BoneChat #23 - Oligo Medic bringing a new cartilage repair technology, to the US market.

Uh, yeah, so we're, we're live with Sam Salmone, um, and Sam's the CEO of Oligomedic. It's a startup that's cartilage defect repair. The product's called JointWrap outside the US. They've got a ton of clinical experience. It works. And, uh, I'm gonna actually hand the mic over to Mark Maloney to give a proper introduction.

Oh, well, thank you very much. Uh, so Sam, uh, who has a PhD, and most of his work was in this particular field, and the company is in Montreal. It was, uh, founded by his father and pretty well self-funded for a lot of years. They have over 10,000 cases worldwide. And the original name of the, of the product was called Car Gel, and I believe the IP— and I'll let Sam talk about that— was sold to Smith Nephew. I think also on board today we have Dennis McLaughlin, who is also on the board with me. And we wanted to take the opportunity today to have Sam tell the story. As we're raising money for the clinical trial to eventually bring the product into the United States. And so I would ask you guys to be as critical as you can and offer whatever advice or constructive or you have after the presentation. So Sam, the floor is yours.

Excellent. Thank you so much. So let's get into the slides. So this is the team already partially introduced by Mark Maloney. I believe we also have Matthias Schorhoff, who's my clinical advisor and working closely with me on our trial and our regulatory approach with the FDA. So thanks, Matthias, for joining.

My apologies. My apologies to Matthias for missing that. Sorry.

No problem. Yeah, so as was said, we're focusing on cartilage repair. That's what our commercial product is doing. We do have a number of other projects in the company. We may not talk as much about that today, but we're very excited about those as well. So, okay, before I start explaining anything, I just want to be clear kind of what we're talking about. When we talk about grade 3, grade 4 cartilage damage and so on, there's sometimes confusion what we mean. I just want to emphasize it's really different when we're talking about cartilage lesions, grade 3, grade 4, we're talking about isolated cartilage damage, like damage specifically of the cartilage. Whereas on the other hand, there's the osteoarthritis spectrum, which is really a degenerative disease. And it's not just the cartilage, it's the underlying bone and deformity, creation of osteophytes. So typically if you're on the osteoarthritis spectrum, you're probably not a very good cartilage repair candidate. So just wanted to kind of clarify that. Um, so what are we trying to do? We're trying to restore cartilage like it was brand new. Um, of course, if we don't do anything, we all know what happens. Uh, progression to osteoarthritis is pretty well established. But the good news is it is possible to get a treatment that reproduces something that looks like cartilage and can have longevity as much as 15 years. And that's really what we want. We want to be good to go and not have to come back. Now, uh, 15-year studies are, uh, few and far between, but I just wanted to pull one up to illustrate the point. Uh, this is an incredible study that had basically 98% follow-up at 15 years. I don't know how, uh, that was achieved. Uh, it's very remarkable. But basically, this was comparing ACI, autologous chondrocytes. I'll explain a little bit what that is. But it's an approach that reproduces something that looks like cartilage and microfracture, which is one of the first-line approaches. And the bottom line is 50 of the 80 patients had not gone back to surgery after 15 years. So not perfect, but clearly something we can improve upon and what we ideally would like to achieve. So just to survey the spectrum of options that we have, like I mentioned, microfracture is, again, a first-line approach that is relatively straightforward. So basically, what we do with this cartilage pothole is we create access to the bone marrow channels. That's where you get stem cells with regenerative potential. And you regrow something that can function as cartilage even though it's not quite identical. There are a variety of transplant options which I don't believe are the ultimate solution for a number of obvious reasons. There are kind of localized partial knee replacement, you could call them, so partial prosthesis. And there's actually a lot of activity in this space, several companies making iterative products. But I just like to, you know, dismiss them as those are permanent implants. They're metal in your body. They're, you know, trying to make hybrid materials that are softer, maybe better adapted, but still, It's bridge burning. So if you have a shot at taking a biological approach to restore actual cartilage, I think in every case you should try that first. Then the last one is a more advanced cellular therapy approach, which is actually extracting live chondrocytes from remaining tissue, sending them to the lab, expanding them, and then implanting them in a second surgery. And that's when you can start healing. In fact, this is probably considered the state of the art in the US, but— and also it's a product that made $160 million in revenue last year. But in terms of adoption, it's actually quite limited. It only translates into about 3,000 or 4,000 cases because the price is enormous. It's about $50,000 ASP. So obviously a lot of potential to do better there.

