Q3 2024 Monogram Technologies Earnings Call
Thank you for watching.
[music]
i have moment
Speaker Change: Greetings and welcome to the Monogram Technologies 3rd Quarter 2024 Financial Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow formal presentation.
As a reminder, this conference is being recorded.
Speaker Change: Before we begin the formal presentation, I'd like to remind everyone that statements made in this call and webcast may include predictions, estimates, or other information that might be considered forward-looking.
Speaker Change: While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. Your caution to not place under-reliance in these forward-looking statements, which reflect our opinions.
Speaker Change: Only as of the date of this presentation, please keep in mind that we are not obligated ourselves to revise or publicly release the result of any reservation of these for-looking statements alight of new information or future events.
Speaker Change: Throughout today's discussion, we'll attempt to present some important factors relating to our business that may affect our predictions. We may also review our most recent Form 10-K and Form 10-Q for a more complete discussion of these factors and other risks, particularly those heading risk factors.
Speaker Change: A press release detailing these results was issued on November 14, 2024 and is available in the Investor Relations section of our company's website, monogramtechnologies.com.
Speaker Change: Your host today, Ben Saxon, Chief Executive Officer at Noel Canopy, Chief Financial Officer, will present unedited results of operations for third quarter ended September 30th, 2024. And at this time, we'll turn the call over to Chief Monogram.
I'm sorry, Noah, you are muted by accident.
Thank you.
Noah: Oh, yes. I'm sorry. My phone got caught on mute. Once again, can everyone hear me? Yes. Okay. We're good. Okay. Thank you. We're good. We're good. Thank you. Okay. I'm going to go ahead and finish up. Thank you. Thank you. Goodbye. Thank you. Goodbye. Goodbye. Goodbye. Goodbye. Goodbye. Goodbye. Goodbye. Goodbye. Goodbye.
Yes.
Okay, great. Sorry about that. Good afternoon, everyone.
Noah: I'm just going to go over a brief agenda of today's presentation. I'll start off with a financial summary, and then I'll hand it over to Ben to go over upcoming milestones, a review of our regulatory strategy, and then open the floor to questions.
Next slide, please.
Noah: So, here are some key points on our year-to-date financials. We're sitting on $16.5 million in cash at the end of Q3 2024.
Noah: Our operating cash flow year-to-date is $10.9 million. That works out to be about a $1.2 million cash run rate.
Noah: that we're just on par with what we've had in the year, and we continue to be the same going forward.
Noah: The important note for this three-month period was that we had a significant financial raise.
We were able to generate $13.99 million from financing activities.
Noah: The lion's share of that came from a very successful preferred D raise.
Noah: which was upsided. We started looking to raise 10 million and oversubscribed. We ended up raising 13.
Speaker Change: Thank you for your your involvement in that. The greater crowd was was really supportive and that puts us in a really good position going forward.
Speaker Change: We continue to have the same amount of folks on employees, 27, and we have a highly variable cost structure on top of that. The 27 employees primarily around R&D and the engineering staff.
Speaker Change: The other engineers that we have are outsourced and can be turned on and off as we deem necessary. So that's very important going forward. We continue to have no traditional debt and we have very minimal short-term war and obligations that were related to the preferred deraise.
Speaker Change: Those are executable in six months and for up to 12 months, so it's not a long-term obligation of any sort.
Speaker Change: Our out-of-the-U.S. clinical trial cost estimate is about $1.2 million. That's included in the run rate that we expect to go forward at $1.2 million a month. Ben will get into that in the milestones upcoming.
Speaker Change: All things said, we expect to have sufficient access to capital.
through our short-term milestones.
Speaker Change: With this raise and our current run rate, we are in a very good position.
Speaker Change: to meet our obligations and end the year at a very strong balance sheet position. We're very pleased with the activity this quarter.
Next slide, please.
Thank you.
I'll hand it over to Ben.
Ben Saxon: Perfect, thanks Noel, really appreciate it and thank you everybody for joining us for today's call. I want to start by just giving some high-level updates and drill into some detail that I think
Ben Saxon: A lot of folks are interested in hearing more about so.
Ben Saxon: The objective of Monogram right now is to commercialize the the first fully autonomous saw cutting robot on the market. That's really our clear...
Ben Saxon: is a definitive goal as a management team, as an engineering team. Pretty much every employee at the company right now is solely devoted to making that a reality. As we move to the next slide to that end, we've made some pretty significant progress to date.
Ben Saxon: I'm going to kind of drill into, first off, the submission that's been done.
Ben Saxon: So, for those of you who had followed the story in July, we submitted our first 510k application to the FDA. That was submitted.
