BoneChat #32 - ALM Ortho, Saving Limbs, Enhancing Lives - Paul DeJuliis & Brian McLaughlin

Here we go. We're live with Paul de Julius and Brian McLaughlin. They're on the cutting edge of additive manufacturing, particularly limb restoration, and then sort of the brand new field of, uh, bone-anchored osteointegrative implants for amputees. So I'm handing the mic over to Paul and Brian. Take it away.

All right, very good. Good afternoon, everyone. Thank you. I'm— I am Paul de Julius, along with Brian McLaughlin. We're the co-founders of ALM Ortho. Just a brief intro here. We are in the middle of raising funds in our Series A round. So the deck that I'm going to use is geared in large measure to financial investors. I'm going to avoid those slides and stay focused on the business, the business model, and the technology and product. What you'll receive from my end is about a 30,000-foot view of things. As we open up to questions and dive deeper, Brian will step in and address the more in-depth aspects of the technology, et cetera. But basically, to give a brief 1-minute or 1.5-minute overview for ALM, ALM at this point, premier institutions around the US have begun to realize or recognize ALM truly is a leading innovator in limb restoration technology. You know, we have a platform, we have our design software, we have machine learning production capability, electronic beam melting, additive manufacturing. And from that platform, we've been able to produce product solutions that are affirmably raising the standard of care and pushing the limits of what's possible in limb restoration. We do have a product line that is patent pending— excuse me, is patented, is first to market, and is uniquely positioned in a market segment of critical need and little competition. We do have a strong moat around the differentiating technology in that product line. We have a circumstance where leading institutions are both our collaborators and our customers. So we are a post-revenue company in the early stage. We have an excellent team of experts, uh, on the management, uh, group, in the management group, and we are backed by leading experts with international renown in the area of limb reconstruction. So we've put together a pretty compelling platform to go forward. The problem that we're addressing is that surgeons seeking solutions to complex issues, particularly in the areas of limb restoration, don't have access to the technologies needed to create those product solutions. ALM is in fact creating those product solutions. So in collaboration oftentimes with the surgeons themselves, we're creating the product solutions and obviously retaining the IP as part of our portfolio. At the present time, the product, the products of ALM are basically allocated across 3 distinct categories. The first one, which Tiger alluded to earlier, this is our main product line, this is our primary value driver, is our osseo integration, or we call it OI implant program. And the first product out of the proverbial blocks with that is our bone-anchored prosthesis, which we'll discuss in detail. It is targeted at the amputee, the limb amputee marketplace, and it is designed to, and has, as they stated already, affirmably raised the standard of care or the standard of outcome, post-surgical outcome with these patients. Again, we'll discuss that in, at greater length in a second. Our second category is our, what we call our custom products. These are patient-specific products, and the irony is this, in this particular grouping, we actually focus extensively on limb salvage, the prevention of amputation. The third group on the right, we're not going to talk about that here because this is in the embryonic stage. With Hospital Special Surgery, we are collaborating to develop a portfolio of products that address upper extremity restoration, but That's a 2025 undertaking of greater significance at that point. So returning to the previous two, the first one, as I said, the OI in bone, the bone-anchored prosthetic. You know, at the present time, we have commercialized both of these groups. They are commercialized via the custom device exemption pathway. We spent the time necessary to create the quality platform required by 2014 issuance by the FDA that allowed for custom device exemptions. The custom products, the patient-specific, that's exclusively via that pathway. The OI, the beauty of the custom device exemption, it allows us to commercialize on an accelerated basis while we move this along the FDA channels to clearance and broader market access. The interesting thing, and we'll talk a little bit more about how technology is making— is actually creating the market opportunities. At the present time, the combined footprint of those two groups based on what is perceived as the potential is about $6 billion a year split evenly between the two. So I'll take the next few minutes. This is, this is our lead product. This is the product that Tiger alluded to. This is the product that we're literally changing the market with respect to limb amputees. And again, I'm going to give you a few minutes of the overview. We'll come back to this in greater detail later. Where Brian can fill in the gaps in more technological sense. But in the images you see before you, the X-ray you see on the left, basically what you see there, you're seeing the standard of care that prevails in the US today with regard to limb amputation. And without elaborating on the various components, drawing your attention to the image on the right, you see standing in stark contrast, you see the impact of our bone-anchored prosthesis. The first thing you notice is that the femur is realigned between the hip and what now becomes the, what I call the prosthetic knee. Obviously the impact of this is the restoration of stability, normalization of stability. What you see is that the residual limb is removed from the sock-based prosthetic on the left. That removal reduces a lot of the abrasion and greatly diminishes the potential for infection. What you cannot see clearly from the x-ray, but what is the most significant aspect, the implant is designed in a way that allows bone to grow into it to create even greater stability. You're looking at the first generation here. In the second generation, there will be a porosity that allows the reconnection of muscle and tissue, the regrowth and the reactivation. And that's the area that has the surgeons in the community the most excited because of what that means with regards to the proprioception, the issue of proprioception, the space movement, et cetera, and the return of activation, what that means to the patient. Also, Brian will talk a little bit more when he jumps in on this about some changes we have coming up in the coupling that's gonna dramatically enhance the outcomes there as well. The— this product, the significance of this product can't be understated. At this point, we— it stands at that rare intersection where there is linkage between the possibilities of advanced technologies and the existing needs of a specific marketplace. The product has the potential to be so transformative, it will be a feature product in the upcoming International Limb Lengthening and Reconstruction Society meeting in Florida. Economically, on a per-unit basis, and I'm gonna flip just a little bit here because I'm gonna lead this into what this means from a market perspective. This product is going into the market at about $33,000 per implant. Our fully absorbed margins on this product are 87%. After considering commissions, etc., this will generate about $22,000 per implant in free cash flow.

So, Paul, are you talking about the, the OI stem, or are you talking about the entire prosthetic?

The entire— well, no, not the, not, not the prosthetic, the, the implant from the femur down through to where you see the coupling connecting it to the prosthetic.

