BoneChat #110 - Ortho tech innovations, VC trends, mergers (Arthrex-Corin), and startup strategies.

So Chance Eric is, he's head of engineering for Dymacron. They've got a, I mean, it's ceramic for spine that'll just literally never wear out. It's just, wow.

I mean, it is actually, it's actual diamond.

It's diamond. It is the coolest thing. And it's, you know, the FDA's putting them through the hoops, but yeah, it's a, it's, it's literally zero wear.

Wow. Are you, do you have to do an IDE or can you get by on a de novo safety study?

No, we have to do an IDE.

Yeah, for sure.

Yeah.

Tiger, I don't know if you want.

Congratulations. I'm gonna need it at some point in time. I'm fused from actually L2 to S1.

Wow, that's, that's plenty.

Yeah, too many. Yeah, I actually auto-fused the level above and the level below, which was kind of interesting.

Wow, that is—

yeah, that is.

Well, Tiger, if, if you want, now that I have been able to catch my breath a little bit, I can, I can present the, the technology here someday.

Yeah, absolutely. Get a, um I will have Ann tee you up for— so you'll have a proper date. I'll have Ann tee it up for you. Let me make a note.

If nothing else, it's unique.

Yeah, it's good to see new materials coming into orthopeds because it's so hard to get new stuff in.

Yeah.

Well, this is so— this is an open discussion day. So anybody can bring any topic you wanna talk about. Talk about what's going on in the news in ortho, talk about pain points, problems, opportunities, anything.

James, why don't you talk about Kapitan?

Yeah.

Right out of the gate, right? Yeah.

Well, I happen to be, you know, involved in SI and other—

Yes, sir.

The Genesis guys, so.

I know, I know. Nice to—

been polling my surgeons, man, on— I've been sending them little, little blurbs about it, getting some—

oh, well, thank you—

mixed responses. You know, I think there's education in the story to be told.

Well, the interesting thing about it is, like everything else, you know, everybody wants to have data, uh, which I certainly understand, and we're going to, we're going to provide data, but we got to start putting it in patients, you know, first. Um, so But yeah, really nice to actually connect. Um, yeah, bro, we've seen a few things, um, via LinkedIn over the time, but, uh, it's really nice to be a guest and be here and be able to connect with so many people that are out on the edge of bringing new technology to market. Because it's, in my opinion at least, this is my 31st year in the medical device space, and, um, I think it's a really opportune time to bring, you know, technology to market. I think these larger companies, since there's so much merger activity that's taken place, they're all looking for actual acquisitions and looking for space and problems that still aren't solved is one of the reasons why we chose at Genesis to address irreparable cuff tears. So we got a lot of work ahead still, uh, but we've, we've done a lot in a year and a month. Um, so that's been pretty amazing to see.

Cool. Yeah, you had a press release just yesterday or the day before, I think.

Yes, sir, on Tuesday.

Yeah, excellent. Announcing—

yeah, yeah, the formation of the company and, and we'll, we'll, um, you know give a little bit more information to the public over the next couple months. But in essence, we've gone through, you know, the prototyping. We've gone through laying out the procedure. We've gone through the biomechanics of what we're trying to accomplish with an implant that only takes up a base portion resurfacing of the humeral head to keep the head aligned in the joint. But we've already done a QSUB submission. We've done obviously a formation of the company. We've done, took our provisional patent to patent pending status, both for product, US, international, as well as method patent. And we're at a point now, we just started a capital raise on October, excuse me, December 1st, which is, I'm sure everybody's laughing at me going, dude, what are you thinking trying to do a capital raise in December? It wasn't my ultimate choice, but that's when we got started. And we're 40+ days in, and we already have half of our financial goal received in commitments and deposits. And I expect to be really done, I guess, maybe no later than the end of February. And so, I think, you know, for those that, that know, um, Dr. Sean Churchill, he has been a shoulder expert both as a, as a surgeon and as a designer for a number of years. We're going to be bringing aboard other subspecialty-trained surgeons outside of just shoulder reconstruction, especially on the sports medicine side. This is where a lot of these, these cases, especially for the primary, are, but You know, we've made a lot of progress getting to where we are today. We're actually, you know, already ordered test parts to do testing and validation and finalize our QSUB, you know, in the regulatory pathway and trying to utilize, you know, some experience of the team and expertise to get done and actually try to be commercial into our LMR in 2 years.

Hey, Chance, do you know how long that balloon took to get through? Yeah, because that's, that's the— those guys that I've polled are the ones that are interested, are kind of disillusioned by that right now. I'm sure you've seen—

I think that's the big thing that we've— I've heard from a lot of, you know, especially sports fellowship trained and hand and upper extremity trained surgeons is the balloon really, you know, doesn't ultimately make sense to them because they can't anchor it. And it's going to dissolve and go away over a period of time. And then they've all heard, you know, or even had experience where it's moved around in the joint. It's not where they placed it initially. But to my knowledge, they didn't have any cases in the US when they were acquired by Stryker. And data-wise, I think everything they had was OUS. As they came into the United States.

Hey guys, Patrick, I'm new as well. I can chime in with James's comment. I was back at ArthraCare then. We did actually first-in-human of the in-space balloon. And the only thing I can advise you is define what is an irreparable cuff tear. That was one of the biggest challenges. With the in-space balloon. You know, what the Italians called irreparable, the Aussies said, that's repairable. And that was where really the initial challenge was of the in-space balloon. And you're correct, there was no cases in the US before the acquisition was all, all US. Yeah., but we, we, we decided not to proceed. Um, yeah, so I was, uh, back then for, for, you know, for, for reasons. Uh, yeah, but, but that was— that, that's just some insight. So that, that one is certainly an interesting, interesting philosophy, uh, rather than, uh, um, replacing the, the, the cuff or repairing the cuff, you know, address it from the bursal side, right?

