Joe Mullings 0:04
All right, well, thanks everybody for joining in. If you're plugged into the robotics world at all, you know what a treat it is to have each of the individuals that are sitting on the stage today, the body of work and the experience of substantial startup, big corporate advisement from the ASC side, all the things we're going to talk about today, and that sets up the stratification, robotics. And especially, we're going to probably focus on the soft tissue side of things giving our audience here today. And then obviously, the influence that the ASC world has had and it's going to have an a different formats coming out today. So if each of you can introduce yourselves and maybe share the perspective in which you'll be thinking about the questions.
Evelyn Tee 0:46
Alright, my name is Evelyn Tee. I'm a partner at LSE Life Sciences consultants. It's a boutique consulting company that works across the medtech and biopharma space, and we work with some of the biggest names in industry. We work mainly strategics and investors to do growth strategy such as market assessments due diligence is and we have deep domain expertise across a number of areas including orthopedics, ASC channels and robotics. I co lead the med tech investor practice and I further specialize in orthopedics, Structural Heart and Vascular. I look forward to being on his panel of everyone today.
Scott Huennekens 1:22
Hi, Scott Hennekens, former CEO of verb surgical where we did a soft tissue robot, formerly NuVasive Xboard, where we're doing spine robots and this is for dental robots, interventional cardiology robots. So in digital platforms, so I'm coming at it from all that now on boards of a number of cardiology surgery companies.
Michael Clouthier 1:46
Hi, everyone. My name is Mike Claudia, I lead Business Development for the surgical operating unit for Medtronic which includes our open laparoscopic and robotic tools and offerings. I've been with the company for almost 16 years. So from the infancy of our robotic program, and that's the perspective I'll be bringing is kind of a big player in the market and how robotics is going to continue to evolve.
Greg Roche 2:11
And my name is Greg Roche, CEO of distal motion. I've been there about 125 days, my prior two years I spent at avatar medical so both soft tissue multiport robotic companies and then the previous four years before that I was responsible for launching Rossa, which is Zimmer Biomet total knee robot. So been in robotics, six, last six or seven years? All over the world.
Joe Mullings 2:38
Alright, so we're gonna jump right into this. And I'm gonna focus on want to kick the clock just so I know where we are in this the stratification of robotics and soft tissue surgery and my start, Greg, with you, you've you've obviously been involved with ever Terra to come from the ortho ASC side as well. And now leading distal motion. So what have you seen? And what are you focusing on from your perspective with this, though, and the leader there on this stratification?
Greg Roche 3:06
Yeah, so I think one of the things you look at, there's really two categories, you have clinical barriers. And you have economic barriers, especially when you talk about outpatient surgical hospitals or ASCs. So the learnings for me are, everything matters. From a clinical perspective, to get adoption, you have to have ease of use, you have to have simple integration. You You have to work around the workflow of that particular site of care versus trying to force the work workflow, the tool that you're using. So that's really, really important. The other burdens from an economic perspective, obviously lower reimbursement when you move to those sites of care, so you have to be conscious of that. But inventory space, all of those things really matter. So it's one of the reasons I ran the distal motion, small form factor, perfect for outpatient perfect for minor procedure rooms, the ability to do both high and low acuity cases. And I think we're all seeing, you know, when you think about the patient, we have to move to these sites of cares, just less burden on the patient better place for them to have surgery, especially the lower acuity surgeries. So there's a lot to do, I guess, you know, multifactorial to really understand whether or not you have a product that will fit. And again, I'll just take the learning from Zimmer. I mean, I think about 30 plus percent of our robots in the first three years were in the outpatient environments. And again, all of those things we had to figure out in and you don't really think about how inventory stored and logistics around sterilization, but all those details matter. So there's, you have to have the perfect product to really cross those boundaries. Scott,
Joe Mullings 4:50
early days of verb did we even think about the stratification robotics at that point in time and soft tissue surgery?
