons still have to rely on assistant to control the camera, they’re not control of division during the procedure, certainly both SurgiBot and the ALF-X, puts their control back in the surgeons’ hands or eyes. Challenging ergonomics, as you see on Slide 7, surgeons with laparoscopy’s getting very difficult positions and they have to stand there for many hours, and some instances and this leads to [indiscernible] robotic platforms like SurgiBot and ALF-X can definitely address these.

And lastly with robotics precision movement is one of the big advantages that allow surgeons to do precise movements, especially when it comes to suturing around delicate organs and vessels. Now, which we move to Slide 8, we want to talk about early the second growth driver, we believe that robotics today for all the great things and it offers certainly some technology can be brought to market that address to some of the current trade-offs and surgeons are estimate.

First and foremost is no haptic feedback with current robotics. Surgeons constantly tells us that they want to be able to feel tissue whey they are interacting with tissue bone suturing.

And on the SurgiBot allows that with direct drive system actually having their hands on the instruments that we’re using and ALF-X has haptic feedback built-in, and surgeons are truly able to feel their interactions with tissue as they go to the surgery. Next, camera movement with current robotics, surgeons have to disengage their instruments and take both of the hands, and take control of the camera and moving to the next plane with the surgical field, certainly with SurgiBot, the surgeons are allowed to do that on their own.

And with ALF-X, as many you have seen that actually has eye tracking software that allows wherever the surgeons looks on the screen, the camera will follow. This enables the first robotic platform they can move three robotic arms simultaneously.

Also this engagement with surgical field, surgeons like to be involve serious in the surgical field and communicate easily, SurgiBot they are within the sterile field and with ALF-X they have an open platform, they can see in communicate with they are very easily. And lastly, minimally invasive and this is important with current robotics the majority of the trocar size that are used 8 millimeter, but if you go back to traditional laparoscopy, most of those trocars are 5 millimeter.

Our ALF-X system also has 5 millimeter trocar platform, which allows people less invasive in this. And lastly, ability to reposition the patient, many surgeries required patient to be moved, whether it’s head up, head down, it’s very common, someone do that today with robotics and we can easily do that with both of our platform.

So we feel like the second growth driver of – tracking some of these trade-offs that are required today are met very nicely about both of our platforms. And thirdly on Slide 9, talk a little bit about economic value, certainly we hear from hospitals that they are concerned about both capital, acquisition costs and per-procedure costs.

The SurgiBot is able to have very unique lower capital acquisition costs upfront and ALF-X is able to mimic the pricing structure, the hospitals currently enjoy with traditional laparoscopy. This is important because robotics goes and enjoyed a special reimbursement code that used current existing laparoscopic code, so they like to be able to try to keep us close to what they have used to, what procedure costs in laparoscopy.

And we are able to do that with our ALF-X platform. So last three or four slides, which really wanted to review, how both of these platforms address the three key significant growth drivers that we believe are going to drive the next wave of growth in robotics.

Now, we’re going to hand the call over to Joe Slattery.

Thank you, Todd. During the Slide 10, I’m going to go over some of the key financial highlights of the quarter.

The acquisition of the ALF-X technology requires us to allocate portion of the purchase price to the net assets required, including an assessment of identifiable intangible assets as well as the recognition of goodwill, because identifiable intangible assets, such as in process R&D are amortized. These non-cash items are expected to be material to our financial statements.

With the acquisition having occurred so late in the quarter, we are currently in the process of concluding our analysis. As a result, our complete financial statements will be provided in our Form 10-K – Form 10-Q to be filed next week.

Today, I will provide the key financial highlights of the quarter. We’ve recognized no revenue or cost of goods sold in the third quarter of 2015, as our efforts remain focused on the development of SurgiBot in the advancement commercialization of the ALF-X system.

Research and development expenses were $7.1 million in the third quarter of 2015, compared with $9.1 million in the third quarter of 2014. The decrease in R&D spend resulted primarily from decreased contract and consulting service expenses, and parts and supplies related to the development of the SurgiBot system.

Sales and marketing expenses were relatively unchanged at $0.4 million in the third quarter of 2015 compared to $0.5 million in the prior year period. General and administrative expenses were $1.8 million in the third quarter of 2015, as compared to $1.5 million in the prior year period.

The increase was primarily due to increased personnel and stock compensation costs, partially offset by decreased public company costs. Costs related to the acquisition of SOFAR, surgical robotics division were $4 million during the quarter.