Ben Saxon: Basically, following a very aggressive development push pretty far ahead of schedule versus what we had been communicating to the market.
Ben Saxon: And subsequent to that submission, we received what's called an Additional Information Request. We'll also call that an AIR from the FDA. That was received on September 30th.
This was really not a surprise to management.
Ben Saxon: almost 28,000 pages. The FDA, really, it's a pretty incredible task to try and review that level of complexity in 72 days, which is how long they took to review the application. And we now have 180 days from receipt of that request.
Ben Saxon: to produce the requested additional information, which would put us to March 29th of next year would be the latest that we would be able to reply to the FDA without kind of overstepping the clock.
Speaker Change: So I want to kind of drill into the additional information request a little bit as much as I can.
As part of the additional information requests,
Speaker Change: The FDA advised us or recommended that we request what's called a Q-submission or Q-submeeting.
Speaker Change: We anticipate that that meeting will take place in December. So the FDA had basically 15 comments that related to various aspects of the system. I would characterize them in different buckets.
Speaker Change: One bucket would just be, you know, clarification questions about how the system works.
Speaker Change: Another bucket would be additional proposed testing, or not specifically recommending testing, but making comments that could be inferred to be recommending some additional testing.
and questions.
Speaker Change: We have prepared a response, a written response to those 15 questions.
Speaker Change: That is, the company is planning on submitting actually this week. It's incredibly detailed. We have
Speaker Change: So that document will be submitted to the FDA. Right now it's about 40 pages and maybe 15 to 20,000 words, something like that. So it's a pretty thorough, very thoughtful document.
Speaker Change: The FDA has about 21 days to respond to that, so that puts us into a meeting sometime in December to go through our proposed response and the proposed testing that's included in that response.
Speaker Change: We expect that during that meeting, we're going to get a lot more clarity on
Speaker Change: whether our proposed testing plan will kind of fully address all of the FDA's questions and that teleconference we think is really a critical moment for the company in terms of really de-risking the application. Obviously nothing's guaranteed but it certainly would be very helpful.
Speaker Change: to have a conversation with the FDA and have more clarity. And we have, we believe if the FDA takes a favorable position on the, on the testing that we have planned.
Speaker Change: We think that we have sufficient time to execute the proposed plan so we wanted to really take our time to really be extremely thoughtful in terms of what our plan is.
Speaker Change: So that kind of tackles the AAR and I'll be happy to answer more questions on that in the Q&A.
The other major milestone update, moving to the next slide.
Speaker Change: is that the company plans to perform, as we've kind of said many times, an OUS clinical trial.
Speaker Change: That is proceeding as planned on schedule, so we have applied to run an OUS clinical trial for the fully autonomous version of our robot.
Speaker Change: We are going to be running that with a group called Shalby. They're a publicly listed hospital chain. They're listed in India on the Indian stock market.
Speaker Change: And that agreement will help us to execute our clinical trial. We're going to be working with five Shelby surgeons at three Shelby sites.
Speaker Change: The goal is to perform the surgery on a hundred and two subjects. The FDA is wanting us to look at four soft tissue complications.
The acceptance criteria will be an 11.4% incidence.
Speaker Change: The primary endpoint will be after 6 weeks, with a secondary endpoint of 12 weeks.
Speaker Change: So within kind of three months post-op, that'll be kind of the
Speaker Change: the follow-up period. As Noel said, you know, on the low end, we expect
Speaker Change: the clinical trial to cost on the order of 1.3 million. The reason we think it's going to be sort of economical for the company is largely because Shalby uses the same implant as Monogram. So we licensed an implant that we have upgraded.
Speaker Change: and Shelby acquired the company we licensed the implant from. So it's a company called Consensys Orthopedics. So there's a clinically
Speaker Change: established FDA-cleared implant, and we are leveraging the same implant. So there's a lot of really nice synergy there. It saves us a lot of money. We don't have to worry about inventory on the implant side.
Speaker Change: And I should highlight that the clinical trial has been reviewed formally by the FDA in February.
Speaker Change: They indicated that they believe the population is generalizable to the U.S. population.
Speaker Change: So this is really great news. We kind of have, let's call it a belt and suspenders plan to getting clearance.
If everything goes great in the December meeting with AIR.
Speaker Change: and the FDA doesn't feel like clinical data is needed with our application, that's terrific. If the FDA wants clinical data, that's okay. We have a plan to get that data very quickly. And if...
Speaker Change: The clinical trial will be helpful regardless because it's a clinical trial for the fully autonomous version of our system and it'll give us valuable
valuable information about our system.