Scott Huennekens 5:00
Yeah, I believe so. I mean, look, I, every market, you know, is going to start with some generalized tool, you know, the Model T, but we know, we're going to end up with off road vehicles and sports cars and all the like. So I think we're at an exciting time where, Hey, there's this intuitive system that is an incredible invention. And I'm sure the newest version is going to be incredible as well. But does that fit all of these different, you know, segments of soft tissue? Where Hey, can I offload some capacity to do this particular hernia procedure or this particular and make it as he talked about, you know, more available economically, to each of these different markets around the world, as well as each of these different segments clinically, that also exist. So we were thinking about that, and how we may end up having to have three robots to have a portfolio to meet all the different needs, either clinically, economically or geographically.
Joe Mullings 6:05
And Mike, so how's How is Medtronic thinking about that, you know, you put your first or in the water with Hugo. And that architecture probably was ideated, even before the ASC was thought about candidly, being there early days, so So how are you thinking of that portfolio moving forward? Is that an ASC model? Is it a hospital model? You're going to try and split them? Yeah,
Michael Clouthier 6:27
I think the the idea first was to focus on the hospital market, where historically Medtronic surgical instruments were being utilized. And the surgeons were performing surgery there. So we focused the robot on applications in that area. But the modular design, I think, where you're kind of going Joe was very much meant to be something that could be adopted and adapted to the ASC kinds of markets where maybe you don't need all four arms, you might have a three arms or being able to leverage that same product into the ASCs, maybe lower acuity types of cases, maybe they don't need the advanced vessels sealing or stapling products, but still a product that could be adapted towards those additional markets.
Joe Mullings 7:14
And Evelyn, going into the CSCs. You've got a specialization, that area around that, and how to surgeons view the use of robotics, the same surgeon think about it when she's in a hospital or an outpatient or an ASC? Yeah, that's
Evelyn Tee 7:29
a really interesting question. So when you think about the entire population of surgeons, they're definitely not a homogeneous population, that definitely different segments within that. And where we end, when you think about scaling up, it's not the same as starting up. And where we are in the technology adoption curve is that I think we've won over the early adopters and the innovators. And the surgeons are inherently much more comfortable and open to using robotics than those who have yet to adopt robotics. And so if you want to think about winning over the early and late majority, we need to think about servicing these potential customer sets, who will be using and view robotics in a very different way from the current customer base. I think some of the the perceptions that we have heard from surgeons about using robotics is that robotics can lead to longer procedure time, longer per set up time, which affects the procedure efficiency, it can lead to higher costs, which of course affects the business economic success of their practice. And some of them even believe that it can lead to an erosion of their surgical skills, which we all know surgeons really pride themselves on. I'm sure many of you here, myself included, and my fellow panelists, of course, a great believers in the power of robotics. But we have to recognize that this sentiment is not necessarily shared by all surgeons and your staff. You know, like, I'm sure, you know, all of us here can think of at least one or two surgeons who think of themselves as like Doctor Strange, you know, they have a really high ability, great, begotten inability of the hands. And so when we want to scale up into market, we have to think about addressing some of these perceptions. By really, regardless of where surgeons are stand in robotics, right now, generally speaking, all surgeons do view robotics as the way of the future, because they believe that technological improvements will ultimately allow robotics to always deliver better patient outcomes.
Joe Mullings 9:25
Intuitive has done a very sort of clever and had the time to do this. And I just want to toss this out because it comes into play. They've built both a technological moat and and financial moat, especially with the major trend and leasing. So the cohort was selling to right now in ASC is is different than an institutionalized buyer. And Michael, start with you, I guess, on this one, how, how should we be thinking about as a community, putting soft tissue robots into an ASC? Consider the future of financing that and placing those robots
Michael Clouthier 9:58
I think So, it's a really interesting question. I think you're right that, especially for early stage, robotics companies, Medtronic, you know, we're not going to have the the margins out of the gate that an intuitive has. So they have a lot of pricing capability to be able to leverage there. But I think you have to be creative. And there are different ways to do that. I'm in, for example, in the Medtronic case, we do have instruments across the board open, laparoscopic and robotic, that we might be able to bundle in a certain way and be able to offer to customers that maybe Medtronic can't and offering similar performance across those platforms with those instruments. So we just have to figure out a different way to compete, maybe in try and match some of those business models. That intuitive is pioneering. But we've got to find the right niche and the right product offering for those markets.
