Pristine Surgical | Bryan Lord, CEO

(Transcription)

Bryan Lord  0:01  

Good morning, everybody. And thank you, Peter, just want to add my congratulations to the LSI group for the really tremendous growth of the past three years the conference, as Peter mentioned in his introductory remarks, really great to see everybody this morning. Just as a quick update, we've been here and presented all three years delighted to be here again this year. Since last year to this year, we've been very busy, we completed actually a $15 million equity round, we added a debt facility and we completed a strategic acquisition all in 2021. So was a busy year looking forward to a productive year here in 2022, as well. So at Pristine Surgical, we like to say that we see beyond and so I'm gonna break my presentation up into three different components seeing beyond the scope, seeing beyond the procedure and seeing beyond the present. So we're working in the minimally invasive surgical space, this is a very large space, hundreds of millions of procedures performed per year minimally invasively, you can see sort of the DaVinci man here on the on the right, that shows all the different areas that minimally invasive surgery is performed. And in the upper, I guess, the other side of the corner, what a arthroscope system looks like, these have been around since the 1950s 1960s. And it's sort of matured in in a very standard and recognizable way. You see a lot of different components. These are expensive and complex systems to purchase. And to actually maintain as well. It costs about $100,000 to buy one of these systems, and then a lot of service and sterilization costs that follows after that. Little discuss though is that visualisation of these devices is actually unpredictable. You can see here a sales manager that was describing on a LinkedIn post that said, Gosh, this is what happens when devices interact with which happens in the field with our arthroscope. So you can see a chewed up scope, she said 50% of the scopes that she PMs in the field are nicked up and dinged at. And then And that's consistent with the types of focus group information that we've got. And also certainly from our investors and medical advisory board members that talk about nicks and dings and cracks in the traditional rod lens scope. So with that, I'd like to introduce you to the pristine fully fully integrated, single use surgical arthroscope. So that's kind of a mouthful of adjectives. It's why we simplify and say see behind. But we're going to break up a few of those key components so fully integrated. What do I mean by that fully integrated in that we include a camera and the light source on the chip of the tip, so no external light source, no external camera head, while chip and chip technology. This is designed for surgical procedures. So some of you might know about single use arthroscope that are used for diagnostic purposes in office are as a full surgical device that's designed for full surgical repairs, such as ACLs MCL, is rotator cuffs and the like. And it's driven by a surgeon driven ergonomic design. So in spite of us flipping really where the components are on the device, we've taken great pains to make sure that the device is familiar to the surgeon, we are going to be launching with 1080p, we've got multiple pathways to 4k, and are excited about what the roadmap looks like ahead for visualization. So we take that that kit, that scope, and we actually put it into a single use kit that looks very much like other single use kits that you'll see in in ORs. So you see the kit there on the left and includes the surgical endoscope that I talked about the cannula, the trocar, electronic cabling, and water cabling, it plugs into what we call our image processing unit. And that sits on a standard rack. Eventually, we were evaluating OEM partnerships for pumps and and other types of peripherals. But the device is designed to be fully interoperable with all kinds of other water pumps and other peripherals screens in the lake as well. So it's only a simple razor razor blade model with the kit, and then our image processing unit. So with a single use scope, when you think about just the scene beyond the scope aspect of things, one of the key things to point out when we do think about sort of the Pepsi Challenge, if you will, a visualization is that there's really two ways to think about the comparative visualization. One is, what do you see sort of on the showroom floor, right? What's the visualization really, when when the scope is if you will, in a pristine position. It's really only in that position once in the first month, it was straight out of manufacturing when we compare ourselves to a rod Lynn scope. Over time, as I mentioned, that rod Lind scope is going to degrade and the quality of the image is going to degrade. So we compare extremely favorably it's very difficult to tell any difference when were in the showroom floor and there's no comparison when you look at the difference between a degraded scope after 10, 20, 30 uses in terms of quality of image so our Doc's are interested in two things they're interested in instantaneous quality of image and they also importantly are are interested in the consistency of their visualization as well. Okay, so second component See beyond the  procedure. So this is a part that isn't talked about quite as much in the in the visualization most of the time marketing is talked about in terms of have metrics and dynamics of the scope itself. But