Got it. So that alone is $33K. That, that, uh, inside the bone to outside the body stem is $33K.

That is accurate. Terrific. So here's, here's why this is such significance in the, in, uh, in evolving in terms of significance with regard to the, the surgical community that focuses on limb reconstruction. There are 185,000 limb amputations in the US alone each year. 53% of those are vascular, so there's little we can do about that, little that can be done about that. But the other 47%— 45% is trauma, 2% is cancer— that roughly 90,000 cases each year is the prospective market for this product. That excludes The 2 million existing limb amputees, they could also be differentiated and tiered and could also become potential users of this particular— patients for this particular product. We do not factor that into any of our projections. We focus only on new cases. So the product, as I said, it's at a unique— it's a unique intersection right now. It's the technology has made this possible. The need is significant. The market leading Dr. Rossbrook down at the Hospital of Special Surgery, we're talking what the leading limb reconstruction surgeon in the US is behind this product. So we're clearly at a point now, and this is part of what we can talk about later, clearly at a point now where we're going to begin amping up and we're gonna be in a position to have to address the wonderful problems of what happens when a company commences a rapid escalation of its product development, product sales. So that's where this product is. Again, we'll come back to it in greater detail later. I want to touch on this just briefly. This will be the second product that comes out of our OI program. This focuses on limb length inequality. This is right now is a patent-pending product. So we are not— this is not a broad-based push. We're doing this on a select custom basis right now while we continue to develop this and push this through the system. This will likely be an FDA initiative mid to late next year or so. But we do have other products in development. This is being produced in conjunction with the surgeon down at the Paley Institute in Florida. This product has aspects to it. Again, I'm not going to dive deep into it right now, but could make it significant in the— a significant transformation in the area of adolescent limb inequality. I mentioned the second category, the customs program, and how we focus on limb salvage with this particular program. Here again, to demonstrate what we have done, in the images you see before you on the left, basically what you're looking at on a non-technical basis is the failure of existing technologies when it comes to addressing the types of problems that this patient had with his left arm. The arm was scheduled for amputation. ALM was able to develop the enhanced solution you see on the right. Perfectly matched to the patient's anatomy with the ability of bone to grow into it to create incremental stability and functionality. Our implant, as a result of our implant, this patient's arm was saved, avoided amputation, and 2 years later he has a fully functioning left arm. So that's what we're able to do with the custom program, with the technology allows us to, to do with the patient-specific area. When we talk about markets, markets for something like this, it is difficult to define the potential. As I said earlier, some people say they go as high as $3 billion. The limiting factor in this market is surgeon education. Technology is making opportunities to salvage limbs like you see here available in a way that never existed before. So surgeon— as we continue to educate surgeons as to the capabilities of advanced technologies, this market will continue to grow perhaps well beyond even those numbers that the quote-unquote experts are suggesting the potential is at this point. So this is another area of where the technology platform that we're deploying is creating opportunities heretofore never seen before and never achieved before. And what we're able to push, as I said in my opening monologue, catalog the limits of what's available with limb salvage and restoration. Just a couple of more slides and then we can jump into questions. And obviously Brian and I have questions for you in areas that we'd like some insight on. This is a quick overview of the team without going into it in depth. It's a self, it's a self, you know, educating slide here as to who's doing what and what their capabilities are. A couple of key issues. And for this discussion, you know, Brian is the gentleman that introduced electronic beam melting additive manufacturing into the United States. He'll discuss in a bit the significance of that and how that's differentiating from any other technology out there, including laser. It is more advanced, it is more precise, it provides a broader range of capability, it is more efficient. It is, it is, but it is a leap ahead of anything else that's out there. And we deploy it at a level that is almost untouchable by anyone else who is using this technology. My bracket, my background is secondary to this particular discussion. It's primary to the discussion with financial investors because frankly, for the last 30 years I've been investing in and acquiring businesses and turning them around and positioning them for exit. And I've got a series of documentable successful exits on my resume. That's an important aspect to a financial investor. Uh, Jeff has 4 decades in the healthcare industry. He's a recognized expert in process and, uh, process and, uh, quality control. Steve Block's got 4,000, uh, design implant designs to his credit. Uh, Caroline Webster down at the bottom, who we just brought on recently, is a transformative type of individual, a PhD from North Carolina State University, PhD in biomedical engineering, and some background on electronic beam melting, which makes her a rarity in the marketplace. I'm gonna close with this slide. Earlier I noted that the leading institutions are both our collaborators and our customers. You're seeing a list of those institutions here. You know, many of the names jump out. They have an international claim. Hospital Special Surgery has become a major collaborator with us and a major customer. That aforementioned case you saw for the arm salvage, that was a Stanford University procedure. Duke, the Paley Institute is a collaborator with ours. Dr. Paley with his facilities on 4 separate continents has worked with us. Their group worked with us on that limb lengthening device. So we have been received, accepted, and have gained, as I said, a reputation among some of these leading institutions around the US. I mentioned again that the quality of our surgeon advisors, I'm just gonna pick 3 out of this rapidly. Doctors Paley, Rosbrook, and Quinnan are considered by anyone's assessment, if not in the top 5, then perhaps the top, you know, 7 to 10 limb reconstruction surgeons in the US. They are amongst our advisors and collaborators. So that's just a brief, I don't need to go any further than that. The rest of the slide deck is focused on the financial investment customer and what they're looking for. That's a brief overview of what we're doing.

That's good, good stuff. Yeah, let Brian jump into the technology and capabilities because eBeam is certainly different.