Sam, Sam, I would, I would say one thing on your continuum of care. Yeah. With, there are some buttons now that are out there where, and they don't really burn much of a bridge. So they would kind of go in between the mosaicplasty and the partial knee replacement.

Right. So synthetic button.

Synthetic button. Yeah.

And it may be a bit aggressive in dismissing everything as bridge burning, but I kind of, yeah. Just in the replacement category.

Yeah, you should probably add that just for to be complete.

Yeah, good point. Um, and then the last bit on this slide, um, is just kind of, uh, an idea of the procedure volumes, and it's really, uh, meant to show the total addressable market more than really trends in, in practice. That's not so much, uh, what I want to show here. I know the Data is a little bit not recent, so that's not the point. The point is 80,000 microfractures per year, that's your patient pool. Whether the practice has shifted towards or away from microfracture is not so much the argument. Okay, so let's go a little bit for why we think and believe our solution works. And then we'll go into who's using it and what's it been looking like in terms of adoption. So the first reason we know it works is because it's an iteration on a first version of the product that Mark mentioned in the very beginning, developed by my father's first company starting in 1995. So lots of work has gone into this, a full state-of-the-art randomized clinical trial with 80 patients has demonstrated robust outcomes, which we'll go briefly over. And the way it works is basically it's an adjunct to the microfracture procedure. It's a scaffold that covers the clot that's created by the microfracture and just keeps those marrow elements in place and protects them from in the early stages of healing. Now, great outcomes, uh, was bought by Smith Nephew, but it was, uh, a little bit of a slow product. It took about 15 minutes to prepare and another 15 minutes, uh, to wait, uh, for it to set. It was pretty liquid, had to be mixed with a patient's blood, uh, so, and that's exactly the design that philosophy that came into the JointRev formulation is streamlining all of that and making a breeze. So just quickly, the outcomes. What are you looking for? You're looking to repair the cartilage. So in terms of filling the cartilage defect, having the product on top of the microfracture or not makes a night and day difference. We'll just look quickly at the, let's say, the proportion of the patients that got at least 80% filling. With the product, that's 95%, whereas without the product, it was not even 80% of the patients that got at least 80% fill. And in terms of what it's, actually filled with. So it's compared on MRI, the signal is compared to healthy cartilage as a reference. And you can see that the group with the product was basically twice as close to the healthy reference as without the product. And actually almost half the patients in the study subjected to voluntary biopsy and the organization of the collagen structure was also analyzed and showed superiority with the product CarGel. Now what's Joint Prep? Again, it's basically streamlining all of this product, very similar materials and so on, but what you want to focus on is prep time, 1 minute instead of 10 to 15, Gelling time, it's, it's a snap of finger, really, uh, 3 to 5 minutes, you're ready to close, as opposed to again 10 to 15 minutes or more. No need to mix with peripheral blood, doesn't require a horizontal surface because it's viscous enough to kind of, uh, be applied in any configuration. And we're leveraging the Level 1 evidence that, uh, the first product was able to generate. So just quickly in action, this is what it looks like. So here microfracture was done already and the fluid was removed from the scope. So now JointWrap is being applied. You see the position is basically vertical. It's against the wall, but it doesn't drip. It doesn't need anything to stick. And yeah, once the surgeon's done applying, uh, just waits a, a couple minutes, uh, for good measure, and ready to close. Um, so I would say that's, uh, probably the best part of it. And on the other side, um, just kind of what's happening, uh, pretty simple. Uh, you get, uh, the bone marrow elements that are released into the lesion site and kept there by the gel. Um, so here are a couple cases, uh, uh, with follow-up. Uh, so this is a patient in New Zealand, young patient, uh, decently sized lesion. And you can see on MRI that, uh, before the case, there was pretty sizable here, white patch, which is a cartilage defect, and also some whitish tint in subchondral bone, which means that there's a problem. And all that is gone at 9 months, and the cartilage tissue is completely filled. Now, an even more complex case, this one from Poland. A very large lesion, 3 by 3 centimeters, uh, 58-year-old, which is also, uh, on the upper end of, uh, these typical eligibility pools. And, uh, also it was a concomitant realignment, a high tibial osteotomy. And again, at 6 months, surgeons were very satisfied of the aspect and of the feel of the the filling tissue. So this product has been used in more than 10,000 cases in many countries around the world. Currently done $1.3 million Canadian in revenue last year with very good gross margins. Yeah, small comments about the competition. We'll say more later, but yeah, basically several distributors are moving from other types of scaffolds, which are membranes, which are much more difficult to apply surgically. It requires gluing, cutting to shape, or suturing, lots of work. So we're displacing a lot of previous players there. And just mentioning also, that I'm talking a lot about the knee, but there is an even more differentiated potential, so to speak, in other joints just because, for example, arthroscopy in the hip is that much more difficult. The space is that much tighter. So having a product that's really easy to get in there is even more of an advantage. So yeah, we're approved in Canada, Australia, New Zealand, many countries in Southeast Asia, Latin America, Israel, and Russia. So basically all over the place and launching in a couple others this year.