Speaker Change: We believe that the two critical, let's call them critical milestones that would come out of this, obviously,
Speaker Change: There's certainly risk, but if the FDA were to clear our system, we think that's obviously a very significant milestone. And if the FDA, once we have our first live inpatient surgeries, we think that's also a very significant milestone. So the company is a really interesting inflection point.
Speaker Change: I'm moving to the next slide and just kind of detailing what's upcoming, so...
Bye.
Speaker Change: This year, you know, we've kind of highlighted what we've done this year. The big news was submitting the 510K application, which was
Speaker Change: really significant lift. I think it was a really, really strong application. I think the team did an incredible job for the size of our team. The dedication was
Speaker Change: really just terrific. So it was a massive team effort, very happy with where that landed. So right now kind of the main outstanding thing to do this year is to have a Q-sub with the FTA about that submission that was done in July.
Speaker Change: continue to push forward on getting clinical trial clearance in India where we're planning on running the clinical trial.
Speaker Change: Moving into next year, you know, we have a couple of critical milestones that we anticipate, so...
We anticipate firstly submitting.
Speaker Change: A second 510K for the fully autonomous version of our robot.
Speaker Change: And we also plan on initiating the clinical trial that we've been talking about. We expect our first live inpatient surgeries and we expect that clinical trial to move very quickly.
Speaker Change: Shelby does a lot of volume and patient enrollment, as we anticipate, will be fairly efficient.
The company is also...
Speaker Change: looking to expand its international relationships. The relationship that we established with Shalvi is very attractive for the Indian market. We would like to find similar relationships in other large markets with large populations and growing demand for robotics.
Speaker Change: We think there are a lot of attractive markets that may have, let's say, lower barriers to entry or that are...
Speaker Change: significantly underserved. So we're going to be attending our first kind of major international
the trade show early next year.
Speaker Change: And then in terms of just planned launches, you know, we anticipate that obviously depending on what happens with
Speaker Change: The system that was submitted, 2025 may be a launch year or it may be into 2026 for the fully autonomous version of the system. But regardless, we're
in a pretty exciting spot with respect to critical milestones.
Moving to the next slide.
before we open up the Q&A.
Speaker Change: A big question we get is just sort of reiterating the investment thesis and the value proposition of monogram.
Speaker Change: When you look at the market dynamics, just from a 30,000 foot view, we think that the market has never been better for a solution like we're developing.
Speaker Change: And the reason for that is the underlying market is fundamentally changing and it's changing in a very interesting and quick way that we think may be underappreciated by the market generally. So,
Speaker Change: I'm just going to share some select statistics that we think highlight this point.
Speaker Change: When you look at the percentage of fellowship programs that have access to a MAKO,
Speaker Change: That number is 70% of fellowship programs have access to a MAKO.
Speaker Change: And if you're going to try and get into orthopedic medicine, large joint reconstruction, without a fellowship, it's incredibly difficult. More than 90% of orthopedic residents seek a fellowship.
So, the front end of the funnel is...
very much Mako-dominated.
Speaker Change: and then you look at where the robotic adoption is going.
We've seen studies that suggest that by 2030, which
Speaker Change: that's only six years away, one in two knee replacements will be robotic.
Speaker Change: And then you couple that with the fact that 60% of orthopedic surgeons in the U.S. will be over the age of 65 in a similar time frame.
Speaker Change: So, the market is changing very quickly. The way we've done knee replacements is not the way we are going to do knee replacements.
Speaker Change: And we think that the future, as it appears today, is very much Mako dominated. Mako appears to control the front end of the funnel, right, for any market.
Speaker Change: Whatever is filling up that funnel, it tends to be, fast forward that, what's going to dominate the funnel down the road.
Speaker Change: We think Mako has done an incredible job of locking up sort of new entrants into the market and then if you think about just
Speaker Change: attrition on the backside of surgeons retiring and that existing mix, the share of surgeons, that mix going away over time.
Speaker Change: we think this this really lends itself to the future of orthopedic medicine. So with that I want to open up the floor for questions and look forward to answering any questions folks may have.
Speaker Change: Great. Thank you. At this time, we will be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key.
One moment, please, while we pull up for questions.
Bye.
Bye.
Thank you.
Speaker Change: And our first question here is from Tom Kerr from Zacks Investment Research. Please go ahead.
Good afternoon, guys.
Speaker Change: A question on the out-of-US-India trial, I think we're just waiting on clearance. Is that taking longer than we thought or sort of what's the timeline on that or what are your expectations? And then part two on the OUS trial, it is approved, it goes on in 2025. Is that, would there ever be a revenue producing items from the trial or is that just purely R&D expense?
