BoneChat #134 - Open discussion

Good to see Alyssa. Hey Dennis, so it's open mic day, so we can talk about anything and everything. Hey, Patrick Connie is in the background.

Um, so I just gotta say, Dennis's office is exactly what I would think for a man of his caliber to look like. And all of the projects you've done through the years— oh, you're muted. I'm so glad to see you on here, Dennis.

I made it a priority. It's been a long time coming.

Nice.

But, uh, yes, this is my, uh, upper office. This is like— I'm in like a I'm like at the high end of my house and it overlooks everything, but now everything gets thrown in here. All my kids' shit, everything.

Yeah.

So in a month it'll be completely redone.

Yeah. Oh yeah, I have a pile that, uh, just consistently stays a pile, and then because I'm too OCD that if it goes, it gets put away, it has to be put away perfectly. So nothing gets put away and that, that pile just grows until I have time. But then if I work on a contract or something that's really intensive, that pile has to be gone before I can focus on it. It's the, it's an interesting process.

You're a zero inbox kind of person, Alyssa.

I'm a what?

You're a zero inbox. So you want to clear out your inbox every day or you can't go to sleep, right?

No, that's impossible. Let's see, I have currently, I have 378 emails unread. But yeah, it's, if I tell people, if you, if you need an answer quick, text me. If, if it can wait, email me.

Yes.

Email's supposed to be asynchronous, but people use it like, uh, instant messaging now. It's crazy.

Yeah, I can't, I can't keep up with email. Email's too much. LinkedIn, I, Anne has worked for me for years just on LinkedIn. She messages She's done everything.

I love Anne. She works for me. Here, I'm going to show you something just for fun here. I don't know if you guys saw this. So now, now you can just buy your knee at Home Depot, and you got to love the language here. It says, do it yourself and save thousands, and everything you need, no hospital, instructions included, results may vary. And they give you an extra tibial stem just in case you have bad bone stock. So isn't that great?

That is hilarious.

Isn't that hilarious? A friend of mine sent that, but I have no— who knows where that came from.

But yeah, you know, I mean, but there's a lot of— yes, there's humor to it, but there's a lot of truth to it.

And he is truly Commoditization of implants, you know, it's for sure.

Yeah. I think we still have a lot of room for improvement in total knees.

Oh, no kidding. Well, I've got some really exciting speakers coming up and one of them is Kinematic. I love that company. That's like my favorite company I've ever heard of. They're basically a concierge service for the patient and a surgeon for total knees and total hips. So, um, I'm gonna— you're gonna be blown away when these guys show up. But no implants, no inventory, nothing. They, they sell a, um, I'll try to explain it a little bit. So in the intraocular lens world, if you go in and get a lens, your insurance pays for a generic version. Nobody, nobody gets the generic version. Everybody pays thousands of dollars and gets the, you know, the one with more features. So these guys from that world came to orthopedics and they said, what, you know, the surgeon walks in to do a total knee, they don't even remember who the patient is until they look at the x-ray on the wall. So, and they're gonna, they're only gonna use one implant, their favorite implant. What if you had a choice of 30 implants and the surgeon did all this pre-op planning and wore AR goggles and found the best fit implant for you? So the patient pays out of pocket thousands of dollars and the surgeon gets a chunk of that and the surgeon sells the service to the patient. And these guys are, they're doing really well. I'm not explaining it that well, but we'll have Kinematic on Um, and I love the business model. It's just all cash, no insurance, no Medicare, no inventory, no codes. It's just pure cash.

So the surgeon's okay with working with a bunch of different vendors as their reps?

Yeah, that's the thing I don't understand, because if, you know, if it's Max Ortho's hip that's the best fit, then the Max Ortho guy has to come in and I don't know how that works.

Yeah, that's, that's the tricky thing that I see as a huge barrier to entry because the reliability of each individual rep is different. And if the hospital isn't coordinating or doesn't work well with that rep, that's, that's, that's an interesting one.

Yeah. Anyway, we'll, we'll learn about that. Then I've got, then, um, I've got a giant supply chain guy from Georgia that Maloney knows, and he just retired from the hospital, so he can, he can tell us everything about how hospitals think, how they make decisions. So that one's going to be good.

Hey, just on a quick note, Tiger. Yeah. Mark's having a problem with his back. He's not feeling that well and he just moved. So that's probably why he's not on here. I just want you guys to know.

Oh, thanks. Yeah, I know he just moved. He just sold his big house and downsized. So yeah, good. Well, good for Mark.

Has Dennis present? Dennis, have you presented your company?

No.

Oh, that's a cool one.

You talking about MD Envoy?

The, the pain?

Uh, yeah, I, I presented, uh, the pain one.

That's right, you did. That's right.

Yeah, but I got— we've made a lot of advancements, so I don't think we're ready. We're, we're pretty close. Uh, I've got some studies that are starting and, and are about to finish up. Mike Wang is doing one, Alyssa.

Nice. I love that company. I, I mean, like, it's one of those moonshot, but they've made so much traction that it's not moonshot anymore. It's foreseeable future.

Wow.

Yeah.

Yeah. We'll get you back on. That's right. And then I got Charles de Kook coming on at some point. The guy that's doing 15 knees a day somehow.

Have you ever been to his practice?

I haven't. I haven't talked to people.

It's a machine.

Yeah. That's, and it's no, it's no tricks. It's just, it's just great efficiency, right? There's no, there's no ro— robots and crazy stuff.

Yeah.