Joe Mullings 10:51
Scott, on the same point that Mike just made, we have to figure out a way to compete, how many different ways are there to compete, finance outcomes, patient selection,
Scott Huennekens 11:03
I go back to what we started using the term digital surgery at verb surgical across all these things. And and I just view robotics as one part of improving surgery. It's like, how do we democratize surgery around the world to improve outcomes, you know, equalize performance at low cost, and robotics are part of that solution to scale into that. And again, I go back to my comments about sports cars and offer, you know, on off road vehicles, like I think you can compete on having a portfolio of robots to say, Hey, I've got this like $30,000 ventral hernia robot, or I've got this, you know, $30,000, this robot, and you only need these two instruments to do this procedure. That's easier to adopt for hospitals around the world, you go to the presentation intuitive made this morning, and you project 25 years forward, where surgery is going to be done volume wise, and where's the population growth. And we need to make the solutions more economical and more adaptable. Also, with connected platform, we're going to have remote surgery that's going to happen in the next 20 years. So there's all of these different between data between training between product between bundling, which, you know j&j, you know who bought, you know, verb and Medtronic, we have the biggest portfolios by far, procedural surgery, they so back to my volcano days, anyone coming in, they may have a little better Ivus product than volcano did. But we had 20 different products and use eight of them. And here's your free volcano system. And verb, the plan was, hey, use $6 million of instruments, here's your free eight robots. Again, a margin was still 70%. Plus, I'm sure their model can be the same week. So that's a whole different way to compete with intuitive and and to the numbers that were shown. I mean, market penetration is still what 15% In the US, like outside the US much lower in Europe much lower. Other places, we're in the early beginning of democratizing surgery performance wise around the world. And it's going to take all of those and more different ways to make it a reality. My, Greg,
Joe Mullings 13:12
as you position this, the motion to be one of the earlier soft tissue robotic systems that will be selling into ASC as well as hospitals but staying on that ASC model and stratification. What are you thinking about as a leader there? What do you think about as a platform company? And then what's going to make you attractive from one of the big strategics that might be able to come in and pick up a distribution?
Michael Clouthier 13:33
Well, first, I'll say we're building the business for us selling
Joe Mullings 13:38
you're ready to right now,
Michael Clouthier 13:39
I do appreciate that. But, you know, for us, we were very intentional. And this was before me, our founder, Michael Frederick was very intentional about saying no. And one of the lessons I learned actually in my last role was, you cannot be the master of everything. So to enter the market and expect that you can master robotics, instrumentation now, visualization and advanced visualization, data and AI, telepresence tele surgery. I mean, it's an impossibility for distal motion. So what we what we chose to do was build an open platform. So we're going to master and you know, I always say it's very difficult to make something so complex, very simple, but we tried to simplify our platform for ease of adoption, for me, you know, to adopt this platform into a site of care, but really, the gist of it is to be open. So we were allowing surgeons to choose their visualization technology, we don't think we're going to be better than Stryker or Stuart's or Olympus in that category, obviously, ICG multispectral imaging and there's so many tales there. We don't expect we're going to build a better stapler than j&j or Medtronic, you know, energy devices. So we're, you know, we think that that part of the solution is Choice, allowing, you know, building a platform that you can use, you can justify. So it's not an anvil to a nail, it's it makes sense to use it in these lower acuity cases, and giving the surgeons the ability to choose what they feel is best for their patients at that particular site of care.
Joe Mullings 15:17
I'm curious about your opinion on this one, I wonder what you're thinking. So you spent a lot of time in the ACS and you've solicited the owners, the PE firms, and the work teams that decide which which, which vehicle they want to drive, who influences those decisions, obviously, not in every ASC, but in general, that the manufacturers are not really paying attention to so.
