Latest / Vanguards of Healthcare by Bloomberg Intelligence / Think Surgical Miniaturizes it Robot to Broaden Its Use in Knees

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Think Surgical Miniaturizes it Robot to Broaden Its Use in Knees · Vanguards of Healthcare by Bloomberg Intelligence

• 0:20
  Speaker 1: Welcome to another exciting episode of the Vanguards of Healthcare series.
• 0:23
  Speaker 1: My name is Matt Hendrickson, the medical technology analyst at
• 0:26
  Speaker 1: Bloomberg Intelligence, which is the in house equity research platform
• 0:30
  Speaker 1: of Bloomberg Elpete. We are pleased to have with us
• 0:33
  Speaker 1: today Stuart Simpson, CEO of Think Surgical, a privately held
• 0:37
  Speaker 1: medical device company that is innovating knee replacement surgery with
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  Speaker 1: t Mini, it's handheld robotic system. Stuart, thanks for joining
• 0:45
  Speaker 1: us again.
• 0:45
  Speaker 2: Thank you for the invite. It's great to be here again.
• 0:47
  Speaker 1: Matt, Yeah, absolutely, And maybe why don't we just ground
• 0:51
  Speaker 1: the listeners. You know you were back here in twenty
• 0:54
  Speaker 1: twenty four you were talking about the new innovation in
• 0:58
  Speaker 1: kind of robotics for with the p Why don't we
• 1:01
  Speaker 1: just start with kind of a brief description of what
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  Speaker 1: that technology is and how you're planning to use that
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  Speaker 1: to kind of differentiate yourself from the current robotic platforms
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  Speaker 1: that are out there.
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  Speaker 2: Thank you for the question. It's kind of a broad question.
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  Speaker 1: Yeah, I was loud.
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  Speaker 2: There's a lot to cover there, but to summarize, robotic
• 1:24
  Speaker 2: orthopedic surgery is fast approaching a standard of care. So
• 1:28
  Speaker 2: instead of the old manual instruments. Increasingly surgeons are seeing
• 1:32
  Speaker 2: the value and using a robot to deliver more personalized
• 1:35
  Speaker 2: and precise surgery, which impacts outcomes for the patient and
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  Speaker 2: the originate to the original movement towards robotics was, as
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  Speaker 2: you know, started by Striker with our acquisition of Mako
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  Speaker 2: back in twenty thirteen. All the big orthopedic companies are
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  Speaker 2: now in the market with robots, but most of them
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  Speaker 2: are large format robots, in other words, are very large, heavy,
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  Speaker 2: nine hundred pound pieces of equipment that are quite intrusive
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  Speaker 2: in the operating room. So our approach is to miniaturize
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  Speaker 2: the robot, make it more economical, and make it more
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  Speaker 2: seamless in terms of how it integrates into the operating
• 2:18
  Speaker 2: room environment. And secondly, all of those big companies have
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  Speaker 2: closed systems, so proprietary systems where the robot and implant
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  Speaker 2: are tied together. Our approach is to unlock the implant
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  Speaker 2: from the technology, and our mission is to be able
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  Speaker 2: to support every and any brand of implant so that
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  Speaker 2: the physician doesn't have to give up choice in order
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  Speaker 2: to achieve the benefits of precision with our technology.
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  Speaker 1: That's interesting, so that the handheld compared to a nine
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  Speaker 1: hundred pound let's call it a nine hundred pound gorilla
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  Speaker 1: in the operating room. How were you able to develop
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  Speaker 1: this Technologyogy two? Because absolutely I can't hold nine hundred pounds,
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  Speaker 1: But how were you able to be able to get
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  Speaker 1: that technology miniaturized into a handheld feature? What did you
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  Speaker 1: see in the kind of traditional robotics that you didn't
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  Speaker 1: need to kind of eliminate that huge weight or a
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  Speaker 1: huge weight.
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  Speaker 2: Yeah, the original approach to robotics was to take a
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  Speaker 2: conventional industrial robot and adapt for surgery. So it's a
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  Speaker 2: very big, heavy base unit with robotic arm And what
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  Speaker 2: is clever about the way our inventor, Joels Uhard approached
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  Speaker 2: this was he understood what it was the surgeon was
• 3:43
  Speaker 2: trying to achieve and worked backwards from that and ended
• 3:47
  Speaker 2: up with this handheld device. So what is it the
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  Speaker 2: surgeon's value in robotics? First and foremost, it's the CT
• 3:55
  Speaker 2: based plan, which allows them to have a patient specific
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  Speaker 2: bone model and pre plan a virtual, personalized surgery for
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  Speaker 2: that patient. Secondly, it's the ability of the robot to
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  Speaker 2: assess ligaments in the knee during the surgery, but before
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  Speaker 2: the bone cuts are made so that the surgical plan
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  Speaker 2: can be adjusted to the unique patient characteristics. And then
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  Speaker 2: it's the graphic user interface that allows the surgeon to
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  Speaker 2: interact with the technology. And then the last thing is
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  Speaker 2: the easy thing. It's go ahead and make the bone cuts.
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  Speaker 2: So you don't need a big robotic arm to do
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  Speaker 2: all of that, and that's how we ended up with
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  Speaker 2: a handheld technology.
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  Speaker 1: Okay, so the robot is essentially not making the cut,
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  Speaker 1: it's creating the position for the surgeon then to make
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  Speaker 1: the cut. Is that the right way thing?