And then I've got Mike Minette, who, I, he is a deal maker. He's done hundreds of deals, partnerships and licensing deals in med tech. And somebody, one of the BoneCheck members asked, I think it was Raymond, we need to learn more about pros and cons of licensing and partnerships and, you know, learn best practices because a lot of little companies can't, you know, it's hard to get funding. It'd be great if you have a partner, right? You know, distribution partnerships can really move the needle. So this guy Mike Minette is unbelievable. He's, his resume is just hundreds of deals he's done and that's all. He's a deal maker. And so he'll be on. So we got some good stuff coming up.

Yeah, that, that, I think that would definitely be a powerful one. And pricing, you know, as we get international distributors, they want transfer pricing agreements, who pays for the inventory up front, where the ceiling should be, how much margin should be built in. Here are the things that you don't think about when you're selling internationally. There's all sorts of whether your registered agent should be the distributor or whether it should be a separate entity in case the distributor partnership turns ugly. You know, there's all sorts of things to consider. Do you have anybody, Tiger, that would, that would be valuable in that capacity?

No, but I can put the word out, that's for sure. I will do that. You guys tell me, I mean, this, this is, you know, this belongs to you guys, BoneChat. So if you have a topic, I'm your servant. I'll go find somebody that can speak to that topic.

Tiger, I would love it if you put together, I think some, a big value of BoneChat could be a distributor list according to, you know, where we could correlate all of our distributor information. I think it could be very powerful. Distributors are very challenging to get. We're lucky because the surgeons are telling us who they want their reps to be.

Right.

But that doesn't always happen.

It's a good point. So you're looking for a comprehensive list by zip code or what products they carry and who they're working with, something like that, a database.

And like in BoneChat, who they're working with. So you could do a phone a friend. And say, hey Alyssa, you've been work— I see you've been working with this Distributor X out of here. What's been your experience?

Got it.

So there's like a, almost a, it's like Yelp or something. There's a score. There's a—

like Angie's List.

Yeah.

Angie's List score, service score somehow. Is Stephen— I know Stephen Flutie is doing something like that. Have you looked at his database?

I haven't seen it. I know he's presenting at MSK with—

Yeah, he presented last night. He did great.

Oh, I missed it.

Yeah, you got to check it out. It's called InCircle and he's got different derivatives to it. Some of it's related to sales reps, some are distributors, some fundraising. He's trying to build this kind of subscription model network to where you get access to all these things and you can filter it. It's AI aggregated, it's real time. You're going to want to take a look.

He's been working on something like that for years, but it's changed names throughout the—

it's evolved, it's evolved. He was, he was building like a— initially he was built— I forget the name of it, and I think they've kind of abandoned it, but he was, he was, um, building a thing where it was meant to be a consultant connecting to an innovator, a surgeon, and like his service was going to be the go-between kind of like a, like a WeWork, you know, Upwork sort of thing, but specific to med device. And that one just didn't kind of go. Ultimately, I think the bottleneck he ran into was doctors don't want to pay for the work that they need done. PitchSync was that one. Yep. So, but this, this other thing is much more related to aggregating available data to help find quick solutions to distributorship based on territory experience on and on down the line. He's even like a surgeon adoption element to that too. Like a surgeon early adopter thing.

Yeah, I call it matchmaking. It's like, or date, it's like a dating app for surgeons, distributors, device companies to find each other with some kind of reputation score.

I, I, I, he's been, he's been working hard through the years. I really hope he, it's find success, um, as he— as we know more, you know, we get better as we know more, and if we're adaptable. So I really—

connector, he's a connector, so he's trying to build a business based on that. And now I think the idea is that's a good one to chase because he's good at it. And now it's a matter of kind of finding the business model that works. I think he's on to something.

Yeah, all of these, it's always the network effect that if you have 100 people, you got nothing. If you have 1,000, you got a little bit of something. You have 10,000 You, you're getting, you're getting somewhere, you know. Yeah, it's so hard to build a social network and, and a B2B. It's just really hard to do.

Really hard.

Yeah.

What, so what's on, anybody have a topic they want to throw out or the problem?

I had an interesting experience and I actually want to share this kind of template of what to look for when analyzing a potential big check investor. Because through the years, I've had some pretty interesting experiences, and the most interesting one was we got a $15 million letter of intent. We, we did a lot of due diligence, making sure that it's a registered Swiss fund. A lot of this cannot be seen, but you can look at the website when the domain was established, kind of like a check a framework of are these real legitimate people. We— I get so many spam or phishing or fake stuff. Um, um, it's— it— this one was really good, um, and it was a registered Swiss entity. They were affiliated— that entity was affiliated with a dental implant company that called their devices therapeutic devices. And, um, I'm like, okay. And then a pharmaceutical company had invested in them, um, and so I was like, okay, it makes sense. So I go out to Barcelona, um, the deal was a very good term. That was a red flag because typically you kind of negotiate a little bit, right? Like that final— it was like that final negotiation, um, right up out the gate. And I was like, okay, this is, um— but, and we had several people look at it, including somebody that had lost $16 million in a deal that JPMorgan was involved in. So there was enough positive to warrant the closing of the deal. But I get over— there was a term on the back end that wasn't established, and it was, we'll wire you $15 million in the first 30 days. We want you to wire us back $1.5 million. You've seen this, Eric?

Yeah, we, we got caught up in one, um, and our, our friend Ted Bird was working for us at the time. Oh yeah, yeah, it, it's crazy. It's straight out of some like spy novel, um.

That's just a new version of the Nigerian Prince.