Evelyn Tee 15:43
So right now, about two thirds of ASCs do not have an orthopedic robot. So really the that that means there's an opportunity for a strategic to take the market leadership position. And surgeons right now they're operating across two to three settings right one in an inpatient setting and then another time in an outpatient whether or not it's H OPD or an ASC setting. So this same surgeon with access and good exposure to a particular robot robotic brand in an inpatient setting will have a higher propensity and a really good impression of the same robot or robotic brand in an outpatient setting. The question is, if he can, he or she can make the economics work and if the strategic can come up with an innovative business model that reduces or shares that high capital costs. And so to your question about who makes the decisions right now in an ASC is normally the older surgeons, the ones who bring in all the business and to the x, certain extent, some PE companies, because P companies are now coming into the Arena and they're buying up a lot. The ASC is like, em search is one of them that just got bought out by a P company. But that being said, that being said about the older surgeons having the influence is really promising to note that it's the younger surgeons that generally speaking that have the most utmost anti genetic and optimistic about surgically. Surgery is being supported by robotics, whether or not it's orthopedics or general surgery. And although this youngers not younger, that cohort right now is still the minority compared to the entire population of surgeons, and as of right now still do not have the influence and buying power within the ASC. That's all going to change very quickly in the next five to 10 years. And then if you if you consider all the incoming cohorts, or surgeons who are going to be graduating, you're going to see this group of robotic enthusiasts forming a much larger part of the market space. And these younger cohorts of surgeons think very differently about robots than the older cohorts. And so row, companies really need to think about how these younger surgeons, like think about your mindsets and how they go about with your buying decisions or robots. And think about also investing brand loyalty right now. I mean, the reason why advertisers spend so much advertising to fit to 18 to 35 year olds is not because these customers spend more than that 35 to 55 year olds, but it's because they inherently understand that brand, loyalty and brand preferences are often nurtured from a younger age.
Joe Mullings 18:17
So on that the lifetime value of a customer, right and LVC model, we always want to think about that in any brand new driver, Mercedes and Audi, BMW luxury car, just an example. They want to keep you in that vehicle as long as possible. With that the form factors are going to change and Scott, the lessons you learned, or insight to learn that verb, do you forecast a rapid adoption of changing form factors down to these smaller robots that may be procedurally specific, and the clinicians ability to do adopt those as standard of care?
Scott Huennekens 18:51
No, no, I, you know, I think probably the thing I'm most frustrated in my 30 year career is that in medical devices, things don't just take twice as long, they take three times as long as you'd like them to take. And that's the reality that we have to face, we we may say we know it's the right thing, it just takes a lot longer to get through whether it's regulatory, clinical product development, market adoption. So I can see the future in 20 years and what it's going to be, it'll have its ups and downs to get get to there with application specific connected, you know, robots with more specific tools in better form factors, overtime would be my, my prediction. And I think that has to be taken into account relative to the venture investing that's taking place where there was this mad rush and probably overfunding of robots when you consider, you know, really the clinical benefit, the cost and the accessibility didn't really match the amount of capital it was putting put into the space. And now I think we're getting into a more realistic view on on timing of adoption and the real clinical benefits of these products, Mike,
Joe Mullings 20:06
when you think about developing a robot and defending a position such as the endo tools that you have, some of that's a defensive play someone's opportunistic. How, how does Medtronic think about satiating the emerging market of roboticist? If you're not a digital native per se, respectively?
Michael Clouthier 20:31
That's a, that's a big question, Joe.
Joe Mullings 20:34
Why they call me?
Michael Clouthier 20:37
Out? gave it to you. Yeah. That's, that's, that's a tough one. So maybe I'll answer it in this way did, I think if I, if I look at 10 or 20 years, I think there'll be a significant consolidation of all these players into a few big ones that will offer multiple products and applications across a variety of fields. But they'll still be those niches that are out there, including, I think, what you're implying, maybe the, the opportunities in in, in countries that don't have as much spend on healthcare, or in rural hospitals here in the US, or maybe even in ambulatory surgical centers where cost is, is more critical, that there still be an opportunity to meet a specific need. I don't know if that might be, you know, sort of hybrid systems like a digital digital motion, where, you know, they're going to do some of the procedure laparoscopically, and they're gonna do some of it robotically and maybe be able to remove a surgical assistant. But thinking of, you know, unique solutions to fit those needs to those markets, I think for us as Medtronic will try and capture as much as we can, with a platform that we intend to to build on. But we're not going to be able to meet everybody's needs in all cases.
Joe Mullings 22:01
Greg, when when you're navigating, where you're heading now with digital motion? What what do you see as the largest barrier right now, technology or finances?