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  Speaker 2: That's where the whole value is. Yes, And our technology
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  Speaker 2: precisely locates a conventional four and one cutting guide which
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  Speaker 2: allows the surger and to pick up their saw which
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  Speaker 2: they've views since their first day of residency or training
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  Speaker 2: and perform the cuts which have been guided by the
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  Speaker 2: robotic technology. So surgeons will tell you that the bone
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  Speaker 2: cuts not the hard but that's the easy bit. It's
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  Speaker 2: all the steps before that is where all the value accruise.
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  Speaker 1: Yeah, and you know the other thing that you mentioned
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  Speaker 1: too just the was the CT based planning, and we
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  Speaker 1: touch base at AOS earlier this year. You showed me
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  Speaker 1: the entire ecosystem it's not just the handheld robot, it's
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  Speaker 1: the planning and the team mini pro workflow. So how
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  Speaker 1: does that entire ecosystem just kind of help be able
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  Speaker 1: to create that strong, you know, experience for the surgeon
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  Speaker 1: when they're doing this procedure.
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  Speaker 2: Yeah, So the surgeon will send a patient off to
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  Speaker 2: get the CT scan. That CT scan is then uploaded
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  Speaker 2: through a secure portal to and our case planners will
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  Speaker 2: use that CT data to create the three D board
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  Speaker 2: model for the patient in a software called t Plan,
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  Speaker 2: and I would argue that T plan is the industry
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  Speaker 2: leading planning software. Then our planners will respect the surgeon's
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  Speaker 2: preferences and develop a surgical plan that's then transported to
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  Speaker 2: the surgeon, who approves it and loads it onto the robot.
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  Speaker 2: In the operating room, there's a camera system we call
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  Speaker 2: it t NAV that is unique to us. It is
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  Speaker 2: very different from the technology associated with the other large
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  Speaker 2: robots such as Maco and all the other ones that
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  Speaker 2: followed because it sits above the operating room table instead
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  Speaker 2: of on the other side of the operating room table,
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  Speaker 2: and that creates a lot of more working space for
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  Speaker 2: the surgical team that communicates dynamically with the t Many robot,
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  Speaker 2: and then the surgeon will perform certain assessments before any
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  Speaker 2: of the bone cuts, and those assessments are captured in
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  Speaker 2: the t many pro workflow in te Nave, and the
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  Speaker 2: surgeon can make small adjustments to fine tune the surgical
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  Speaker 2: plan to be a perfectly balanced surgery for that individual
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  Speaker 2: patient before the robot does anything. So it's not just
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  Speaker 2: the robot, it's that ecosystem.
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  Speaker 1: Well, it sounds like you're also but you're working creating
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  Speaker 1: that ecosystem to you know, we talked about eliminating the
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  Speaker 1: nine hundred pound corolla, but it's also that ecosystem with that,
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  Speaker 1: you know, the ten NAV being above the bed also
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  Speaker 1: kind of create opens up space for the surgeon and
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  Speaker 1: kind of creates the needs of access. Is that Yeah,
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  Speaker 1: it just makes it so much easier for the physician,
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  Speaker 1: the physician's assistant, and for the scrub tech compared to
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  Speaker 1: the existing robots, and that leads to familiarization with existing workflow,
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  Speaker 1: it leads to easy integration into that workflow, and it
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  Speaker 1: just makes it really easy and efficient in the operating
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  Speaker 1: room where time is of a premium in the operating room.
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  Speaker 1: So that's the feedback we've been getting.
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  Speaker 2: It's just seamless.
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  Speaker 1: Yeah, that makes sense. We'll probably dive deeper into just
• 8:28
  Speaker 1: the market dynamics, especially with MEE replacement being such a
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  Speaker 1: high volume, hyper procedure. That sounds like that's got to
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  Speaker 1: be quite helpful. Let's just circle back there because you
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  Speaker 1: also mentioned being agnostic to what implant could be utilized,
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  Speaker 1: and when I was kind of doing my work beforehand,
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  Speaker 1: you know there's one, two, three, four or five six
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  Speaker 1: plus at least six main knee brands that you're working with.
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  Speaker 1: I think every recent press he's talk about this up
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  Speaker 1: to seventy percent of all implants in the market. Let's
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  Speaker 1: just start with why you made that decision to be
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  Speaker 1: that kind of agnostic business model versus creating your own
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  Speaker 1: knee implanting kind of gain that pull through effect.
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  Speaker 2: Yeah. Well, first and foremost, the investors behind this company,
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  Speaker 2: who approached me when a left striker to take on
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  Speaker 2: the CEO position, offered up capital for me to acquire
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  Speaker 2: an implant company if I wanted to, and my decision
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  Speaker 2: was absolutely no. If we had done that, we would
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  Speaker 2: have been competing in the same business model head to
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  Speaker 2: head with the giants in the orthopedic industry and not
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  Speaker 2: adding any new value. So the new value that the
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  Speaker 2: implant agnostic approach brings is twofold. First, for a facility,
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  Speaker 2: a hospital or surgery center that starts using our technology,
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  Speaker 2: it means they can deploy that technology for all of
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  Speaker 2: their surgeons, not just the surgeons who use one particular
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  Speaker 2: type of implant. That leads to incredibly positive, unique economics
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  Speaker 2: in our favor. And that's important because you know, hospital
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  Speaker 2: and surgery center margins are under pressure, so the contribution
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  Speaker 2: margin per procedures an important metric for them. So that's
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  Speaker 2: an economic benefit. The clinical benefit is that surgeons are
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  Speaker 2: increasingly recognizing that one brand of implant might not be
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  Speaker 2: right for every patient, so it allows them to seamlessly
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  Speaker 2: pick and choose what they believe is the best implant
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  Speaker 2: for each individual patient. So there's an economic benefit and
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  Speaker 2: a clinical benefit.
