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Carlsmed Personalizes Spine with AI · Vanguards of Healthcare by Bloomberg Intelligence

• 0:20
  Speaker 1: Welcome to another episode of the Vanguard's healthcare series. My
• 0:24
  Speaker 1: name is Matt Hendrickson, the medical technology analyst at Bloomberg Intelligence,
• 0:28
  Speaker 1: which is the in house equity research platform of Bloomberg LP.
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  Speaker 1: We are pleased to have with us today Mike Cordonier,
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  Speaker 1: co founder and CEO of Carlsmed, a medical device company
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  Speaker 1: pioneering AI enabled and personalized spine surgery. You can dive
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  Speaker 1: deeper into the company and its financials by typing in
• 0:45
  Speaker 1: c A r L equity go on your Bloomberg terminal. Mike,
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  Speaker 1: thank you for joining us today.
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  Speaker 2: Thrilled to be here today.
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  Speaker 1: And you know, Mike, why don't we just get started.
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  Speaker 1: You know, Carlsmed was a recent IPO, not even twelve
• 1:01
  Speaker 1: months in yet. But what was your path in your
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  Speaker 1: career path that got you to founding Carlsmed and getting
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  Speaker 1: it into as a publicly traded company today.
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  Speaker 2: Yeah, well, thrilled to tell the story. You know, I started,
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  Speaker 2: believe it or not, I've been doing this almost thirty years,
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  Speaker 2: which I just thought about this today and that seems
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  Speaker 2: like a really long time. But you know, starting in
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  Speaker 2: the nineties, I really started in the diagnostics center and
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  Speaker 2: diagnostics gave a really great start to my career because
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  Speaker 2: looking at software systems, big data analytics, and then made
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  Speaker 2: the transition in the early two thousands to devices and
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  Speaker 2: did my first spine company in the early two thousands.
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  Speaker 2: And it's a really interesting story because I have a
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  Speaker 2: really personal bent to why I started CARLSMD because it
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  Speaker 2: was when I started the first UH spine company in
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  Speaker 2: the early two thousands coincided with when my father had
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  Speaker 2: his first spine surgery, and it was a very traditional
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  Speaker 2: medical device company, UH. And I came from a strong
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  Speaker 2: software background, but the traditional medical device company UH for
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  Speaker 2: spine surgery was patient, you know, goes to their doctor,
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  Speaker 2: goes to their surgeon to get a you know, to
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  Speaker 2: get diagnosed. Ultimately, surgeon decides what they will use for
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  Speaker 2: devices in the operating room and there's a series of
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  Speaker 2: you know, stock devices that are that the surgeon can
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  Speaker 2: choose from in the operating room. And you know, ultimately,
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  Speaker 2: my father called me knowing that it was just at
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  Speaker 2: this you know, new spine company that was up and coming,
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  Speaker 2: and asked me to design everything for a surgery and uh,
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  Speaker 2: you know, this technology really wasn't there yet. And I said, no, like,
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  Speaker 2: that's not the way it works, you know. You know,
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  Speaker 2: I'll you know, make introductions to spine surgeon and h Ultimately,
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  Speaker 2: you know, my father had you know, some complications from
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  Speaker 2: his spine surgery, which is really common uh with unfortunately
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  Speaker 2: with adults with spinal deformity, and so that lesson kind
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  Speaker 2: of stuck with me. I transitioned into actually working for
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  Speaker 2: a very large contract manufacturer orchiand Orthopedics, which they just
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  Speaker 2: announced their merger with Ticomet you know, two of the
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  Speaker 2: largest contract manufacturers. It's a really great experience for me
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  Speaker 2: because I learned the fundamentals of lean manufacturing, uh and
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  Speaker 2: on the contract side, and you know, really how to
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  Speaker 2: take you know, this this concept that was developed you know, uh,
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  Speaker 2: the Toyota way of how to do you know, single
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  Speaker 2: piece flow, build on demand manufacturing, and ultimately transition that
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  Speaker 2: to going back into devices with Zimmer and being part
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  Speaker 2: of their early entree into digital dentistry. And I bring
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  Speaker 2: that up because it was very much focused on the
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  Speaker 2: digital workflow for medical devices. So it took a lot
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  Speaker 2: of my software experience and was able to leverage that
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  Speaker 2: in a way to make mass customization. Along with this
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  Speaker 2: deep training that I had in lean manufacturing and ultimately,
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  Speaker 2: you know, that gave the concept to you know what
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  Speaker 2: is now CARLSMD of how to take digital workflow, take
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  Speaker 2: you know, a lot of the lean manufacturing philosophies, and
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  Speaker 2: ultimately saw this big clinical problem for complex spine deformity
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  Speaker 2: that has a high reoperation rate, and so that led
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  Speaker 2: me to start Carl Zamanda twenty eighteen. It's been you know,
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  Speaker 2: a rapid growth story, as you know, and you know,
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  Speaker 2: really thrilled to be on the other side of the
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  Speaker 2: public company now.
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  Speaker 1: Yeah, and you know, we could probably go into that
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  Speaker 1: growth and we'll talk about their pre announcement and a
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  Speaker 1: little bit. But let's let's go back to the current
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  Speaker 1: state of the spine market. Because what caught my attention
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  Speaker 1: when you were talking about the early two thousand and
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  Speaker 1: the stock devices, because that's what spine was used to
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  Speaker 1: be known as. It was a commodification of cages, a
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  Speaker 1: commodification of screws, a commodification of plates. So let's start
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  Speaker 1: with just mainly maybe we'll start with just the progression
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  Speaker 1: of degenerative disc disease and why is it some why
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  Speaker 1: is this a disease that can't be treated usually without
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  Speaker 1: some sort of fusion surgery or procedure done.