Michael Clouthier 22:13
Yes. I may have gotten a harder question. At least I didn't have to decipher what the words were. Yeah, I mean, I, I, I think both are barriers. But I would say honestly, the reason that robotics isn't, you know, through low acuity cases, and as Scott said, you know, and penetration is 10 to 15%. And outside the US, it's much much lower in these, you know, general surgery, gynecology. Some of these markets is price. I mean, don't be don't be fooled. I mean, the it is, it's that anvil to a nail, as I said earlier, you you can't justify the costs for the benefit. So I mean, you know, we talked about the definition of robotics, you know, and I would say, we have the luxury at distal motion, you can do the surgery, fully robotically, you can put the mesh in with a straight stick if you want on a hernia. But the benefit is wristed instruments. Right. So the suturing dissection and working in confined space on any robot is that's a huge value to a surgeon, there is no question. And that, you know, I think that understanding in the marketplace, and especially now, when you talk about fellows and residents coming out there are people that don't even know how to do laparoscopic surgery, right they to do a hernia, they need a robot. So I would say we have to we have to lower the barrier. financially. I mean, again, if you look at you know, the current market players, the cost is only going up. I mean, right, the next model is a 20% premium. So there's got to be some segmentation as the as you know, this talk is called we have to have segmentation in this market. Because the adoption is going to come and it can't come at the sake of, you know, profit for a business or, you know, to really, in the long run, hurt the patient, right, economically hurt the patient. So, we've got to, we've got to have a balance, and I think we're getting there. One other comment, I do agree with Scott. One of the things that I learned, you know, over the past six or seven years is utilization and actually being able to use the tool on a broad basis is really, really important. So when you think about some of these niche, your products, and again, they may sell big they have to solve huge clinical problems, in my opinion to justify ROI. Even if it's a 30 or $40,000 device they have to solve a huge clinical problem maybe rather than you know, other other tools that go across that robotic spectrum.
Joe Mullings 24:39
Scott you first and Neverland your opinion on this. The innovation on the robotic side always comes external from the large strategics large strategic great at distribution support. Sort of service sales, etc. Is the bill to buy model one that is gaining traction in med tech And finally, as it is in biotech, and is that a pathway forward to address the stratification issue?
Scott Huennekens 25:06
Yeah, I that's a non robotics question. Is that the intention? Yeah, yeah. Okay. Because Because Absolutely, I mean, the verb surgical is a perfect example. Like, you can all read about it publicly. Now Joe sent me the nice, you know, Bloomberg Law summary of the j&j verb or a stuff. But, you know, the, the idea that, you know, in four years, you could ever build a robot that was unscheduled to have a CE mark, that wouldn't have been possible to do within a j&j environment. Now within a j&j environment, you're back under all of those legal regulatory quality challenges that have just kept pushing, you know, timelines out, but you know, I'm on the board of Vera Annex A big hole, you know, part of our thesis is that, you know, the Medtronic, the j&j is all of them have incredible balance sheets, but they all have ups objectives on their income statements and limitations. So they'd like to do more that they could put more into their interest. So how can I do organic growth in organic group growth or off balance sheet transactions, of build the buy for a specific application. And so I'm involved in two other ones where large strategics and, and VCs have put, you know, upwards of $150 million, there's an option for the strategic to buy it, after four years, when you get regulatory approval at 600 million. And, you know, it's a perfect, you know, working model, because you can have that kind of intrapreneurship entrepreneurship focus of a startup team that's done it before. And then you're delivering a product exactly what that strategic wants to fit into their channel. And that could be anything from a regulatory trial, a product extension, or a whole new product category. So I see it as a huge opportunity for, you know, Medtronic strikers, the j&j all the Boston's, etc, to just go faster. It's another lever lever to pull and leverage their balance sheet in order to do it.
Joe Mullings 27:10
And I bring it up in the robotics because I don't think there's a category that has a more massive requirement of finances in order to get a product over the line into clinical use. Where if I'm using a PFA catheter, it's not quite the lift the burden? Everyone thoughts on that subject?