Looking at the balance sheet, we finish the quarter with $52.9 million in cash and cash equivalents. During the third quarter of 2015, our cash decreased by $18.2 million, which represents approximately $8.5 million in cash used for operations, $25 million paid to SOFAR for the ALF-X system purchase.

Approximately $400,000 in property and equipment investment offset by the net proceeds from the issuance of common stock of $5.8 million and proceeds from issuance of debt $9.9 million. We believe our current cash will fund operations into the third quarter of 2016.

While, this outlook represents an increase in our quarterly cash use as compared to past results. As we transition of the commercial phase, our cash will be invested in inventory and other working capital.

As our sales begin to ramp next year, we expect our quarterly operating cash requirements to decrease relatively quickly. Overall, the combination provides much faster revenue growth, shorter time to cash flow breakeven and lower overall operating cash requirements through cash flow breakeven.

We expect to achieve breakeven in terms of cash needs by the end of 2018. I’ll now hand the call back to Todd.

Thank you, Joe. Slide 11, we are going to talk to you about things we’ve done prepared for commercial success in third quarter and subsequently we made significant progress toward commercialization of both our platforms.

Slide 12, I’ll talk to you a little bit about SurgiBot, we have prepared our response for the A.I. and continuing to work on that, those requested from the FDA in August.

And we plan to get approval in the first quarter of 2016, and launch in the second quarter of 2016 with the SurgiBot. This is consistent with our timeframe that we’ve been communicating over the past year.

We also hired, Paul Ziegler, going to be Vice President of Sales. Paul’s got deep industry experience, this was an extensive search, we took a year in the process, we are very excited about him joining our team He’s got extensive experience, not only medical technology, but surgical robotics and he spent a lot of time both on the capital sales side and clinical experience.

So we are very pleased to have him leading up our sales and commercial efforts. And he now is beginning to build out his team heading into the Q4, as we’ve communicated in the past.

Slide 13, we turn our attention a little bit to our ALF-X platform, as you know, we completed that acquisition back in September, we’re integrating that technology and the team right now. Anthony Fernando, we mentioned in our press release, we are very excited to have Anthony join our team.

He comes from Stryker, where he is the Vice President of Innovation and Technology for the international group. And Stryker is got a long history, not only in MedTech and technology, but in international operations.

So we are very happy to have among the team, and everything on our integration is on track. We also recently this – early this week announced Steven Boudrez is joining the team for our Vice President of Sales in Europe.

Steven also began his career in technology with Ethicon Intuitive Surgery, experience in the last 13 years in surgical robotics. He’s really been involved with the surgical robotics business in Europe from the beginning and he has a wealth of experience and rolodex is to help us build our platform and our team very quickly.

And we continue to believe that our first commercial sale of the ALF-X platform will happen in the first quarter of 2016. So as we look at our Slide 14, we’ve been quite responsive to market interest, closing the deal September 21, we’ve had a very busy October, we’ve been the French surgery Congress and also the Endourology World Conference in London, the American College of Surgeons in Chicago.

We’re in Italy for two meetings both with urology and general surgeons. Just take a moment to comment on the American College of Surgeons meeting in Chicago, several of you are there.

This was an exciting time for us and it was the first time that we have the SurgiBot on the floor of a large conference, the traffic was really nonstop in the feedback. We actually we continue to hear people comment on their excitement around the single port technology, and surgeons capability to operate with robotics, we have been in the sterile field, which is on tremendous.

We also have the ALF-X there in a room off of the mentioned floor. We had many surgeons from CE Mark countries.

The ALF-X does have it active CE Marks and we were able to bring them in and let them demonstrate the system and see it in action. A lot of positive feedback, especially about – two things continue to resonate, first is eye tracking software, for surgeons to be able to control the camera with their eyes was a very enabling.

They now to be able to operate both robotic arms left and right and the camera arm all simultaneously, which is new really opened up a lot of thought about different procedures that they feel like, they can do robotically now. And certainly the ability to have haptic feedback of surgeons are used to having their hands to be a real resonator when they are operating the surgical field and to be able to have that on the robotic platform was generating a tremendous amount of interest.

So our last Slide, this is our vision slide, many of you have heard us talk about that in the past really being focused on improving clinical outcomes and patient care through robotics. I think you can see why were so bullish on the future of TransEnterix.