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  Speaker 2: Yeah, So, degenerative dis disease, in very simple terms, is
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  Speaker 2: over time, the disc, which is the part between the
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  Speaker 2: vertebral bodies, starts to lose hydration and that causes a
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  Speaker 2: collapse of the disk base. And as that disease progresses,
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  Speaker 2: you get you know, the phenomenon that is degenerative dis disease.
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  Speaker 2: And over time, what happens is that you start to
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  Speaker 2: lose height. And if this isn't treated over time, it
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  Speaker 2: continues to progress and also causes a coronal sagital plane deformity,
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  Speaker 2: which causes an unnatural s curve of the spine. And
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  Speaker 2: the reason, you know, the standard of care to treat
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  Speaker 2: that is spine fusion and that's a procedure where the
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  Speaker 2: surgeon removes the disc and replaces it with a device
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  Speaker 2: like an inner body fusion device that's packed with bone.
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  Speaker 2: And that's been a really great advancement in that care. However,
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  Speaker 2: there's limitations to what the surgeon can do intraoperatively as
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  Speaker 2: they're typically limited by you know, the sizes that are available.
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  Speaker 2: And so, you know, what we wanted to do and
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  Speaker 2: ultimately what we built the platform to do is essentially
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  Speaker 2: do that part of the surgery digitally first, so that
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  Speaker 2: we can then design the devices that will achieve a
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  Speaker 2: very specific correction to make it very repeatable, and to
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  Speaker 2: take that decision making instead of being in the operating room,
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  Speaker 2: to do that preoperatively.
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  Speaker 1: Okay, and this is the PREVOS system correct, Okay, And
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  Speaker 1: so you know, why don't we just jump into that
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  Speaker 1: system then and kind of you know, we talked a
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  Speaker 1: little bit about the preoperative side, but how does that
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  Speaker 1: preoperative process work and kind of from the initial diagnos
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  Speaker 1: diagnosis of the disease to the start of the procedure itself.
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  Speaker 1: I mean, what are the additional steps that are used
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  Speaker 1: to kind of start creating this customized or personalized implant
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  Speaker 1: for them.
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  Speaker 2: Yeah, Ultimately we designed it to follow really the continuum
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  Speaker 2: care of patient and to utilize what the current workflow
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  Speaker 2: is for the patient. And so patient gets a consult
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  Speaker 2: surgeon then reviews their X ray CT scans. They will
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  Speaker 2: then prescribe a Privo if they're a candidate. Once they
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  Speaker 2: do that prescription, we get a signal through the Privo
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  Speaker 2: technology platform that says that we now have a new patient.
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  Speaker 2: It will have the patient's prescription information they're imaging as
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  Speaker 2: well as the surgical objectives for that patient, and then
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  Speaker 2: typically the same day or next day, the surgeon will
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  Speaker 2: then receive a three dimensional plan which includes a three
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  Speaker 2: dimensional digital representation of the patient's pathology, three dimensional view
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  Speaker 2: of the alignment plan, as well as the specific devices
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  Speaker 2: that will achieve that plan. This, you know, one of
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  Speaker 2: the things we just launched is the new ecosystem, so
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  Speaker 2: this can be done mobile or in the in the
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  Speaker 2: doctor's clinic, so wherever they are they have access to this.
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  Speaker 2: They review the plan, approve it, and then that those
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  Speaker 2: digital files get translated into files that can go into
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  Speaker 2: production and the specific devices are produced and then a
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  Speaker 2: sterile packed single use surgery kit including the instrumentation devices
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  Speaker 2: needed for the surgery are delivered directly to the hospital.
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  Speaker 2: And you know, the procedure for the patient is very
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  Speaker 2: much like a traditional spine fusion procedure. However, depending on
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  Speaker 2: the complexity of it, a lot of times it's a
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  Speaker 2: shorter procedure time because it eliminates trialing trying to find sizing,
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  Speaker 2: and if it's a really complex procedure, you know, it's
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  Speaker 2: really possible to do the entire alignment in the disk space,
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  Speaker 2: which can eliminate the need to do you know, additional
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  Speaker 2: procedures like a post theior osteotomy in order to achieve
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  Speaker 2: the full deformity correction.
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  Speaker 1: Okay, and so you know, one of the things I
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  Speaker 1: caught my attention just now you're talking about the preoperative side,
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  Speaker 1: is it sounds like maybe you're maybe not eliminating the
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  Speaker 1: surgeon's time to do planning, but it sounds like you're
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  Speaker 1: setting it up for them, which is less time wasted
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  Speaker 1: on their side actually having to do that planning. Did
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  Speaker 1: I hear that correctly? Is that of one of the
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  Speaker 1: benefits of that preoperative side.
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  Speaker 2: Yeah, And I think how we've designed it is really
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  Speaker 2: to make it easy to adopt for the surgeons. And so,
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  Speaker 2: you know, surgeons time is very valuable, and you know,
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  Speaker 2: what we want to do is to give the power
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  Speaker 2: of three dimensional planning to the surgeons and ultimately use
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  Speaker 2: our platform, you know, that's trained on patient data, that's
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  Speaker 2: trained on their surgeon preferences, so they get a three
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  Speaker 2: dimensional plan, you know, that will meet what their operational
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  Speaker 2: goals are without them having to do that themselves, and
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  Speaker 2: so that they can review it and get the power
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  Speaker 2: of preoperative planning, but not have to spend the time
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  Speaker 2: doing it themselves, and also in a new way to
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  Speaker 2: really do this in three D. So it provides a
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  Speaker 2: lot more information than surgeons may typically do even if
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  Speaker 2: they are doing preoperative planning based on X rays, because of.
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  Speaker 1: The essentially because of being planned and the device is
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  Speaker 1: being designed on the computer, and once the surgeon approves
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  Speaker 1: that design, how long does it take for the actual
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  Speaker 1: implant to be manufactured at that point.