Evelyn Tee 27:26
Yeah, having done quite a few due diligence is for strategics. And just having observed the market, I, you know, we think that strategics will continue to have their own robotics programs, but still keep an eye and ears really close to the ground for interesting technology. So companies that can augment or supplement your existing portfolio. I think another point here I wanted to raise was that, you know, high procedures have been moving from the high acuity inpatient settings to the low acuity HPPD ASC settings for the last number of years. And in fact, the ASC share procedures has doubled over the last five years. And in the really near future, it's expected that the ASC will become the site of care for the majority of orthopedic procedures. So strategics are thinking about about robotics, not just a way for them to gain revenue through the sale of the robot itself across the different acuity settings, but but from the Associated implant, and consumable as well. Like if you ask your surgeon, if access to a particular robot impacts their Choice of implant, the answer is probably going to be no. However, once the robot is actually placed in a certain setting, the surgeons impressions and openness so the associated implant increases. And what we're seeing is that on average practices with a certain robot, increase their usage share off that associated implants substantially. And so robotics and the implants are really, really living in that same ecosystem. And so we think that strategics will continue investing in robotics for them to defend your share and robotics, but also in the associated implant and consumable space.
Joe Mullings 29:03
Like we got to get that stapler going on you go.
Michael Clouthier 29:08
I mean, I could talk a little about just innovation in general, because I totally agree that usually external innovation can go a lot faster than within the organization, like motronic. And we have our ventures group and, and other relationships that help accelerate some of those things. But there's also a big challenge in integrating it into a robot. And I think Scott was alluding a little bit to this, that, you know, from a regulatory standpoint, from a vnv I mean, robots are unbelievably complicated. It's not as you were talking about a PFA ablation catheter or something. You got all the software, you've got all of the hardware. And it can be incredibly difficult. And I think the group that kind of figures that out and of course, we're trying to push to do this, but figured out that systems engineering that systems integration capability to accept third party innovation and build it onto a robot and be able to do Do that verification validation, get the regulatory approvals, you know, could really accelerate their offering in the marketplace. I think one of the things that that might be more along the lines of that kind of innovation is really on things like visualization. And on the digital platforms, software related things that that can be, in theory integrated a little bit faster, you know, software is still very complicated to test. But I think those are some of the opportunities that you can really accelerate and build off of a hardware platform. Let's
Joe Mullings 30:34
go to the business model for a second here. Now let's go to AI C's in particular, we've got them owned by PE firms, surgeons, and even let's call it out hospitals as well. And it's a different selling model. I think Scott touched on it earlier, it's a different supply chain model. Or, Greg, you might have, and are the robotic companies set up today, or the business models set up today who sell to an institution now ready to sell to a decentralized provider network? And then what does that future look like when I'm in opens up for IRA, Iowa with an ASC? And I've got single use, and I've got to supply that and keep those cases running? So Greg, you're gonna have to solve that sooner than later.
Michael Clouthier 31:24
Yeah. So I mean, we're starting with single use for this very reason. But over the next year and a half, we'll have optionality in reusable. And again, all based on site of care. You know, I think my funny enough, the biggest learning I have is from orthopedics. Because it's great to get a robot in the amount of instrumentation that comes along with that robot. And if you're in the middle of Iowa, and you have a premium brand new system, it's it's very difficult. I mean, I know, every company is looking at, you know, offsite, sterile is, I mean, offsite sterilization, how logistically, you can move in and out, you know, instruments. And again, our methodology is simple. Keep it keep it very simple. We have five instruments, we've done 1000 surgeries in Europe, over 35 different types of procedures, low and high acuity, we don't need much more. So again, when you have that philosophy, it doesn't matter if the accounts in Tibet or Iowa, we can service them all, you know, then it just becomes economics, you know, if you can, if you can delight them clinically. So, I, again, logistics is, you know, when I say logistics, I mean instrumentation, logistics, and all the things that are needed to serve that robot, I mean, you have to consider what the sterilization capabilities are in those hospitals, or, you know, I should say, alternative sites of care, and then you have to match them, they're not going to put in a massive sterilizer to adopt a robot, right. So, again, is everyone there yet? Absolutely not. There's a lot of technologies that are just not there. And if you, if you talk about any, anybody that's adopted robotics, the one of the biggest costs outside of the acquisition of the robot is the inventory. You know, so if you're, if you have five robots, and you need 1520, sets of instruments, times in every set has four instruments times 15 uses, you can do the math, on what that would cost to hold that type of inventory. So that's impossible at an ASC. They can't do that the business model doesn't support it.