Yeah, Tiger, good to see you. Recognize some names and faces on here, so thanks for having us this afternoon. Yeah, we, you know, a little history here. You know, I've been in orthopedics for a long time. You know, some of you have known probably from the ORCA Design days. You know, Tiger, we've known each other for a time, known a lot of folks at HSS for a long time, etc. So a lot of these relationships are, you know, great to have and good to leverage along the way, right? Certainly become, you know, kind of that entrepreneurial spirit here leveraging additive manufacturing in our industry, right? So, so yeah, to the point of technology, I mean, I introduced really it was the third generation electron beam melting platform to the United States back in 2014. I worked for Arcam the Swedish-based company, right? And, you know, additive manufacturing, as we all probably on this panel are very aware, is impacting industry in various ways, right? You know, I think the way I like to describe what we're dealing with and what we're using, you know, Electron Beam Melting, where we have the latest and greatest, it's really now GE Additive, Arcam Q10, whatever you want to call it, it's the latest machine, right? We are, and it's installed operational and You know, my last company, we had the latest machines that got sold to a contract manufacturing company. My prior company before that, we used electron beam for a lot of foot and ankle implants that got acquired as well. But I think this point in time, it's pretty interesting that I think with some of these challenges that we have, I do think it's the right— it's the perfect mix of the market need and the right technology right now. You know, as far as design software, right, you know, between Caroline and myself, We've got that all figured out. These implants take us approximately 5 minutes to design at this point, you know, based on patient anatomy. Each one of these is patient-specific, which is nice. But it is really to me at this point, the perfect combination of the technology and the market need, right? That's what we have in front of us at the moment. You know, a lot of people talk about the scalability of, you know, customs and, you know, patient-specific applications. I mean, no one honestly in the market has really gotten there. I think, you know, Stryker is the only company probably in the United States, you know, in the world who has laid down any level of commitment to additive manufacturing in a way that is going to change the market. Nobody else is really even close, you know. And in fact, the Q-10 platform is actually designed by them with Arcam. It's kind of interesting. Not a lot of people know that. But, you know, that's the platform we're employing. We believe it's better. It is faster by an enormous amount. You know, we do know at the bone level the roughness provided by the EBM process is, you know, it's micro roughness. Obviously you're talking, you know, very small differences in certain technologies from that perspective, you know, but it's better for bone ingrowth. It's, you know, overall just, you know, again, I already said it's a faster process. We're able to do lots of customs at once, which is fantastic. But I think the really exciting part that you know, that we have some intellectual property around is really the soft tissue ingrowth, you know, innovation here. And that's been one of the challenges for the, the OI market, actually. So if you look at, you know, there aren't a lot of players in the market, is the, you know, the players that are in the market, they have some problems with infection. There's no question about that. Right. You know, and it's all around how the skin is open around the base of the implant. Right. How do you close the, The problem is how do you close the skin around these metal implants, right? So we actually have animal data and, and around that and we're, we're in the process of actually probably, probably doing some more studies, but we have data in hand showing, you know, 3D titanium, you know, lattice structures of a certain type at a certain pore size, you know, using a certain technology, close the skin, right? And that's very exciting.. And I think that's really where we're going with this. You know, we're, we're, we're easing into that. There's no doubt about it. But the sky's the limit with regards to really, I think what we're doing here with regards to that application, with regards to the right technology. And listen, for those of you who know me on this call, you know, you know, I'm a proponent for electron beam melting. You know, I have been for many years. But it's interesting when you have both technologies and you have them in your hands, we have it, you know, we've had EOS, you know, and we've operated that at the same time as right side by side with, with, you know, electron beam melting. I mean, it's, it's night and day at the end of the day, right? So, you know, that's, that's really where we're, we're coming from. You know, all our experience with electron beam, I'm actually, I think this marks 10 years for me with the EBM technology this year, August actually. So it's a small category. So when we say we're pretty far ahead of the competition, we're pretty far ahead of the competition with regards to technology within orthopedics.

So Brian, here, walk, walk us through. So a surgeon's got a salvage situation, you know, and okay, they, and they contact you guys and from that date to implant available is 14 days. Walk us through how, how you guys do that.

Yeah. And obviously Tiger, that's based on complexity.

That's an average.

Yeah. Yeah. That's an average. I mean, honestly, I'll, I'll give you a great example. Here's, here's one of the OI implants right here in my hands, right? So obviously got a complex lattice structure for bone ingrowth, right?

So, you know, Paul, take it off slide sharing so we can see this bigger.

Yeah.

Stop sharing somewhere.

Yeah, I'm—

Perfect. Nice, nice. So yeah, this device in itself, this is the OI implant, right? This is, this is really what we're dealing with. You've got this, it's a 3D printed stem. You know, this is obviously done some secondary machining on it and coating obviously just for, some, it's titanium nitride coating to harden up the surface, right? So this literally between Caroline and I with what we've done, you know, kind of established the programs, you know, once we have the patient data, right? Once we have DICOM data in place, I mean it's a day to segment, it's not even a day anymore to segment. It's very fast, various tools out there. So again, even that technology has come a long ways to make access, you know, patient data a lot more accessible, right? So that's practically overnight. These designs are done very quickly, right? Obviously you have to present it back to the surgeon. Where we tend to run into timing problems is communication with the surgeon, right? That's always been the challenge. But this is a, call it a 2-day print, right? Comes out of the machine in, in parallel. We actually print a fixture to hold it in for CNC machining, right? So we're parallel printing using plastic technology to hold onto the implant. This gets turned, machined, and then sends out for one more process for the coating and then ready for surgery, right? So that all happens in less than 2 weeks, right? That's—

so that's a great— is this— is the surgeon communication over an app or email or cloud thing?

Depends on the surgeon, to be honest. I mean, I think that's always the answer, right? We have some surgeons who, you know, I'll, I'll email, you know, Dr. Rosberg at, you know, Thursday night and he gets it back to me before Friday morning, right? I mean, you know, other surgeons, you give them the design proposals and, you know, you have to constantly remind them that we need a signature before we can move forward to manufacturing, right? So that's the variable that kind of drives you a little bit crazy. So we are obviously working on a platform to simplify communications with surgeons, right? We're in process with that. It's a platform where we've got all our design steps in place, but you actually have digital communication with the surgeon so he can pull up on his phone review the designs there and even approve it right there and then. Right. That's in process at the moment because that's what you would expect nowadays. But we're still in some cases, you know, still doing DocuSign, probably no cases at this point where people are actually physically signing anything any longer. Right. Which is good. Right.

