Video Transcription
Jon Greenwald 00:01
Good morning. I'm Jon Greenwald, co-founder and CEO of Caira Surgical. I know I'm the last speaker before lunch, so I will adhere to the time limit. Everyone attending this meeting, half of us are going to develop osteoarthritis of the knee at some point in our life. And for women, there's a higher probability of this situation. So I'm going to talk about knee replacements, which is the beachhead for our first technology. In the United States alone, we are tracking towards three and a half million knee replacements annually by 2030, and that's just the US. So this is an extremely high-volume procedure around the world. Now, over the years, there have been a lot of advancements to improve the treatment of knee osteoarthritis, technologies including robotics navigation. The first robotic surgery, the Mako robotic surgery, which is Stryker's product, was in 2015, and so here we are, 10 years later, and only 17% of these in the United States utilize any kind of technology that's robotics and navigation. The majority of that is robotics, but it's still relatively low adoption for this period of time. Why is that? Principally because current technology impedes adoption. It gets in its own way. So I'm going to just walk through very briefly a couple of images of a navigated knee replacement surgery. So you hear the couple of elements you have a user interface, oftentimes out of the sterile field, has to be operated by a rep, oftentimes a company representative. You have fiducial trackers. So this is for joint replacement. Optical tracking is the state of the art, and optical tracking requires the use of these large fiducial arrays. Each one, this is a knee, so tibia, femur, each one of these arrays is held in place with two bicortical pins, meaning they go all the way through the cortices. That requires additional incisions. In this image, it's an extended incision, but more often than not, it's two additional incisions in the tibia, two additional in the femur, and then the violation of the bone outside the field. There is a camera that tracks the position of those fiducials, so it's, in essence, tracking the position of the anatomy as it moves through space. This camera is subject to line of sight occlusion, meaning if someone were to walk in front of it, or the assistant that typically stands across the table from the surgeon blocks that camera from seeing the fiducials, so the assistant has to move. If you speak with orthopedic surgeons, that's probably their number one problem with optical tracking, not only the fiducials and the pins and the invasiveness and the time it adds to the procedure, but also they have to ask their assistant to move out of their normal position. So these technologies, optical, especially navigation and robotics too, they're expensive in their current incarnation, with the Mako robot, the leading robot, over a million dollars in the US. They add time to the procedure. They're invasive with the cortical pins required for the fiducials, and there's a high level of complexity to them, with a long learning curve. And then lastly, they're just obstructive. These pins sort of stick out, and once they're in place, they're not removed until the procedure is over. So you have the surgical team kind of working around them. So Caira Surgical is focused on addressing these barriers to adoption for technology, and our core tech has to do with tracking. We replace optical tracking with a radar-based system. We're the first company in the space to utilize radar for a surgical tracking system, and then looking at other pain points within a technology-assisted surgery. We have an automated and AI-enabled automated planning system, and then that's used interoperatively, and then also for registration of anatomy. We have a handheld scanner that both of these take time out of the procedure. Today I'm going to talk mostly about our core technology, the radar tracking. So this is a Caira instrument set, and on the left, you can see what we call the constellation, and that's just a user interface with six radar tiles around it. So rather than additional incisions and bicortical pins, we fit everything within a standard incision for a knee replacement. Our fiducials, which we call beacons, are the white sort of hockey pucks on the stems there. Those are held in place with a three and a half millimeter diameter cancellous bone screw, so very minimal violation of bone to hold those in place. They can also be removed during the procedure, so they can get out of the way, unlike optical fiducial trackers. And then here you can see this is what it looks like with the constellation in place. Radar enables you to put a sterile drape over the constellation so that the whole system is sterile. It can come in, and the surgeon can actually use the touchscreen if they so choose. And then you'll notice the assistant standing across the table from the surgeon. That person couldn't be there if they were using existing optical technologies. So here is a near production prototype of the constellation on the left in a cadaver setting. And then these are our beacons. The video is demonstrating that they're rigidly fixed, but they're easily removed, and that has to do with some very elegant design around the base plate, around which we have some IP. So the advantages of Caira radar tracking are we're 75% less expensive than traditional systems. So that is a huge barrier to adoption for technology, especially in the US ambulatory surgery centers and in community hospitals, where there just aren't a lot of resources to purchase robots or the disposables associated with the case. We take time out of the procedure, both in terms of implanting the fiducials or the beacons, and then also the fast landmark registration saves time as well. We eliminate additional incisions. It's a simple, as you saw from the video, very simple procedure. So it's a quick learning curve, and it's unobtrusive. The beacons, again, can be removed during the procedure, and the system is able to maintain sight and registration throughout. So we are a large market. Our first product is navigation, radar navigation for total knee replacement. We're also looking at hip and spine, and then ultimately, the vision is to utilize the tracking system, not just as a standalone navigation system, but also in conjunction with robots. So with those procedures added up, and looking at the robotics space as well, it's a $13 billion a year opportunity worldwide. This is particular to the US market, but I think has been well publicized. Ambulatory surgery centers are taking on total joint replacement. So by 2030, 68% of total joints are going to be done in an ambulatory or an outpatient surgery setting. What does this mean for Caira? So we're a smaller footprint, we're less expensive, both in terms of capital equipment and the disposables. ASCs operate on a very thin margin. The reimbursements are typically lower in the US. So we are tailor-made for this sort of environment. We're tailor-made for where the joints are going in the US. We have planned a limited market release in the second half of next year. So we have already begun discussions with 23 surgeons at 13 centers around the country. Geographically, this is what it looks like: some of the key centers on the East Coast, Texas, California, and Arizona. And then, from a competitive comparison