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  Speaker 1: And then what is the process to add on new implants?
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  Speaker 1: And it feels like that those steps to kind of
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  Speaker 1: get that approval is evolving over too. Yeah, walk me
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  Speaker 1: through kind of over the past few years how you've
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  Speaker 1: been able to add those kind of implants and how
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  Speaker 1: that pathway has evolved.
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  Speaker 2: Yeah, the first eight companies or brands of implant that
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  Speaker 2: were added to our platform were through partnerships with small
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  Speaker 2: to mid size companies think about Medacta in all this
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  Speaker 2: link and others who didn't have the resources to develop
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  Speaker 2: or buy their own robot and increasingly recognized they needed
• 11:35
  Speaker 2: needed a robot week, so they asked us to put
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  Speaker 2: our implants on their robot, their implants on our robot.
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  Speaker 2: They provided their CAD models and we entered into a
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  Speaker 2: partnership agreement. Then number nine was Zimmer. Zim or biomet
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  Speaker 2: the market leader came to us and said, we like
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  Speaker 2: what you're doing. We see this as complementary to what
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  Speaker 2: we're doing. We would like to have a unique and
• 12:02
  Speaker 2: exclusive partnership with you, and we agreed to that. That
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  Speaker 2: means that we put the Zimmer Knee on our robot,
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  Speaker 2: and we provide the robot with only the Zimmer Knee
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  Speaker 2: software to Zimmer as a distributor and they sell it
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  Speaker 2: to their customers through their sales channel. It gave us
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  Speaker 2: a tremendous market access. So we really have two different
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  Speaker 2: versions of the same robot, one with eight different brands,
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  Speaker 2: and then a different one only with Zimmer sold by Zimmer.
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  Speaker 2: We sell the other one direct and recently we've we've
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  Speaker 2: been working on this for a couple of years. It's
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  Speaker 2: protected by a trade secret inside our company. We figured
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  Speaker 2: out how to put on Strikers implant without an agreement,
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  Speaker 2: without any intellectual property exchange, without any partnership with from Striker,
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  Speaker 2: and the FDA cleared that at the end of December
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  Speaker 2: last year and we announced it in February this year.
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  Speaker 2: So that's where we took a big step forward. Because
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  Speaker 2: between Striker and Zimmer, they account for over sixty five
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  Speaker 2: percent of the market. The other brands that we have
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  Speaker 2: account for nearly ten percent, so we're north of seventy
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  Speaker 2: percent now.
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  Speaker 1: So is that like just for that Striker example, is
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  Speaker 1: that you know, one way to think about it is
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  Speaker 1: with Strikers make up, you have to use the triathlon
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  Speaker 1: d but not every triathlon MEE is done with a robot.
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  Speaker 1: And so is it something where if you're using manual
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  Speaker 1: tools for a triathlon MEE that's not using a robot,
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  Speaker 1: you could theoretically think of sync surgical as a tool
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  Speaker 1: that is implenting the triathlonne.
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  Speaker 2: Yeah, the big robots are fast approaching a ceiling in
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  Speaker 2: the market. I don't know where that ceiling exactly is
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  Speaker 2: going to be, but there will be a ceiling, and
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  Speaker 2: then I believe a bigger segment of the market will
• 14:02
  Speaker 2: adopt the handheld technology instead of the large robot. So
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  Speaker 2: it means that those newcomers to the robotics category who
• 14:12
  Speaker 2: didn't want to use a large robot, if they're using
• 14:15
  Speaker 2: Striker's Knee, they can use our handheld robot. If they're
• 14:20
  Speaker 2: using Zimmer's Knee, they can use our handheld robot. If
• 14:23
  Speaker 2: they're using one of the other eight brands on our platform,
• 14:27
  Speaker 2: they can now use our handheld robot. And you know,
• 14:30
  Speaker 2: the success with the Striker innovation opens the door for
• 14:37
  Speaker 2: us to add all of the others, and that is
• 14:41
  Speaker 2: our intention.
• 14:42
  Speaker 1: Yeah, I mean, it probably takes some time to kind
• 14:44
  Speaker 1: of because you got to do that work yourself, but
• 14:47
  Speaker 1: I would see the same thing. I can easily see
• 14:49
  Speaker 1: the other thirty percent eventually, because it is at the
• 14:52
  Speaker 1: end of the day, t MINI is a tool that
• 14:54
  Speaker 1: the surgeon's have, it's not.
• 14:55
  Speaker 2: Yeah, well, we have the development pathway and we have
• 14:58
  Speaker 2: the regulatory pathway worked out. So those are predicates for
• 15:02
  Speaker 2: what we intend to do with DEPEW, Synthe's and with
• 15:06
  Speaker 2: Smith and Nephew, and I've been very transparent with the
• 15:10
  Speaker 2: market and with those two companies around our intentions and
• 15:14
  Speaker 2: an actual fact, it's met with quite positive feedback. So
• 15:19
  Speaker 2: I think the market is recognizing that there will be
• 15:23
  Speaker 2: a implant agnostic technology channel and they would rather participate
• 15:29
  Speaker 2: than not.