But does this— does a surgeon see a prototype? Do they see a plastic model? Do they see a 3D image? What do they see?

Yeah, it's always a 3D image. Right. And obviously all the things that would be provided for the surgery. Right? That's part of your design proposal. When it comes to prototypes, it kind of depends, right? If we've done a similar enough case with that surgeon before, no need. If it's the first time for a surgeon to get them to a level of comfort, we are in many cases providing, you know, patient-specific plastic models that can be sterilized in the OR as well so they can be holding up the bone model and put the implant on it. You know, that's, that's pretty commonplace at this point. So, and you know, when and if we need to, you know, provide some guides and so on and so forth, we don't do that as often actually. With some of these surgeries, there's, you know, a guide's not necessarily gonna help. You know, it's, it's, it, a lot of these surgeons are freehanding a lot of this stuff, quite frankly, or it's already well-defined because of the scenario, right? So that, that's pretty interesting in itself. But we, we employ probably every 3D printing technology around that, right? From fixtures, from patient-specific models and poly that can be sterilized to obviously the most valuable aspect of that is the actual permanent implant that's left behind in the patient. And that's done via EBM.

Well, questions? Well, what's the regulatory window that you have to work within for an OSIO integrative and then also custom?

Yeah, that's a, that's a great question. So customs, you know, you have their, you know, the, the Customs Device Exemption document allows you to do a certain number for a certain indication on an annual basis, right? And you know, that's, you know, there's a little, I wouldn't say flexibility, it's just how it's described by the surgeon, right? And lots of these are just, they're just unique. Like that humerus that you saw, that where we saved the, you know, that's one of a kind anyways, right? And that's a lot of what we're dealing with, right? But in cases where we are doing some limb lengthening, you know, and we've got this, some IP around, you know, how we're doing that, You know, we'll pursue FDA when it's appropriate. Right now we haven't quite hit the number on those and there's enough variation with those right now where it's a non-issue. You know, as far as the bone-anchored implants, right, we are pursuing FDA regulatory pathways with that. And for that, it's not straightforward to, it's not a $510K as you would imagine.

Right. What did Intergram do? I mean, that's your only competition, right?

Yeah, so they're the only ones with an FDA approval and, you know, everybody on this call is familiar with the different pathways, right? So our pathway is, you know, custom. That's what we're doing right now. You have compassionate use if you have to go there. We don't necessarily— I mean, you— the nice part about that is we have the group, you know, the, the actually the biomedical engineering group at HSS. We're friends with them, and they said if you need a hand, we'll help you. So that's always nice, right? And then, but the, the real pathway is really the HUD/HDE pathway, right? So if you look at what Integrum did, yes, that's the pro— that's the path they pursued. In 2015, they got their first one and then they subsequently did a handful further and then eventually in 2020 got a, their PMA approval, right? So, and again, that was really for transfemoral, right? So it's really a single indication relative to, I mean, there's a lot of other amputations that go across the body. You tend to see a lot from these companies is what they can offer, but very little is offered in the United States, right? Some of that. So we are pursuing the HUD/HDE pathway and, you know, likely have— I mean, we're obviously well down the path on some of that at the moment. And, you know, using a lot of our excellent regulatory contacts throughout the years, right? You know, it's kind of bringing the network that we've developed over the years, right, to fruition and helping out along the way. So it's an exciting time for us because there are probably a number of A2D/HD, you know, opportunities with what we are doing, right? Because it is a differentiator. It's not the same thing. You know, we are targeting some, you know, the soft tissue is a huge part of that. But there are also— there's some early steps that we can do without necessarily integrating that as well, right? Because there are some open market opportunities, you know, at the moment. So yeah, it's a really interesting— and this is where I think, again, come back to my comment on the right technology and the right market opportunity right now. And that's where we sit. We do believe this is the right time with what we're doing.

Yep. So here, Mark Maloney's got a question, then Ted.

So, you partially answered it already, but what are you doing? What's your situation with the military and what are you doing internationally with other militaries?

So the VA, for instance, right, they prefer to only use FDA-cleared products or approved products, right? So that's one challenge there. We have spoken to the VA. We actually have done customs during, within the VA. But with regards to the osseointegration implant, we know that obviously the military, that's a huge need. We do know that. And I think so once we get through the HDE pathway, that should open up opportunities to work within that particular population, right? Internationally, I mean, we're, we're, we're great opportunity. Honestly, we're pretty focused on the US market at the moment. There's a lot of opportunity here and, and even working with the current surgeons at the moment and, and even prosthetists. In the past couple of days, we've actually had a number of calls with prosthetists because they're the ones really treating patients downstream. So there's a whole other aspect to this market. It's all the components that connect to this, right? You have to manufacture and provide those components. And a lot of those are bought and sold also post-surgery. So it's kind of interesting. But we have actually spoken to folks, for instance, you know, the war in the Ukraine, for instance, right? I mean, that's certainly— that's come across our desk a number of times. And there's quite a bit going on there. You know, they're trying to build out clinics and so on and so forth with, you know, treating, you know, a lot of the soldiers with, you know, limb amputations. So we've been in contact with folks. But, but it's really, we want to lock down here in the United States, and then I think the, the rest of the rest of opportunities will, should open up, uh, um, quite friendly, uh, uh, to us. Thank you.

Sure. Good question.

Go ahead, Ted.

Yeah. Hey guys, um, I may have missed it and you may have covered this. I had to take another call earlier, but reimbursement strategy for, you know, that 33,000 $1,000 average sales price, is that, you know, under a reimbursement scenario with Medicare and/or third-party payers?

Yeah, let me, I'll jump in on that one since I'm front and center on that with the facilities, etc. So basically, Ted, the hospital is our client. So we don't get a PO from the hospital unless they're certain they can be reimbursed. So before we commence the program with HSS for this OI and the $33,000 per unit, they had already made a determination that they in fact could basically collect on that on the other side. Now the way it works for us is collection is their issue. So basically the relationship with HSS, we, they, they issue the PO. We make the product, we deliver the product. There are terms attendant to that. And, you know, if the surgery takes place on time, that's great. If the surgery is delayed, the surgery is delayed. They still pay within the terms of the, of the PO and the invoice. And then the reimbursement is their issue. Now, again, they're not going to engage us until they're certain they can do that. But that's, that's basically how the relationship between us and the facility works.