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  Speaker 2: Yeah, So when we first started, you know, we received
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  Speaker 2: a Breakthrough Technology designation in twenty twenty. We did our
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  Speaker 2: very first procedures in twenty twenty one, and we're deeply
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  Speaker 2: focused on teaching institutions with really complex procedures and so
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  Speaker 2: at that time, with the state of the technology in
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  Speaker 2: twenty one, it took about eight weeks. So what we
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  Speaker 2: just announced in our Q three report is with the
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  Speaker 2: advancements that we've done in our digital production system as
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  Speaker 2: well as you know, further leverage of AI through our platform,
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  Speaker 2: we really have an integrated system that can now do
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  Speaker 2: this in eight days.
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  Speaker 1: Wow. Yeah, that's so. And once again probably almost roughly
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  Speaker 1: the same time that you know, you getting the full
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  Speaker 1: package of traditional implants delivered to the hospital.
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  Speaker 2: Yeah, or maybe not.
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  Speaker 1: It might might be, but I mean it could be,
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  Speaker 1: it's still not. Yeah, eight weeks versus eight days is significant.
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  Speaker 2: Yeah, and while these are all scheduled procedures, you know,
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  Speaker 2: we really designed it, like I said before, to follow
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  Speaker 2: the continum of care patients, and so it fits within
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  Speaker 2: a surgeon's traditional practice for when they do a consult
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  Speaker 2: when they schedule surgery. And so this has really been material,
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  Speaker 2: you know, for you know, our early surgeon adopters to
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  Speaker 2: you know, really transition their practice to doing this where
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  Speaker 2: they have a true digital workflow for their clinic and
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  Speaker 2: for you know, planning for their operative time.
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  Speaker 1: And then the other thing I caught my attention as
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  Speaker 1: well is you talked about with traditional implants the time
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  Speaker 1: to get the sizing right of the implant, walk us
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  Speaker 1: through that, and why that's kind of precious time saved
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  Speaker 1: with the PREVO system.
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  Speaker 2: Yeah, and I think it really goes to interoperative decision making.
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  Speaker 2: And if we can remove that interoperative decision making, then
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  Speaker 2: the surgeon can focus on other aspects of the procedure.
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  Speaker 2: And you know, one of favorite quotes from you know,
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  Speaker 2: one of our busy surgeons said, you know, when you
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  Speaker 2: know they do in a prevo procedure, it's a boring
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  Speaker 2: day in the o R because and that's actually a
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  Speaker 2: good thing because you know, they don't have to think
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  Speaker 2: about that part of the procedure. And you know, certainly
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  Speaker 2: for the and you know, we have some really talented
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  Speaker 2: surgeons that are doing minimally invasive deformity correction procedures and
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  Speaker 2: with that, you know, they're able to really leverage you know,
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  Speaker 2: the power of the three dimensional implants to do you know,
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  Speaker 2: full deformity correction inside of the disk space, which can
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  Speaker 2: you know, materially save not just that mental load of
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  Speaker 2: making the interoperative decisions of what to do, but also
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  Speaker 2: time because it can eliminate you know, some of the
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  Speaker 2: more complex portions of the procedure where you know they
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  Speaker 2: may have to do you know, posteriorositeonomies and custom uh
• 15:43
  Speaker 2: you know rod bending for posterior fixation rods.
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  Speaker 1: Okay, and you know we just talked about the mainly
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  Speaker 1: invasive deformity cases. Might be worth while to take a
• 15:52
  Speaker 1: step back and just walk through where what the system
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  Speaker 1: is indicated for, whether it's law, whether it's cervical cases,
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  Speaker 1: whether it's open surgery, whether it's mentally invasive surgery. Just
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  Speaker 1: how expansive has that indication gone since you know, your
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  Speaker 1: first you know procedures in twenty twenty one.
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  Speaker 2: Yeah, when we started twenty twenty one, we had indications
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  Speaker 2: very specific to lumbar adult spinal deformity procedures. We since
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  Speaker 2: have expanded indications to degenerative dis disease for spinal fusion
• 16:30
  Speaker 2: for the lumbar, and we most recently launched our cervical indications.
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  Speaker 2: So just in Q four for both cervical deformity and
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  Speaker 2: degenerative dis disease.
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  Speaker 1: Okay, And is this for both open and minimally invasive
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  Speaker 1: procedures at this.
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  Speaker 2: Point, Yeah, And so it can be used for open
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  Speaker 2: it can be used minimally invasive. Mini surgeons use robots
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  Speaker 2: also to integrate with the system to place the devices
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  Speaker 2: as well as intraoperative navigation, and so the systems really
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  Speaker 2: designed to be very harmonious into a surgeon's operative workflow,
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  Speaker 2: so that the innerbody fusion portion of the procedure is
• 17:16
  Speaker 2: very straightforward and works with the rest of the spine surgery.
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  Speaker 1: All right, and then let's then jump into just kind
• 17:24
  Speaker 1: of the expansion strategy here. You recently issued a press
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  Speaker 1: release with the fourth quarter in twenty twenty five preliminary results.
• 17:35
  Speaker 1: I love to hear your thoughts on those results.
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  Speaker 2: Yeah. So, you know, as mentioned in our pre announcement,
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  Speaker 2: we had a really strong year, you know, both on
• 17:43
  Speaker 2: the top line and with our you know, surgeon education program.
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  Speaker 2: So we exited the year with two hundred and fifty
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  Speaker 2: three trained surgeons and fifty point five million on the
• 17:55
  Speaker 2: top line. As we think about this year going forward,
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  Speaker 2: you know, a lot of momentum in the latter half
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  Speaker 2: of the year, particularly with the Q four launch of
• 18:06
  Speaker 2: the cervical platform. So as we as we think about
• 18:11
  Speaker 2: twenty twenty six, you know, we continue to make significant
• 18:15
  Speaker 2: investments in our surgeon education. So we talk about the
• 18:20
  Speaker 2: importance of education. You know, what we've really done from
• 18:24
  Speaker 2: a paradigm shift is transition to digital surgery in the
• 18:32
  Speaker 2: preoperative planning. And so you know, having you know, some
• 18:36
  Speaker 2: of our our top surgeons continue to train the next
• 18:40
  Speaker 2: generation of surgeons on this concept of digital surgery preoperatively.