Yeah, he, he flew to, to Rome and met with these guys in a restaurant. They just, they just, you know, met up there. They're, they're going to go from there to sign the deal at, you know, their, their office or whatever. Um, and in the middle of the meal, the, uh, the Italian police came in the restaurant and, uh, grabbed everyone, including Ted, threw him in the back of the cop cars, and they, they told Ted, hey, we're doing, you know, we're arresting you just for show because, you know, these are some really bad people you're dealing with.

Yeah.

And it was the same sort of thing. They, they wanted a million back. Um, but the red flag was everything was too good to be true.

Yeah. It, but it, it wasn't, it wasn't, this was not too good to be true. It was just like they were ready to close and, and, you know, like you hear deal, it was like, it was the, it was ideal. They were gonna make money. We were going to make money. You know, like And so, um, and then I talked about this to NASC because nobody talks about this. And, um, I— and Anthony Viscogliosi chimed in and he was like, Alyssa, you are not the only one. We had this thing happen too. Um, Dennis, have you had this happen?

Had people approach me about it. I've gotten on the phone with them and then once my radar goes up, I give them like a— I give them like, okay, here's a couple action items that we have to do, and I just see how it goes. 9 times out of 10, it starts coming out pretty clearly. So I haven't gotten to the level that you have.

Yeah, well, they— we did 4 weeks of due diligence back and forth. I mean, it was like everything, the cadence was there. And so, um, and we— I mean, we did quite a bit, um, that one term at the end. And, um, so our CFO said that this is a trend that's happening in Chinese funds as well. They had 3 with his pharma company. They had 3 that were similar, and, and it's legitimate funds, but they want the startups to pay for the management of the fees of the fund. And so, like, if you're desperate as a startup would—

oh, I think she froze.

She froze good.

Froze right in the middle of—

back that $1.5 million to them and our accounts get closed. They've moved on to another country, right? With that, with that $1.5 million, you have 4 companies like that You're living pretty good for, you know, you just find 3 or 4 entities that will wire $1.5 million over, you know, in Bitcoin.

Yeah, yeah.

Well, no, they— what? No, it was cash. They wanted it directly to— yeah, they're— yeah. Oh yeah, but they're moving on in their Bitcoin. Yeah, they're— so yeah, um, yeah, yeah. Jurgen Klein, um, he did a deal with JP Morgan where they were merging 4 companies. JP Morgan wired over $100 million, and the guy ran with it, fled. He finally got caught after 2 years, got sentenced for 2 years in a Swiss prison, and he only had to serve 8 months for $100 million.

Crime pays.

Yeah, I mean, like, we hear Swiss family office networks are fantastic. These are These are what family office— like, what think people can get away with in Swiss entities. It's very quiet, very private. So, wow, that would be a good phone chat.

That would be disaster funding scams.

Yeah, yeah.

Uh, you know, I think that that goes back part and parcel to, um One of the things I'm dealing with significantly right now is either consulting or advising or working with one-product companies. Small, like you said, I think Tiger, somebody said it earlier, you know, these, these companies, um, are all trying to absorb the cost of what it would take for a large company. It's the same cost, right? And so I think it goes into a couple of your topics. It goes into the licensing potential, it goes into potential, um, co-marketing deals, uh, but ultimately where I see this going is a roll-up.

Yeah.

Um, and there's been some pretty successful pharmaceutical companies. I was actually a part of one. We did this, uh, a while ago. And there's, for example, in pharma— on the pharma side, there's a few companies that have like a bunch of $20 to $10 million to $30 million products, but they got like 40 of those companies. And, you know, sports medicine is a prime example. Like, everybody's got their one little thing, right? And they're all trying to get funding for their one thing instead of having a, you know, several, whether it's through a, a co-marketing deal, you know, there's, there's all these types of people are trying to find ways to do this. And I ultimately see, you know, I, first of all, I think that one product or smaller company, you know, topic, you know, what are the challenges? What's the plan? What are options to overcome them? I don't think it's only funding. It's, it's, it's, it's access to doctors. It's getting it on a value analysis committee? Do you go to ASCs? All those types of things, right? Get reimbursement. And then what, what, what are your options? You know, I, I, so I think there's obviously licensing, there's co-marketing, there's, uh, outsourcing, there's, um, you know, actually doing a deal and acquiring other companies. Like, I mean, as an investor, I'm telling you right now, I'm on a board of a company, we just made an acquisition All right, I'm the one pushing acquiring multiple companies. Like, that's a strategy.

I agree wholeheartedly. It is the best time to buy right now. There's no better time to buy. The valuations are low. Small companies struggle. You have to keep evolving, and you have to— you can't keep evolving into commodity. You have to have something differentiating as a cumulative function of the company.

I couldn't agree more because I have to say some of the technologies are pretty unique.