Yep. Now, from an— just coming at it from an investor perspective, I'm gonna look, you know, look at the company and the opportunity based on, uh, you know, what is the scenario for the, the hospital, for your customer, you know.

If they get—

if they get blocked every time and they're, they're reliant upon private pay, you know, is that a limit limiter to, you know, your market opportunity? Unless there's some discussion with chief medical officers, you know, for these— this type of patient and a cost-benefit for what you're doing over what's being used today. I'd want to understand that a little bit more.

Yeah, and Ted, let me, again, I'll give you, I'll respond to that with some facts, but again, they're facts drawn from other sources because we haven't been deep enough into it to affirm these ourselves. There are studies out there, the AAOS and the, I think it's the American Academy of Foot and Ankle Surgeons, Do have studies out there that basically show the, the, the savings achieved by a limb salvage or a limb reconstruction in the context of what we're talking about versus the alternatives. And basically what they did was they studied the operative cost and the post-operative care cost over the assumed life of a population of patients, and they concluded that What we're doing and the products and the services we're providing have the ability— now, they didn't do it on our behalf, they did it generally with regard to what we do, uh, etc. But they're basically showing a prospective savings of up to 66% per patient when you employ what we provide versus the alternatives that are in the marketplace today. So that's the kind of information that's beginning to filter through the market. The reimbursement groups are beginning to grasp this. So it's, it's the numbers sound a bit staggering when you consider them on an implant by implant basis. $33,000 is an eye-opener. But when you consider the lifetime cost, post-operative care costs of our solution versus some of the other solutions, the savings are significant. So the $33,000 becomes an investment that's palpable. And as I said, HSS had no problem getting approved for that, that particular number for our implant.

Yeah, so you've got the data. I mean, that's terribly important, you know, to be able to have that, you know, and, and the scientific paper. Second question is a follow-on question, more from an investor perspective. Um, what does an exit return on the investment look like?

Okay, so basic transaction—

who's gonna, who's gonna, um, you know, buy the company and who targets and things like that?

Well, we, we've been approached by a number of companies that have expressed an interest in us once we, once we scale up. I mean, we've got it, we've got a lot of work to do to prove the efficacy of the product and and the desirability of the market to use the product, et cetera. We're making great strides towards that, but we have had 4 companies amongst the major companies in the industry that have approached us and expressed a level of interest. The thing, and I'll get more to the numbers in a second, the thing that's appealing to them is that even, and I'm not suggesting any names here because clearly I don't want to go off on tangents, but— Sure. Even if you take someone out of the Big Four, we all know the relative size of those entities. A brand new market that has the potential to be a $3+ billion market is still a significant opportunity. And because this is a unique new product, none of them have a product like this in their portfolios at this point. So the product itself and the size of the market are going to become attractive. We just have to continue to execute along, you know, with regard to proving that the market demand and the efficacy of the product is there, etc. Uh, the, you know, in terms of, in terms of the numbers, what we've calculated is wherever we exit along the curve over the next 5 years, clearly there'll be an accreting multiple that'll be realized. Uh, but at the present time, uh, as I stated earlier, we're in the middle of a raise. We say raise, it's not a large raise, uh, it's only a $3 million raise. We, we raised about $1.8 million in our seed round, and that was enough to really get us launched into this point. Um, given that raise, I don't know if you were on, Ted, when I talked about the, uh, the free cash flow on a per implant basis that we anticipate realizing from this.

22,000.

Yeah, yeah. So you take, you take the free cash flow on a per implant basis, you take what we expect to be a ramp in the market once we get our clearance, our HDE clearance that Brian was talking about earlier, you combine that, we really believe, and we've tested these numbers on a pretty conservative basis, that we're going to be on a run rate in 2026 approaching about 15 to 18 million. That's going to be big enough and we'll have done enough at that point to prove that the market is there, the acceptance of the market, you know, is there. There'll be some more regulatory hurdles to continue to increase market access. Et cetera, but they're relatively modest investments for a large entity. So we believe that's where we're going to get the re-engagement in the discussion. And, you know, that's not a, that's not a wet finger to the wind type of assessment. That's based on what those discussions were. What are you looking for? Where do we need to be, et cetera? So then once we get to that point, then we're just talking, what are the multiples at that point? There's no one on this, this call that I need to discuss multiples in this industry with. What they were. They've dropped a little bit in recent memory, you know, will they come back, et cetera? But they're healthy regardless. Sure. So, so, you know, you know, you take that multiple, you take the escalating revenue curve that we think we're gonna, uh, realize as we continue market penetration. And, you know, if, if I were to say that it's gonna be a, an ROI for an investor of 12 to 15, I'm not, I'm not saying anything stupid. I mean, it's just the numbers, no matter how you play with them. Continue to demonstrate that that's a relatively good, you know, estimate as to where we're going to be.

Very helpful, thank you.

You're welcome.

Seems to be that your two biggest opportunities are getting regulatory clearance, because then, you know, you get out of the customs game and it, you can, it just opens up the whole country.

Yes.

And then, and then the second thing is, um, building a, a way— so a surgeon in Sioux City, Iowa, you know, is doing a salvage case, how in the world are they going to think of you guys, you know, um, if they've never heard of you? It's just market reach. And how do you—

those are—

seems to be the two biggest hurdles right now. Not the technology, certainly not the clinical results, certainly.

Yeah.