• 15:30
  Speaker 1: Yeah, and I think, you know, I kind of saw
• 15:32
  Speaker 1: that with the diabetes market, and you had cgms and
• 15:36
  Speaker 1: you had insulin pumps, and you know, the companies that
• 15:38
  Speaker 1: were agnostic to which pumps used, which cgm's benefited, and
• 15:43
  Speaker 1: the companies that tried to have a closed system they
• 15:46
  Speaker 1: fell behind. I could definitely see that kind of rolling
• 15:49
  Speaker 1: over into the knees and you know, other orthopedic procedures
• 15:52
  Speaker 1: down the road.
• 15:53
  Speaker 2: Now I'm learning something and I'm going to go and
• 15:55
  Speaker 2: look that up. Yeah.
• 15:56
  Speaker 1: No, absolutely, But let's just go down to some of
• 15:59
  Speaker 1: the other press releases that came out. The one that
• 16:02
  Speaker 1: caught my attention is in May you highlighted you've completed
• 16:07
  Speaker 1: five thousand cases. And then I went back and a
• 16:12
  Speaker 1: year ago in May May twenty five, you said a
• 16:16
  Speaker 1: thousand cases. And so you went from a thousand cases
• 16:19
  Speaker 1: over the you know, the first few years of launch,
• 16:22
  Speaker 1: and then you went another four thousand in just one year.
• 16:25
  Speaker 1: We talked about a lot of different drivers here, but
• 16:28
  Speaker 1: off the top of your head, what is probably the
• 16:30
  Speaker 1: main inflection point in that adoption or that acceleration of
• 16:34
  Speaker 1: the adoption.
• 16:35
  Speaker 2: So let's go back in time. We got our first
• 16:38
  Speaker 2: product cleared in twenty three, late twenty three. That was
• 16:45
  Speaker 2: the T Mini one doll. We only launched that in
• 16:49
  Speaker 2: a small number of centers for twelve months as a
• 16:52
  Speaker 2: limited market release to learn about the technology and how
• 16:56
  Speaker 2: it performs in the operating room. We identified some user
• 17:00
  Speaker 2: experience improvements that we wanted to make and we deployed
• 17:03
  Speaker 2: that in our one dot one software which was launched
• 17:07
  Speaker 2: in fourth quarter of twenty four. So that added what's
• 17:11
  Speaker 2: called gap balancing, and that was a requirement for us
• 17:15
  Speaker 2: to achieve an inflection point. But then obviously adding the
• 17:19
  Speaker 2: market leader, which we did late twenty four, was another
• 17:24
  Speaker 2: inflection point for the business. So our first full commercial
• 17:30
  Speaker 2: year was twenty twenty five, and we're very excited that
• 17:35
  Speaker 2: we overachieved on our financial objectives for the year, both
• 17:39
  Speaker 2: top line and bottom line, and it looks like we'll
• 17:44
  Speaker 2: double the business again this year. So what's fueling growth
• 17:49
  Speaker 2: is two things. New systems going into the market. You know,
• 17:53
  Speaker 2: our second quarter new system sales were double digits, so
• 17:58
  Speaker 2: we're adding systems fast. We're up to over eighty surgeons
• 18:04
  Speaker 2: routinely using the product. It will be well over one
• 18:06
  Speaker 2: hundred surgeons approaching one hundred and fifty by the end
• 18:10
  Speaker 2: of the year. Then it's utilization. How many cases are
• 18:14
  Speaker 2: they performing per month with our technology, and our utilization
• 18:20
  Speaker 2: rates are currently double digit which is above what is
• 18:24
  Speaker 2: published in the market for Striker and almost two times
• 18:29
  Speaker 2: what's published in the market for Zimmer. So it seems
• 18:32
  Speaker 2: like when surgeons start using this technology because they find
• 18:35
  Speaker 2: it easy and efficient, they're using it on a routine basis. Yeah,
• 18:40
  Speaker 2: and then I mean we talked about the one point
• 18:43
  Speaker 2: zero to the one point one. There's also the we
• 18:46
  Speaker 2: talked earlier about TEA plan and TV. Are those new
• 18:50
  Speaker 2: features or that has that been kind of the same
• 18:52
  Speaker 2: features and now the doctors are just at that aha
• 18:54
  Speaker 2: moment when they have discovered the potential benefits of the
• 19:00
  Speaker 2: that technology for them. Yeah, there's a growing realization in
• 19:04
  Speaker 2: the market amongst our customers that for the first time
• 19:10
  Speaker 2: there's a technology available to them that is functionally equal
• 19:16
  Speaker 2: to the market leader, Maco for totally replacement. In fact,
• 19:21
  Speaker 2: almost seven out of ten customers that we have today
• 19:25
  Speaker 2: are conversions from Maco, which I never thought i'd be
• 19:28
  Speaker 2: talking about. When people ask me about how are you
• 19:32
  Speaker 2: going to compete with Maco three years ago, I said,
• 19:34
  Speaker 2: we're not. We're trying to expand the market. But here
• 19:38
  Speaker 2: we are today. We're seeing a lot of conversions, so
• 19:41
  Speaker 2: that's very exciting, and as a small company, we can
• 19:44
  Speaker 2: respond to feedback very quickly. We do about on average
• 19:49
  Speaker 2: one hardware release per year and two software releases per year,
• 19:54
  Speaker 2: so over the last four years we've had twelve day clearan.