Joe Mullings 33:30
So what is the answer? Because that's going to be critical to the adoption of the Scott consignment
Scott Huennekens 33:34
and raise more capital, but he's trust to raise $150 million. That's right. I mean, right. I mean, you're gonna fail, figure out consignment and pricing models. Yeah, or volume discounts. And that's,
Evelyn Tee 33:49
yeah, if we can just raise a point here. So having worked with some global logistics, healthcare companies, that they are very well aware of this, this unmet need, and also, of course, this business opportunity for them. So they are thinking about developing a network of localized inventory and management centers that service, not just the ASCs, but all the healthcare facilities in that localized area, and providing even just in time delivery for perhaps single use products. Even the question is, if they can do all this inventory management and delivery in a really accountable way, whether it's through blockchain technology or what it is, and also be able to deliver it in a cost efficient manner. So it's definitely something that they are working on and possibly this inventory and management responsibility could be solved for by a new entrant.
Joe Mullings 34:38
Like, do you have to address that when you're coming out with you going intention is to get ASCs
Michael Clouthier 34:43
Yeah, I mean, obviously, we're focused really on on you know, significant acute care hospitals now, but I think the is we think down the road, I think there's a certainly the logistics is has been spoken to, but I think that there's also a technical solution for things like A training simulation. Other things that you typically see a sales rep or other clinical specialists that are present typically in hospitals today are going to have to be taken over, I think by some of these other technical types of solutions, telepresence, you know, the simulation things that you don't have to have somebody physically on location in the middle of Iowa, every single time to support so I think there's going to be an evolution and development of some technical solutions as well.
Scott Huennekens 35:30
Maybe adding to that one frustration that I've had in this whole area relative to adoption. And democratization is, if you look at verb, like I wanted to create a Switzerland platform, Google said, Great, let's create a Switzerland digital platform that can make all these devices, whether it's, you know, Charlie's over there with an old storage, imaging striker imaging, the robot, you know, up to the Cloud Search, surgical training, telepresence, whatever it might be. But everybody kind of wants their own version of that. So now, then I went to digital surgery, which these guys bought, then they said, Okay, well, that didn't work, because they bought it. Now, we still don't have a Switzerland platform. Now I'm at our proximity. And the challenge is, the hospital doesn't want to buy it, because they don't want the added cost the vendor doesn't want to buy because they don't wanna deal. But you need it to drive, this vision that we're all all talking about. That's one of the things that we got to figure out. Now, I like your model, because you're open platform, and you're, you're working with proximity. So I like that.
Michael Clouthier 36:31
I was, I was gonna say that if you did that, how did
Scott Huennekens 36:34
you get to the decision to work with them where, and now we're in further discussions with multiple strategics, you know, as a Switzerland platform to drive a lot of this chaining, telepresence, or efficiencies, etc, apps on a platform with an open platform. But
Michael Clouthier 36:51
yeah, so I'm going to say a couple things. Number one, I'll go back to the master of everything, you can't master everything. So part of our strategy is partnership, of which we inked a deal with proximity in in December, but what it does for us, you know, you just said it, it allows us to be in every or so we can now you know, now, we can not only from a sales and marketing perspective, can we have people see what we're doing. But we can also teach and train we can have virtual proctoring. But that really is, in my opinion, not the sauce, the sauce is now we have a data infrastructure, we have cloud based services. And we can go from high touch which robotics right now, most companies are very high touch, meaning rep in the room, almost, you know, on every case, and with technologies or platforms like proximity, the idea is you can have a cockpit to do it. So, you know, we distill motion, I mean, it's not a sustainable business model to put a rep in every case, that doesn't make any sense at all for us. So we're really focused on this high touch to low touch model where now we can get the benefit of technology, and still delight the customer and serve the customer in the way that they expect.