Yeah, yeah, but it's almost impossible to build a business around them. And I, because I agree with both of you what you're saying, and but it is understandable to see how these companies get there. And I will avoid giving specific examples because there's at least a dozen that come to mind, but what, what you, what you see happen Or what you can envision happen is somebody's got an idea and they raise some capital and they get started, and then they make some progress and raise some more money. And now they've started to make some promises on valuations and earnouts and multiples, and it just becomes— it just keeps getting harder instead of easier to where now you're stuck. And now it feels like the only way out is to grow this pie and to grow your portion of the pie in order to earn this scalability 10x at the end to then get the kick, you know, the, the earnout that you had been hoping for the whole time while also making everybody happy. And eventually that stalls, and now a new team gets brought in and then tries to recycle the same thing. It's— it happens over and over again. But I think your point is, I wish I could— I wish I could find a way to get some of these companies that are on that track to just consolidate, because there's some companies working in spaces that would be totally complementary that if you go, okay, let me use something outside of medical device. We got a company that's making football cleats, and we've got another company that's making receiver gloves, and we've got another company that's doing visors, and we've got another company that's doing elbow pads. And if the four of them went together, you'd be one heck of an outfitter, and you could compete with the big dogs. But the four of them independently are going to just completely struggle because it's— there's no same-store sales. Everything you've got to get, there's no catalog. You're a one-trick pony. So I That's a very interesting point. And it— but it's wild to me how some of those companies can start by raising so much money off of a single product, even if they— even if they portray it as a platform. Everything is portrayed as a platform, and rarely, rarely are they. So it's a fascinating time in the market to see how that's shaken out.

I think—

I'm speaking on this on Tuesday. I, I need you there with me. Should have called you a long time ago because we just—

I'll be in Boise Tuesday, otherwise—

first acquisition.

And that's where I think that you can be short-sighted with what the market needs now, because by the time that that transaction's done, it's commodity. You— it cannot be commodity. It has to be what does 10 years look like, and can— have you met achievable milestones to get to that 10-year, um, that 10-year. And you can sell earlier than that 10-year, but if you get too short-sighted in this provides revenue now, it can— there's no differentiator a lot of times. So I think there's a balance between the two. I'm so sorry, I have to pop off. I have an investor meeting, but it was good to see you.

Hopefully it's a real investor.

Good luck.

Tell Nigerian Prince hello, right?

Bye, gentlemen.

Thank you.

Bye, good luck.

Yeah, I wrote an article about how it's too easy to start a spine company and it's too hard to grow a spine company. All you need is 2 or 3 hospitals. Yeah, hey doc, I'll design your favorite cage and you use it. And you get to $5 million in sales and you think you've made it and then you just hit, they hit the wall and nothing happens. The challenge with your football analogy is you gotta stay in the same, sales pattern though. You got to do sports medicine for sure. Yeah, sure, joints or trauma or biologics.

We got to be able to appeal ideally to the same people that are going to be selling it, distributors or reps. You got to be able to appeal to the same customer base that has relations with those people, trauma docs or hand docs or neuro docs or whatever it is. And then you need to at least have something about your technology that directionally tells the same story. Like, you wouldn't want to have probably a biologic for the feet, for a foot that's combined with a prosthesis for a below-knee amputation. Like, those are— they're close enough, but they're not in the same realm to where it makes sense. But, you know, there are— I was just talking to an old buddy of mine today who started his own thing. He's actually got a product commercialized, and I'm trying to, trying to figure out how to guide him towards, like, I want to introduce you to a couple people that should be strategic early on right now, targets for you, instead of going too far into raising money and trying to scale this one product company because it's— we— I've seen it before. You're gonna— your life's gonna be better if you can find something earlier in that process. And I think there would be interested suitors out there. So, um, yeah, yeah, I may write an article about that.

That's— biologics is a classic because there's a million cats and dogs. There's 100 biologics companies with their own little graft or something. None of them can get distribution. Yeah, that's really, that's fascinating. That's it. So I know Maloney's not here today, but he was, we, we talked about, can you do an ASC-only startup? And I think you can. It has to be disposable kits. It has to be something that's really easy to use, doesn't need a lot of training. Very little rep service, if any. And Maloney's actually working with a European company right now, and they're doing it. They're doing the ASC-only customer play. So that'll be interesting.

Tiger, I just finished up the business plan with him on that.

Oh, cool.

So we probably got another one time of vetting it. And then we're going to be presenting it to— we're going to do it for a couple of companies.

Excellent, man. I love that. I love that strategy because your cash flow works out. You don't, you know, you don't need a lot of— you don't need a lot of employees. You don't need a lot of inventory. You have no instrument trays. I love that. I love that business model.

It's hard not to imagine a lot of foot and ankle going that direction, not going that direction. It's kind of made for it. You know, there's not a lot of risk of you having big interventions like in some total joints. So I see a lot of foot and ankle stuff going that way. I suspect Patrick is thinking a lot about that for field.

Yeah, he's trying to, Patrick's trying to get in, but he can't, for some reason can't get in. I sent him the link again. Can you, can you hear us, Patrick?

Can you hear— can you hear me?

Yes, hear you.

We can hear you.

I was just, uh, thanks. I don't know why I, I said a couple things, but I'm like, okay, they're not hearing me.

So now we can hear you. Yeah, awesome. Yeah, so your stuff— your stuff is kitted, right?

Yeah, yeah, I think, um, To the point of the ASC, I think a lot of organizations are specifically thinking about how to kit out their, their products for, you know, ASC-specific procedures. So yeah, we— I thought it was a good idea to have an ASC-specific company, but it gets challenging though, right? Because you're like, where do you start? Which indications? You know, hand, foot, ankle— like, I mean, goes on and on, right? So yeah, but we're definitely thinking about this every day.

Well, and some implant sets are really hard to think about that. And we've even got examples of failures of trying to like Flower that tried to do their single, you know, individually packed screws and plates was an interesting idea, but just was an absolute inventory nightmare. And they even made these cube customizable things. It was really, really hard. And that's the most kind of simple, benign legacy commodity type of product with plates and screws. So that can be really hard with some. There's others where companies are starting to do this disposable bunion jigs and a couple of screws and a couple of wires and something like that. You could picture kind of kitted up because there's not, you don't need to offer the whole screw size range. Trauma applications, I think, are gonna be really hard.