So, yeah, but it's, um, yeah, I still don't quite understand how it works, so Well, I think what, you know, from what the surgeon feedback that I receive is, you know, they see the degradation process of the humerus as it starts to migrate proximally and dead end into the acromion. And then, you know, the simple part that I always hear from surgeons is, well, it's kind of like your front end on your car gets out of alignment. You start creating wear patterns and they become rather immobile.. And, you know, it becomes very difficult to go through range of motion. And so I think the premise was, let's kind of put, you know, a pad in there. And you kind of hear these acromioplasties where, where people are even trying to sew in some material to try to keep the, the, the subacromial space as robust as possible. You know, and keep the, the kinematic alignment. And so, especially since we spend, what, 90% of our time in neutral. But when our deltoid fires, that's when we get up into abduction, and that's when they obviously start to hurt the most. And so we're trying to address the biomechanics of it and not, you know, all the biology. If there's these patients that are out there that are 35 to 55, 60 years old that maybe have had, you know, two previous attempts at repair. And to your point, now have no real, you know, answer. And surgeons are frustrated for not having something there. So I know at MMVC, I was kind of looking at the companies that are out in, you know, the front end of the care continuum. And there really seems to be a lot, you know, because trying to create a better anchor, make it more efficient, and certainly make it repairable in that sense. But Problem with it is we know that the retear rate is high and there's a group of patients out there that have already, you know, had a secondary repair but don't have any osteoarthritis, but yet don't have, you know, a real surgical option. And so we went to the back end and this, this space in between an augment, you know, because Genesis worked on the, the Tapestry augment that sold to Zimmer Biomet. A couple of years ago. And we said, well, what about these patients? You know, the ones that are diagnosed each year, a couple hundred thousand, and the ones that have been suffering through this for a long time. And so that's what we kind of tried to work towards creating a solution for those patients.

Got it. Hey, Raymond's been patiently waiting. You got a question or comment?

Well, probably a bunch of ignorant questions because I'm not familiar with this space. But my antenna went up in that you were talking about your raise. And again, I'm not real familiar with either Genesis or Capitan.

Yes, sir.

And so first off, did I hear you say this is your first time you've been on BoneChat?

Yes, sir.

Okay, well, welcome. And hopefully we're not making you feel uncomfortable because I'm all these questions. But my question is, how did you approach your fundraise at this stage Are you using safe notes or are you establishing a valuation? And then what is resonating with the investors? Yes, sir.

Well, number one, thank you all for allowing me to join. I've actually told Tiger I would be joining last year and I'm finally, you know, getting around to joining. I've heard so much about all of you. Secondly, Genesis Innovation Group is a company that basically helps entrepreneurs and early-stage companies go from ideation to commercialization. So in essence, we're trying to solve a problem that is, I kind of affectionately label the entrepreneur's dilemma, right? There are lots of entrepreneurs, kind of like Shark Tank, that come in with an idea and they got a lot of passion and they got a lot of work ethic. The problem with it is, you know, you're missing vital, information about what the process entails, how much time it's going to take, how much capital investment, and they don't have relationships. They don't have, you know, really a ton of investment capital to put in it and time or a really definitive need as to what an exit strategy would look like and what the requirement would be. So we actually formed Genesis— excuse me, we formed Capitan as a subsidiary company underneath Genesis.. And the thing that we always look at with regard to our, you know, potential companies that we work with is there's, there's kind of 6 things that we ask. Number 1, does your technology solve a clinical need or clinical problem?

Right.

Number 2, does it fit into the current workflow with the surgeon user and especially the actual surgical setting? Because we know ASCs are, really ramping up to take on more patient load? Number 3, is there a clear pathway to reimbursement? Meaning, is there, there an actual CPT code that's out there? Number 4, what does the leadership and management team look like? You know, how much experience do they have? How much expertise they have to getting through this, this process? Is there a low cash burn? And then, you know, is there clinical data that supports the actual, you know, claims. And so what's resonating right now with our early investors and those that have committed to invest, we've already done one close on January 9th. Our second close is going to be on actually this coming Friday, but they instinctually, you know, see both industry experts, surgeons, and, you know, VC investors as they see the clinical need. And they, the first, they see the market size, right? And they know that there is a clinical need that is unmet in the market. There's not a lot of real competition that has solved it. There are all of the 68% of the global market share is controlled by 8 companies. And so they look at who could be a potential acquirer and do they have anything in their product portfolio now? And so we also get to, you know, the fact that we do have a reimbursement code, and we're trying to solve a problem not just for this patient and for the surgeon, but also for the clinical setting. So we've made all of our instruments and implants sterile. So there is no work for, you know, the facility to do sterilization, which we can actually put a non-arbitrary number on nowadays, in order to process this for every case.

It's ACS ready, right?

Yes, sir.