• 18:47
  Speaker 2: We really see a lot of traction in the early
• 18:50
  Speaker 2: to mid career surgeons, you know, as we are integrating
• 18:54
  Speaker 2: into residents and fellows programs and teaching institutions, and continuing
• 19:00
  Speaker 2: to drive that preoperative workflow that provides value in the
• 19:07
  Speaker 2: operative center. So as we you know, as we expand
• 19:13
  Speaker 2: our team, you know, continue to put programs in place
• 19:18
  Speaker 2: to accelerate surgeon training and the continued adoption of this
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  Speaker 2: preoperative digital planning, driving very predictable intraoperative alignment, which is
• 19:34
  Speaker 2: what ultimately drives the better outcomes for patients.
• 19:38
  Speaker 1: Yeah, and usually you know, you kind of see that
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  Speaker 1: exponential curve up with adoption once surgeons are trained. How
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  Speaker 1: how have you seen that play out with some of
• 19:50
  Speaker 1: these initial surgeons that have been trained. Is it a
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  Speaker 1: few months and maybe like in those first few months
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  Speaker 1: they'd have do one or two cases and then and
• 20:00
  Speaker 1: by let's say x month, they're like, oh, I get this,
• 20:04
  Speaker 1: and then you see the adoption start to accelerate further
• 20:07
  Speaker 1: with them.
• 20:08
  Speaker 2: Yeah. So we're certainly in early days here, you know,
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  Speaker 2: but you know, we're really really happy with the level
• 20:17
  Speaker 2: of adoption that we're getting. And when we think about
• 20:20
  Speaker 2: the adoption curve, because this is a new technology, it's
• 20:26
  Speaker 2: typically going into a new institution, uh, getting getting through
• 20:31
  Speaker 2: the back process, getting through the initial trial and most institutions,
• 20:36
  Speaker 2: UH start with trial utilization, collect data and then ultimately,
• 20:42
  Speaker 2: you know, go on contract and you know, give the
• 20:46
  Speaker 2: surgeons opportunity to use it across their practice. And so
• 20:50
  Speaker 2: you know, depending on the institution, you know, that can
• 20:52
  Speaker 2: be a few months or a few quarters. And you
• 20:56
  Speaker 2: know what we see is once uh surgeons you know,
• 20:59
  Speaker 2: get through and the hospitals get through that early adoption phase,
• 21:03
  Speaker 2: you know, we have a really phenomenal retention rate of
• 21:08
  Speaker 2: surgeons continuing to use and ultimately expand utilization across their
• 21:13
  Speaker 2: practice because when they really get this embedded into their
• 21:18
  Speaker 2: preoperative workflow and patients here about you know, the opportunity
• 21:23
  Speaker 2: to have something made specifically for them as well as
• 21:28
  Speaker 2: the clinical data that's behind the value of that in
• 21:33
  Speaker 2: improving the likelihood of better outcomes. You know, it really
• 21:37
  Speaker 2: becomes much of a patient pull in that practice as well.
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  Speaker 2: And as surgeons get their practice cadence to doing this
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  Speaker 2: digital surgery embedded into their clinic, it really becomes much
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  Speaker 2: the standard operating procedure for them.
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  Speaker 1: Yeah. And you know the other thing too, that you know,
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  Speaker 1: probably adds to the the strategies is that initial launch
• 22:02
  Speaker 1: of a prevo cervical, as you were mentioned earlier, when
• 22:05
  Speaker 1: you think about adding that component to the lumbar cases,
• 22:10
  Speaker 1: how much of the cervical launches kind of just simply
• 22:13
  Speaker 1: adding a new tool for the same surgeons, or how
• 22:16
  Speaker 1: many surgeons were kind of maybe on the sidelines and saying, oh,
• 22:20
  Speaker 1: I want to see this cervical come out, or there's
• 22:22
  Speaker 1: a specialists who just does cervical and that being able
• 22:26
  Speaker 1: to expand to those surgeons as well.
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  Speaker 2: Now, yeah, you know, it's really interesting because I talked
• 22:31
  Speaker 2: about the origin story of the company really deeply focused
• 22:36
  Speaker 2: on lumbar adult spinal deformity, and what we found as
• 22:42
  Speaker 2: we continue to scale is first surgeons really pushing for
• 22:48
  Speaker 2: larger indications use this on their DGEN patients as well
• 22:52
  Speaker 2: as well as the surgeons that do lumbar surgery, which
• 22:56
  Speaker 2: about eighty percent of them do both lumbar and cervical,
• 22:59
  Speaker 2: really thinking about how you know, this digital surgery, personalized devices,
• 23:05
  Speaker 2: you know, very predictable alignment can work for their cervical patients.