Yeah, there's an ongoing debate around distal radius, right? So you've got, what you got to do, a couple companies have, you know, they have a procedure kit, but it hasn't really taken off as I thought it could in the AC setting. So I'm not sure why.

Yeah, yeah, Treece did it successfully for a while before everybody started taking their market share. Osseo's, Osseo's, everything Osseo does is kitted. They're, they're a little bit of, they have a challenge right now cuz they're trying to sell to foot and ankle and sports and they're dealing with the two sales channel issue. Hmm. Yeah, it's gotta be, you just gotta start way back at the beginning with the product design. It's gotta be just dog simple.

Yeah, retroactively making something a kit, consider that darn near impossible.

Yeah.

Yeah.

And so the best you see companies doing, like shoulder innovations, is doing this big push like they can do a, you know, a one-tray shoulder. I'm not sure it's totally accurate, but that's their, you know, their— there are marketing gimmicks that are coming out when you haven't designed it from that, from scratch with that, because it's too hard to retroactively make it work.

The challenge with that, at least in the hand, I have found the challenge at times is while the kitting of a procedure kit makes sense. The reimbursement unfortunately doesn't mirror that. So you, you— yeah, you, these— some— yeah, so that, that's definitely something that we're looking at before we make a decision on let's do procedural kit. Does it warrant—

so two things I've seen on that, Patrick, sorry if I interrupted you. Two things to think about that. One is if you're going to do a single kit you're guaranteed to lose and you're, you're diluting your profit margin because your instruments are now something that you eat the cost of every time because they're getting thrown away. And if they're included in an implant kit, then you're going to only get money for the implants. However, there are ways to gimmick that. Two things to think about: one is to make sure you always have two kits. There's your disposable instrument kit and there's your implant kit. And what usually happens is the Salesforce distributors, what they're usually able to work out is either I'm going to give you a 40% discount on the implant and I'm going to give you a 40% discount on the procedure pack, but you're paying for both, or I'm going to give you the instrument procedure pack for free but you're paying full list price for the implants. And by using those two different strategies, most of the time if you separate implants versus instruments, you can, you can drive up a selling price that is of value to keep profit margins there. The other trick, and I'm in the process of working this gimmick a little bit right now on my own project, is if you put some ancillary implants into your standard procedure pack, right? So like an end cap or a special screw or some sort of other button that you might not always use, but an implant goes in the procedure pack. You might throw it away sometimes, but it's not a huge cost to eat that every time. Sometimes that means you can demand a higher cost for your procedure pack because an implant is included in there as well. It all feels very gimmicky,, but that's part of the game sometimes. So stuff to think about.

How, how do you think about— it's, it's a, a conversation we're having with Gripplasty at the moment. So we're— so we got a single procedure kit where everything is included, and then now we're splitting that. So basically implant and instrument separately, right? Um, and we, we, we still trying to debate how do we position that in the market, right? So we've got So here's some of the question marks, right? So we have surgeons that love our single-use procedural pack where both instruments and implants are in one single sterile pack and they use it for all their cost-plus, right? So they're commercial patients and they get, we get a very high price on that because they're ultimately, yeah, that's the one, they're ultimately getting 20% on top of what we're charging them. But then we, you know, that's maybe 3 out of their 10 patients. The rest are the Medicare patients, and then we can't do anything there because we can't use the same product and price it differently in the same, within the same health network, right? So that's why we kind of said, okay, let's split the pack and start having a better price discrimination, um, and maybe we can, we can cover the, some of the Medicare, um, patients as well where the volume is higher, right? But I'm not I'm not sure. I'm just not sure. And then again, it varies from bloody state to state as well, and health network to health network, and some are national, some are local. So it gets quite complex. Not sure what your thoughts there are, Kyle.

Well, if you're interested in my thoughts, I'm happy to share. When I look at this, I think a couple of things. This is made for exactly what I was describing, splitting it up. And it sounds like you're already thinking about that. There's a couple of advantages that come with that. One is you probably are able to not— you might even be more efficient because you break out all those metal pieces. They might even go into a thermoform tray. It's super easy to design. You probably can do an adoption for an existing tray validation, so you're not spending a ton of money there. And you can hit them with gamma because it's all metal pieces. And so your sterile validation pathway is just easier, cheaper. Everything is just not a huge mountain to climb. The other thing I would suggest you consider doing is upon special request, you offer a reusable sterilizable instrument tray that those tools can get dropped into after they're used one time. And so you, if you have like a Medicare-only account, they're going to get the procedure pack that is the implant that has to be ethylene oxide because you got sutures and stuff in there, and then they're going to get a tray, and then one time they're going to get the instrument procedure pack. And they're going to open that up. They won't be able to charge, but then they drop them into a tray. That way you're not eating the cost every time. They just reuse those sharps until they go dull. Um, that ends up creating like these three different tier things, but maneuvering around that and getting an associated commission is what salespeople are doing all the time. So if you kind of— you build it and then, you know, you give the offering and you probably don't let your distributors decide that they're going to offer all three. You probably have to segment the market a little bit and hopefully have a marketing team that can help you with that. But you could— I think you could really optimize your cost basis and your spend. And then the way that the field is able to maneuver that, I think you could do all things.

Okay, interesting.

I'm just writing this down. Thanks. Thanks for that.

Some good ideas.