Yeah. Yes, sir. Exactly. And so we have a very experienced leadership team and surgeon design team that we're actually going to be continuing to add to. Our cash burn, we don't have any outstanding debt. My company, Genesis, we did the basically the seed in a sense, and we've already invested, you know, over half a million dollars in getting to the point where we are today. So there's a sense, a lot of de-risking that's taking place. And I'd say the last thing regarding the investment on where we are, this is kind of like a friends and family round. And so we're gonna, we're gonna get to FDA clearance, and we're raising enough to cover the first 150 patients that we do in this round, which is kind of far along. And that allows us to basically create a registry. With this group of surgeons that we will identify and put forth, and then we'll allow them to, you know, follow these patients for a defined period of time and publish the outcomes. So we need the proof points because we are taking this to market to sell. I think what we've heard— does that answer your question, sir?

It was very helpful, but my other question was, are you finding that you needed to use a SafeNote with no valuation set, or did you, um, set a— establish a value?

I apologize, I left that out, so thank you for reminding me. We're using a convertible note, and we're trying to create some, you know, downside and upside protection. So we're going to do a 6% interest on this. We're going to do a 20%, um, Um, so we did a $20 million cap and we'll do a 20% discount as well. We expect that our next valuation and potential priced round would be after receiving clearance, and we expect a higher valuation, um, at that point in time.

Very good, thank you.

Oh, thank you. I hope that answered it, um, as brief as possible.

Well, I just wanted to comment that may be helpful, or maybe it's obvious, um, the Integrity Orthopedic acquisition last week from Smith Nephew has got to be a shot in the arm for you, I would think.

Yes, sir. We see, you know, the market, if you look at the CAGR of the last 10 years, it's 5 to 7%, depending on where you look. And so a lot of activity. Um, and as I say, if you look at just really the potential, you know, big co-companies that may have an interest that don't have anything in their portfolio What I think is going to be the requirement, obviously on our side, is the execution excellence, but documenting this, you know, in a way from the podium and from the published reputable journals, what the outcomes are, because everybody wants data.

Can I put another member of the panel on the spot? That's Colleen Gray. And I'd love to hear how you react or how you felt my comment about Integrity Orthopedics, um, how that either hit you.

Well, okay, so, um, my view is that the increased M&A activity that we've seen over, I'd say, the last maybe 6 to 8 months compared to the previous 6 to 8 months is— has been very helpful in getting investors to, I guess, be more optimistic, which then leads them to make investments. And I would say that was a prevalent, I guess, feeling or just— I went to the JPMorgan Healthcare Week last week in San Francisco, as you know, and Generally, investor sentiment was much improved if you compare it to, you know, the first part of 2025 or mid-2025. So, you know, the more, you know, strategic acquisitions of, you know, relatively small to mid-sized or, or even, you know, more successful companies is a huge thing for everyone. Right. It's, it's the beginning, hopefully, of freeing up a lot of capital that's been sitting on the sidelines.

Yeah, I was hoping that's how you'd respond. I wasn't sure though.

Thank you.

Well, you know, I, I have to give you a kind of a disclaimer in that we all felt the same way this time last year. Um, so, uh, but you know, I think it was more of a hope without any data, uh, a year ago, whereas now there's actually been, um, you know, a lot more M&A activity, and not just the huge transactions, because Well, those are something. It's just not, you know, it doesn't help that many stakeholders in the industry.

Yeah. The other thing is that the IPO market is open for real now. I mean, the Scholl Renovations is, that's got to help also. You know, even if you can't get acquired, there is the, you know, exit of last resort is the IPO. Which is open now.

Yeah. Yeah, I'd say it's more open than it's been recently. Definitely.

Colleen, I'd be interested in your thoughts on kind of some of the recent Piper Sandler discussions that, you know, have been talking about the market and really what acquisition, you know, revenue requirements are. It seems to be they're kind of pushing those numbers upward somewhere between $25 and $40 million. Was that communicated at the recent conference about kind of some of the attributes of some of the early-stage companies that would be viable?

Yeah, I would say when you were— when we're talking about the largest, you know, companies, I mean, they're going to want to acquire someone that has de-risked the market acceptance. And I think that's the biggest reason for those revenue numbers creeping up a bit. I would say that's— it's stronger in the device sector than, you know, for instance, you can look back at Zimmer's acquisition of Monogram and there's no revenue there, but it's not a device, right? I mean, it was, you know, Zimmer's motivation obviously has been their less than stellar performance with ROSA. So there was a different reason. But, but yeah, I'd say, um, you know, over $20 million and, and you have people's attention because it's not easy to get over $20 million.

Yeah.

And the run rate too. I mean, the trajectory really matters.

Yeah.

Yeah.

Yeah.

And, and then, you know, having a, you know, a, a solution and a product that is expected and set up to be successful in ASCs. I think is also, you know, something that's really getting a close look by M&A and business development executives.

Yeah. One thing I heard too, Colleen, and for the panel too, I don't know if anybody else, you all have heard this as well. It seems to me that most of the acquiring companies you know, we're kind of coming off the holidays, right? So they kind of want the most beautifully wrapped present underneath the Christmas tree that when it gets opened up, it's like, oh my gosh, this is everything I could have wanted. Right. And so, well, what do you want? You want basically a company that can scale with the large co-company that actually, you know, says, well, you're solving a clinical problem. You're making it easier for our surgeons to adopt it. You can use it in a surgery center. It's got a billing code. We don't have this in our portfolio. And the thing that I've heard lately is, can your manufacturing keep up with us if we put it on all of our contracts and give it to our 2,000 people in the field?

