Israeli medical robotics company XACT Robotics has announced to its 65 employees that it is shutting down and laying off everybody. Most employees were unaware of the troubled state of the company and some were even hired in recent months. XACT Robotics has developed autonomous robots for performing hands-free surgery. It currently remains unclear whether employees can receive the full amount of compensation due to them.
A source close to the company told "Globes" that although XACT Robotics received FDA approval for its product in 2019 and began sales in 2020, it has failed to generate significant revenue - a typical development with medical device companies. At the same time, XACT Robotics began talks to be bought by an international company but last week learned that an acquisition is no longer on the agenda. Meanwhile the company has been unable to raise capital and is on the brink of insolvency. As soon as the shareholders received the negative response from the international company, they decided to close down XACT Robotics.
"It was possible to save the company
Two sources involved with the situation at XACT told "Globes," "It's a shame. It was possible to save the company. It has good technology." But though they agree on this, they disagree on other matters. One source says the controlling shareholder turned down a $500 million acquisition offer in 2020 and that the current offers was also attractive but the controlling shareholder bargained so much until the offer became irrelevant.
The second source tells a different version and that the product was never fully developed so that acquisition offers were never a practical possibility, and the company remained dependent on it while hemorrhaging cash and failing to create alternatives, or even closing the company earlier in a more orderly manner.
Another proposal was recently on the agenda to merge XACT into a public company or to sell it to a group of investors for a low amount in order to try to continue to maintain it as an independent company, but even these proposals did not mature into a deal, among other things due to sharp differences between the shareholders.
Now the company's main patents are expected to return to the hands of the Technion, where they were developed, but it is not clear if they will be able to be used again. For the company's employees, it will probably be irrelevant.
Raised $60 million to date
XACT was founded by leading figures in the field of medical robotics in Israel - Harel Gadot, formerly an executive at Johnson & Johnson who wanted to found a cluster of companies in Israel in the field of robotics and medical devices, among other things in the Medex technology incubator that received support of the Israel Innovation Authority. Another founder and shareholder is Yossi Bornstein, who founded and managed Shizim Medical Devices. The CEO of the company is Shai Meltzer, who previously managed several medical device companies.
XACT's technology was developed by Prof. Moshe Shoham of the Technion, on the basis of which Mazor Robotics was also founded, which was sold to Medtronic for $1.64 billion.
XACT has raised about $60 million to date. In its most recent financing round in 2019, the company raised $36 million with the participation of the Saber family fund and led by the Chasing Value Asset Management fund.
Published by Globes, Israel business news - en.globes.co.il - on September 3, 2023.
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