Yeah, Sam, why not Europe? I noticed there's not.

Okay, let's get to that.

Yeah.

So let's go to the arc of the company and kind of gives purpose to the project. So basically, as Marc said, this company was bootstrapped. It was launched in the EU with basically no data. It was approved just on a few compassion cases done in Canada. And yet, despite that, it had a pretty good adoption until it had to be withdrawn from the market because at the time of renewal of our CE certificate, under the previous Europe regulations. Well, that was exactly the time of the transition to the new MDR, medical device regulation. And they basically said, sorry, you're out of time to complete the, the exam, you have to start over under MDR. And then just to add insult to injury, after that, they said, well, we're gonna push back the deadline, but only for actively CE-marked devices. Thank you. So that's what happened. But takes us to the next phase. We launched in Australia. So with a little more data that was generated in Europe, and we see kind of the progression with more data, more adoption. So full reimbursement under launch and flying right off the shelves, 1,000 cases a year. And so just a quick comment, per capita, that's 10,000 cases in the US. So what I mean here is product market fit. And again, so what happens when it flies off the shelf, they start taking a closer look at reimbursements, and they decided that the little data we had generated in Europe wasn't quite enough for the realities of their budget. Which takes us to, uh, the next phase, uh, of the company. We, um, got a, again, state-of-the-art, uh, trial going as a post-market study, but it's intended to be a regulatory registration study for, uh, all the markets that we're not in. Um, yeah, so we're targeting 158 patients recruiting in Australia and Canada, very strategic countries to do research in, very generous subsidies, very, yeah, functional research establishments. And in parallel, we're engaging with the FDA to be sure that we get alignment, that we're in the right direction, that eventually they can confirm the study protocol. We actually got breakthrough device designation in December, been mostly with Matthias on this, and now we're in a sprint discussion to get initially high-level agreement and then to the meet. So we're targeting 2028 to get to the US market, but we're seeing a lot of value creation building in the meantime. First of all, the reason it's 2028 is because we know FDA wants to see 2-year follow-up data, which is a lot, but that's what it is. But we do definitely plan a readout at 1 year. I think a lot of the value is created then, so that's about 2026. So I do think you first of all get the opportunity to leverage that data for other markets like Europe or anywhere else. And second of all, it's certainly predictive of the outcome. So I think at that point you can also become an acquisition target. And I know public markets are what they are these days, but I do think once the trial is clarified with FDA and recruiting at pace, it does become possible to at least look, see if there's an IPO window.

So, well, thanks to— so we've got a big group here with a lot of experience. So what's your— where's your pain, Sam? What can we help you with?

Oh, well, we'll get to the money part. That's, that's certainly what I'm focused on. Uh, okay, so I had quick words on competition. Um, so basically the, the top of the table is other scaffolds basically kind of acting in a similar way. That's our international competition, and we're doing very well against them. So I only included those, uh, that have expressed intentions to file with the FDA here. Um, Agility is an interesting one. Uh, we'll go come back to it. I'll just say quickly, so there are allograft products that kind of are applied the same way, um, but they're on a different regulatory pathway. They don't require clinical data for approval, so, uh, typically they don't have that much. Um, and then there's, uh, Macy, the autologous chondrocytes which like I said, are making a lot of money. So the reason Agility is interesting is because it's the most recent transaction in the space. And for those who have been following, they remember the bit of a story with Bioventus announcing an acquisition for $315 million upfront, but then seemingly not able to finance the acquisition., and then a year later it was bought definitively by Smith Nephew for $180 million upfront. And I'll just skip here to the money part quickly because I want to make the comments. So just note the exit mark here of $180 million. We're raising at the valuation of $16, so that's 10x potential for that scenario. Yeah, and again, Macy, That's the VeriSales product. Like I said, they made $160 million last year with a very high sales price, and that's giving them a market cap of $2.5 billion. So that's 100x from where we are today. Yeah, so we have a pretty straightforward cap table since the company's been bootstrapped, only common shares, and we're raising only common shares. So everybody's on the same footing, no veto, no preferred, no nothing. We have a round open for up to 3. We are seeing a need for at least half a million in the near term to kind of go to the next phase of accelerating the trial and $3 million is really the worst-case planning that Tiger has been vehemently recommending in view of possible scenarios with FDA. So for example, we're budgeting for an additional GLP large animal study, which we don't know that FDA will require, but is in the realm of possibilities. So yeah, $3 million is our fully funded roadmap with leeway. And I do model just conservative growth for the sales internationally. I think there's potential for really a lot more. I'm not taking into account any qualitative impacts around data readout or any new major markets. So yeah, that's JointRep. Maybe I can pause here. I'll just, uh, uh, go back to the beginning and mention that we do have other products in development, but, uh, I don't want to be speaking all afternoon, so maybe I'll, I'll stop here, maybe start the discussion and see where we take it.

