Video Transcription
Bob Crutchfield 00:02
Hey, good afternoon. I'm Bob Crutchfield. I have the privilege of being the executive chair for Synaptrix. This is a company that we spun out of a publicly traded company in Atlanta called Avanos. But just two caveats. First, there was a panel earlier this week that said the CEO should always give the presentations on an investment pitch. And so our CEO would definitely rather be here than have me here, especially since he knows that I had a former ex-wife who told many people that it frightened her that I made any portion of my living by communicating. So bear with me as I walk through this. This is an exciting technology. Avanos had a change in strategy of concentrating on digestive diseases, and so that left two pain franchises, one called On-Q, that they still are working with because it's about an $800 million business unit for them. But Synaptrix had been a product that they were developing and getting it ready for clinical trials. They spent about $24 million in developing the product, and we were able to spin it out at the end of 2022, early 2023. Everyone knows the problems with post-surgical joint pain—hips, knees, shoulders—and so our first application is for total knee arthroplasty and for shoulder. You know, my mom is 87, and the three questions she was asking when her orthopedic surgeon was talking to her about joint pain or having her knee done were that she wanted to know how badly would she hurt, how long would rehab take, and how many opioids would she have to take? You know, one of the things that I didn't understand until we started doing this work is that we all know the size and scale of the opioid problem in the US and globally, but I didn't realize that 8% of naive opioid patients undergoing total knee arthroplasty become addicted. So that's a frightening statistic. You know, there's a large and growing opportunity because of the aging population for joint surgeries. We see this as a $4.2 billion potential market opportunity for us. There are a lot of things on the market today, but there's not one single solution for post-operative pain that's on this list. Often, many of these are used in concert, so there's no single-use solution out there today. So that's why we developed NovaBlock. This is a neuromodulation technology. It's a single, four-minute pre-operative treatment for per nerve that lasts 17 to 21 days. Our claim with the FDA is 10, but our feasibility data showed 17 to 21 days of continuous pain relief post-surgery. So this is the system. It's really quite simple. It has a neuromodulation generator, a connecting cable, and disposable probes. It's a very easy system to use. The anesthesiologist is the person who will produce the treatment. And so you have two electrodes. One is the primary. You get to within ultrasound, to within one centimeter of the large nerve bundle. In the case of the TKA, it's the sciatic and the femoral nerves. We create a voltage that during this four-minute application impacts the non-myelinated and the low-myelinated portions of those nerves, and we get an effect that the mitochondria stall. They just shut down. They're not injured, they're not harmed. There's no tissue damage that's done, but that shutdown lasts for 17 to 21 days. We have no loss of motor function, so it doesn't impair rehab, and there's no loss of sensitivity. Just a sort of an anecdotal side note. When we were doing our first two patients, we didn't really know the impact of this, and so one of the patients went home the day of surgery and went shopping, and the other tried to cut their yard. And so what we found out was that edema and tightness in the joint becomes the proxy for pain. So we've done 109 patients in our feasibility study. 32 were treated. So we did 23 actually treated patients and 9 sham. And what you see here is that there was a wide gap between the worst pain post-TKA between the treated patients and the sham patients. You also saw that there was a significantly reduced opioid level of use. And the interesting thing here too is that the protocols for a clinical trial are going to be different than the protocols we used in the feasibility study because in the feasibility study, the patients went home with a prescription with the option to fill it, and then the other thing that happened is, as patients were beginning to go into rehab, the physical therapist would say, "Have you started your opioids? You need to get on those. Get ahead of the pain." And so now we've got those protocols in place so none of those occurrences will happen. So we have the feasibility study informing our pivotal trial. So the pivotal trial, the primary indication is going to be worse pain at day 10, and then secondary is going to be measuring total morphine equivalents used cumulatively through day five, and then the percentage of subjects using opioids in the first five days. And then there are going to be some functional outcomes that we're going to be measuring in the secondary output outcome. We've got a great team of investigators—Stuart Grant from UNC, and then we've got Rex Health here, who is going to be in our series A; that's one of our first clinical sites. And then David O. Young at Virginia Mason, I'm also at Kettering, and Dan Matthews down in Fairhope, so we can get patients done with a surgeon outside of a teaching center.
Bob Crutchfield 06:40
So NovaBlock really allows for one therapy to be used to prevent pain post-surgically for 17 to 21 days. As you can see, all the other indications on the market today are, you know, 72 hours or less, 12 hours or less, not motor-sparing. Some, you know, it's just, this is really a solution that we're terribly excited about. The other thing is that we do not break the workflow. You know, healthcare is workflow-driven, particularly surgical healthcare. So the orthopod prescribes NovaBlock, the anesthesiologist applies the NovaBlock therapy in the block room prior to surgery, we do the procedure. You know, we've got the discharge nurse, physical therapy. So nothing changes. Nothing changes in the workflows. So the reimbursement strategy—everybody asks about the reimbursement strategy. We did a 200-market analysis survey with administrators, orthopedic surgeons, and anesthesiologists at Avanos. They said that, based on, you know, if the outcomes are as we claim they will be, that outside of the bundle, they would see a $600 to $900 charge for the disposables to be something that they would support. So the first thought is that we will try to take this to the market by picking up a portion of the bundle, but we're also going after CPT codes. The feasibility, the clinical data in our randomized clinical trial of 120 patients will help justify, or help promote the justification for cat one codes, even though we may have to start with the cat three. We're also getting breakthrough status, so that allows for in-tap codes, and then traditional trust pass-through payments, and then the No Pain Act is a big driver for us as that's going to provide new opportunities for reimbursement. The thought now is it will be ASP plus 6%, and that will begin in 2025 and run through 2028. And the other thing that's important is that we believe that with bundled payments, the healthcare economics here are really good. I'm going to skip through this because I want you to see the team. Sham and Eric came out of Avanos. Sham was the general manager that was shepherding this project. Eric is the inventor of the technology, and he is really the author of the seven patents that we have, and then we have seven more pending. We set this up to be an operating business, so we really are behaving as an operating business today, and we're pretty excited about getting rolling with our clinical trial. So that's our story. We're pretty excited about Synaptrix. If you have any questions, I'll be glad to answer your questions. We're raising a $15 million Series A; we have approximately $11 million that will close in October, and there's $4 million left open if you're interested. Thank you.