Yeah, I think that's a big one. You know, I would expect a lot of diligence around the supply chain. Depending on how it's organized, as well as diligence on, you know, talking to your KOLs and all of that. You know, I mean, the other thing that was discussed is that the length of time to get from, I guess, early discussions to a close of a transaction continues to be relatively long. Yeah. Right. You know, I mean, maybe 9 months. You know, I think some are shorter, some are longer, but, but that's just a fact of life. You know, they're gonna wanna really get to know the team as well as, you know, the economics of the deal.

Yeah, great point.

I think the, the one thing I have seen and experienced is as you go through seed, you know, A series, B series, probably your B series is is probably could be maybe the most important one because you have the choice to go with maybe a VC that has a reputation and does a ton of due diligence on you. So it almost gives you like a certificate of validation for, you know, one of the big 8s or 4s or whatever space you play in, right? So I think That's probably something to consider as you build your cap table, your investor strategy. I'm not saying it's the solution, but certainly it'll help. Yeah, we've gone through this and I couldn't believe how long and how extreme the due diligence process was in our company. Like, it was like extreme. And so I'm like, there's not much more you can really do if you're now a Johnson Johnson.

So my blood type is this and everything. Yeah. Raymond, I want— I wanted to— I just thought of something that also seems to be resonating with our early, you know, investors. The fact of the matter, we think, is that we will only have to do one other raise after this is really catching people's attention. And I think that, that what we're explaining is by the fact that we are in a sense, you know, have de-risked as much as we can to this point. We still have to put, you know, the implant into patients and get the, the actual results documented. But we're doing that in this round. And so, you know, the hypothesis is, well, you're going to be able to do, you know, a lot more commercialization in this next round. And you're going to technically kind of raise, I guess, dollar for dollar for how much revenue is going to need to be raised in order to quote, capture big co or midco attention. And so 2 raises in totality is something that, that is, has kind of captured attention.

And, and you're doing that because you're forecasting breakeven sooner rather than later.

Yeah. And that, like I say, getting these first kind of— I think the gold is, is really going to be these first 100 patients that we're going to document through a registry and, and follow them, like I say, for a defined period of time and show the outcomes. If we are able to achieve the outcomes that we think, you know, and have hypothesized, then we believe that the next round will just be full-scale commercialization.

Yeah, yeah, it's a growth venture, basically.

Yes, sir.

Well, that's excellent. Yeah, so for everybody, you know, Chance and Patrick are the newest members.

Um, is he on? I haven't seen— I haven't looked at the list of, uh, participants here. Patrick, you on?

Yeah, yeah, I've been talking.

Oh no, I'm not— I know you, Patrick.

I know the other Patrick.

Sorry, sorry, I thought you meant Patrick Jamnik.

I am here. This is probably the longest I've stayed silent in the Bone Shack conversation, year and a half or two years, but I am here.

Well, you know, it's when you— when you all brought up this lengthy time frame Patrick and I experienced this with Stanmore Implants.

Mm.

And oh my gosh, was that a lengthy period of time. We thought they were just kind of watching to see if we'd drain capital.

Call us when the bank account's 1 cent and then we're ready to pull the trigger.

Yeah.

That's right. So Patrick Connea is the CEO of Field Orthopedics and they're a really innovative hand and wrist surgery company. That's making headway in the US.

So absolutely.

Yeah, thanks. And tell us about your fundraising, Patrick, because I know you've been very successful the last year.

Can I, can I keep the fundraising till next week?

Oh yeah, yeah, yeah, no problem.

That would be good.

Don't want to jinx it. And I've got 6 days left until I see, see the money in the bank.

So yeah, it's not there till it's wired.

That's all right. I don't know, but we're doing well.

We've got, you know, we're sort of ready. We've, you know, we have an Australian organization now flipping into the US and have some, you know, some really good ideas around where and how to disrupt the hand surgery space. It's probably one of the last spaces that just has been completely ignored by the, you know, big ortho companies, you know, other than the distal radius plate. So yeah, so, but I think there's a lot more to do. Yeah, so appreciate being on this panel and with this group. So I'm looking forward to learning a lot and hopefully adding a lot of value as well.

So appreciate that.

And I gotta run out because I got a really key meeting with my new bosses. So they they asked me to join now. So really appreciate it, Tiger, as well.

Yeah.

Thanks for popping in.

Good seeing you, Patrick.

See you guys.

See you at AAOS, right?

Absolutely.

Yeah.

And then we'll see you next week again, right?

So, yeah.

Thanks. I will give you a call, Chance. I didn't realize you worked for Skeletal.

Skeletal.

Yeah.

Yeah. Let's definitely catch up.

All right, ciao. Thank you.

Bye-bye. Perfect. So a few months ago, Al Nani whispered in our ear that Arthrex may be buying Corin. Still has— there's still no press release, but I'm hearing from employees that this is going to happen.

Yeah, it's closed. Yeah, they put out a letter.

Oh, really?

Investors. And it's It is the— and I could write the story. It is the perfect example of a company with amazing, an amazing foundation and future that got run so poorly and ended up selling for less than the debt of the company. Like, wow, there's conformists of the world and stuff that, you know, they're with a good organization now, Restore3D, at a song of $14 million, which was insane. But this, um, I, I, the journey was really, it was sad because first it was outside US leadership that, that just is, just could not get the US market. And then it was a private equity group who was not in med devices and appointing board chairs that had no real, couple guys who got some lightning in a bottle here and there, some big names I won't mention who, but just had no real feeling for the market and just poor decision after poor decision. Um, and, and I mean, I, I don't know what Arthrex is going to do with it. They've tried it before, but I'm not, I'm not confident. The sports and joints, two separate cultures, two separate worlds. It's, it's totally different. Totally different. So I— yeah, it's a shame.

