This News Explains TransEnterix's Surging Share Price

What happened

After announcing positive regulatory news, shares of TransEnterix (NYSEMKT: TRXC), a medical device company focused on robotic surgery, soared 13% as of 9:57 a.m. EDT Tuesday.

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So what

TransEnterix announced that it has received FDA clearance for a number of label expansion claims for its Senhance Surgical System. Specifically, the device can now be used for laparoscopic inguinal hernia and laparoscopic cholecystectomy surgeries.

The company estimates that this label expansion claim will widen its addressable market opportunity by nearly 2 million procedures annually. That represents a more than doubling of its current opportunity.

Here's what TransEnterix's CEO Todd Pope had to say about the approval:

Given the news, it isn't hard to figure out why investors are having a great day.

Now what

The news out of TransEnterix has been extremely positive in recent months. A few weeks ago we learned that the company sold five Senhance systems so far in 2018, which I think is very impressive. Last week the company announced that it secured a $40 million debt financing agreement. The move extended the company's runway in a non-dilutive manner. When adding in today's regulatory news, it is understandable why shares have almost doubled since the start of the year.

Will this label expansion claim help the company to win over some of the naysayers and accelerate system sales? That question remains an unknown, so I continue to believe that taking a wait-and-see approach to this stock makes the most sense. However, there's no doubt that the company is making progress to improve its financial position and increase the commercial viability of its product. If the company can continue to execute against its promises, then it won't be long before I officially count myself as a bull.

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Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.