standpoint, Caira hits all the marks in terms of overcoming existing pain points for the use of technology. I think I'll draw your attention to the install cost. So that's the capital equipment, what we for us, what would be a constellation, are orders of magnitude lower than either navigation or robotics. We want to eliminate that barrier to entry, especially for the ASC segment in the US, and also for developing markets and cost-sensitive markets like Europe. Then disposables per surgery, we want to cut that cost as well. This, especially in the United States, is the big pain point for hospitals because there, while there are CPT reimbursement codes for the use of technology in joint replacement that goes to the surgeon, not to the institution. So whether it's a hospital or an ASC, the use of technology hits their profit margin. So that becomes a big adoption barrier that we look to overcome, and this is our timeline so far. So we are really pleased to say, to date, we've raised almost $7,750,000, of which was non-dilutive through a National Science Foundation grant to demonstrate a proof of concept around radar tracking at sub-millimeter accuracy. And then just last week, well, I can't tell you who, we signed an agreement with one of the major strategics in the space to do an evaluation of our planning software that I mentioned earlier in the presentation. So presently, we have a $10 million Series A that's open. We have a million committed, and we're now in diligence with a lead investor for between five and nine. So there may be anywhere between one and four left in this round. Then looking out into the future, again, second half of next year, limited market release with radar navigation for total knee replacement, and then looking into the future, we want to expand on the AI planning solution, likely in tandem with one of the strategics, and then landmark registration with the scanner, and then robotic integration. So taking the radar tracking system, putting it on a robot, and then other indications beyond knee, hip, spine, and shoulder. We have a pretty broad IP moat, with granted patents, with eight presently in review at USPTO, and then more in development. We have PCT protection in the EU, Australia, China, and India. We've been very active in terms of ring-fencing our space, which is really sub-millimeter accurate surgical tracking, utilizing the radar system, and all tracking surgically is typically sub-millimeter accurate.
Jon Greenwald 10:01
We are on the 510(k) pathway in the United States. There are multiple predicate candidates. While radar, in and of itself, is a novel technology, we're essentially navigating or providing surgical guidance to a robot. So optical, there are many predicate optical and EM systems that have come before us that we can cite as predicates. This is a little aspirational, but I think eventually we would like to have not just a single-use, but a reusable instrument set. The objective here is a life cycle whereby the beacons, the instruments, go into a hospital, they get used. We provide an incentive, most likely a discount for the hospital to then disinfect it, give it a cursory disinfection, return it to us, where we can reprocess the beacons, so the electronics inside the beacons remain sterile throughout the procedure. So it's a matter of opening those beacons, taking out the electronics, and reprocessing, putting them through a QA cycle and back into the manufacturing cycle. The objective here is to reduce our COGS. If we can get 10 turns out of a beacon, we've reduced our COGS dramatically. This helps us overcome another barrier and push the cost envelope to get technology into more frequent use. So our team is extremely experienced. I've been in the space for about 25 years. I've had two exits within orthopedics, one to J&J and one to Stryker. I've spent many years at J&J prior to that, both in the US and markets around the world. My co-founder, Dr. Mehta, is a very high-volume KOL at NYU. Our CFO comes from 10 years on Wall Street, doing large healthcare transactions, and is a great driver in the company. Our CTO, he and I worked together at one of the companies that exited to Stryker. Gordon has been in the space for 25 plus years focused on navigation and surgical tracking. And then our technical team, I have to point out, Safa Dr. Salman comes from the automotive industry, and that is a little bit of the story behind the radar technology that we use. Probably 10 years ago, this technology wouldn't have been possible, but because of the advancements in automotive radar, we've been able to utilize some of that technology, repurpose it, and build on it. So Safa has joined us from the automotive industry, also in radar. This is our advisory board. We have a fantastic clinical advisory board. Dr. Kreutzer has his own ASC in Houston, doing 3,000 knees a year. Dr. Vallevis was on the Mako IDE, as was Dr. Kreutzer and Dr. Mao at Stanford, also a very prolific joint surgeon. And then I'll just draw your attention to key radar advisors, Dr. Lamonta and Dr. Metcalf. These guys help us differentiate Caira from anybody that might look at radar. Both of these guys, well, Lorenzo comes out of defense. Justin comes out of automotive. But it's a really cool team. It's really fun to bring in experience from outside of the med tech universe and then use this tech in our space. So we do have a path to revenue. We do have an exit strategy. I think one of our core value props to the strategics is that we can replace optical tracking. We can help one of them differentiate their robot dramatically from their competitors. Nonetheless, we are planning a limited clinical release next year, and then a longer path to revenue building in hip and spine, so that by 2028, we anticipate $43.5 million in sales. This is the $10 million that we're raising now. This is the use of proceeds, so 40% to R&D to continue expanding indications. And then also 21% for the limited market release, the commercialization element, sales, marketing that is going to be required to support that operation, that's largely building the inventory to support the limited market release. And then, of course, we're going to continue to file IP and we'll have regulatory costs. So this, I'll just leave you with this parting thought. In the space, there have been a number of major M&A activities over the last several years at an average 12.1 times revenue multiplier, just lower left here. This just happened this quarter. Zimmer Biomet acquired Orthogrid, which is basically a surgical guidance company for anterior hip replacement. But I put that on there just to say that this is, you know, we date back to 2013 on this list, but this is a trend that's continuing. It's non-stop. I guess there are sort of two other similarities to point out here. Every one of these acquisitions had to do with a strategic acquiring a technology as either a standalone technology or to augment an existing robotic system that they could then further differentiate from competitors. So thank you very much. In conclusion, we have an incredibly experienced team, broad IP ring-fencing our technology, significant market, some fantastic partners, and we eliminate the pain points associated with the adoption of technology in orthopedic surgery. So we are raising the Series A, and I would welcome any discussions during the remainder of this day. Thank you. Applause.