• 20:00
  Speaker 2: We're in a being very quickly because we're a small
• 20:02
  Speaker 2: company and we can yeah, I mean, yeah, that's absolutely
• 20:05
  Speaker 2: and will continue to Yeah.
• 20:07
  Speaker 1: I mean we talked about one point zero. One point
• 20:10
  Speaker 1: one came out end of twenty twenty four. Is there
• 20:13
  Speaker 1: a one point two or at two point zero that's
• 20:16
  Speaker 1: on the docket for next release?
• 20:19
  Speaker 2: There's a one point two in a limited release at
• 20:22
  Speaker 2: the moment, okay with our sort of early user group,
• 20:26
  Speaker 2: likely full release within the next couple of months, and
• 20:30
  Speaker 2: there's a whole major two dot software release, which has
• 20:35
  Speaker 2: got some hardware elements as well, which is planned for
• 20:40
  Speaker 2: first quarter next year. Okay, so we're moving quickly, and
• 20:46
  Speaker 2: our core hardware technology and the software technology that drives
• 20:53
  Speaker 2: it is working extremely well. Our mission is to continually
• 20:59
  Speaker 2: improve the user experience, and you know, as a as
• 21:03
  Speaker 2: an early stage company, once we have a highly stable
• 21:09
  Speaker 2: platform that's performing well in the market and we continue
• 21:13
  Speaker 2: to innovate for user experience improvements, then we turn our
• 21:17
  Speaker 2: eye to significant cost out initiative to drive the company
• 21:24
  Speaker 2: more towards profitability. And we expect that with the recent
• 21:28
  Speaker 2: financing that we announced, we have the resources to get
• 21:35
  Speaker 2: to break even probably by the end of twenty seven.
• 21:40
  Speaker 1: Okay, let me just go back to the one point
• 21:43
  Speaker 1: two in the two point l that's coming out first
• 21:45
  Speaker 1: quarter twenty seven. That's gonna be a nice little announcement
• 21:47
  Speaker 1: for AOS twenty twenty seven. But yeah, one point two
• 21:51
  Speaker 1: two point zero, and yeah, as you said, these are
• 21:55
  Speaker 1: all expected timelines. It's never but one point two two
• 21:59
  Speaker 1: point zero. How what are the key features that are
• 22:01
  Speaker 1: taking place in those two step functions that kind of
• 22:04
  Speaker 1: are improving the one point one currently?
• 22:09
  Speaker 2: Yeah, I think the biggest areas of improvement that we're
• 22:13
  Speaker 2: making are in first of all, registration, The two dot
• 22:19
  Speaker 2: all registration experience for surgeons will be a major step forward,
• 22:25
  Speaker 2: and as benchmarked against the market leader, we believe that
• 22:30
  Speaker 2: we leap frog the market leader with the two dot
• 22:32
  Speaker 2: ZO and registration is the process you go through in
• 22:37
  Speaker 2: the operating room to register the patient's anatomy to the
• 22:41
  Speaker 2: virtual bone. You collect lots of points on the mown.
• 22:45
  Speaker 2: It can be a bit painful at times. It's one
• 22:50
  Speaker 2: of the pain points that Surge has talk about the
• 22:52
  Speaker 2: difference between what we're doing today, which is equivalent to
• 22:56
  Speaker 2: the market leader, and what we're going to be doing
• 22:58
  Speaker 2: next year is now and day. It will be so fast,
• 23:02
  Speaker 2: it will be so easy, So we're excited about that.
• 23:06
  Speaker 2: The other thing is there is one feature in the
• 23:12
  Speaker 2: market leader technology called CT slice View, which our customers,
• 23:19
  Speaker 2: because many of them are converting from Maco, are asking for.
• 23:23
  Speaker 1: So we're going to add that. Okay, that's there'll be
• 23:25
  Speaker 1: some good adjustments, and it's interesting the registration. Talking about
• 23:29
  Speaker 1: quicker registration gets some to the actual procedure. Quicker, getting
• 23:33
  Speaker 1: the procedure done quicker, you can actually probably get in
• 23:35
  Speaker 1: another extra procedure per day.
• 23:37
  Speaker 2: Maybe it's like hypothetic, is it's not that kind of
• 23:42
  Speaker 2: time saving. You know, it's going from a few minutes
• 23:45
  Speaker 2: down to one minute. Okay, okay, okay, it's not adding
• 23:49
  Speaker 2: another case, okay, okay, but it's something. But it's the
• 23:52
  Speaker 2: thing that the surgeons want to be almost instant. Yeah,
• 23:57
  Speaker 2: so you know, we're focused on what they are asking for.
• 24:01
  Speaker 1: I got Joe, Okay, but that kind of still goes
• 24:03
  Speaker 1: with my segue with just like the market dynamics anyway,
• 24:05
  Speaker 1: because like I said, with knee replacements, it's a high
• 24:10
  Speaker 1: volt These centers need to have a high volume to
• 24:13
  Speaker 1: be able to make the profitable for the hospitals. Where
• 24:18
  Speaker 1: are some of your views of the current market dynamics.