You know, do you know what the price is?

I do. Uh, I'm, I, I'm, I'm pretty sure it was 330 million.

Wow. And that— and their sales are—

what, what sales are globally? They're, they're close to 100. However, the Premier Group self-financed the debt, and so they're getting paid first. They bought $260 million. Premier bought it from the original group, the Koren Group, uh, and Omni and everything. So they, um, then they financed another $100 million in self-financing or whatever. Um, so they, they— the people who had founding shares are totally screwed. Like, nothing. Zero.

Wow.

It's terrible. And buddies, people who were counting on it stuck around. And it's a shame. It's a shame. So that's the word. Don't say that I told you that on LinkedIn. This was a message I got copied on. Their fault. They copied me on an email. They probably didn't want to copy me on.

I mean, the message is you want to be with a growing company. If you're not growing, I mean, you're, you're, you're, it's hard. Life is hard, right? You have to take on debt. You can't reinvest in the business. You gotta grow. And they've been around, Korn's been around since 1985. So, oh yeah, 40 years of, and well-known hip and knees products all over the world.

A huge ODEP, uh, rating. I mean, their, their implants are, are bulletproof in their clinicals. Never finished and completed the implant lines. Just, you know, they were the, they started and bought that company outta Australia, the hip spine relationship. They were the first company to do it. Like that was, that was all the rage, their OPS analysis. They botched that. They've got a robot that's actually a balance, you know, a non-static balance, the only one that actually gives you feedback on, in soft tissue tension on their balancer. It's just, it's just a disaster. It's just been run poorly. And it's a shame.

It's, and it has nothing to do with the products. It's the business.

That's nothing at all. Yeah. Nothing. Just terribly run organization. Too, too many mistakes.

Yeah. I think Arthrex, the only reason they did it is it's faster than developing their own systems. You know, it'd take 3, 4, or 5 years to develop full lines.

Well, here's one for you. 4 years ago, Arthrex offered him $600 million, then they walked out of the room.

Oh geez, that hurts.

That is a horse's mouth. Walked out of the room, said, what did we just do? Moment. Somebody told me that Reinhold left the meeting enraged. They wanted a billion. Wow. Yeah.

They've been trying to play in the knee space for a while, right? They have a partial or they've had a partial for, I don't know, 4 or 5 years.

They have a total for a while.

But it seems like they haven't done it in a, in a very big way, right?

No, they had, they had a joint. They went after the arthroplasty line. They came out with a knee. They could never really get it off the ground. They met with us when I was a VP of sales for Korn for a brief time., to discuss, you know, licensing our hip. And that's how it all got started. And those people in the room literally were telling us like, we, we don't know what we're doing in joint replacements. We should not be in this business. Um, and then you look at other companies that have, are, are kind of almost either selling off their sports line unless it's connected to some kind of soft tissue or regeneration stuff or cartilage regen, you know, all, all, all the biologics. But the cultures, the sales cultures are going to be so hard. Now, KORIN has the shit, like, they've only got a few good distributors, right? So they— but it's, it's the, it's the customers themselves. They, they did— to penetrate, you can go in, Arthrex is a, is a premium line. KORIN has been a value-based quality line. And you, you are merging, like, ideologies of, of business and how, and how you are represented in the market. So you can't turn KORIN into a premium brand overnight because too many people know that they're not. And you're, you're, you're the surgeons, they don't understand how loyal the, the reps and surgeons are, and they don't cross. They really don't. I mean, you're going to find some sports surgeons who are like, sure, I love my Arthrex rep and I hate my knee rep, I'll combine, but they're going to be few and far between. And I, and I, and I'm saying this with the utmost confidence, like I, I know this is gonna be the dynamic because I'm a joint guy. I've brought in 3 different qualified, experienced sports people to sell really good products with me, and we have failed because they, they can't penetrate through Arthrex or the others, and then they can't, they didn't have any joint replacement, and our joint replacement guys can't cross over. So it's I don't know.

It's, it seems to me that if anybody can figure it out, Arthrex probably can.

Maybe.

Well, I'm sure they'll have a revolving door down to Naples and, and do what they do where they, you know, pay every surgeon $1,500 to come to Naples and have a couple days in Naples. And I mean, that's, that's their model.

Yeah.

I think what Al's saying is people underestimate the different sales channels and how hard it is to cross sales. I mean, there's—

yeah, I totally get that. I totally get that. I was just thinking that if anybody can set up a separate, you know, ortho sales group and execute with it, perhaps it's Arthrex who can do that. I know, you know, again, Smith Nephew has had kind of both and has been pretty successful. And then trying to cross over between the two has always been a challenge, at least when I was there. But I don't know, I was just wondering out loud if perhaps Arthrex can can create that, you know, separate sales channel and be successful with it because they are pretty good executors. It's my only thought.

No doubt. No doubt. And I'm not— I have, you know, obviously I have a very, very front row seat in this whole experience and have these things that I know have gone on. But I just see difficulty. And it's just going to be how much, what is considered a success, right? In the end, what's going to be considered a success of the merger.

And raise your hand if you've seen a company that buys another company that's a very different culture and it just goes belly up. Raise your hand if you've seen that.