Yeah, go, go back to the FDA timeline slide, uh, 19. Yeah, that's a good place to stop. I'm sure there's People's heads are turning so far away.

That's a challenge.

Yeah. How far would the $3 million get you, Sam? And into, uh, all the way. All the way.

Wow.

That's incredible. It seems light.

It is.

How many, how many patients? How many patients is that?

It's 150, 158. And so it's light for several reasons, several good reasons. So first of all, the cost of running a trial in Canada and Australia is half or a third of doing it in the US. First of all. Second of all, you can stack up to about 50% in tax credits on top of that. Third of all, we have a very efficient team. Many are part-time. Um, yeah, and, uh, and we're making revenue, uh, which, uh, subsidizes a large part of it. So that paints the picture.

What— are there things you can do to, like, you know, 2 or 3x your revenue outside the US during the study?

Yeah, we're working hard on that. We're having different plans for each market. So the one we're going big on in this year is Canada, actually. We have untapped large regions. We're organizing a lunch session at the Canadian Orthopedics Conference with 4 speakers, one of which is basically the top, toppest KOL in Canada, Ivan Wong. Um, um, yeah, Latin America, we have basically one master distributor that's extremely active. Uh, they're super engaged in organizing events upon dinners upon webinars and, uh, firing on all cylinders. Uh, there are new regions that we're launching, um, like the Gulf countries. Um, we're just going through the, the paperwork, the, the bureaucracy, and, uh It's just about to go through. So that's a really interesting one as well. In Asia, we have a number of good countries. We're working with the distributors to kind of identify KOLs, support them at their local conferences and all that. And really, I just want to go back to the theme that this is what drives adoption. Is more publication. We see this over here, start with no data, a little more data, a little more adoption. And to me, that's how it snowballs.

Got it. Mauricio is the first one to raise his hand. Can we hear you, Mauricio? He froze. Mauricio, can you hear us? All right, we'll come back. I see my old friend Emanuele. He's an expert in knees and clinical studies, so I'm dying to hear Emanuele's first thoughts.

Ciao, Mike. First of all, hi to everyone. I'm curious, so it is my understanding you would like to use the Canadian Australian study to file for the FDA review and approval. I'm, I'm really curious to understand because it might not be necessarily a risk factor with the FDA, but it might be down the road with reimbursement having a study with no US patients and the patient population is definitely different than than Australians, maybe not as much as with Canadians. But that's definitely a risk. And this, this is what, as an example, CartiHeal is impacting now going to market because they only had 50 patients in their IDE study that were from the US. And how flexible is the study design in case the FDA may come back to you with specific requests that would require a redesign of the study?

Mhm. Appreciate the question. Um, so let's see, in which order? Um, so in terms of, um, well, first of all, in terms of precedent, uh, for example, the Macy study, uh, which like I showed, uh, is making a lot of money, uh, and fully reimbursed, uh, was entirely run in Europe. So yeah, but that's just a reference point. In terms of the FDA, I don't really expect a very high chance that they require US sites. Everything in the language so far has been open to it. We're obviously just about to confirm that very clearly. But yeah, again, in terms of precedent, this is not unprecedented. You asked also about— yeah, can you help me? What am I missing?

The flexibility of the study design in case the FDA might come back with specific questions on, you know, sample size, endpoints, et cetera, et cetera.

Right.

Yeah.

The endpoints is really what we anticipate a possible pushback, and since, um, it— we're collecting everything at least as a secondary. So, uh, in terms of data collection, I, I'm pretty confident we have everything we need. We haven't done any interim analysis so far, so, uh, revising anything about the study hypothesis still doesn't invalidate any of the statistics. So really that's kind of the range we're playing in.

Good.

Yeah, good questions. Tom is up next.