So we look back on this last quarter, since we are with you on our last call. We’ve made a lot of progress on the SurgiBot platform, we’ve completed our ALF-X acquisition.

We’ve made significant executive hires that really sure up our team and prepares for our execution in the future. And our line of sight in 2016 is Q1 revenue with the ALF-X platform and certainly a SurgiBot approval in 2016 revenue on that platform.

So with that, we are going to turn it over to Q&A, and look forward to talking you that process.

Good morning, Todd. Let me start off with FDA, you indicated that you got your questions in your preparing to respond.

Just any additional color there, where the questions as expected – I mean, is the response like if you follow in the next day, week, month, I mean, obviously your general timing, you reiterated, but just any color about where you stand there?

Yes. Good morning, Rick.

The FDA, I’d characterize our interactions with them as expected, we had a detailed submission in the additional information request were allow the line is that, we’d anticipated. So we are in close contact did you always are with the agency, when you are responding.

And we want to reiterate our timing and we believe the first quarter approval will be in line for us.

Okay. As you indicate, you’ve hired two senior sales leaders, may be looking at over the next year, when you based on your current thoughts and assuming U.S.

approval for SurgiBot. What – how do we think about just in the broadest sense, the number of reps, you’d like to have as you exit 2016 in the U.S.

and internationally. And again any color just your early preliminary perspective there?

Well, I’d say, we got to take those in separate own buckets as far as Steven Boudrez in Europe with the ALF-X have an active CE Mark will be building out that commercial team in right away, will be bringing on some hires in the fourth quarter of this year, and then building it from there in 2016. Certainly, Paul is aligning a lot of the planning process.

He will also begin to bring on people to his commercial team in the fourth quarter of this year. And then build ahead of our anticipated launch in the second quarter.

I just, if I get push a little bit on that, Todd, as I – so when we think about for each – in each geography in 12 months, maybe five to 10 reps system trying to get sort of an order of magnitude on sub-10 plus – 10 or bit. Just have you frame it a little bit?

Yes, I think, five to 10 in each geography is fair, Rick. I mean, obviously we’ve not sold the system and either geography and I think a little bit of that will dictated, but the early interest with ALF-X with an approved product, we’ve just in the five conferences in October.

The interest is high, so we’re going to be beginning to build that team. So I think those numbers as you mentioned are accurate.

Okay. And just one last one for me.

Just, remind us again maybe you talked a little bit more about how you see the European opportunity is a size, I mean, that your early thoughts on the number of half of the centers you’re going to target. And I mean, after always just my question is that your major competitor has 500 – something approaching 600 robots in Europe.

Is that the market size is it bigger, help us think it’s about that a little bit, as you can ready to launch – step up your launch?

Sure. Well, I think, when every you think about the market, right now, there are just one system out there, so we are really talking about penetration from one system.

And to your point is being great success, I believe there is over 570 units place with the current technology in Europe. And I think that’s a good start of the market.

I just think, when we think about the market. We just listen the feedback, we talk to hospital, we talk to executives in hospitals and certainly surgeons in, we here is that they really like the features of robotics.

They really do, but they say that, if their ability to use robotic technology without some of these job as today, if they were able to move to camera on their own, if they were able to easily reposition to patient without haven’t to buy extra technology, if they were able to continue to use 5 millimeter trocar, if they were able to have haptic feedback. They tell us that they think the market as far as procedure adoption will be quite larger then when you coupled that in Europe – especially in Europe, when you tell hospitals, we can take your robotic per-procedure costs and have it to be equal to laparoscopic surgery.

That’s significant goes in many times, their current robotic per-procedure cost is 200% to 300% higher. So when you add those two things together we think about the market being a lot more procedures, they could potentially be positively impacted by robotic technology.

As we think about trying to boil that down, obviously we would not given numbers, but we think 2016 can provide meaningful revenue for our company in CE Mark countries.

I appreciate that. Thanks, Todd.

Thanks, Rick.

Yes, thanks for taking my question. This is actually Brenden [ph] on for Glenn.

So couple of questions, first, remind us when you expect to respond to the FDA for SurgiBot. And what is still, we have to do thing in terms of your response.

And then, how long in the FDA have to reply to your response, and what gives you confidence that the FDA will accept the submission, and it won’t be stick around the question.

Yes. Hello, Brenden.