• 23:09
  Speaker 2: And so we had a really strong pool to ultimately
• 23:15
  Speaker 2: build the cervical platform and you know, expand this to
• 23:19
  Speaker 2: the cervical patient population for those surgeons and so when
• 23:24
  Speaker 2: we you know, again very early days in our launch,
• 23:28
  Speaker 2: you know, we've had a strong uptake from our surgeons
• 23:33
  Speaker 2: that are trained on the lumbar platform because the preoperative
• 23:38
  Speaker 2: workflow is the same, you know, it uses the same
• 23:41
  Speaker 2: a pre vote digital planning portal that they're already trained
• 23:44
  Speaker 2: on and used for. But the benefits and really the
• 23:50
  Speaker 2: devices that are created for cervical spine and fusion are
• 23:54
  Speaker 2: really different because they are designed and away and there's
• 24:01
  Speaker 2: a really interesting story about this. They're designed in a
• 24:04
  Speaker 2: way that actually maps to the anatomy of the cervical spine,
• 24:08
  Speaker 2: so has broad coverage of the cervical disc The history
• 24:15
  Speaker 2: of sizing for cervical inner bodies actually goes back to
• 24:20
  Speaker 2: the size of a fibula. So because that it was
• 24:24
  Speaker 2: originally cervical spine fusion was using fibular graphs, and so
• 24:30
  Speaker 2: the size of inner bodies that have been created over
• 24:34
  Speaker 2: time were based on the size of the fibula, which
• 24:37
  Speaker 2: isn't the ideal size to actually provide broad coverage for
• 24:44
  Speaker 2: the cervical spine. And so, you know, we we developed
• 24:49
  Speaker 2: this technology with a lot of input from surgeons that
• 24:52
  Speaker 2: were working on the prevo platform for lumbar about really
• 24:57
  Speaker 2: taking the same philosophy and mapping the three dimensional area
• 25:03
  Speaker 2: of the cervical spine to provide this great platform for fusion,
• 25:08
  Speaker 2: UH that can also provide very predictable alignment in a
• 25:12
  Speaker 2: three dimensional way. So so we had a really strong pull,
• 25:18
  Speaker 2: you know, in just in you know, the first quarter,
• 25:21
  Speaker 2: we've had about ten percent of our surgeons already trained
• 25:24
  Speaker 2: and you know, starting to utilize cervical and so it's
• 25:29
  Speaker 2: been a really rapid uptick and you know with uh,
• 25:35
  Speaker 2: not just the early uh you know, early usage from
• 25:39
  Speaker 2: the lumbar trained surgeons. You know, we have a lot
• 25:44
  Speaker 2: of tailwinds with the new Medicare new technology add on
• 25:48
  Speaker 2: payment that went into place in October one, uh to
• 25:53
  Speaker 2: really give you know, the hospitals, you know, the open
• 25:59
  Speaker 2: the door set the hospitals to actually provide this to
• 26:02
  Speaker 2: their surgeons that they can use and you know, give
• 26:05
  Speaker 2: a really strong economic value to them to adopt this
• 26:09
  Speaker 2: new technology.
• 26:11
  Speaker 1: That's that's wait, I just want to make sure I
• 26:13
  Speaker 1: understand that sizing component that you're saying is that cervical
• 26:18
  Speaker 1: discs were never originally designed to be sized for the
• 26:23
  Speaker 1: actual cervical disc it was using a predicate device that
• 26:27
  Speaker 1: was not for the cervical region.
• 26:29
  Speaker 2: Yeah, for the for the cervical innerbody fusion device. Is
• 26:32
  Speaker 2: the reason that they were so narrow is that it
• 26:36
  Speaker 2: mimicked the size of a fibular graph which before Inbarti's
• 26:40
  Speaker 2: fusion devices were actually created. You know, it was fibular
• 26:45
  Speaker 2: graphs or for the cervical spine, or femeral graphs for
• 26:49
  Speaker 2: the lumbar spine, and so that just set you know,
• 26:53
  Speaker 2: the sizing which ultimately, you know, if you know, if
• 26:58
  Speaker 2: most surgeons would just do this scratch, you would design
• 27:01
  Speaker 2: something to fit the cervical spine. So that's the you
• 27:05
  Speaker 2: know a lot of the innovation that the surgeons brought
• 27:09
  Speaker 2: to us about leveraging this technology really to make sizes
• 27:14
  Speaker 2: and footprints that fit the natural anatomy of the cervical spine.
• 27:19
  Speaker 2: And you know, the early results have been really outstanding there.
• 27:24
  Speaker 1: Yeah, that's kind of the interesting thing is that you know,
• 27:26
  Speaker 1: we're going from this commodification of these products that we
• 27:29
  Speaker 1: talked about earlier, Yeah, actually being able to look at
• 27:32
  Speaker 1: the patient's anatomy and be able to say, how does
• 27:34
  Speaker 1: this bet how can we make a product that best
• 27:36
  Speaker 1: fits the anatomy instead of just saying, let's take an
• 27:38
  Speaker 1: old product and just shove it in there. Yeah, and
• 27:41
  Speaker 1: so you know, we'll talk about reimbursement. You talked about
• 27:45
  Speaker 1: the add on payment, but let's also just quickly talk
• 27:48
  Speaker 1: about the clinical data that has been published to support
• 27:52
  Speaker 1: the benefit of a prevote over traditional fusion. And mainly,
• 27:56
  Speaker 1: I think just a couple of weeks ago or even
• 27:59
  Speaker 1: last week, there was a uh, you guys had a
• 28:01
  Speaker 1: press release about a two year up two year clinical
• 28:06
  Speaker 1: data that got published.
• 28:08
  Speaker 2: Yeah, so the Global Spine Journal published the two year
• 28:13
  Speaker 2: data for a prevot versus stock devices and you know,
• 28:21
  Speaker 2: showed the significance of the ability for a pre vote
• 28:25
  Speaker 2: ultimately to reduce reoperations related to mechanical complications. And you know,
• 28:31
  Speaker 2: the the reason that you know a prevote really provides
• 28:35
  Speaker 2: you know, better outcomes is that the actual three dimensional
• 28:41
  Speaker 2: deformity correction can be done inside the disk base, which
• 28:45
  Speaker 2: gives a harmonious alignment to the spine during fusion. It
• 28:53
  Speaker 2: removes a stress from the posterior fixation. And what's been
• 28:59
  Speaker 2: shown again, you know, compared to the best of the
• 29:02
  Speaker 2: best surgeons with the data that using this personalized devices
• 29:09
  Speaker 2: with personalized planning can provide a very predictable alignment that's
• 29:15
  Speaker 2: harmonious that you know, provides long term outcomes for that
• 29:19
  Speaker 2: patient population.