Speaker Change: Sure, thanks for your questions. So the, you know, the first point about time to launch in India
Speaker Change: Yeah, so we, as you can imagine, just like in the United States, there is a...
Speaker Change: a regulatory agency that has to approve the system for clearance.
Speaker Change: We have received soft approval to import the unit for clinical trial use for training purposes.
The clearance is still kind of in process.
but we are working with...
Speaker Change: one of the largest clinical research organizations in the country that has done a really, really good job helping us put together that application. It was a painstaking application. I think we've done a very good job with that. I would say that
Speaker Change: India is pretty receptive to technology. I think that there's an awareness of
the value proposition of robotics for that market.
Speaker Change: So, we feel like that's on time and at this point don't have any concerns about getting clearance to run the clinical trial. We haven't provided any specific dates for that.
Speaker Change: Largely because we, you know, we don't want to peg ourselves to without having absolute certainty on on when we expect that to kick off but
Speaker Change: I would say that we're prepping a system, now that we have clearance to import, we're going to start prepping a system to ship over and start training the five surgeons. And we're going to be as aggressive as possible to initiate that trial once we get the clearance.
But we would announce the clearance once we got it.
Bye.
In terms of
Speaker Change: I think your second question was, is it all cost or is there any revenue opportunity out of it?
Speaker Change: The clinical trial itself is is going to be all cost. Part of that is just the...
Speaker Change: We want to follow all of the best practices for running a clinical trial, so we really want to, we don't want to have any...
Speaker Change: economic incentives or anything else. It's really purely just a cost.
Speaker Change: We're pretty far removed from the process, so the clinical research organization is really, and the surgeons are going to be responsible for enrollment, they're going to be responsible for proper execution of the study, we're really going to be at an arm's length when the trial is actually executed.
Speaker Change: But, we don't anticipate any revenue, but what we do anticipate is, you know, if the trial is successful.
Speaker Change: obviously that would, we anticipate, could lead to clearance in India, which is a very significant market. Just to kind of help paint the picture there.
Speaker Change: There's a company that's listed on the Korean Stock Exchange called Corexo. They're a very big player in the robotic market in India.
Speaker Change: They guided last year I think on the order of a hundred systems in India.
Speaker Change: We think the market potential is much more significant than that. We think that we have some...
Speaker Change: In terms of just how we compare competitively with our system, we think we have some favorable dynamics.
Speaker Change: But, you know, it's it's a different market. Obviously, it's it's cost sensitive.
Speaker Change: We have some technology we're working on to try and drive down our costs so that we can be as competitive as possible, but it's a very large market, huge population obviously.
Speaker Change: And we anticipate post-clearance that Shelby could be a helpful partner for us to scale very quickly in India.
Speaker Change: Okay. Thanks for the cover on that. A couple of quick financial ones.
Speaker Change: Marketing advertising cost in the quarter was high obviously because of the preferred stock. Does that go back to normal in the fourth quarter where you're, you know, five-digit numbers or six-digit numbers?
Noah, do you want to take that?
Noah: Yeah, so Tom, I would say that was, that's not an ongoing thing, so, you know, the marketing expense was largely to drive.
Noah: awareness of the campaign, and the marketing spend has really been materially reduced since that was closed.
Speaker Change: Okay, that makes sense. Just want to clarify. Yeah, and one more quick, I will say, you know, one thing I'm just saying kind of a nice synergy out of it that I think is.
I think is a little bit underappreciated, so.
Speaker Change: I just want to kind of highlight the some of the value propositions of our system or potential value propositions, you know, one of the.
Speaker Change: One of the things we're really thinking a lot about is and the team is really devoted to is having
Speaker Change: We have an aspirational goal to have the most accurate system on the market.
Speaker Change: Now, obviously, that would need to be clinically validated, and this is just an aspirational goal. But, you know, if that turns out, for example, to be the case, we can demonstrate that clinically speaking our robot is very accurate.
Speaker Change: We think that the marketing that's been spent to date over the life of the company will
Speaker Change: It feels like we have somewhat of an intangible asset in our newsletter and in the audience that follows Monogram and we think that we will potentially have the ability to market our system in ways that could resonate with our audience.
Speaker Change: So, I think it's an undervalued thing for us to have this support.
Just kind of a note there.
Speaker Change: Yeah, that's an interesting note. Quickly, and I'll get back in the queue, the burden rate, you said $1.2 million throughout.
Speaker Change: this quarter in 2025, but then you said you're funded enough to achieve short-term milestones, but with your cash, that's more than 13 months.
Speaker Change: Is there a better way to say that you're funded until the end of 2025, or what does short-term milestones mean? Why not long-term milestones?
yeah sure I think I think you know we
Speaker Change: I think it's always important for us to, you know, there's kind of a, we don't want to run things to zero. There's kind of a
Speaker Change: a point at which we always want to make sure that the tank is full, so to speak. So I think that's part of it.