And I suggest those things because I've done it multiple times.

We did a procedure pack.

Actually, it was the first time. I think it was the first time it ever happened in large joints where we had a cutting tool procedure pack. Wires, drills, reamers historically all dropped into the tray because they were pretty expensive. We were able to harmonize the design and make it fairly cheap. We thought, okay, we're going to probably have to eat the cost of this. We made this own, you know, its own a PO pack for the instruments. And within the first year, DePew had sold $1 million worth of just those instruments, 'cause they were charging for it every time. And the field, 'cause they were getting a 10% commission every time they sold it, there was an incentive for them to do it. The sales pitch for the hospital was, "You use a new saw blade, a new scalpel every procedure, why wouldn't you use a fresh reamer every time?" So there's a strategy that has worked here in the past.

Great, great comments. Hey, hey, Mark, you made it!

Hey, Tiger, sorry I almost missed it. I was on the phone with some political friends and they're kind of long talkers, go down the rabbit hole.

Oh yeah, I was worried your back was, was too painful to get on.

Oh, so sorry I missed it. Uh, okay, I'll catch the, um, the recording on the down— on the downside.

Well, we talked 10 minutes about the ASC-only strategy. And really?

Yeah, yeah, you got all the credit.

Yeah, that was Dennis's idea. I stole it from him, actually. I feel— I think we all came up— you know, it's a funny thing. I've always had a philosophy: when you get a good idea there's 100 other people that have the same idea at the same moment. 3 of you write it down and only one person does anything. A year, then a year or two later, the other 98, 9 say, damn, I thought of that, should have, I should have done that. Oh, funny. Well, we'll see. Hopefully we get a chance to try it, right, Dennis?

That's right.

I told him we just wrapped up, we probably got another One more version to go and we're ready to get, get rolling.

Oh good, I've got a hand up from Daniel Jacobson. Can you, uh, hear us, Daniel? You're on mute. I can unmute you, I think.

While you're sorting this out, Tiger— oh, sorry, you go first. I'll ask my question later.

No, you go ahead.

I was just, you know, one topic, Tiger, would be quite interesting, um, is the, the, the grant, uh, landscape in, in the US, non-diluted funding. I, I find it a maze, uh, in the US. I don't even know where to start and what to Google and what not to Google. And, and it's, yeah, be interesting Interesting to understand that. I don't know if you have any—

we did that connections. We did that about 2 years ago. We talked about federal grants and state grants, but we need to do it again. Yeah, that's a good topic, Patrick.

I've been doing a deep dive on that very recently, and I, I can't say that I'm an expert in it, but I've learned a whole lot, and I have some potential contacts for you to maybe, uh, speed up the process. Um, September 5th is the next deadline.

September 5th. Okay.

Yeah. And then it'll be every 3 months to the day after that. So NIH SBIR funding round submission deadline starts September 5th, and that's actually the first one since last September because they went on a dead space for about 7 months because of something lapsed with the government and they had to get it rebooted. So September 5th and then January 5th, and there's a lot of money to be had. There's some nuance to it, but there are some firms that specialize in helping you with that. And if you want, I'll be happy to— I know on that.

Yeah, Alyssa got state money from Missouri.

I mean, a lot of people have gotten state money and sometimes state money, they'll match what the federal government does too.

Yeah, we definitely— because we have a couple after last week's call, by the way, thanks for all the input. We're definitely going to make some strategic decisions and it'd be good to get some additional funds in that are non-dilutive. So if that's something that is available, because we're— as well, Field was an Australian incorporated company, but part of our funding, we did a flip-up and we're now a US-based company. So that's why we probably qualify better for these grains. So, yeah.

And you're in a good state too, Texas, for that.

And there are certain rules about how many employees you have versus how much that are in the US versus how much business and manufacturing in the US. You have to navigate those. Have you filed taxes as a US corporation yet?

The CFO question, I believe not yet. Probably the first one.

That might be a pacing item for you. They like to use that as a— if you haven't filed your first tax return yet, that usually is a way to keep everybody from jumping into the system before they're ready.

That'll be the first one because we incorporated in February. So, so no. So we would have— so that's coming up in, you know, in whatever, 7, 8 months.

Right.

So are you—

if you want, you might be able to make your fiscal year ending 10 days ago on June 30th and put that year behind you.

Yeah, that's interesting. Yeah, grants is free money with no strings attached, but you know, it's non-dilutive like Patrick said. It's just, it's just not, it's not big checks usually, it's just little things.

Well, Phase 1 you can get up to $300 grand, Phase 2 can be up to $2.2 million. Uh, the hardest part that I've heard about it is that you have to have extremely diligent auditing. So if you got a CTO that can put good time focus on it, that's helpful. Depending on what project you're thinking of, you might be able to jump right to a Phase 2. And there's— but there's money to be had.

Okay, that's good.

Thanks.

And if you want, Patrick, we can— yeah, we can jump on a call and I can give you a rundown.

Another one, Patrick, is we had a group on about a year ago that helped, held everybody's hand on R&D tax credits. So you, you, you can get it. Yeah, it helps if you're profitable and you're paying taxes, but, um, you— it's real easy to get an R&D tax credit. Um, just—

I was just, I was just on the phone with the firm that specializes in that today, like an hour ago. So if you're making money, that's, uh, it's a good route. If you're not making money, you largely can just use it to offset your corporate payroll taxes, which is not nothing. I mean, it might be 8, you know, was it 7.65% that your company has to match with that, that, you know, if you got a decent payroll. That one's super easy. The thing to watch out for is I think the firms that help you with that, they want usually like 12%, I'm sorry, 25% of whatever funds they get you cleared for. And it's a forward-moving credit based on retroactive spend.