And, you know, the, the, you know, Brian has already addressed the regulatory pathways. And, you know, we were— we, we had some in— I had some input today, at least I received, and maybe Brian's had it for, you know, but I got some input today, uh, from Caroline that's, you know, our level of confidence in our regulatory pathway and being successful is rising daily as our experts, you know, explore it more deeply and applying. So we're gaining confidence that we're going to achieve that regulatory clearance, you know, if not by year end, then shortly thereafter for the HDE. And there we get to your market access, which is a critical step. Here's an interesting thing to consider, Tiger, and to all, and, you know, again, anything I say, I'm always looking for feedback that makes me a little bit smarter in this particular area. The, the pool of surgeons for limb reconstruction is a much smaller, tighter pool than you experience in things like knees and hips and shoulders, etc. Uh, in fact, by some estimates, there's maybe 120 to 125 surgeons around the U.S. that specialize in limb reconstruction. So the process of educating those surgeons, not only as to our existence, but our product and what our product can do, et cetera, is a less mammoth undertaking than it is with regard to some of those other disciplines.

Really good point. Yeah, they all have a target on their back. That's a really good point. And there's not that many.

Right. And here again, we're not asking them to switch a product. I'm not saying try my knee versus this knee. I've got something brand new, a brand new solution, and here's the data and we've done this many cases and here's the outcomes. We can demonstrate that this product does what we says it— we say it will do, and we can demonstrate how the post-surgical outcomes for these patients are dramatically enhanced. So it's—

it's—

I'm not going to undersell it because it takes work, but it's not as overwhelming as it is to try to get a doc in Sioux City, Iowa to change from this knee to that knee.

Right, right. All right, let me— we've got 3 hands up, so let's go. Alessa, Jamie, and Chris.

So, uh, thank you, gentlemen. Um, I really think that this could be a market that has a lot of potential, uh, and I was literally involved in a shark attack where a woman lost her hand 2 weeks ago, so, uh, it was extraordinarily close to home. Um, my biggest concern is there are a lot of meta— it's the hardware isn't necessarily always— isn't necessarily the issue that needs to be solved. It's the vascularization, it's the infection control, it's the wound, it's the seepage, it's all of these factors that— and the immunocompromised patient that really need to be solved. How are you guys solving that? Because the implants are not usually the issue. Having been in a lot of these cases.

Yeah, good to see you.

Good to see you.

I got a— I got background going on. Yeah, so that's where the animal studies that we've done come in handy, right? We've seen revascularization for soft tissue around, you know, the— our lattice structures, right? And that's what some of the IP covers.

I mean, I know lattice structures. Inside and out.

Yeah, I know you do. Yeah.

There isn't— solve these type of catastrophic injury problems. And, and that's why we have our IP built around therapeutic delivery, because we know that there's, there's, there's a fundamental aspect that orthopedics is missing biomechanically. You can only address biomechanics with biomechanics. So I mean, you can get a, you can capture a small amount. I don't take that, I don't wanna minimize that, but when you're talking about muscle attachments, you're talking about the structures that are attached to the muscles and they typically, I mean, if are you putting like in a reverse total shoulder on the fracture stems, they have holes that you suture it. I'm assuming that's what you're doing.

For the— no, actually we aren't, not necessarily with suture holes per se, right? So it's actual muscle attachment into the lattice structure itself and ingrowth. And then for soft tissue and skin, we're seeing revascularization at the surface, right, with structures, right? So, so that's what we've shown. We've seen both, we've actually seen in both pigs, rabbits, and actually, interestingly enough, fish, right? That's a unique one in itself. We actually developed an anchor with the University of Maine locally that we used because they came to us, and this is actually just more of a conceptual idea of, hey, you know, we've got these fish tags, quite frankly, that they're plastic, they always create holes in the fish, and half the time they pull out, and we may be We lose 90% of them anyway, so we don't really get great data, but the data we get, blah, blah, blah. So we said, well, given some of this IP and this other work that we've done, have you ever thought about this? So we actually developed a fish anchor with a lattice structure. And when we did that, we actually saw it was roughly 85-90% growth of muscle through the soft tissue. Very interesting, right? And then, you know, we took it out and they segmented it for us, et cetera. They get to do a lot at university, right? So, for cheap, a lot cheaper than industry. So, you know, it's eye-opening stuff, you know, when we're really kind of dabbling in some other things that people have brought to us and, you know, we're collaborating with them on that does address some of the problems you just brought up, right? I'm not going to say that, you know, maybe a combination device wouldn't do better, right? There are hurdles with that as well, right? And I'm sure you know firsthand. So, I think we're trying to use, again, this is, you know, at the time, you know, right now we're, we're not, we haven't, we haven't started using that in the industry yet. We're still collecting more data around that. So we're really more doing traditional right now. So even with some of our existing products, I mean, you know, it's a, with our process, it's just a better fit right now with the patients, which, so it's a better fit. So they're, you know, on their feet a little bit faster, right? And I just was on a call with, with HSS this morning about, you know, a couple of patients and he was like, X-rays look better than I've ever seen, right? Which is fantastic. So that's, that's part of that internal bone ingrowth, which is great because no one else has that even. And as much as you would expect that in today's world, I would think, you know, it's just, it's classic TPS, you know, you know, blasé coding, you know, for, for those applications, which, but, you know, I, I think you bring up a good point. I think there's still opportunity within that marketplace, you know, and I would think it's more of a combination device and, and kind of what you're talking about, but, We have seen some pretty good animal data so far.

That's awesome. Congratulations, guys.

Thank you.

This is a market that is so deserving and it's so under-addressed and there's not enough funding and these people really suffer. And, and so I think it's a, a beautiful market to target.

Yeah. Yeah.

It's rewarding. It's super rewarding right now is what I will tell you. Like, it's, it's exciting to, to see the, the, You know, I mean, just the excitement of the surgeon and even the prosthetist, they're super excited. Just one, actually, to talk to someone in the United States who's doing this. Hurdle one, that was pretty easy, right? But as far as just customer service, you know, we're listening to them, we're getting them involved, right? Obviously, we're passionate about orthopedics. You know me, and I'm a little bit crazy that way, but, and the technology, right? So it's, you know, it's just kind of a perfect storm right now. And but we are getting them involved, which is the best part about it too.