Thanks for the question. Typically 510(k) process is 90 days, and usually the agency tries to respond your first submission in 60 days.

Then you have a timeframe that you can take to get all your communication with the FDA and response in. And then, how to your response goes back and they typically response within 30 days, and that what makes up that 90 day period.

So we are expecting in first quarter 2016 approval. And that’s consistent with what we’ve said.

So our response would be within that timeframe. And I’d say just our confidence stems from what we’ve highlighted in the past.

We set down personally with the FDA in 2013 and started grasping our submission in our work. We took the extra step to do a pre-submission that we delivered March 31 of last year to the agency.

They responded back to us formally and riding later that summer gave us feedback and then we followed all of that guidance, and learning from our interactions with the FDA to put our submission. And we continue to interface with FDA regulators they have typical questions on a submission.

So the timeframe that how we lays out and certainly our confidence as you just want from our close working relationship with them over last two years.

Okay. And then separately, can you give us any update on the ALF-X approval timeline in the U.S.

When you expect to file for the approval and what indication, do you expect to file for, it will be like SurgiBot. And then can you give us any more clarity around when U.S.

approval may occur it first half of 2017 or second half of 2017?

Yes. I mean right now, all are really comfortable, is that we expected 2017 approval.

We will set down with the agency just like we did in the SurgiBot and talk about the language of the CE Mark approval. And the CE Mark approval has approval for general surgery GYN, urology and thoracic.

So and we will have good experience in the market with the ALF-X, by the time we fall, so we set down with the FDA and discuss all this prior to our submission and we turn out to talk about things publically and towards set with them.

Okay. And then, Todd, last question for me.

Are there some international markets you go direct in versus have any other distributor. And then, are you close to if any distributors, any major market, it’s going to be any update there?

Thanks.

Yes. Thanks, Brenden.

Certainly as you look at like the CE Mark countries, there are certain geographies that different technologies and companies it make sense to partnered with the distributor. And then certainly some did make sense to go direct.

And we are in those discussions now, we know the markets very well all of us kind of around the senior management table have been involved with growing high growth MedTech companies in Europe, and abroad. So we’ve got good relationships with distributors and we are in active conversations with many distributors.

And Steve coming on board this prior week has 13 years of selling robotics in Europe also, so we’ll be craft in that strategy and probably and like new more going into our next call in March of next year.

Okay. Thank you.

Thanks, Brenden.

Thanks, and good morning, Todd and Joe. Just a quick question.

You’re talking about the futures and procedure costs for the ALF-X. And I guess – I’m assuming doctors like the futures, hospital like procedure costs, is that correct or they both like above?

Well, I’d say that, certainly in MedTech, I think that environment is changed. Today, especially in the U.S., so many surgeons are actually employees of the hospital now, that they are much more aligned with performance and compensation around the cost of their procedures.

So I think the days are gone of surgeons, palming their hand on the table, so what technology they want, they are involved with the economies also. So they’re certainly are the most key thing on futures, because they ones use in a day and day out, but I’d say administrators and surgeons are equally invested in cost.

And some of the European doctors are you saw in Chicago were talking about procedure costs also, not just tell, what are these are great features, I want this thing?

Absolutely, because thing about there has been a nice growth of capital placement of robotics in Europe, but if you really dig into utilization, I rarely hear people say that they don’t like operating with the robot, they like some of the technology that’s broad. But there is only a few number of procedures that really make sense that you could potentially ask a hospital to double or triple their per-procedure costs.

And still have good utilizations. So when they hear per-procedure costs similar to laparoscopy, they think great, this is good from our patients, I can take the benefits of robotic technology and use it across many more procedures.

So that’s what we here, when we talk to European surgeons both at ACS and certainly this last month, where we’ve attended that many conferences.

And that’s kind of what we’re hearing with our actions that, it’s a per-procedure that kind of limits, what they can use your competitor for. I’m sorry, in cases and I get back to can you remind me about the 5 millimeter toolset, or instruments for the ALF-X.

What do you have – what CE Mark, why they are cheaper than your competitor. Can you go through that again, please?

Sure. With the ALF-X, we really wanted to try to Mimic laparoscopy in the development.

The majority of laparoscopic procedures today used 5 millimeter trocars and 5 millimeter instruments. The majority of robotic procedures today used 8 millimeter trocars and 8 millimeter instrument.