Interesting. So I'm gonna put, I'm gonna drop the, uh, I'm gonna in the chat, I'm gonna drop the, uh, the, the Bone Chat where we talked about it. Here's, it was Bone Chat number 26. Wow. Long time ago. Because this is 134. So that was many, many moons ago.

So, um, I don't know if Mr. Jacobson is Norwegian, but I am certainly a big fan of the Norwegian team. I'll be rooting for them Saturday against the Bulldogs. Everybody loves on the internet Mr. Haaland, Erling Haaland. He's hilarious. He's great.

He's great. My answer for you is Berman, we're out.

Okay. There you go. So, you know, the only— that's the only jersey I own is German.

Is there time for a quick question?

Yeah, no, go ahead, Dr. Jacobson.

Yeah.

Hey Tiger, I've been listening in. I've been stuck in traffic in Chicago and I was listening in, but I wasn't participating. But now Traffic is so slow that I can comfortably talk. Um, I, I guess, uh, next week I'm meeting with a company on my, um, improvements in surgical suction. So for those who don't know, um, and why would you, uh, I, I'm a retired physician and inventor. Um, I came up with two improvements in surgical suction that are safer, um, to the tissues, especially with, you know, high negative pressure sharper suction tips, especially in neurosurgery, but also for other— and also I have a quieter suction, so the suction doesn't make as much noise. So I have a meeting next week with a company. Where could I get help on, you know, structuring a licensing deal if they're specifically interested? I don't want to kind of throw out a lowball offer. I don't want to suggest to them, you know, that I'd rather be the co-founder of a startup and, and make, you know, a lot of money. Do you have any advice on, on that? Anybody?

I just dropped, uh, Dr. Jacobson's patents in the chat. So he's got a bunch of instrument patents and, um, and he's getting the runaround from the big ortho, obviously. Yeah, so that's— I forgot how he came to me, but somebody brought him to me. What would— what advice would you give him? You know, disparate, disparate patents on bone and on instrumentation, that's— but without any working prototypes yet.

Oh, thank you.

I have working prototypes for everything.

Oh, okay, that's good.

Yeah. So I have a bone cleaning tool. It's basically a drill bit that cleans all the soft tissue off a bone. I have a patent on that, and I did have a lowball offer on that one from, from industry. But the meeting next week is my 3 improvements in suction. So I have working prototypes, several generations, iterations of prototypes, and I also have Patent pending, public.

Hmm. Well, bone chatters, what would you do?

It's not— that's probably not gonna be an orthopedic company that's a target, right? Isn't that gonna be something in consumables? Place like, uh, Medline, Becton Dickinson, others that are in hospital equipment stuff.

So this is kind of a Can I say something? Yeah, I was gonna, yeah, the, this is kind of a not common, but this is a notably well-heard story. I know several physicians that are good inventors that have for one reason or the other retired. Once you stop doing surgery, your, your shelf life with the big ortho kind of withers away quick. Uh, they're, they're very often quick to make a deal just to get your business or your group's business or your practice's business or get your influences at KOL, right? Uh, once that happens, you, uh, you have to simply work 10 times as hard and get the message out to 10 times. If you have a good idea, there's going to be somebody somewhere that needs it. It's just gonna be a lot more challenging. And I wouldn't worry, I wouldn't waste my time talking to big ortho, the cartel. It's gonna be a smaller company and maybe an entrepreneur.

Okay. Yeah, I, I, I never really had that pull 'cause I, I assisted in surgery for over 35 years. So I never was the KOL. I never was the one who decided on what instrument to use or implant.

Got it. Okay.

Well, next week I might be contacting you, Tiger, to say, well, you know, if there is an offer or severe interest, you know, what might you do?

What's the question?

So I'm meeting with a company next week. It's a small company, a small privately held company owned by a family. For the suction devices, the pre-suction improvement. And I just, I feel prepared going into pitch and, you know, how valuable this is and how important it is, but I don't feel comfortable negotiating a licensing deal if they thought that that was a thing to do.

So, well, yeah, can I make a suggestion here? Yeah, uh, first of all, I, I applaud you for all your efforts to improve, uh, the surgical specialty in, in numerous ways. Uh, definitely take the meeting and, you know, sell the product. And, and I would just ask them, you know, what are the options that they see and lay them out. So option A is a licensing deal, option B is they buy the product and pay royalties. You know, I wouldn't go in assuming anything until you got to that point, right? And then find out what the options are. And then when it comes to— if let's say that— let's say you want to focus on a licensing deal, you know, you bring back— I mean, I've done multiple licensing deals. I don't want to say I'm an expert or anything like that, but definitely you bring— you get— that's when you get the expertise to come in and help you, you know, determine the, like, you know, what, what type of licensing deal you might want to do, if you want to do one, right? Because you gotta, you gotta lay out the pluses and minuses of the licensing deal. Uh, you might want to do it just because you want to fund the rest of the tech you're doing, or maybe part of your licensing deal is that they're going to be— they're going to have a first right of refusal on launching your other products, if it's a good enough licensing deal. So that kind of gives you a pathway, and you don't have to be constantly out trying to raise money for new things. So I, I would take the meeting and then look at, you know, look at the options as to what— how they see them. Because, you know, selling it and getting a royalty deal is not, not a horrible thing either, depending on what you get.