• 29:21
  Speaker 1: Yeah. And you know what caught my attention as well
• 29:23
  Speaker 1: with the when I was going through the journal article
• 29:26
  Speaker 1: is you know, it was one hundred and fifteen consecutive
• 29:30
  Speaker 1: patients and no patients were excluded for air quotes here
• 29:36
  Speaker 1: learning curve, and they led to if I interpreted the
• 29:43
  Speaker 1: data correctly, was a four percent revision rate at two
• 29:47
  Speaker 1: years for a prevo versus kind of the sixteen seventeen
• 29:50
  Speaker 1: percent for you know, the traditional fusion is that I
• 29:56
  Speaker 1: have to imagine that that you got your salesforce can
• 29:59
  Speaker 1: use that as a marketing you know, pitch to these
• 30:02
  Speaker 1: surgeons just saying look saves you time but also gives
• 30:06
  Speaker 1: you better results. Is I mean? Is that are you guys?
• 30:09
  Speaker 1: Is that going to be a major push for you
• 30:11
  Speaker 1: guys in twenty twenty six to get that message out there?
• 30:14
  Speaker 2: Yeah? Absolutely, you know, I think you know, when when
• 30:18
  Speaker 2: we think about our company and the technology that we've developed,
• 30:22
  Speaker 2: it is for the surgeons and for the patients, and
• 30:25
  Speaker 2: the fact that we can you know, use this technology
• 30:29
  Speaker 2: to drive better outcomes for patients is you know what
• 30:33
  Speaker 2: we always lead with and that's the cornerstone of our company.
• 30:38
  Speaker 2: And it's also you know underpinns, you know, the you know,
• 30:44
  Speaker 2: uh favorable economics for adopting this technology because you know,
• 30:49
  Speaker 2: as you know, as we've talked about before, the you know,
• 30:53
  Speaker 2: cost of revision surgery is extraordinarily high. So it's not
• 30:57
  Speaker 2: only uh obviously uh burden for the patient because you know,
• 31:03
  Speaker 2: no patient wants to have surgery first, and once they
• 31:07
  Speaker 2: had surgery, they don't want to have another one. Yeah,
• 31:10
  Speaker 2: so uh, but you know, the payers, you know, bear
• 31:14
  Speaker 2: the burden of this high cost, particularly when we talk
• 31:16
  Speaker 2: about the Medicare patient age of If you know, there's
• 31:20
  Speaker 2: an opportunity to you know, have a patient have have
• 31:24
  Speaker 2: surgery once, you know, improve their quality of life, improve
• 31:28
  Speaker 2: their outcomes. You know, that's a significant savings to the payers.
• 31:33
  Speaker 2: If we can eliminate in the data shows that we've
• 31:36
  Speaker 2: been able to do that, if we can eliminate future
• 31:39
  Speaker 2: revision surgeries.
• 31:40
  Speaker 1: Yeah, and so then that kind of then we can
• 31:43
  Speaker 1: move in and segue into just that reimbursement landscape itself.
• 31:46
  Speaker 1: Because there are DRG codes that are specifically for customized devices.
• 31:53
  Speaker 1: I would love to just hear how they are different
• 31:57
  Speaker 1: from traditional fusion reimbursement rates. And then you also talked
• 32:01
  Speaker 1: about that add on payment, So how is that incrementally
• 32:04
  Speaker 1: positive for the overall hospital setting for gaining that reimbursement.
• 32:08
  Speaker 2: Yeah, So if we take a bit of the history,
• 32:12
  Speaker 2: we you know, we developed the PREVOT platform initially for
• 32:16
  Speaker 2: lumbar deformity and you know received FDA breakthrough device designation
• 32:22
  Speaker 2: is likely standard of care for that patient population, and
• 32:27
  Speaker 2: also a new technology add on payment in twenty twenty
• 32:30
  Speaker 2: one for lumbar spine fusion, utilizing the Privo devices and platform.
• 32:39
  Speaker 2: As that sunset, you know, Medicare came out with specific
• 32:44
  Speaker 2: DRG codes that reimburse at a higher level for you know,
• 32:50
  Speaker 2: what are called custom made anatomically designed fusion devices. And
• 32:55
  Speaker 2: so the intent is again for Medicare to the payers
• 33:01
  Speaker 2: to incentivize utilization of technology like this that can improve
• 33:06
  Speaker 2: outcomes and ultimately reduce the cost of care for that
• 33:09
  Speaker 2: patient population.
• 33:11
  Speaker 1: The other headlines too, just with spine surgery itself, is
• 33:15
  Speaker 1: you know, the use of robotics and also the shift
• 33:18
  Speaker 1: of the A s C setting. We kind of talked
• 33:20
  Speaker 1: about the robotics setting, and you're you know, a PREVO
• 33:23
  Speaker 1: is designed to be used harmoniously with other you know,
• 33:28
  Speaker 1: technology that the surgeons I bet they're you know, at
• 33:31
  Speaker 1: their bedside. I'd love to kind of just see deeper
• 33:34
  Speaker 1: into kind of how you are able to if there's
• 33:39
  Speaker 1: a plan or a strategy to continue to integrate with
• 33:42
  Speaker 1: some of these technologies and then also with the A
• 33:45
  Speaker 1: s C setting you know, as C setting for some
• 33:48
  Speaker 1: of these simpler fusion cases get the patient almost out
• 33:52
  Speaker 1: same day, if a prevo is a part of that
• 33:57
  Speaker 1: process to shift.
• 33:58
  Speaker 2: To the A f C setting, Yeah, let's talk about
• 34:01
  Speaker 2: the robotics and kind of lump robotics and navigation together.