A few. A few. A few. Cynthia's. It's easier to do Cynthia's.

It's a much shorter list that it hasn't, right?

Exactly.

Yeah.

Yeah.

Flip it around.

Who's been successful?

Name a good one. What's a good one that's that's actually been accretive. Anybody think of one?

Maybe Globus and Nuvasive. I don't know much about the particulars. I just know the president of sales is a buddy of mine.

So I think that was a little more of a hostage takeover than it—

Yeah, exactly.

Stryker did a lot with Mako. I mean, they, um, they— that was probably one of the biggest winners for sure.

Yeah, for sure.

You know, Biomed getting the Hand Innovation stuff probably fits the bill, but then it got destroyed with the Zimmer thing, you know, 2 years later. So it's round and round we go.

True.

I think Al's point about like what counts as success in their minds is probably really astute because like if there's $150 million in sales domestically or, or whatever, or $200 million domestically, like turning that into $300 or $400 million is probably doable with the sort of normal playbook stuff. But like turning that into a billion, sort of like Smith Nephew type of levels, will require enormous investments on their part. And there just will be a lot of competing voices in like in the room of like, well, why we're gonna pump all this money into this and they're simultaneously trying to sort of like stand up a Spine business, enter like a couple other different verticals at the same time that causes or has the potential at least to cause a lot of like budget types of arguments. And not for first and foremost from like the sort of like bread and butter sports lines. Or, you know, sports portfolio.

Yeah, I'm sure the math equation is fairly straightforward if they're, you know, if they're sitting on $1 billion in cash and want to use some of it, right? If they're only spending $330 million on core and they're probably getting $30 million worth of inventory that is already in place, they don't have to reinvest in. If it's $100 million in sales, it gets pretty quick before it looks like a really smart investment, even if it's, you know, not even fostering growth, it just expands their base and maybe gets them into some more accounts. And now you get same-store sales potentially from mixed distributorships. So I don't know, I think, uh, Laura Lynn's comment about maybe Arthrex can figure it out is, I think, part of it. Or, I mean, they have— they don't have a great track record of every time they get into total joints, it just doesn't seem to work. But, you know, they're going to keep trying, I guess.

Now, Al, what's the breakdown of OUS sales versus US sales at Corin?

Uh, so they lost a lot. Their big markets were really important markets, so it was Australia, uh, and, and then, um, you know, they were growing in the US, and they've been a foundationally pretty strong company in, in the UK. Um, but if I were— we were at $43 million at the top when, when I was still really active in distributing Korn. $43 million US, um, about 30 million Australia and then the rest outside in Europe. So which basically the UK.

So it's like an English-speaking company, English-speaking joint company.

Yeah.

Yeah.

We had some fun there, man. I mean, honestly, they had— I went with them and my buddies went with them to lead them at the time when I got taken direct by, by DePuy, but which was good. But I went because I'm like, holy crap, this company has got quality implants, has a great vision on technology that's going to be brought responsibly with cost. And I just watched it like, I, I don't even, I don't know if I'd say go backwards. It just sat, it just sat. I had poor decision after poor decision.

I got to see that OPS, uh, hip navigation thing like 5 years ago, 6 years ago. They— that was pretty cool. They were— that was really interesting, but they just couldn't execute in the US.

Well, they didn't have a product, a deliverable product, um, and the software was being engineered in Australia. So even the timelines of, of getting these discussions down with engineers, um, it was just— it was never fixed. No investment in US-based engineering, which I see a lot with a lot of custom companies, right? We, we've seen that across the board. But, um, yeah, they, they just, it was, they, they started the whole hip spine discussion. They were it. Fort Korn started it. And, but they never could have a deliverable, never could come up with a PSI guide, never could have instruments that were actually able to, to, to, you know, take the, take the plan and implement it into the, into the patient.

Well, this is be, it'll be fun to watch this one play out for the next year or two.

Hasn't, hasn't, um, Arthrex, didn't they create a cardiovascular division too? Thought I saw that they were, they're entering into cardiovascular space as well.

I think that would be cool. That would be quite a jump.

Maybe I missed that somewhere, but, um, obviously trying to get into a lot of like interventional spine types of things like, like, but like an actual vascular cardiovascular business. I mean, that would take a lot of, a lot of capital.

I could have sworn I saw something, maybe I was wrong, but obviously they're, you know, they're actually doing really well in trauma and, you know, their, their, their joint business is, is doing pretty well, but they, they've actually done really well, you know, getting into trauma. And then one thing I'll say, you know, Al, you know this extremely well, but the distributor for Arthrex is very different. There's a lot of control over them in that channel and their requirements and the amount. Obviously, the other companies have started to press towards the same sort of agreements, but they really press them for, you know, putting the right people in, in place and hitting metrics for sure.

Well, they, and they, they've broken up their major distributors, which is different from, say, the Puse mega distributors or, or other company. So now there's the one distributor in the greater Philly area is now three. Yeah. Um, which has not, you know, that's strange, uh, for Philadelphia because both sides of the bridge are very incestual, uh, from Philly to Jersey. But, um, Yeah, I, I, I don't know, Chance. It just— the, the shoulder, I get they've done really well in the shoulder. That's their customer. Yeah, they're already there, right? Right. And then the unis are done, a lot of them are done by the sports guys or the, those guys, early intervention type guys. Um, but listen, it's not going to make any difference to me if they succeed or not. I, I mean, it doesn't matter in my world. So I'm just, I'm giving, I'm giving kind of a, a very thoughtful Prediction. I, I just, it, it's gonna take some time as everything does. But I, I think the real challenges will come when they realize just how different the customer base is.