So when we were developing the ALF-X, we wanted to try to have 5 millimeter toolset. And today, we have over 20 instruments that are approved CE Mark.

The majority of those are 5 millimeter, that are few, that are larger, but that’s the size and why we try to develop that less invasive is typically viewed better patient outcomes. And then lastly, the cost is fairly simply in laparoscopy.

The majority of those instruments used in traditional laparoscopy are reusable, with the few of them being disposable. With our ALF-X system the same holds true, the majority of our instruments are reusable with few high valued instruments are disposable.

And with other platforms the instruments only able to be used a certain amount of time and then they need to replenished.

Excellent. And, last but not least, can I assume and this is way out, but can I assume some of the technology from ALF-X, make it integrated into SurgiBot 2.0?

Yes. It’s a good assumption; we are certainly looking our technology roadmap.

I’d say that goes both ways. We’ve got some great technology with SurgiBot and some great technology with ALF-X.

And as we look at future roadmap, we see their both platforms can share some features and benefits with one and another, just strengthen our future iterations.

All right. Thanks, Todd.

Thanks, Joe.

Thank you, Greg.

Thanks, Greg.

Hi, guys. Thanks for taking the questions.

Hi, Jeff.

So could you clarify, where you are talking about when you’re rolling to some of the metrics on the balance sheet, I got up to 25 cash is paid for the ALF-X acquisition, and $5.8 million common, $9.9 million debt issuance, is that correct?

That’s right. And roughly…

Okay. Okay.

The rest of remaining $8.9 million was – operating of $8.5 million and $400,000 of capital.

Okay. And the $4 million acquisition expense, do you expect some expense to be in the fourth quarter or beyond into 2016?

We think we have the entire expense fully accrued into the third quarter with that number.

Okay, got it. And Todd, you were recently talking about the ALF-X instrumentation.

Are there any follow on R&D projects as far as any other instruments that you maybe adding?

I think, what we’ve spoken about is in 2016, we’ll have an advanced energy platform that’s I got most of our focus right now on instrumentation development.

Okay. Got it.

And can you talk a little bit about provided we see a SurgiBot approval in the next few months, how that may play out for a CE Mark, or as far as your timeframe and integration of European sales growth direct into distributors for SurgiBot?

Yes. Somewhat low, we said about ALF-X, we think we are anticipating 2017 to have ALF-X approved with 510(k) and similarly with SurgiBot CE Mark in 2017.

Okay. So actually, we start shortly either after U.S.

approval for a CE Mark. We should expect?

Yes.

Okay, perfect. Thanks for taking the questions.

Thanks, Jeff.

Thanks, Jeff.

Hi. Thank you for taking my questions.

If we could get some more color on the European launch preparations that would be great. You’re making some hires, you’re talking to distributors.

Can you tell us a little bit more about what the anticipated revenue uptick might be if any local regulations or tender procedures that might affect the timeline?

Yes, good morning, Bruce. I would say that, first of all start, we have been going to an aggressive recruiting process to get our sales leadership employees.

And the hiring of Steven Boudrez, which we just announced earlier this week on Tuesday, it’s really that first foundation of building block, we’re tremendously excited, certainly our number one choice. And we are able to be able to get him on board and we’re excited about that.

It’s just really beginning to build out his top process on structure and team meeting with distributors in the coming weeks and certainly meeting with a lot of customers. So I would say that more color and guidance for what we’ll be doing in the 2016 will be reviewed in our next conference call.

Yes, Bruce, still I’d just add that, you spoke about the capital cycle and certainly the way we think about that is efforts going into the capital cycle over the next few months or really going to show results late next year, but we do have significant inbound interest in the system, we have already in place the couple of clinical sites, where surgeons are able to go CE procedures. We’ve got a fully function of Telelap [ph] in Milan, that’s very active.

Our tradeshow schedule is full, and the attendance has been very high. So there are many targets that we see that will allow us to work outside of the traditional capital environment, particularly when you’re talking about academic centers and the existing placements.

And we really do have an opportunity to have some nontraditional revenue, but certainly that is going to be, where we would get most of our results over the first and second quarter of next year. And our internal assumption is would be moderate sales expectations and then the ramp will really take place in the second half of the year.

That’s great. Thank you.

Thanks, Bruce.

Great. Thanks again for joining us today for our third quarter call.

We look forward to updating you on our progress in next quarter. And thank you again.