Speaker Change: We think that there may be opportunities if we continue to execute on critical milestones. One of the reasons we went public was to
Speaker Change: we've alluded to some of the milestones being helpful for that. I think that you know
Speaker Change: We have the ability to accelerate our development, but that would be in part tied to
Speaker Change: access to capital. So, for example, what we've said is that we
We want to be a multi-application system, right?
Speaker Change: When you think about returns on invested capital, it is incredibly creative for the company to deploy new applications on our system. So, for example, partial me.
To raising Capital at prices. We think uh, do not necessarily reflect the intrinsic value of the company.
Speaker Change: if we could develop a we see a for example an opportunity for a press fit partial knee there there has not been any company in the space that has commercialized the press fit partial knee which is
so at the us then in the United States,
Uh, but, you know, obviously, the capital needs of the company itself. So, um, with those caveats, I'll say that. Um, we expect initially to grow faster.
and the reason for that is just, um, the uh, the time it's going to take us to
Kind of the perfect application for a press fit implant.
Kind of fully seed. Uh,
news is a little more involved, so
Uh, the US accounts that we're targeting with with implants, and it's a little bit of a longer time to get through all all of the, uh, the hospital buying groups that we've been, um, we have surgeons that have relationships with. So, uh, and also the servicing of the US, uh,
Speaker Change: So, you know, there is a possibility that we could step on the accelerator if we
Whereas us.
Shelby already has the implant. Uh we would be a little bit more of a open.
Platform model, where we would Supply.
Speaker Change: If we have the right opportunities and partners, I hope that makes sense. So, you know, the burn rate could go up, but it would be tied, we feel, to very high ROI, R&D.
The robot and sell the consumables, uh, and uh, and some software piece. So,
Uh, so obviously, India is a very attractive Market. Uh, I'm not saying that, that's what we would do. But, um, you know, we, we think that we could
all that to say, we, you know, if you look at the comps in India, for the correct system, they, you know, they did a 100 units, uh, last year,
capabilities, I would say.
Speaker Change: So, if we just sustain it where we are right now, yeah, I think we have an attractive runway, but time is of the essence to deploy new applications.
Move pretty quickly in India.
Uh, if the value proposition makes sense with Shelby. So,
um, that's what I would say for us domestically, our
Plan is we're targeting 5 sites.
Bye-bye.
Initially. Um, so that would be 5 blade, surgical systems.
Uh, we have a range of surgeons of various volume levels. Um,
Speaker Change: Once again, as a reminder, if you would like to ask a question, it is star one.
we we have uh, 1 surge who's quite interested in our system, who is a
Speaker Change: At this point, I'd like to turn the floor over to Larry Hull for any questions over the web.
Pretty well known. Um, robotic user that does a lot of volume.
Speaker Change: Our first webcast question asks, can you speak to any strategic interest in your technology?
so, you know, it's going to be a mix but
uh, we haven't provided any
how many and how advanced are any discussions.
uh guidance yet on on where we see Revenue in 2026 but
We think we'll be uh in a we think put it like this. I I think we have a market. I think we're going to have a problem of
Sure, thanks Larry.
Speaker Change: So what I would say is, you know, just kind of going to the last slide and, you know, just reiterating the market dynamics, right? So.
Uh, meeting demand. Um,
and uh,
Where we won't be able to.
Kind of less trying to drive interest. I think we'll have a problem.
fulfill demand, I that's what I anticipate, but
Speaker Change: When you look at at the market right now, 70% of fellowship trained surgeons are being trained with with a MAKO system and you kind of think about the front end of that funnel.
We'll see when the time comes.
the next question, asks,
What other International markets are you targeting?
Sure. So that's why uh, we're going to Arab health
Uh, in in January. So
Speaker Change: And then 60% of orthopedic surgeons will be 65 years old within the next seven years.
you know, when you look at some of these uh large markets like for example you take Indonesia
There's a bunch of pretty attractive markets in South America.
Uh, which is a a massive population.
Speaker Change: So you kind of think about the attrition on the back end of that funnel. So we anticipate, you know, that that was always the investment thesis for Monogram was that we always felt like
Uh, we think uh, parts of uh, even the Middle East.
Eastern Far Eastern Turkey. Uh, if you look at um where uh, correct so has done really well. We think that they have kind of blazed the trail in terms of
Speaker Change: Striker's value proposition with Mako was obvious. We believe they have the best robot on the market.
And we believe that their robot
Markets that are attractive for robotic adoption.