• 24:22
  Speaker 1: I think you know we're early here in you know,
• 24:25
  Speaker 1: mid July, we're starting with the second quarter earning season.
• 24:30
  Speaker 1: We're hearing mixed signals about procedure volume and potential headwinds
• 24:36
  Speaker 1: from insurance subsidient cuts. What has been your view of
• 24:42
  Speaker 1: how you know we're here we are in July twenty
• 24:45
  Speaker 1: twenty six of kind of procedure volumes, both in orthopedics
• 24:49
  Speaker 1: or just in general.
• 24:50
  Speaker 2: Yeah, I mean my conversations with orthopedic surgeons. I asked
• 24:55
  Speaker 2: this question, and the standard answer is there's been no
• 25:00
  Speaker 2: impact or no noticeable impact, so they're not seeing a
• 25:04
  Speaker 2: slowdown in patient milliums. Now, whether a surgeon would notice
• 25:08
  Speaker 2: it on a you know, a weekly or monthly basis,
• 25:10
  Speaker 2: or whether it would show up at the end of
• 25:13
  Speaker 2: the year remains to be seen. I've also seen a
• 25:16
  Speaker 2: lot of research that suggests that it's probably only affecting
• 25:20
  Speaker 2: about one percent of the patients the subsidy cuts. The
• 25:28
  Speaker 2: other thing is, you know, when you've got to the
• 25:30
  Speaker 2: stage that your arthritis is so bad that you want
• 25:35
  Speaker 2: to have a joint replacement surgery, it's a massive, major decision,
• 25:40
  Speaker 2: and I don't think at that point it's truly elective.
• 25:44
  Speaker 2: I think it's kind of I have to do this
• 25:47
  Speaker 2: no matter what. So I would predict that there's minimal
• 25:52
  Speaker 2: to no impact on surgical volume in joint replacement when
• 25:59
  Speaker 2: we get to the end of the year.
• 26:00
  Speaker 1: Well, and that's I think. You know what I'm saying
• 26:02
  Speaker 1: too in the orthopedic space is that you know, like
• 26:04
  Speaker 1: you said, you're doing a knee replacement when it's the
• 26:07
  Speaker 1: worst case scenario and the worst type of pain. Like
• 26:10
  Speaker 1: you know, me in my forties, when I run, if
• 26:12
  Speaker 1: my knee gets sore, I'm not going to ask for
• 26:14
  Speaker 1: a knee replacement. That's not that's when you think of elective.
• 26:18
  Speaker 1: That's the elective. But you're almost saying when that kind
• 26:20
  Speaker 1: of you're getting to that acute pain, it's no longer elective.
• 26:24
  Speaker 1: You have to like treat them for that knee replacement.
• 26:28
  Speaker 2: Yeah, and you've got to remember that the GLP ones
• 26:31
  Speaker 2: have brought more patient candidates into the surgical on no,
• 26:37
  Speaker 2: because high BMI patients were often denied surgery even when
• 26:43
  Speaker 2: they needed it in the past, and so you know,
• 26:46
  Speaker 2: there's kind of an offsetting impact from GLP ones as well.
• 26:51
  Speaker 2: So I don't think that the trains are going to change.
• 26:56
  Speaker 2: The projection for total need replacements in the United States
• 27:01
  Speaker 2: is you know, today it's over a million patients a year.
• 27:06
  Speaker 2: By the early next decade, it's likely going to be
• 27:10
  Speaker 2: closer to two million. By the end of the next decade,
• 27:13
  Speaker 2: into the twenty thirties, it's projected to be three million.
• 27:16
  Speaker 2: So it's a real growth category.
• 27:18
  Speaker 1: Yeah, and you know that's kind of interesting because you
• 27:21
  Speaker 1: know it's growing, but the number of hospitals aren't growing,
• 27:24
  Speaker 1: and you're seeing more orthopedic cases moving to the ASC setting.
• 27:29
  Speaker 1: So I'm curious how you're seeing if that's a trend
• 27:33
  Speaker 1: that you're seeing and you still expect to see, and
• 27:35
  Speaker 1: then how does things surgical fit into that transition to
• 27:40
  Speaker 1: the ASC setting.
• 27:41
  Speaker 2: Our technology is perfect for the surgery center, it doesn't
• 27:44
  Speaker 2: take up much space, it's a lower cost of capital.
• 27:48
  Speaker 2: That lower cost of capital can be amortized over a
• 27:52
  Speaker 2: much larger number of procedures because you're open platform, So
• 27:56
  Speaker 2: it's perfect for the ac Interestingly, as a look at
• 28:01
  Speaker 2: our data customer data, we're almost equally distributed a third
• 28:08
  Speaker 2: into academic hospitals, a third in community hospitals, and a
• 28:13
  Speaker 2: third in AICs. But you know, I think Kevin Lowell
• 28:17
  Speaker 2: Striker on one of the earnings calls late last year
• 28:21
  Speaker 2: said that their may call is less than ten percent
• 28:25
  Speaker 2: surgery center. So I guess we're you know, way ahead
• 28:28
  Speaker 2: and new when it comes to surgery center adoption.
• 28:32
  Speaker 1: Yeah, and I think that's just that's the new growth
• 28:34
  Speaker 1: industry there. Yeah, and then kind of just you know,
• 28:38
  Speaker 1: kind of rounding out the market as the competitive landscape.