Hey, Sam, congratulations. It sounds like you're making great progress. I'm in that same business. We approach it differently. We focus on the bone. So that's where we work our way from the bone up to the cartilage. So I have a number of questions. Does your product, does it integrate with the surrounding native cartilage?

Yes, and that's the beauty of it. In fact, that's one of the parameters of the MRI score in the secondary, the MoCard score. Looks at integration. And really, especially compared to the membrane scaffolds, this is a liquid. It really matches naturally the shape of the underlying lesions, as you can see visually here. So I think that that's really a strong component of it. I've even heard surgeons kind of adapting the clinical practice to that. There's a bit of schools of thought in microfracture in terms of how much of the lesion do you— right away, did you, you know, create a pool basically, or do you preserve as much of the tissue as possible? And so basically I've heard, yeah, surgeons, uh, develop the reflection that, hey, since we can basically like have a liquid espouse the perfect shape of the lesion, maybe we can keep more there. And still get good results. So yeah. I'm sorry. Yeah.

Does that fibrocartilage, does it overgrow over the top of your implant, your graft?

We haven't seen too much of that. And we haven't seen any of that really in that study here with the quantitative MRI.

And I only have a couple more. Who scoring is a key part of what we do. So for pain relief, right? Does that— are you, are you looking at that? Is that any, anything you're looking at or?

Yep.

We are collecting that as a secondary. Okay. And just because if you actually look at the microfracture literature, There are studies where COUS is good and others where it's not so good. So we just thought it would be more predictive. And also kind of it's the scientific hypothesis is really, you know, mechanically it's keeping more of the clot and leading to better repair tissue. But certainly we're looking at COUS as a secondary.

Sounds great.

Thank you.

Thank you for the—

Yeah, Dave Saunders up next.

Yeah, um, did you mention that you have a pre-sub meeting with the FDA already scheduled?

Uh, it's ongoing. That's great.

Oh, it is ongoing. Okay, so, so they are okay with you, uh, having a— your study data being from outside the US?

As far as I can tell, um, we'll get that on paper, black and white, uh, yeah. Every indication is in that direction.

Okay.

The only reason I ask is the winds change at the FDA and, you know, 10 years ago it was super easy. In fact, I worked with multiple surgical robots that were actually doing all of their initial study data outside the US. And then all of a sudden the door slammed and they were required, every single one of them was required to actually conduct a US-based subject study. And because there's nothing in the statute that actually says one way or the other. So it's kind of a weird political situation with the FDA. It's just the winds kind of change.

Yeah.

So that's good.

Good, good, good.

Yeah. Did you mention what is the current, at least for the US market, what does the current reimbursement structure look like? Do you have a CPT code for this?

No. So in fact, that's something I could have mentioned earlier about reimbursements. There's actually a program run by CDRH to basically introduce you for early payer feedback, and we just had our first call for that last week. So we're going to start to engage soon. I don't believe there is a CPT code that matches a scaffold, really. That being said, the international competition I mentioned, our— at least Yellow Fest has completed its enrollment, so it'll complete in the next 2 years. So it's very possible that they would create a code for a scaffold.

Okay. And then lastly, and if I missed this, I apologize. Is this a 510 or a de novo?

So far we've been talking about de novo. Again, that'll probably be confirmed when we finish the sprint discussion.

Okay, good stuff. Mauricio is up next.

Hey Sam, congratulations. Your model and your product looks very interesting, and this is something that You know, it's nice to see that it's starting to have better and better outcomes and better and better performance over time. I have a question. You were mentioning Latin America. Which country specifically in Latin America?

We're most active in Chile, Ecuador, Peru, Panama, and we launched in Mexico this year, so that's growing very fast. We had events in Tijuana and Mexicali hosted by our distributor and with Dr. Vargas, who's based in Miami, doing the webinars and case presentations. So 50 surgeons at a dinner, very active over there.

If you need anything in Colombia, reach out.

I think we might. My distributor is working very hard, but that's one of the countries he's been struggling more with, uh, but he tells you. Cool, thank you.

So I, I like, uh, Manuel's, uh, question, Dave. I think you need flexibility in your study design. I mean, because the winds, the winds will change. Um, yeah, Dave's nodding. The winds always change. Um, and Everything the FDA tell you, nothing is binding. So they just give guidance and then they are allowed to change their minds. Emanuele's been down that road a few times. So you may, you may need more than $3 million. And the code, I mean, we've talked about CPT codes. You really can't start too early, you know, fighting for your codes. And it's, it's not cheap either.