Areas. That would be a focus for us outside the United States and
So, those are some of the, some of the
uh, we're we're going to start attending trade shows that
Will help us, uh, build the relationships. We need to
Speaker Change: as quickly as we think it is. We think it's only kind of a matter of time before that awareness drives interest in Monogram now.
To launch uh, in some of those markets.
The next question asks, what are the cost? Savings benefits of embossed robotic system to hospitals and surgeons.
whether it has already driven interest in monograms.
Speaker Change: difficult for me to speak to. I would just say, you know, Monogram has what we think is going to be one of the most attractive orthopedic systems on the market in development.
Sure. So
Is.
The the biggest uh, cost-saving for any robotic system.
Uh well it really is the the clinical value proposition of the robotic system. So
the reason that 1 out of 2,
robots will be robotic by 2030 is because
Speaker Change: So I think the engineering team has done an incredible job.
Certain types of Robotics have actually changed the surgery, fundamentally changed it. Um, so MO
Speaker Change: I think our registration is very fast, very efficient. I think our cutting is going to be...
Personalized custom surgical plan for that patient and they're 1 of the few robot companies in the world that use a CT scan. And what Mako has shown is that
uses a CT scan as the pre-operative um, information to basically generate
Speaker Change: very fast, efficient, safe, accurate, our laxity planning, all of it. So, I'm incredibly proud of how our system is performing, you know, we've had now well over 20 surgeons come in and use the system and verify and validate its performance.
If surgeon's personalized the surgery uh that seems to uh enhance the patient satisfaction outcome surgical outcomes. So
it's not a surprise that a 1 size fits non approach to surgery and giving everybody the same knee.
We think the feedback is really starting to resonate.
Speaker Change: We think that we will convert surgeons to our platform post-commercialization.
What mo is shown is that if you customize the surgery,
Doesn't really uh cut.
uh, patient outcomes seem to be enhanced. So, um, that, uh, if you
Speaker Change: We think the surgeons we convert will be both high-volume and low-volume and we think our robot will have broad market appeal.
think about it in a very competitive landscape where
um, Orthopedic surgeries joint reconstructions are highly profitable surgeries
So, you know, I think.
for hospitals.
I think for somebody on the outside looking at monogram,
uh, the the ability to have a robotic system that enables
Speaker Change: I think it's just really important to kind of think through all of those things. I think it's really important to look at utilization of systems on the market.
a a surgery uh, to be executed
Seamlessly without risk with minimal, uh, learning curve, kind of plug it in and the surgeons efficient from day. 1 kind of
Speaker Change: So, Striker has very high utilization of the Mako system, you know, on the order of 60 plus percent.
That could be very valuable to a hospital. Um, so the, the most real fundamental value proposition from a cost savings is
Speaker Change: make of robotic surgeries that Stryker does or of surgeries that Stryker does are robotic, the utilization of any other system on the market is much much lower than that and so
is just, it's really it's it's the marketing side of it. It's enabling surgeries that makes a clinical difference.
Speaker Change: If we move to a world where one out of two joint replacements, knee replacements, is robotic,
And then it's when you think about kind of the long,
Tail risks of surgery, you know, adverse outcomes, uh, you know, cutting a an MCL cutting a patellar, tendon, doing something bad.
Speaker Change: We think that just the dynamics of not having a well-utilized robot will start to cause a squeeze.
A system that really mitigates, those risks, uh, drives a lot of cost savings. So that would be the first thing.
Oh, wait.
So, I would say, yeah, we're, I mean, we, um,
Speaker Change: And we're in constant communication with our peers in the space.
The second thing, you know, I would say is
Right out of the gate, our system is is going to be. Uh, it's going to be hard for us to be competitive. Uh, when you look at the, um,
The the unit, uh, e economics of just our consumables.
I think that's what we've said publicly.
Thank you.
Speaker Change: Our next webcast question asks, can you provide any more details on the timing of the FDA clearance, such as what are any outstanding items?
You know, as we're getting scale, it's going to be. We're going to be at a disadvantage for our peers.
in terms of buying, um,
Uh, and getting kind of the realizing efficiencies of volume, but, uh, we we do have some advantages. So, for example, the Mako system, uh, requires a tool change. So to do the posterior cut and the distal femur cut
Speaker Change: Perfect. So, the big thing right now, you know, we submitted to the FDA in July.
Speaker Change: The FDA came back to us in September after 72 days with a request for additional information. We were largely expecting that.
System, you need a right angle adapter and what a lot of, um, surgeons will do is they will preload that adapter with a blade.
uh, with the make
Speaker Change: We think we can address all of the FDA's information requests if they accept our proposed test strategies.