Go ahead, Jamie.

Yeah, hey guys, great presentation and a lot of passion on what you're doing. And I think the rewards you're getting from, you know, seeing it help patients and that is obviously coming through to everybody. So it's nice to watch. My early career was in orthopedics with Zimmer and some others, but I was fortunate enough to work with Ross Wilkins at the Institute for Limb Preservation with a whole pediatric cancer program. So I didn't, wasn't doing implants, but I got to know him pretty well on a lot of that. So I know the impact. So one of my questions is, are you looking at pediatric indications for this? This is just personally because I do a lot and my whole life now is in pediatric scoliosis, uh, orthosis. So I'm in, I'm in orthotics. We make a dynamic, uh, brace for, uh, uh, scoliosis.

So I've kind of crossed over. Jamie's in the customs business also.

And I'm in the customs business and a lot of everything's unique. Yeah, yeah, everything's unique. So, and I deal a lot with Hanger and have got a big call with their main PhD on Monday. So, um, I, I kind of follow on some of the things that you guys are doing. I'm curious, just personally, is it, is it helping pediatrics or do you see that is one question. Another one, do you see below-the-knee help for prosthetics and that in the future? And then also, do you think with the integration— infection's always going to be a big thing. Phantom pain is a huge thing with patients. Do you think having some of the soft tissue integration may help with some of that phantom pain by any chance?

Yeah, I think first question, pediatrics, yes, absolutely. We've talked about that. We're going to address it.

I was sure.

Yeah, yeah, of course. Right. So we've, we've worked with, you know, the Paley Institute already in, in that aspect. And what was your second question? I just pulled a blank. I'm sorry.

It was also the, do you think it's going to help with phantom pain and then below the knee?

Yeah, below the knee we're addressing already. We are working in that space. Yep. And then, you know, phantom pain, I, I don't know the answer to that, to be honest.—

Yeah.—

Yeah.

That's, that's an interesting one. I, you know, with the re-engagement, you know, of some of the musculature, you know, with a better attachment. I mean, they do, they do attempt to attach this, you know, they, they essentially, you know, scrape up the, the bone, the residual bone, and then, and then wrap the muscle down onto it, but it's not really growing into it. It's just kind of wrapped onto it.

Yeah.

Right.

Yeah.

So I, we do believe you'll get more engagement I don't know what that means yet, right? And I think that's the question. That's a good question. I don't think we have any— Yeah.

Yeah.

Hey, I know very little about it, but I know it's a big problem and I'm just wondering, hey, maybe this is one of those things. I hope it does.

I, I, yeah. Yeah, yeah, yeah. Agreed.

Agreed.

For all of that. Yeah. Thank you.

Yeah, go, go ahead, Chris.

Yeah.

Hey, sorry, I don't have my camera on. I'm somewhere where I can't do that right now. But just question, is it a two-stage surgery? With been involving plastic surgery, if I'm hearing this right?

One. So that's, that's, yeah, the international company Integrum. It's a two-stage surgery. Uh, another, another company who's doing on a custom base in the US, single stage. We're a single stage, right?

Okay.

Okay. Um, all right.

So there's, and then there's no stoma, 'cause you're saying that there's actually soft tissue integration at the, I guess, the coupling site or at the site that it's coming out of the the skin?

No, no, let me, I'll correct that now. We're, we're doing similar to what others are doing at the moment 'cause we're still collecting more animal data around the soft tissue integration. So there will be a stoma now and, you know, in management thereof for current patients, you know, moving forward we do plan to integrate that soft tissue interface and, you know, essentially the goal is to solve that problem.

Yes.

Yeah, no, 'cause I know that's a, that's always the, the, the, the big issue with these patients. They, when they see the, the OI, they get focused on this, you know, hole they're gonna essentially have and the wound management. And it's nothing more than if you were to manage, you know, an Ilizarov pin or not. So, all right, great. Awesome.

Thank you.

Appreciate it.

Really, really love OI.

I think it's something that needs to be accepted a little bit more on the US side. It's just a difficult road. I remember my days at Oncoast, we had the Integram distribution agreement and and it was, it was a difficult mountain to climb.

Still is.

What was, Chris, what was hard? What was hard about it back then? Was it convincing the surgeon?

It's convincing, you know, well, there's, you know, there's always like early adapters, right? So those guys were pretty, pretty eager to go, but it was getting the, it was getting the patient to really adopt, like, I'm gonna have to have two-stage surgery, you know, two surgeries. And then insurance was a huge issue., and getting, and getting approval. Um, you know, one of the things I know I had asked early on was I think we need some type of, and Ted had mentioned, you know, about the reimbursement. And I think, Paul, you were alluding to this and that 66% savings over a lifetime, but it was, people don't realize that that sock, you know, they wear, you know, two things happen. Do you have to do multiple changes over a lifetime? So I think we figured out it was like $420,000 a year. But then the other problem is, is the, the actual wound that it causes if you live in Florida or you live in South Louisiana or you live in Texas because the heat, right? It's, there's a lot of chafe, there's a lot of rub. So you have multiple wound issues with it that trying to even get them to understand like you don't have to deal with that anymore. It's still mind-boggling to the patient. But you know, I, it is great concept. And gosh, if you guys can kind of get away from the two-stage I think that would, I mean, have, you know, get, definitely get away from the two-stage. That's gonna be a much more compelling story.

So, yeah. Well, you know, on that note, Chris, I mean, you know, we're also, our broaches are all custom printed right next to the implants, which is unique in itself as well, which is, which is pretty interesting. You know, one of our doctors is like, oh, can I keep this and use the next case? And we said no, right? No, no, you can't. So, you know, I think our approach to everything You know, we're leveraging the technology obviously, but it is, we're trying to simplify it, you know, and I think even today's communication, I, you know, we had a connector that we sent for a patient and then, you know, jumped right on with a prosthetist and accessibility is a big deal, right? And support, right? And that's what they're not seeing from the international companies, right? It's a mess. And maybe you experienced that too, is that, you know, Integrum, I mean, just dealing with the US market's different. Than international markets, right? I think, you know, we just hear from all the distributors we spoke to that actually have had either Entegra or the other one, you know, OPL. They're like, it's horrendous. So, you know, that's not— that's not a—

look, if you can have— if the brooches are custom, you've—

that's the—

so that's the interoperability challenge now. And with supply chain and logistics you've met, because that was always a problem. There wasn't enough sets.