it's important to understand the full scope this full breadth of the procedure. In addition to purchasing that capex, that $100,000 device over the lifetime of ownership of that of that system, you'll spend three times as much with processing costs and with sterilization costs all borne by the purchaser by by the facility that providers, so all the components here need to go through sterilization process after every procedure need to be taken out of service, and, and service from time to time as well. You see a 35 step instruction for use. You see a flowchart here that shows that what that sterile process system looks like, in in a graphical format. There's an even higher cost of non compliance, basically a pretty large soft cost as well to think about so here's a letter that was sent by Goshen health to 1100 patients a couple of years ago, and said, Hey, we're really sorry to tell you but one of our seven surgical instrument technicians, which by the way, are being recruited and competed with for McDonald's and Walmart employees, these are not high end and highly paid employees, one of those seven surgical instruments, tech Tech's missed one of those 35 steps. So we regret to inform you that we might have infected you with HIV or hepatitis B, or hepatitis C. Sorry, for any worry. That's not the kind of letter that facilities want to be sending right to their patients, regardless of whether actually anything happened. This is the kind of notice that needed to be sent. And of course, as we, as we know, from the literature, even when you perform all of those steps, we really don't get all the biofilm off of the devices as well. So take those components and replace that with a single use device. And you decrease risk and increase consistency. We have taken our single use platform, and stitched it together with what we call our pristine Connect platform. So that image processing unit that I showed you is is connected to the cloud, we've built a full end to end logistics platform. So we can track from manufacturing, to sterilization to our three PL to our shipper, all the way to the facility end to end through a full digital heads up display that we can provide to our facilities to our salespeople, and to our manufacturers. And that enables us to sell scopes in a different way we call it soap scopes by subscription we all know about the emergence of the subscription economy, this single use device facilitates us to think differently about the way that we sell devices. So scopes by subscription Think about it like a Hello Fresh type of model, if you will. For scopes, as opposed to big capex we align actually the utilization of the of the equipment with the payment of the equipment as well. So we we change the purchasing paradigm and improve how visualization is bought and sold rather than that upfront capex payment per month service fees and then per case sterilization expense, we sell without any upfront expense, we charge a monthly subscription fee, and then a payment on a per kit basis. And it really changes the efficiency also of the sales staffing with us from an operational perspective. So our promise to our to our customers is across the board regardless of whether you're in ambulatory surgery center or hospital outpatient, regardless of what your volume is, our commitment is to reduce costs overall to all of our to all of our customers by between five to 10%. And then also deliver the type of efficiency that we talked about. In addition, we can provide with that platform, a whole host of other digital health services. So now that we have a digitally enabled platform, we can integrate a bunch of software services that are difficult to integrate in other instances, right, it's hard to think about how an ambulatory surgery center puts for example, voice to text, you know, capability. We plumb those into our platform, simple checks bought checkbox as the facilities want to utilize some of these neat and emerging digital health services. And off we go. And finally see beyond the present. So look into the future. So minimally invasive visualization is really primed for disruption. This The time has come folks have wanted single use visualization for a long time and the technology just has not quite been there. And it is now, we're really excited about the continued emergence of CMOS technology and high quality image sensors. And we're in a position to take advantage of that. We will be launching our first gen one arthroscope this year in q3. We're excited about that. And we've got a lot of our commercialization plans already lined up. I've got a grayed out box here. We've got a platform that we're developing as well with other devices to follow and if any of you are interested in hearing more about what that is, come look me up on the on the app happy to share Murthy. This is one of the most attractive new markets we look at Ambu our friends over in Europe who have been a Pace Setter in the single use flexible endoscopy market and we've seen really tremendous growth and growth not only in their business, but also in interests worldwide in single use endoscopy. And finally, we've got a roadmap ahead that allows us to use this single use platform to leverage advanced optics, nanotechnology, and artificial intelligence all are part of that next step that we're talking about that we can integrate into this single use platform so with that thank you for your time appreciate you being here this morning look forward to chatting with you more