I, I think right now that would, that would be my preference. I didn't retire from the operating room to become the founder of a startup.

Yeah, right. The one thing I would do if I was in your shoes, Dr. Jacobson, and I'm pretty tied up next week, but I can help you do this. I would look at the landscape of the companies that would really be aligned to doing something like this.

Okay.

Okay. And I mean, I can help you do that. I know a company that has been doing work in this same area, but they're a very small company, okay? And I took them to the anesthesia world because a lot of suction is in anesthesia and things of that nature. It's just a different market right now. Their technology is very good one, uh, they wanted to deal with a bigger company. And I didn't think they were going to get it because they didn't have enough proof of concept. But I mean, like, there's a perfect example. Maybe I could marry those guys and you guys could do some type of a deal, right? So you just gotta— you gotta get with people who are immersed in the world that you feel has the best opportunity to develop your product line or maximize it. What's a good— I agree, it's not— it's not orthopedics. It's probably going to be— and if it's suction, it's probably going to be some type of anesthesia, uh, you know, could be CRNAs, it could be companies that are in that field. Um, I, I think Avanos is probably not going to be interested in something like this, but you never know. They just made an acquisition.

So what company was that?

Avanos. I would put up—

I would like—

what I would do is I would do a whole I would do a whole company landscape and look at what their product lines are and say, okay, you know what, my product fits in in these 3 companies. And then what we do is we go— there's a lot of good BD, business development, people on the street right now that work in these companies and know all the back channels. Okay, so I don't know if this helped you or not.

It does. I mean, I've kind of already done that. The improvements are in surgical suction basically for spine and neurosurgery. It's a safety issue. It's not, you know, like suctioning out somebody's oral pharynx or, you know, their endotracheal tube or something like that. And then one of them is the suction is just quieter. You know, the operating room is a noisy place and I've come up with a solution for— the noise of a, uh, Fraser-type sucker, which are used in a lot of orthopedics, especially spine and neurosurgical procedures.

Well, don't forget, I can absolutely help you in the spine world.

Don't forget about the dental opportunity for something like that.

Yes, yes. Um, we all have had that noisy thing under our tongue, uh, pulling at our mucosa.

So yeah, I agree with that.

Yeah.

Can I, can I give you two things to note here. First is just don't assume— like, you made a comment that I think is a valid concern, like, you didn't retire to then be the founder of a company. You don't have to necessarily look at that as an all-or-nothing thing. There are ways in which you potentially could have a company that has started that you have the ownership or majority equity, but someone else is doing all the work. So you're kind of a background founder. Like, so don't I wouldn't necessarily throw that out just because it's not something that you think necessarily that you would want to spearhead. I get the hesitation there, but there's options for you. The other thing to think about is maybe they're interested in licensing, and maybe you can get a royalty. Um, two things to never forget with that is the amount of money they're willing to pay up front is going to be way less than you want, and the time before you get a royalty check is going to be way longer than you expect, and technically that could never come. Because they have no guarantee. Now maybe you can make a deal where if they haven't launched it after 3 years, they're paying you, you know, $100,000 a year or something that's a penalty or whatever.

Good luck.

You're not going to probably be in a great leverage point for that. And most companies are really, really bad about walking into deals in that way. But maybe you have a technology that is that convincing and compelling that you can get it. But a couple things to keep in mind.

Those are great points.

Thank you very much.

Yeah, Eric.

Yeah, Kyle was hitting on, I think, somewhat what I was thinking about. Because you're talking about selling IP, let's, let's say, you know, I have a Class 2 device, really cool idea. You know, I can, I can get a patent on it. Do I go out trying to sell that device then, or do I go ahead and get the $510K first?

What's—

when's the best time to sell that idea?

It depends on my capabilities, probably, of the person or the company. Yeah, I like Dennis's idea where you find somebody that you're going to have to build it, you know, they're going to have to build thousands, tens of thousands of these things. They're going to have to have manufacturing capabilities, injection molding, suppliers. Those are the people that are gonna— that can— right in their wheelhouse where they can build it. They can already tell you what their margin's going to be by looking at it. Uh, those are the— those are your best, best partners, right?

Well, I think that's part of the question. I mean, how much— how much do you do? Do you— do you go ahead and figure out the whole manufacturing process? Do you get regulatory approval? Do you do all that work for them up front such that it's in a, you know, in a bow, or do you sell the IP?

I think you sell the IP because I, it sounds like the regulatory path is pretty simple for this case.

Yeah, I'm thinking, you know, more in general for something that I might do.

Oh, okay.

That's why I said, let's say Class 2 device of some sort.

Yeah, it's always— every case is different. It's so hard. Well, we, we've gone over, but we can keep talking. We could probably talk another hour.

Yeah, yeah. So Eric, I think there's not a simple answer to what your question was that is an extension of what Dr. Jacobsen was asking about, but the more steps you can take towards commercialization before it can enter the system of any size company of scale is going to have some value to it because they all know that they're terrible at it. And they don't have to be super big to realize that everything is slow and that they've built their own layers of red tape. Everybody knows, like, they know it shouldn't take 3 years to release a line extension on something, but it does. So the more you can do that outside of their system, it's potentially doesn't just add— it may not necessarily add like, you know, big multiples, but it makes you more attractive because now there's less risk associated with it.

Great, great.

Yeah, that, that was, uh, was getting at. Thanks.

Thank you. Yeah, good luck.

Good luck.

All right, thanks everybody.

Been a good open session. See you guys.

Good talking to you guys.