• 34:07
  Speaker 2: You know, as as we see more and more operatings
• 34:10
  Speaker 2: rooms transition to enabling technologies, you know that ultimately use
• 34:17
  Speaker 2: technology to be able to make the procedure more repeatable.
• 34:21
  Speaker 2: You know, we've developed the platform to integrate seamlessly with it,
• 34:26
  Speaker 2: and so you know, very specifically we have you know,
• 34:31
  Speaker 2: the Maya PREVOT platform, which is what the surgeon uses
• 34:35
  Speaker 2: for the three dimensional planning and it's a really great
• 34:39
  Speaker 2: powerful tool intraoperatively as well, because a surgeon can look
• 34:44
  Speaker 2: at the three dimensional plan, actually take measurements off of it,
• 34:48
  Speaker 2: use a three dimensional plan to integrate with their navigation
• 34:54
  Speaker 2: system as well as their robotics system as they're doing
• 34:57
  Speaker 2: the entire surgery. And so it really works very seamlessly
• 35:04
  Speaker 2: in that kind of operating room of the future. And
• 35:08
  Speaker 2: you know when we look at you know, for operating
• 35:12
  Speaker 2: rooms for processes that are one hundred percent manual, you know,
• 35:16
  Speaker 2: it makes it easy for that as well. And you
• 35:19
  Speaker 2: know there's something simplistic about that of doing surgery, you know,
• 35:24
  Speaker 2: without a lot of monitors and you know, technology and
• 35:27
  Speaker 2: robots going around. But you know, you get the power
• 35:31
  Speaker 2: of the enabling technology by having the three dimensional plan
• 35:35
  Speaker 2: and the devices to achieve the plan very specifically. And
• 35:39
  Speaker 2: so you know, we have a lot of surgeons, you know,
• 35:42
  Speaker 2: that have adopted this as kind of their core enabling
• 35:45
  Speaker 2: technologies in the operating room. And so, you know, as
• 35:51
  Speaker 2: we as we think about moving from you know, the
• 35:54
  Speaker 2: hospital based o R to you know, the outpatient ASC setting,
• 35:59
  Speaker 2: you know, as we've talked about, you know, the Medicare
• 36:03
  Speaker 2: is transitioning a lot of these procedures for what was
• 36:07
  Speaker 2: at one point in patient only removing them off the
• 36:10
  Speaker 2: inpatient only list. And so you know, we see this
• 36:13
  Speaker 2: as a general trend of surgical procedures moving to the
• 36:18
  Speaker 2: lowest cost of care center. And you know, we're being
• 36:21
  Speaker 2: very forward thinking, you know, with our true digital surgery platform,
• 36:27
  Speaker 2: you know, having everything you know, uh, you know sterilized
• 36:32
  Speaker 2: you know, specific for uh, you know, single use sterilized
• 36:36
  Speaker 2: specific for that surgery. Provided. You know, we think this
• 36:39
  Speaker 2: will be a you know in the coming years, is
• 36:42
  Speaker 2: that those procedures continue to transition to outpatient you know,
• 36:46
  Speaker 2: a really good opportunity uh for surgeons to integrate this
• 36:51
  Speaker 2: into you know, their outpatient procedures as well.
• 36:55
  Speaker 1: Yeah, and you know that's just part of that, you know,
• 36:58
  Speaker 1: investments to expand this this technology out which kind of
• 37:02
  Speaker 1: turns then into you know, getting the financial sides of
• 37:06
  Speaker 1: Carl's med and you know, you're past the six month
• 37:09
  Speaker 1: of your IPO, how do you use those newly raised
• 37:16
  Speaker 1: proceeds to invest in that growth? And then the other
• 37:19
  Speaker 1: thing is everyone as all of these companies go through
• 37:21
  Speaker 1: IPOs is you know, they're given a little wiggle room
• 37:25
  Speaker 1: to invest aggressively into that growth at the cost of profitability.
• 37:31
  Speaker 1: But investors want to see at least a line of
• 37:34
  Speaker 1: site towards kind of a break even or to start
• 37:37
  Speaker 1: seeing some cash flow generation. So how do you balance
• 37:41
  Speaker 1: that path of revenue growth and that path to profitability?
• 37:46
  Speaker 2: Yeah, that is the billion dollar question, is always right,
• 37:49
  Speaker 2: So you know, I guess kind of dive deeper into
• 37:53
  Speaker 2: a little bit of our business model and you know
• 37:55
  Speaker 2: how different this is. You know, we've been very capital efficient,
• 38:00
  Speaker 2: you know, so on the on the venture side since
• 38:04
  Speaker 2: since origination, since founding, we've raised just over one hundred
• 38:08
  Speaker 2: million inventure. We did another one hundred million in the
• 38:11
  Speaker 2: I p O and with that, you know, that gives
• 38:15
  Speaker 2: us significant capital, uh to both reinvest in the business
• 38:20
  Speaker 2: from product and technology, invest in commercial growth, and get
• 38:24
  Speaker 2: us a near term pathway to profitability. And so you know,
• 38:28
  Speaker 2: as we as we think about our business and how
• 38:31
  Speaker 2: different this is, you know, we ultimately we call it
• 38:36
  Speaker 2: a zero inventory business. Everything's built on demand and so
• 38:40
  Speaker 2: we don't have a traditional medical device you know footprint.
• 38:45
  Speaker 2: We operate much more like a software company. And you know,
• 38:49
  Speaker 2: have you know, as as we reported, you know, delivered
• 38:52
  Speaker 2: strong margins which gives us a lot of operating leverage.
• 38:57
  Speaker 2: You know, as we continue to scale the business and
• 39:00
  Speaker 2: and so you know, kind as we look at near term,
• 39:03
  Speaker 2: you know priorities you know, to continue to invest in
• 39:08
  Speaker 2: our core technologies to drive you know, better hyper personalization,
• 39:13
  Speaker 2: you know, continue to increase our speed of production, build scale,
• 39:19
  Speaker 2: and then you know, add future indications and along the way.