So the, the surgeon will
The surgery switch the blade switch to the other tool that tool will be pre-loaded.
And sometimes even a rep will pre-load. The tool that was used uh with a different tool. So you could use 3 blades in a single case and I can tell you that those blades are not cheap with our pricing analysis. So
So we're you know, we're we're cautiously
Speaker Change: optimistic, but we need to meet with the FDA, have a teleconference, and review our proposed strategy in detail. We have until March 29th of next year to do all of the proposed testing we we plan to do and and respond to the FDA.
Uh, monogram system.
Is just a, uh, there's no tool change. Its it's just 1, 1 blade per procedure. So we, we see some economic advantages there. Uh, pretty much everybody is using, um, similar, uh, fiducials to navigate, uh, the knee and other instrumentation.
and then the FDA would then have...
Speaker Change: So, their target is 90 days from a submission to get approval, so, you know, 92 minus the 72 days that have been used gives you some idea of...
um, so there's not a huge opportunity there, but as we think about kind of the, the next gen and where it's going, uh, we think there's certainly opportunities to potentially eliminate
Uh, the fiducials, the that consumable and um, and lower cost. Um,
Speaker Change: when we might hear back but you know conservatively speaking we would expect to hear back in the second quarter of next year if we use the full clock to to submit.
Then you think about cost savings. It's also just efficient.
In time, right? So the faster you could do a surgery.
The more your robot increases throughput, uh that you know the more competitive it is and uh kind of a head-to-head matchup. So
Once we have this December meeting, I would note that.
Speaker Change: we're going to be as aggressive as we can to get.
We think our we think our robot is um, certainly competitive. Uh, especially as we have scale and, and more purchasing power.
Speaker Change: to get the response in and give the FDA the data that we plan to submit.
But, clinically speaking is, where we think the rubber meets the road. So,
Speaker Change: That would be sort of the timeframe that we would expect to hear back by, let's call it the second quarter of next year.
if you think about a, a large strategic and you think about the servicing cost,
To.
Kind of manage a deployed.
if
Uh, robot base, right? So for some of some companies, in the space, they have thousands of robots that they have to manage and service and calibrate and take care of. Uh, if um, if your robot is only optimized for a single application, let's say total need
Speaker Change: If the FDA requests clinical data with this submission, which was kind of always a risk.
Speaker Change: We have our plan to do the clinical trial in India.
Thank you.
going from a slow simmer to soon full on
But it's not optimized for hip or shoulder or whatever. Um, that becomes very inefficient. So,
Speaker Change: full-on ready to go. So we're in a pretty good position to address.
we think that over time as we become multi-application,
Speaker Change: what needs to be done to get this thing cleared as quickly as we can.
You can cost savings for uh just from a distribution standpoint and service extend Point training standpoint.
uh, having let's call it a best-in-class piece of Hardware that scales to other clinical applications will be a sign.
Bye. Bye. Bye.
Speaker Change: The next question asks, what do you anticipate the timing of the OUS clinical trial to be?
um, tra cross training s
Uh, robot operators.
Sure, so...
On multiple applications. There's all kinds of interesting synergies. So
Speaker Change: I want to be really careful how we answer this because I, like, you know, I want to.
uh, long-winded way of saying we we we think we have some advantages.
The next question asks do you have to train surgeons once you receive clearance and start to come?
Commercialization.
Uh, yeah. But 1 of the, so 1 of the advantages of our system,
Uh, so we think the number of cases required to learn how to use the system is minimal to just kind of give you some examples. So as part of our verification, valid,
Is that we, you know, kind of the the training required to be an expert on our system or the learning curve. We think is going to be very fast.
when we submitted to the FDA,
We had to have surgeons, come in and use the system. Uh, many of the surgeons that came in had never used the system,
Um, all all sorts of protocols that were being run.
and we took them from a quick training session to doing surgery on a cadaver, uh, and the data for accuracy and
Were run on us with a surgeon who had only used the system basically that same day. Um, so that's how much confidence.
We have in the system. Uh, and we think that training is the required training for the fully autonomous version is is pretty minimal.
There really is minimal skill required to execute the cuts. So I don't, I think, I don't know Larry. If you were I don't think you were there but we did. We had an analyst day.
Not too long ago. And at the end of this day, we actually had uh, Dr. Eunice's 13-year-old daughter, uh, run the robot for the
Prep.
so all of the cutting was done by a 13 year old girl who didn't know anything about a knee replacement, so we're really going to get to the point where the surgeon is just
Sort of like autopilot on a plane uh telling the plane where to go and uh the plane kind of takes off flies and lands pretty much on its own.