Right. If I can jump in too, one issue that you have with a de novo versus a 510 is 510s have statutory requirements for how quickly the FDA has to respond, and de novos do not. And so the most critical thing, and I'll tell you, this is true for my most recent FDA clearance, I sure wish I had an extra million dollars in the bank during the quiet period of Ardenovo because we entered substantive review. And then basically the way it works is, and this is kind of strange, but from the time you enter substantive review, you have about a— you have, well, you have 120 days. And at the end of 120 days, hopefully you have received either a yes or a no. From the FDA. Hopefully it's a yes. If you go to a day 121, the way the incentive structure works for the FDA reviewers to get paid, basically they're— they don't have as much of an incentive to respond to you quickly. So once you're at day 121, the responses get slower from the FDA. And so you need to make sure that you have enough cash in the bank to have that runway to make sure that you can definitely go past 120 days if you have to. But then the other issue is during that 120 days, they could come back to you and say, you know, it'd be really great if you could do a 6-person study and show us this. And that literally happened to me, and you don't get an extension. So you'll have to, in that, in that window, you may have to actually come up with additional study data, go back and do some quick little, little test or something like that. And you'll want to make sure that you have the cash on hand to mobilize all your forces and get that done before that 100-day 120-day cutoff, because that is, that's a really critical milestone. And you want to make sure that you can, you can get everything done, because if they do come to you with additional requests, you don't get extra time to do the additional requests. You have to do it all within their timeframe, which is just, it's a little weird because they don't have an obligation to get information back to you in a timely fashion. But you definitely have to get everything done within that 120-day window. Or you just kind of fall off the cliff.

Yeah, appreciate the comments. I guess that's— I'm fortunate to be having revenue, so at least at that point the study is over. We don't need to fund anything, so we just need to kind of keep going. I understand. I don't know if you remember by heart. Well, so first of all, was your device Breakthrough also, or No, actually, breakthrough increases the amount of pressure because so far it makes things a lot faster in terms of the sprint discussions and everything. And that's, that's basically the main reason we went for that. But I don't remember by heart the impact on the submission timeline.

Yeah, yeah. Breakthrough status. And this is stuff that was explained to, to by my regulatory attorneys. Breakthrough status definitely gets you a nice little bit of rocket fuel in the beginning. But once you're in substantive review for de novo, you don't really get a lot of special treatment, even from having the breakthrough status. At least that's what was explained to me by our attorneys.

Okay, good stuff. All right, Dr. David Kaye.

Yeah. Hi.

Nice.

Yeah. Nice presentation. I guess I'll flip the camera on here. Nice presentation. I do have a few comments, a few questions. Maybe go back to the last slide and then we'll hit on this one. So, you know, the, the one that showed all the different products. I guess I can speak as somebody who's actually used these products. De novo is a real issue. It's pediatric cartilage. So that basically means, kids who've passed away and then their joints are harvested. So you feel a little ghoulish when you use it. And it's also very limited. I'll schedule a case and it may not be available. So that's a problem. Biocartilage is part of the Arthrex machine. And of course, you know, they inundate every OR, particularly ASCs, and will tell you how wonderful biocartilage is. MACI tends to be very cost prohibitive, and that's one of the big issues. Now, if you go to your next slide with CAR-TIVA, I know a lot of data on that one, so don't get too excited about it. They effectively manipulated the FDA. This was published by Greg Guyton, who did an exhaustive review of CAR-TIVA and its approval process, including freedom of information.. And I talked to the person who actually made the decision at Wright to buy it, and he told me it was much a defensive maneuver, and they knew that they were in diligence with Stryker. So it was, is really kind of an unusual purchase and all. And what I can tell you is it's not being used very much anymore. There are just too many problems. Now onto problems. Oftentimes OCDs, cartilage lesions, also will have a bone cyst associated with it. And one of the things that I'm not sure you've answered is how are you managing the bone cyst? Are you recommending bone graft filler or what, what are you using to fill in that void? Oftentimes you'll crack into, do the microfracture and crack, there's, there's the bone cyst and that bone cyst needs to be cleaned out. And some of those bone cysts can actually be quite large on a volume basis. So I'll, I'll step back and unfortunately I am going to need to take off. Maybe after, right after your answer.

Thanks.

Thanks.

Yeah, we do have these discussions around any number of sandwich techniques. My understanding is there's not a clear kind of clinical guidance for that. So yeah, we basically discuss it as much as possible with our surgeons. I don't know, Matthias, if you have something to, to comment here.