• 28:41
  Speaker 1: You know, we talked about Striker. We talked about Zimmer,
• 28:45
  Speaker 1: but first there's you know, Striker is coming out with
• 28:48
  Speaker 1: their own handheld robotic system. They it's the full launch
• 28:52
  Speaker 1: of that, and then there's other companies that are trying
• 28:54
  Speaker 1: to come out with their technology. How how what's your
• 28:57
  Speaker 1: view of that competitive landscape and how that is evolving?
• 29:00
  Speaker 1: It Is it something where you're seeing people understand the
• 29:04
  Speaker 1: importance of having that handheld technology.
• 29:07
  Speaker 2: Yeah, and you know, I've been obviously monitoring the public
• 29:12
  Speaker 2: statements from Striker quite closely, and they talk about this
• 29:16
  Speaker 2: being an expansion effect from the category. I think behind
• 29:21
  Speaker 2: that is an acknowledgment that there's a ceiling from the
• 29:24
  Speaker 2: large format robots. And I think it's validating. You know,
• 29:30
  Speaker 2: we're two to three years ahead at this stage. I've
• 29:34
  Speaker 2: been excitedly waiting for Striker to launch his product. It's
• 29:38
  Speaker 2: been talked about for a while. I think it validates
• 29:41
  Speaker 2: what we're doing and creates an updraft. I never underestimate Striker.
• 29:45
  Speaker 2: They're an incredible organization. Their commercial execution is second to none.
• 29:49
  Speaker 2: You know, I had a twenty four year career there.
• 29:52
  Speaker 2: I hold the company in very high regard, so they
• 29:55
  Speaker 2: will do well with that technology. But they will create
• 29:58
  Speaker 2: an updraft which will be if it us as well.
• 30:01
  Speaker 2: And so I'm excited about the future. And you know,
• 30:09
  Speaker 2: I think it will put pressure on some of the
• 30:13
  Speaker 2: other companies because now Striker has got a dual robot offering. Yeah,
• 30:20
  Speaker 2: it can satisfy different customer segments and different customer needs.
• 30:25
  Speaker 2: Zimmer with their acquisition of Monogram and their partnership with
• 30:30
  Speaker 2: Think can equally compete on that level, but the others can't.
• 30:35
  Speaker 2: So I think there's going to be an interesting competitive
• 30:38
  Speaker 2: dynamics largely between Zimmer and Striker in knees and robotics
• 30:44
  Speaker 2: over the next few years. It's very and we look
• 30:47
  Speaker 2: forward to being part of the equation.
• 30:49
  Speaker 1: Well, it's very interesting because you don't think of having Yeah,
• 30:52
  Speaker 1: well we I'm Monny. And it's interesting because, yeah, we're
• 30:55
  Speaker 1: talking about these robotics as being a tool for the physician,
• 30:58
  Speaker 1: but you don't think of how multiple robots in your toolbox.
• 31:03
  Speaker 1: But it seems like that's the direction that both Striker
• 31:06
  Speaker 1: and Zimmer are going by having that optionality for the
• 31:09
  Speaker 1: hospitals to make investments in.
• 31:11
  Speaker 2: Yeah. My view, my vision for the future is that
• 31:16
  Speaker 2: every hospital at least and possibly every surgery center will
• 31:22
  Speaker 2: have one large format robot because there's specialty applications that
• 31:28
  Speaker 2: can be delivered through the large format robot. You know,
• 31:32
  Speaker 2: partial knee replacement, hip replacement, revision, hip replacement, maybe even
• 31:37
  Speaker 2: shoulder replacement. So I see that multi specialty large robot
• 31:42
  Speaker 2: having a value. But for the primary routine total knee replacements,
• 31:48
  Speaker 2: I see the economics and the clinical efficiency of the
• 31:52
  Speaker 2: handheld technology will win out. So I see a future
• 31:56
  Speaker 2: where there's one large robot and multiple small robots in
• 32:01
  Speaker 2: the fleet, and even more so if it's open platform,
• 32:05
  Speaker 2: because then you're not dealing with the competing brand loyalties
• 32:10
  Speaker 2: of different surgeons.
• 32:11
  Speaker 1: Yeah, that's interesting because you know, I even I always
• 32:16
  Speaker 1: don't realize the importance of having that revisionne procedure done
• 32:20
  Speaker 1: as well, because you know, the life of these knee
• 32:22
  Speaker 1: implants is you know, a decade, maybe a little bit more,
• 32:25
  Speaker 1: maybe a little bit less, and so, but yeah, but
• 32:29
  Speaker 1: it's interesting to think about it as a primary knee
• 32:32
  Speaker 1: robotic tool and a revision e robotic tool. Let's then
• 32:35
  Speaker 1: just turn to because that to that commercial execution we
• 32:38
  Speaker 1: talked about the Striker's Great execution. Your experiences from Striker
• 32:41
  Speaker 1: carry over and it is showing just with the number
• 32:45
  Speaker 1: how the cases that are accelerating. First, let's talk about
• 32:49
  Speaker 1: the revenue model, because this is kind of when I
• 32:52
  Speaker 1: started asking about that pull through with the knee implants,
• 32:55
  Speaker 1: because you have a large capital revenue for the placement
• 33:02
  Speaker 1: of the robot, but then you get the pull through revenue,
• 33:04
  Speaker 1: so you don't you kind of eliminate some of that
• 33:07
  Speaker 1: lumpiness of the robotic system because you don't have that
• 33:11
  Speaker 1: pull through with your own implant. How is your revenue
• 33:14
  Speaker 1: being recognized? Is it upfront with the purchase of the revenue?