Yes.

Yeah.

And then my advice would be is on distribution, make sure it's a decent percentage of points because I know that that was also a big problem with trying to go through the oncology side. But feel free to get my number from Tiger if you want to call.

That'd be great. Yeah.

Thank you. Walk through anything. But no, I think the patients are really going to accept the fact that it's one stage, but still it's like, it's, it's any missionary work in our business, right? I think that's why a lot of us on this call have gotten into startups and it's the technology, it's the, it's the mission work, it's the, it's the grit that's needed to see technology become standard of care at some point.

Absolutely. Yeah.

All right. Kyle's been patiently waiting. Take, take us home.

That I'm patient. So any contraindications for your device that are not contraindications for a prosthetic?

Caroline, she's actually sitting here with me. Yeah, obviously we've gotten a few of these written out. I could share that with you afterwards, Kyle.

I was just curious because ultimately I don't know this market very well, but I had to imagine that there are areas where just the prosthetic is just a better for whatever reason for the patient was curious to know what that was. So yeah, we can—

Yeah, I mean like, you know, diabetics, obviously that's a challenging market and you know, so they tend to fall off pretty quickly, right? Just because, and you know, we, we all kind of know the data on diabetics unfortunately is once you start losing your limb, it's, it's downhill pretty quick after that. But yeah, so we, I can help, I can certainly share more data with you on that one. But you know, we're fine-tuning that because we have to obviously, you know, with the, the whole idea of the HUD HDE, you have to really define that market and really whittle it down to less than 8,000 a year. Right? It doesn't mean you can't treat past patients, right? So your numbers are really kind of, you know, your initial numbers are kind of defined. But again, so when you think of like someone, you know, I think it was Jamie or whoever said below the knee, right? That's a market that, you know, is pretty wide open, right? There are no FDA clearances on it, no HDEs on that, right? And, you know, that's relatively straightforward, you know, target for us, right? And, you know, that's really, you know, I mean, I just gave you guys the world, right? But, you know, if anybody wants to jump in, just kidding.

How much tibia do you have to have? How much proximal tibia to fit a stem?

We've done as short so far as I think it was 70 so far. Okay. Right. And, but we've also had a patient that had a total knee. So yeah, these are, these are all the challenges that you kind of face. Yeah. The idea of it being patient-specific, right? Every bone. And here's the other thing, you know, with what we're doing, you know, all our, you know, the other two competitors are, it's traditional manufacturing, rods that are bent, you know, with coated and, you know, whatever. You know, ours don't have to be round, right? Ours are patient-specific, right? You know, that design specific for the anatomy. So therefore the load-bearing bone, right, can return to a very similar load-bearing application that it's used to as opposed to, you know, now kind of changing its shape for a rod, right? For instance, right? So it's pretty, pretty interesting things to, to consider with what we're able to do at the moment. Excellent.

Well, we, we've kind of gone over an hour. This has been fascinating. We're all pulling for you, and, uh, you're welcome to come back on Bone Chat anytime and give us an update. Uh, yeah, we could go into financing and everything. Alessa said, I love the market, love that you guys are doing the right thing at the right time.

Yeah, cool. Yeah. I mean, I'm sure Paul would ask you this. I mean, obviously we're, we're working with some large angels, right? I mean, obviously we're staying around from staying away from institutional really at the end of the day, you know, probably not fit, but, but open to lots of ideas there, right? You know, so if anybody has some ideas, funny ideas, actions, you know, maybe, you know, potential good partners, you know, whatever it may be, I mean, feel free to, you know, Tiger, you know, our info is pretty readily available. It's pretty easy to— it's either Brian or Paul at ALMOrtho.com. But, you know, we're making it, you know, it's a challenging funding environment, as everybody knows, right? And, you know, we're making strides, which is good. And, you know, I think, you know, we've— we committed early. I mean, you know, a lot of companies might wait and outsource. We didn't— we're not outsourcing. We've already built infrastructure. In fact, this is my third time building infrastructure. So this is— it's— we know how to do it pretty well at this point. Right. And, you know, so I guess that's what I would leave you with, you know, and any ideas, feel free to flow them through to myself or Paul and any connections that you might think might be a good fit. Right. We'd very much appreciate that. And thank you for your time this afternoon.

Have you guys taken any money from your— from any distributors?

We have one distributor in Florida that has, uh, invested a decent amount in us. Yes, he's affiliated with the Paley Institute.

Okay.

Yeah, I just— with mine, uh, it was amazing. I got some guys using my stuff, and then they were— my distributor started hitting me up like, hey, are you taking any money?

And it's like, that's exactly—

oh, we might be right now.

Yeah, that, that's exactly what occurred with us during the seed round. Our distributor got involved with us. We had just identified them and established a relationship with Paley. He saw what we were doing. Some of the first products that we produced for Paley were on a custom basis. And he called and said, are you raising money? And says, well, it just so happens at that point we're in our seed round. Yes, we are. And it took about 10 minutes to close the deal and he wrote a sizable check. So that was, that was one of the easier gets that we've had to this point.

Yeah, I've been lucky on that on a few of the guys as soon as they saw it. Saw the response, they were like, hey, I'm just hedge my bets.

Good.

Cool.

Thanks, guys.

Good discussion.

Very good.

Yeah, great.

Tiger, thank you. Everyone, thank you. Uh, and as Brian said, any questions on any area, uh, from technology, design, finance, investment, just— we're both here.

All right. And I— we have a Slack channel, so I will share all your contact information on the Slack channel for the Bone Shatters. Thanks.

Very good.

You okay?

Okay.

Well done.

Take care.