Yeah, it's definitely a challenging environment when you encounter those because like Dr. Kaye just said, you have to clean those out, potentially make them even bigger. And, you know, the joint rep device is not a bone filler. So we definitely need something to, you know, reconstruct the base and then just join grip on top. There's limited or very limited, you know, case presentation or case experiences. So we are just at the beginning of this to explore this further.

So, so one other thing I will add in, one of my partners in my ventures is Ned Amendola. So Ned's gonna be coming in as AAOS president, but he also is past AOSM president. And if probably about 7, 8 years ago for arthrosurface, he was looking at the talus in particular. So on the knee, you pretty much have a flat surface. It has a bit of a curve to it. However, in the ankle, it's more along a shoulder, which is a 90-degree angle. And Arthur Servus is looking at metallic replacements and he found that if it was off by a quarter millimeter from a perfect fit, it actually changed joint mechanics. And of course, we're all going, we can't do it. But in the lab, that's what he was saying. So precision of fit, especially when you're dealing with defects, is just incredibly important for proper joint mechanics. So thanks. But, and Ned's a great guy, by the way. He's also Canadian.

He is a great guy.

I've worked with him during my years of Arthrosurface. I actually worked extensively in the tailors with Nick Van Dyke on that. And so we had a lot of, you know, experience with that in Europe and tried to get it into the US, but there was a, also very difficult.

Sam, does the joint wrap surface conform to the other joint?

Yeah, so one thing maybe I didn't emphasize, so it doesn't turn into a rigid, like a hard material. It's hard enough to maintain its own, but it's not intended, first of all, as a load-bearing implant. And second of all, if the other side is imposing the surface, then it'll just comply, basically.

So that's good. So self-conforms. That's kind of good. I think Ted's next.

Yeah. Thanks, Tiger. Hey, Sam. Good to see you. Great presentation. I'm cheering for you. I want you guys to be successful and I'm You know, from an investor perspective, you know, being in this field myself with another company doing this, but through an IDE protocol is number one. I'm hoping that the FDA does agree with you and approves kind of your existing protocol as close as possible and allows that OUS data, as Emanuele and Dave had pointed out, you know, don't count on it.— and do you know you're going to raise— need to raise a lot more money if they don't? You know, that's where I see that— I see 3 risks. One is the ability to be successful in getting aligned with FDA on that. And then, you know, secondly, you know, the assumption that you can get through on a de novo versus an IDE PMA, which is going to make your timeline go, you know, longer and make it more expensive. I mean, it's just, it's 2-year, you're counting on 2-year anyway, follow up with your existing study. But I think reimbursement is a really important thing if you're thinking about an exit and who's going to buy your company. You know, they're going to want to look at the U.S. market and how are we going to get in, not count on riding the coattails of another company. And that process, as you probably already know, requires getting quite a number of studies in place, peer-reviewed articles in place, and you got to start that earlier rather than later. And the power of US key opinion leaders, you know, for Stryker, for J&J, for Zimmer, for others, that they like to, you know, have that kind of confidence that that's in place for them to make a decision. So that's probably from my input from an investor risk standpoint is, you know, getting the FDA, the assumptions of the FDA accepting your existing protocol and data without too many changes. Secondly, allowing you to do it under a de novo. And thirdly, the whole reimbursement thing of not proactively kind of having that in place. But I think reimbursement to me keeps coming back around as such an important factor. So raising your round maybe higher, going out to— great thing that you've already got revenue going, but maybe your current supporters, whether it's distributors internationally and others that want you to succeed, you know, bump that round up a couple more million and start some US activity would be my advice.

Thanks for the comments, uh, and I, I'll actually pick up specifically on the reimbursement, uh, and the perspective you brought on seeking an acquisition and so on. Um, I don't actually know the reimbursement status for Cartihil at GDC, which was obviously, uh, very successfully acquired. Um, so I thought maybe this is a good opportunity to turn into the group if anybody kind of knows What's the situation there?

I can speak to that. There's no CPT code for CartiHeal. They've started the process. It was actually started by Bioventus when Bioventus was hoping to acquire, and then we had to back out. So right now Smith Nephew is kind of stuck with the initial strategy of obtaining a specific CPT code, so it's going to take time. And even if you end up— it's going to take an additional study in the US.

Interesting that this is happening post-acquisition.

What do you mean by that?

Well, that Smith Nephew went ahead with the acquisition before establishing the reimbursement study.