Kind of a similar thing with, uh, with our system.
Uh, the surgeon will tell the the robot where it wants it to put the cuts but outside of that, uh, should be pretty intuitive.
Is this a razor slash razor blade business model?
Next question. I asked what is the cost of the emboss robotic system?
Sure. Um, so we haven't we haven't disclosed what the, you know, what our
Target ASP is and
It's it's going to be pretty variable and I should say that.
The market in the United States is changing. It used to be
That robot companies like Mo could charge a million dollars per system.
bundling, uh, where uh, they offer
Uh, what they've been transitioning to is more of a u
uh, hospitals and asc's, uh, discounted pricing for
Use of the robotic system. So, utilization drives economics for the hospital.
Um, and they essentially give the robot away in exchange for use commitments.
Um,
so that's that's the direction. The model is going. And yes, it is a razor razor blade model.
so the Capital Equipment,
Can can certainly be.
You know, an attractive business. But uh the money is made on the consumable which in our case is the robot consumer.
And the uh, implant consumables.
And um we we think that the some some companies in our space are doing a very, very good job monetizing.
The robot consumables. Uh, in addition to the um,
To the implants. So that's really where the money we think is going to be made.
Uh, utilization of the system and selling the implant.
And our last question asks,
does it matter that knee surgery is an
The procedure as you look to Rapid adoption once, cleared.
so, um,
I mean, the
uh, the reality is that, um,
even when we look at like, let's say, CEO, uh, which had a m
Material impact on how the knee reconstruction business and and Joint reconstruction.
um, it wasn't that the demand went away, it was just that the demand got deferred
Um people uh, who need a knee. Replacement need a knee replacement.
You look at the the biggest barrier to surgery.
and uh, I think
It's a very real fear that frankly, I would have too of amputation. I mean,
once you kind of
Fully appreciate what's happening in your knee replacement. You're, you're taking bone and you're you're cutting it in a way. That is is permanent. You're never going back.
Into lasiks surgery, right? If we have a system that is
Um that is a very scary thing and so our our goal is to try and over time turn knee replacements.
very, very accurate.
Uh, that requires minimal skill.
and,
Give surgeons all the tools. They need to carefully and appropriately plan where to put that implant. So the patient has the highest likelihood of being satisfied.
And can execute that plan with minimal risk to the patient.
We think that that's really the best we can do for.
Space and people who maybe are sitting on the sidelines, not getting any replacement because it's elective and they're just kind of suffering through. We we really want to have a solution for those people.
To get their life back. Because when you
When you get a knee replacement or a joint replacement, and it goes well.
There's so many people that I've talked to that. It it's been game-changing. It's
I mean, it's
Enhance the quality of their life tremendously.
So that's really our vision. Our vision is to
Basically, make knee Replacements a surgery that is not is not. So scary is is basically
Just almost on autopilot.
And part of part of what happens has to happen for that to be a reality is that the uh surgeons just more surgeons need to use robotics.
and, uh, you know, a lot of people will say, well,
Robotics haven't really proven uh anything clinically, and that's true. Uh if you use a robot to just do what you could do with manual instruments,
Right, if you just use a robot.
value proposition isn't really that significant, but
To do generic knee Replacements. Yeah, the the
if you use a robot to personalize the surgery and uh, really in ways that are
transformative uh we think that's where the value proposition is starting to Showcase itself, so
Hopefully, that helps address that.
For the management for any closing comments.
Terrific. So, uh, I just want to thank everybody for joining us, this afternoon. Um,
Great. That's included the question and answer session. I'd like to turn
The.
You know, the team has been working very, very hard, um, to, uh, execute our objective.
and our objective is very clear, we want to commercialize the first
fully autonomous saw based cutting robot on the market and
We believe that a solution uh, like what we're building?
Has uh, an increasing Market need. Uh, we think the Dynamics of the market are shifting very quickly.
uh,
we believe, uh, most
Younger surgeons coming onto the market, use Robotics. And the predominant, robot, they use is Mo.
and we think as uh you have the demographic Trends kind of shift in in the orthopedic space and more surgeons who
The Need For What romantic monogram is, building is going to become more and more acute. So,
Kind of used to doing things the old way. Uh retiring. Uh we think that
We think time is on our side.
and we, we're just going to
Continue putting our heads down and executing and and doing everything we can to get clearance as quickly as possible.
So really, really thank you for your support. Uh, we uh will be in touch with hopefully some some updates over the coming months as we uh meet with the FDA and and uh hopefully have additional news for.
For our clinical trial.
So with that. Thank you, really appreciate everybody's time.
This concludes today's teleconference. You may disconnect your life at this time. Thank you again for your participation