Joe Mullings 38:01
Going down the panel level and starting with you. What are the unlocks over the next five years in the stratification? And what are the major barriers that are going to have you worried? Glad you got it? Yeah. We're all gonna get it. You got it first. While she thinks about is there anybody else that wants to jump on
Scott Huennekens 38:22
that? Yeah, I look, I think it's there are no silver bullets. There's there's a lot of individual things that and when you add them together, make a difference. So I'll be self promoting with another company I'm involved is that on the board, on target, so okay, we want to move to minimally invasive lung surgery, they talked about lung surgery this morning and intuitive. Now I moved to vats and a robot. Well, now I can't palpate. So now what I do, now I've got, you know, a huge unmet need, I can identify through visualization, where these lesions are actually at and I can have boundaries. And now I can make that a reality. So as we tackle each of these are going to have their own challenges to make that surgery faster, better, cheaper. And the robotics are going to be a part of it a digital platform and learning and training is going to be a part of it. imaging agents, I think are going to be a huge multibillion dollar part of that as well. But we got to solve some of this economics. And I believe that a big part of that is j&j Getting in the market with a robot Medtronic, getting into a robot having bundled deals where you saw what happened like CT is selling for $5,000 drug eluting stent. Now, what's the drill eluting stent costs for when there's eight competitors and everything else? They're under $1,000 Edwards first percutaneous valves. Now we have three or four. But intuitive has not had to have any competition. So go Medtronic, go j&j Get your robots out, and I think it'd be better for patients, it's going to become more accessible.
Joe Mullings 39:52
Mike, you want to add to that? Yeah, I
Michael Clouthier 39:55
think, you know, I agree with a lot of what the What Scott is saying, I think that the, the idea over the next five years is really finding those things that are being identified and being able to incorporate them into a platform. I don't work for intuitive, but what I took away from the Gen five, innovation or launch was actually sticking to the same platform, they made it easier to use, they I think there'll probably be at, there's probably a bunch of stuff that's embedded in there that can be turned on and off. That might be one way to offer to different markets, you turn on and off features allow people to select what things and how much they want to spend for some of that capability. But they can incorporate or we can incorporate some of that same capability, whether it's an on target multispectral, and our visualization system. Some other kinds of tools that might be helpful proximately platform, have other other other solutions like that, that can be integrated to make it fit as many needs as we can. But but the the barrier. I guess the second part of your question, again, I think is the regulatory part. And again, again, I don't work for intuitive, but I think the fact that they use pretty much the same platform, tweaked it helped accelerate their regulatory approval, right, and they got approval for all all indications right away. And so I think that, I don't think you're gonna see big platform changes over time, I think you'll see incorporating around the edges. Neverland? Yeah.
Evelyn Tee 41:27
So I agree with my fellow panelists, I think one thing that companies need to think about is not just like the clinical value of the product itself, but also how the surgeon thinks about themselves and how a surgeon defines a successful surgeon. Because the top three priorities are pretty much always the same. Like they want to grow their business, they want to have an incredible reputation in the in, in the community that they're working with. And they want to have great patient outcomes, whether or not is real bread is true robotics, or whether it's choose to conventional methods. And so when companies think about approaching that, they need to think about how their robotic solutions actually match up against the top three priorities, and addressing these gaps would help to accelerate the growth. Greg,
Michael Clouthier 42:12
you get the last word. Yeah. So I'm not going to repeat. They're all great points. I think the one that wasn't mentioned is this data privacy cybersecurity element. So as soon as you connect a device, there's a whole different element of approvals and the ability to integrate within a hospital. So to me, that is going to be a big at first, probably a big limiter to speed, because the smarter device is, the more conclusions that it will draw for you. I mean, there's lines in the sand that you have, you know, when it starts to really assist with that outcome. And again, if you look at some of the the Advanced Visualization, ICG it's, it's consultative right now. It's not it's, you know, so, again, the more we get into this digital surgery, as as Scott mentioned earlier, I think the more difficult it's going to become, and I think we're going to have to work with the regulatory bodies to to get them there. I mean, you know, for all of us, I mean, I'm looking, you know, looking at Tronic and distal motion, we have to go out and get, you know, multiple indications done to have, you know, these big vertical approval. So it's, it's a big, it is a barrier for any company entering certain markets to try and get done. So multifactorial there, but I, you know, I think there's some work to be done to really clear the path to true innovation.
Joe Mullings 43:33
Awesome. Well, I want to thank my panel. But for the panel, thanks.
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