That is, well, well, the— there are different potentially— I'm not a reimbursement expert, but there's other options to, you know, to access the, the reimbursement pathway. They're now kind of stuck with what Bioventus initially did, but at the same time, that doesn't prevent them from starting cases because the cost of that procedure is very, very reasonable compared to MACI. We're talking 10x down compared to Macey. And so they can, most of these patients can afford cash pay actually.

Interesting. And would you agree with my assessment? This is one square that I had to speculate a little bit. So I said 2 to 3.

I would stay more to 2 than 3. Okay. Because the cost of COGS for that implant is Very, very small.

Yep, interesting.

Thank you. Um, yeah, so as you can tell, I was trying to, um, evoke a lower risk, uh, profile, uh, from an exit perspective, uh, just comparing to the reimbursement situation over there. Obviously, we are engaging as soon as possible. As I mentioned, we had our first call for that process last weekend.

I do have a quick question regarding the fact that kind of came to mind when you mentioned it's not a rigid implant and it's not, you also mentioned it's not a load-bearing construct, I would say. So how does the rehab process look like? How long it is? How long does it take for the patient to be functional with their joint?

Yeah, so we take a rather conservative approach. We think we have enough advantages that we don't need to push every direction to the max. So there's a standard rehab protocol for microfracture, which actually depends a lot on the location and the size of the lesion and what forces it's exposed to. In the trial, we're actually measuring the time of getting back to weight-bearing, getting back to activities, as opposed to prescribing it. So this can potentially also turn into very useful information for reimbursement, for example.

But do you expect 6 weeks, 6 months, 8 months?

Yeah, similar to microfractures, 6 to 8 weeks. And then gradually returning to activities.

Okay. I think Dave's up next.

Yeah, I was just going to say, like, even if you don't have a CPT code, I mean, some of the big F50s that I've worked with, they're— what they're more interested in is knowing what the financial model looks like. So even comparing it to, like, this is what joint repair would look like for the total cost, right? They're looking for that kind of scale of expenditure to repair the knee or the shoulder, whatever it is. And then how do you fit into that? Is it lower cost? Is it slightly higher cost, but you spend less time in the OR? Revision time is substantially less than the implant, right? So there's a lot of those factors that you can then slide around and say, you know, look, we're gonna cost, you know, $10 more than a TKI, you know, arthroscopic implant for the knee. I'm just throwing this out here. But it's gonna spend, we're gonna take, you know, 30 minutes less time in the OR to implement this solution. Well, that right there is an economic factor that you can then attach real numbers to. And that's what these folks are going to be looking like. Johnson Johnson, you know, they look at timelines in terms of like 5 to 7 years. So they're not, you know, the thought that we don't have a CPT code, but, you know, 4 years of post-clearance observation is going to, you give us the data we need to get a CPT code from the payers, that sort of thing. That's just, that's standard operating procedure for them. They don't really care about that. So it's, as long as you've got a financial model that makes sense, um, that's really going to be the thing that's going to sell this into VCs as well as your strategic. CPT code, it's great to have. Everybody's going to ask it. Um, all VCs ask about the CPT code because it's like It's the question that they can remember. Not ripping on any VCs if they're on this call, but, you know, they're gonna ask the simple question first. And if you just pivot from no, but this is what the financial model looks like, that's really the answer that they're looking for. So that's fine as long as you can figure that part out.

Yeah, and I think that's a beautiful place to end it. So I'll mention for the first generation product, there is a pharmacoeconomic study out there and it's basically based around treatment survival. So, and they showed that cost savings after so many years. And our top KOL, Canadian Ivan Wong, that I mentioned, has mentioned to us that So he's used the product in the hip a lot. And so it turns out Smith Nephew has removed the product Cargel from the market, couldn't compete with JointRep. But so he told us that he's sitting on data going out to 5 years, 10 years comparing the difference in survival and unbelievable. So we actually are pretty excited to see that. See that and make that argument.

Well, this has been excellent. If there's been a solid hour, if there's no additional comments or questions, we can end it here. Anybody else?

I want to say, I'd like to say thanks and for this very, very knowledgeable and expert group listening. To the story and we're trying to figure out a way to sharpen the story. And I think what I'm hearing is raise more money and watch out for the FDA.

So, yep. And work on those CPT codes early.

Yep.

And get 'em work on reimbursement. And I've also, in my crappy introduction, I neglected to mention that Matthias is also a physician. And we're very fortunate to have him on the board. Thanks a lot.

Thanks a lot, Tiger. Thanks everybody. This has been great.

Thanks, everybody.

Bye, Sam.

Thank you.

Thanks, Dennis.

See y'all later. Thank you.

Bye.

See you guys next week.