• 33:18
  Speaker 1: Is there servicing? Is it leasting? How is that model
• 33:21
  Speaker 1: playing out?
• 33:22
  Speaker 2: Yeah, So there's three elements of revenue in our business.
• 33:26
  Speaker 2: There's the capital revenue. There's the procedure revenue because there's
• 33:31
  Speaker 2: a disposable kit oh that goes with every procedure. And
• 33:35
  Speaker 2: obviously when five thousand becomes fifty thousand becomes one hundred thousand,
• 33:40
  Speaker 2: that grows exponentially. And then there's this service contract. So
• 33:47
  Speaker 2: every piece of high tech medical equipment in a hospital
• 33:51
  Speaker 2: or surgery center has a service contract associated with it.
• 33:56
  Speaker 2: So the more robots you get in there, the quicker
• 33:58
  Speaker 2: that grows because it's a per year or per quarter contract,
• 34:05
  Speaker 2: so we're heavily weighted towards capital at the moment, but
• 34:09
  Speaker 2: as we get more scale and more volume, we transition
• 34:13
  Speaker 2: to recurring revenue quite quickly. Our business can support straightforward purchases, leases, rentals,
• 34:24
  Speaker 2: or any other sort of recurring payment model that the
• 34:27
  Speaker 2: customer wants. I learned very early on with my Striker
• 34:31
  Speaker 2: make O experience that you have to meet the customer
• 34:34
  Speaker 2: where they're at. If they like deploying capital to buy technology,
• 34:38
  Speaker 2: sell it to them, if they like leases, lease it
• 34:41
  Speaker 2: to them. If they want a rental, give them a rental.
• 34:44
  Speaker 2: So we're not fighting the system. We're positioned so that
• 34:49
  Speaker 2: the customer gets to choose their own acquisition model.
• 34:53
  Speaker 1: And then you talked about the financing that was announced
• 34:57
  Speaker 1: recently that gives you a path to that profitable break
• 35:00
  Speaker 1: even by twenty twenty seven. How do you see that
• 35:04
  Speaker 1: next few years beyond that profitability break even, because then
• 35:07
  Speaker 1: that allows you really to be aggressive in R and
• 35:09
  Speaker 1: D investment other capital allocation decisions, and just you know,
• 35:15
  Speaker 1: between that R and D investment, between capital allocation, where
• 35:21
  Speaker 1: do you see robotic technology and where do you see
• 35:24
  Speaker 1: I think Surgical's role in that market being i'll say
• 35:27
  Speaker 1: five years from now.
• 35:28
  Speaker 2: We did not announce an equity financing which we closed
• 35:34
  Speaker 2: in the beginning of February, because it was an inside
• 35:38
  Speaker 2: around that was fifty million. We just announced outside around
• 35:45
  Speaker 2: a company called Symbiotic Capital provided up to sixty five
• 35:50
  Speaker 2: million dollars in debt financing to the company. So those
• 35:53
  Speaker 2: two things combined give us everything and more that we
• 35:56
  Speaker 2: need to get to profitability. We will deploy most of
• 36:01
  Speaker 2: that towards commercial execution and continuous product innovation. Our outcome
• 36:11
  Speaker 2: that we're driving towards is an IPO, probably in the
• 36:16
  Speaker 2: twenty twenty eight time frame. And you know it was
• 36:19
  Speaker 2: interesting I showed you earlier. I got a picture last
• 36:22
  Speaker 2: night and Nasdak featured us in their Times Square billboard yesterday,
• 36:31
  Speaker 2: which was really exciting, congratulating us on our external financing.
• 36:36
  Speaker 2: And hopefully that's you know, a premonition or a visional
• 36:40
  Speaker 2: links to come, or at.
• 36:41
  Speaker 1: Least they're trying to make a sales pitch to.
• 36:43
  Speaker 2: Get exactly I'm not naive I know what they're doing,
• 36:47
  Speaker 2: but do you know what when you see your company's
• 36:49
  Speaker 2: name up in lights in Times Square with Nasdak attached
• 36:53
  Speaker 2: to it. There's kind of a sense of excitement and
• 36:57
  Speaker 2: validation that comes from that. Clearly somebody thinks that we're
• 37:01
  Speaker 2: a good IPO candidate.
• 37:03
  Speaker 1: Well, and like I said, the number of cases that
• 37:06
  Speaker 1: you've done in your May press release versus where you
• 37:10
  Speaker 1: were a year ago is pointed that and so I'm
• 37:12
  Speaker 1: excited to see how the next twelve months play out.
• 37:16
  Speaker 1: And Stewart, thank you so much for joining us today.
• 37:18
  Speaker 2: No, thank you for inviting me. I always love coming here,
• 37:21
  Speaker 2: I love spending time with you and hope that you
• 37:25
  Speaker 2: go everything you wanted out of the interview.
• 37:26
  Speaker 1: It was a great one. And thank you to our
• 37:28
  Speaker 1: producers Aditiasimani and Mariam Wail for all the behind the
• 37:32
  Speaker 1: scenes work, and thank you to our listeners for tuning
• 37:35
  Speaker 1: in today. We hope you join us for future episodes,
• 37:37
  Speaker 1: and if you like to stay up to date, you
• 37:39
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