Agreed. So chances, by the way, if you don't mind me asking a question, I see this, there's a cardiothoracic, they have cardiothoracic products now.

That's what I thought.

Yeah.

Gotta be, gotta be, biologics, imaging.

Yeah.

Crazy. So, Al, I do have a quick question for you because I see a pretty significant dichotomy in the two pictures you have on your wall, my friend. I don't know. I see it and I'm like, wait a minute, Tiger Woods and Jack Nicklaus and then Steve Martin, The Jerk below.

I love it. Christmas Vacation. And yeah, I just got to let people know who I am, if you know me. Cool. And not take myself too serious.

Uh, Raymond.

Um, so thank you. Um, so I'm gonna put Tiger on the spot now since you said rumor mill from a couple months ago about Arthrex. You also said rumor mill Medtronic spine, right? If I recall. So any update on what?

I haven't heard anything new, but I, it, it's gonna be an IPO spinout of the spine division. It's gonna take a long time. We're all gonna see the S-1 and everything. And, but I don't have any definitive information. It's just all word on the street. Does anybody have anything?

So I know a major distributor for Stryker that's very connected that has been approached by Medtronic to carry Spine. That's all I know. Like that. I don't know if that's telling. I've, you know, I've never heard anything like that, but since Stryker, you know, spun off their spine.

That sounds very territorial, like a one-off thing.

Maybe.

Yeah. I think, I mean, Medtronic Spine's division is the least profitable and it's growing the slowest and they, they have no choice. They have to, they have to get rid of it. They're going to do the Zenvi thing and spin it out and give it a chance. And with, especially with the IPO market opened up now, it kind of makes sense for the bean counters. But I haven't heard anything, Raymond. It'll, it's going to be a, it'll be a slow, slow-moving story.

Thank you.

I have a question for the group. It's a lot of that Overture Orthopedics Um, I think they reported their first, what, million dollars, I think it was, in revenue. Does anybody know the, the time frame it took for them to get to that million? Just curious.

Do not.

What, what, how would you characterize a good time? Oh well, How do I put it this way? What's, what's your goal, uh, if I could put you on the spot, uh, to get to a million once you get your 510 clearance?

Um, I have modeled at this point in time with our team getting to about $8 million, um, in 2 years.

That's, that sounds doable. How many customers is that? Is that a— I mean, it'll be an 80/20 breakdown of like high-volume users and low-volume users, but—

Yeah, I think we're going to try to, you know, create as much, you know, risk mitigation in that by selectively choosing certainly the LMR and who has, you know, most cases. But I was modeling out basically 15 users at one case a month, if I remember— I'm assuming one case a week., if I remember, which I think is rather conservative. Um, I have to go back and look at all the math, but we're trying to get to, you know, and it could go higher because, believe it or not, actually having, um, um, you know, people on the independent distribution side say that I should consider potentially raising ASP. So we still have a little bit of work to do, but, you know, let me get to, to you know, $10 million, $8 and $10 million in 2 years, I think would be the ultimate goal.

Interesting. So Overture was founded in 2020, so, and they've got about 20 employees, so that's, it's just 5 years.

Yeah.

Well, and you know, 2 years being the COVID years, you know, that's, you know, point.

Yeah, that's a really good point. 3 real years. Maloney, you've been quiet. We haven't— we usually hear from Dr. Maloney by now.

Well, you are, um, close to the, uh, zombie apocalypse in Atlanta. You know, we have the— the great ice storm is coming.

So, Armageddon, snowmageddon 2026.

We're not, uh, we're not thinking normally today.

Have you been to the grocery to get eggs and bread and milk?

Uh, no, but I did make a reservation at the Hilton on the other side of the golf course where I live.

Awesome.

Yeah, we're, we're battening the hatchet here.

Yeah, Laura lands in Memphis. She's right in the zone too.

Yeah, we're in the sleet zone, the ice zone.

Yikes.

Gonna be interesting. What else? What's new? It's funny how all the— anytime we have open discussion, it goes— it's a barbell effect. It's either raising money or selling, you know. Developing products and IP and all that is like— it's the easier part.

That's the requirement. Can't monetize it, then you got a problem.

Exactly. My, uh, my AI partner in Vancouver is, uh, going public. They make, uh, AI, uh, it's Agentic AIs, uh, for sales, which is doing real well in the non-medical world. It's, uh, notoriously slow adopting on our side as far as any kind of front-end patient-facing public-facing usage, but on the back end it's going real well. The same thing for our AI Scribe, uh, that's kind of picking up steam a little bit.

Interesting. Are they going on the US exchange or the Canadian? Canadian.

Yeah, yeah, kind of a shell company reverse thing.

Interesting.

So Overture is interesting. Do you know them?

Not much.

Tell us.

Okay. The, the Canadian company that I'm on the board of, Oligomedic, is, we're putting together a portfolio of cartilage repairing, sparing, replacing type, you know, early intervention stuff. And I'm not, I wasn't familiar with Overture. I may I may, I may look into that one.

Put it up, put it in the chat.

Tiger, I think Ben is part of the BoneCheck group too, right?

Yeah.

Oh yeah.

Ben Holmes.

Yeah.

Yeah.

He's a busy guy. He just got— they just raised money to start. I think they're doing horses, what they're going to do.