• 39:25
  Speaker 2: You know, we're continuing to be very thoughtful about our
• 39:28
  Speaker 2: investments that ultimately, with with the proceeds that we have,
• 39:35
  Speaker 2: you know, we can get to cash flow break even
• 39:39
  Speaker 2: on the proceeds raised from the I p O and
• 39:43
  Speaker 2: invest aggressively in our growth.
• 39:47
  Speaker 1: Yeah. Actually, it's interesting you talk about, you know, the
• 39:50
  Speaker 1: improvements in the software, and it got me thinking because
• 39:54
  Speaker 1: that's not a traditional type of product cycle for you know,
• 39:59
  Speaker 1: med tech. Usually, you know, you have a two to
• 40:01
  Speaker 1: four year product cycle. You launch generation one, you're starting
• 40:06
  Speaker 1: to work on improvements for generation two, but you have
• 40:09
  Speaker 1: to get generation to approved by the FDA before you
• 40:13
  Speaker 1: can launch generation two. But with software updates, that's it's
• 40:18
  Speaker 1: not there there, it's more intricate than that, right, And
• 40:22
  Speaker 1: what is I guess the long winded question is what
• 40:26
  Speaker 1: is the process to get those software updates done and
• 40:31
  Speaker 1: work through that with the FDA.
• 40:34
  Speaker 2: Yeah, you know, it's obviously it's multi factorial, and this
• 40:39
  Speaker 2: is really where we look at it as a platform.
• 40:42
  Speaker 2: So we have the software platform, and then we have
• 40:45
  Speaker 2: the devices that we create, and you know, we have
• 40:49
  Speaker 2: ultimately a really great relationship with the FDA. I think
• 40:52
  Speaker 2: we're up to twenty five ten k's you know to
• 40:57
  Speaker 2: breakthrough device designations and with that, you know, we're able
• 41:02
  Speaker 2: to iterate very rapidly, uh in our whole personalized world.
• 41:10
  Speaker 2: And so talk about the software first. You know, we
• 41:13
  Speaker 2: have uh, you know, uh indications for our uh AI
• 41:18
  Speaker 2: machine learning uh, which you know we continue to train
• 41:22
  Speaker 2: improve and that ultimately drives better hyper personalization and scale.
• 41:29
  Speaker 2: You know, we have the surgeon portal, you know, which
• 41:33
  Speaker 2: is the ultimately the surgeon experience where they get to
• 41:37
  Speaker 2: you know, virtually touch and feel the surgical plan, uh,
• 41:41
  Speaker 2: the virtual devices and uh continuously iterate there and then
• 41:47
  Speaker 2: you know, we collect you know, post op data and
• 41:50
  Speaker 2: that's really what continues to drive and train the system.
• 41:54
  Speaker 2: And so you know, we see this as a continuous
• 41:58
  Speaker 2: training loop that continuously improves. And so it's a very
• 42:03
  Speaker 2: different product cycle than would be a traditional med device
• 42:07
  Speaker 2: product where you have you know, a you know, a
• 42:11
  Speaker 2: device that you know, you build in mass and you
• 42:15
  Speaker 2: go and launch and get feedback and you change. Inside
• 42:19
  Speaker 2: our platform, we really get real time feedback that continuously improves,
• 42:25
  Speaker 2: and that's what makes it very differentiated and gives us
• 42:29
  Speaker 2: the ability to ultimately continue to monitor real world evidence
• 42:34
  Speaker 2: to drive real time improvements in our software and devices.
• 42:40
  Speaker 1: And usually end this conversation with kind of you know,
• 42:44
  Speaker 1: where do you see the state of spine surgery in
• 42:47
  Speaker 1: five years or so? I guess I'm going to go
• 42:50
  Speaker 1: with just being more precise and say what percentage of
• 42:55
  Speaker 1: these spine cases can be done in such a personalized
• 42:59
  Speaker 1: way that PREBO is providing.
• 43:01
  Speaker 2: Yeah, so when we look at kind of the universe
• 43:05
  Speaker 2: today for both lumbar spine fusion and cervical spine fusion,
• 43:09
  Speaker 2: there's about eight hundred thousand procedures done annually, and we,
• 43:16
  Speaker 2: with our recent clearances, were unlabel for that entire patient population.
• 43:22
  Speaker 2: And so, you know, with the you know, improved outcome
• 43:25
  Speaker 2: data that we've been able to generate and the continued
• 43:29
  Speaker 2: advancements in our platform to make it easier to adopt,
• 43:33
  Speaker 2: you know, our objective is to you know, make this
• 43:36
  Speaker 2: available to all patients and you know, continue to you know, train, educate,
• 43:44
  Speaker 2: and you know build the surgeon provider network that can
• 43:48
  Speaker 2: make this available to you know, patients across the country.
• 43:52
  Speaker 1: Well, it'll be fascinating to see how this ends up
• 43:55
  Speaker 1: in five ten years we look back and just think
• 43:57
  Speaker 1: adding a you know, standard implant, one size fits all
• 44:01
  Speaker 1: for every patient. But Mike, thank you so much for
• 44:04
  Speaker 1: joining us today. Appreciate the conversation.
• 44:06
  Speaker 2: Really appreciate it, Matt. It's great seeing it having us.
• 44:09
  Speaker 1: Oh yeah, absolutely, And thank you to our producer, a
• 44:11
  Speaker 1: DiDia Somania for all the behind the scenes works, and
• 44:14
  Speaker 1: thank you to our listeners for tuning in today. We
• 44:17
  Speaker 1: hope you join us for future episodes, and if you'd
• 44:19
  Speaker 1: like to stay up to date, you can click the
• 44:21
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• 44:24
  Speaker 1: Take care,