Yeah. So we— our team at Genesis works alongside them and is going to be working now, kind of transitioning to helping with the delivery system for their implant. But they just got— you guys probably already know this, but they, they got, you know, clearance, and we'll do first in case for their safety study in Canada, their first 10 patients, and trying to get, you know, first one signed up in the next few weeks. And so really unique, unique player. I mean, you think of the, the metal implants where this is, you know, being utilized for these cartilage defects in the knee, having something that, that is integrative, 3D printed, and can be placed is pretty unique.

It's, I mean, this is the donut hole in hips where you, you know, you 40 to 60 years old, there's just nothing for you. Yep. And if this works, it's gonna, it's gonna be a game changer. I mean, everybody's gonna, get this to delay total hips. Yeah, I don't know what the patient criteria would be, but it could be huge. You know, I worked at Active Implants for a couple years and we were trying to do the same thing in knees with a meniscus replacement, NuSurface, and we couldn't get it through the FDA. But the patients in Europe that had it just loved it. I mean, delayed unis or total knees took away the pain. They woke— it was a sports medicine mini incision. It was outpatient. They hopped off the table and their arthritis pain was totally gone. And it just— the meniscus just helps spread the forces out. To the tibial plateau better instead of point loading. And even when they had a dislocation, the patient would come back and say, I want another one, doc. You know, I had, I got my life back. I could garden again. I could walk upstairs again. So yeah, I'm, we're pulling for Ben and Nano-chan. That's, that could really change orthopedics forever.

Chance, where are you located?

I actually live in Oklahoma, and our, uh, our office, uh, home office is actually in Grand Rapids. But interestingly enough, our entire, um, you know, company is remote. And so I like to say we're investing in expertise and experience and not square footage.

I knew your name. I was trying to think where I, where I may have met you or saw your name before.

Mostly, most recently, Scale Dynamics. I was there for, um, basically 7 years.

Okay. I, um, was with George Orbea the day he sold that first company.

Oh yeah.

We had dinner that night and he bought a boat the next day.

Yeah.

I think he bought an island a little bit.

That was the story.

We made a run when I was at Wright Medical, 2003. We made a run at him. We offered him $50 million and we did due diligence down in Miami.

Really?

Yeah, it was a done deal. And then he ran into a— I don't know the backstory, you guys may know. He had a friend that owned He was a newspaper owner from Colombia or Argentina or something. He became real good, and he said, no, no, no, your company's worth way more than $50 million. And so the next day we had lost the deal.

Um, wow.

Yeah, yeah, I think they ended up, what, selling for $180 million, I think, um, to The View.

The View, yeah.

I remember a couple things down there. First of all, they didn't do, they didn't really have a quality system. No. And, uh, Orbe had the engineers in his surgery center. And so he would go to surgery. Everybody knows this stuff probably. He'd go to surgery, come back and, and he would get on CAD and say, okay, move the screw hole 3 millimeters over there. You know, and, and he was making real-time changes. To the implant. And he would just iterate every couple weeks. And that was one of the secret sauces. The second secret sauce was all of the profit went into buying more surgical trays. And I mean, for a tiny company, they had like 10,000 hand trays or something crazy. And, um, he reinvested every dollar. Yeah. Uh, so innovation and then supporting the sales Force. He's a brilliant guy. He invented dorsal plating. I mean, he's a brilliant guy.

I just remember he spent 15 years at Synthys and I remember this coming out, but I remember even before that when Synthys had the pie plate and the T-plate in the same set. And we were always asking like, what is it? What's this T-plate gonna be used for? Ah, you put that on the volar side. And so I would talk with surgeons, they were like, we don't do anything volarly, you know? And that caught lightning fast. And that was within it. And you're right, they took advantage, I think, of doing education and putting sets in the field. That was the whole philosophy. And their number one customer and focus was hand surgeons. It was a great product. When I got to Skeletal Dynamics, I'm like, well, who do you think your customer is? I was hand surgeon. Like, do you want to be a hand company or do you want to be an upper extremity company?

We got those two.

Just actually had Patton go out today. I saw for their— they, uh, have a reverse shoulder arthroplasty, you know, system now that they want to get into that market, which I'm sure you all know. I mean, that's what, $25, $50 million just to get started.

Mhm. That Hand Innovations purchased by DePew, we were all joint recon and shoulders. So, but they gave it to us. And it was the— it was timed unbelievably. Orbe was beloved. He had his disciples. He was the engine that was driving it. They had so many sets for us. And we were like, holy shit, this is actually something we will embrace. So we were disappointed with the SynthEze acquisition because that was Yeah, many reasons for me. But, um, they, uh, when they took it away from us, that was like actually good fun revenue, you know. We were hiring reps to cover it. It was great.

Yeah, yeah, they, they, they did a really good job of teaching the philosophy because it's not just he created, you know, the implant from Hand Innovations, but if you also really looked at what he was teaching, he taught a different exposure for the volar portion of the wrist. The extended FCR. And they, you know, affectionately said, imagine what an extra inch will give you.

Yeah, that's right.

Yeah.

So it was, everybody thought it was dangerous. Yeah. Nerves and blood vessels.

No doubt.

He, he figured it out. He's a brilliant guy.

Yeah, he is.

He is. All right, we've gone over. This has been a lot of fun. We'll, uh, so, uh, see you guys next week. No speaker next week, so we'll do this again.

Look forward to it.

Thank you, Tiger Buford.

Thank you, everyone. Thanks, guys.