BoneChat #38 - Discussion of Trinity Orthopedic's near "pain free" way to harvest cancellous bone.

Okay, uh, welcome to Bone Chat discussion number 38. Um, we're thrilled to have Dr. Jim Marino here today. He's known as the founder of Nuvasive and Trinity Orthopedics. Uh, at Trinity, Jim has created a pain-free way to harvest cancellous bone, which is still the gold standard. And I'm sure Jim could talk for hours on best practices that he's learned as a surgeon, inventor, company founder. But today we're going to—

more like mistakes.

For mistakes today, we're going to talk about mostly the CoreX harvester. So handing the mic over to Jim.

Welcome. All right, well, thank you, thank you, thank you all for attending, and hopefully I can make this sufficiently interesting to make it worth your while. So I'm an orthopedist by training. And a, I'll say, a perennial type of wannabe inventor. I'm always, like many orthopedists, trying to figure out how to do things differently and hopefully better. And for those reasons, when I finished my orthopedic training at UCSD and started practicing, I was in a nascent field at the time, which was arthroscopic surgery of the peripheral joints. And I could see where minimally invasive techniques had a great deal to offer for knee, shoulder, ankle, wrist, et cetera, elbow surgery. And at the same time, perhaps the largest segment of my patient population had low back pain. And there were pioneers, particularly in the United States, Parviz Khambin, in very early minimally invasive arthroscopic spine surgery. And I wanted to, as much as I could, become familiarized with the cutting edge, if you will, of minimally invasive spine surgery. And saw that, as in peripheral joint surgery like knee surgery, there would have to be a number of techniques and instrumentation developed to optimize minimally invasive surgery. And with that in mind, I came up with a number of ideas, was fortunate enough to present them before a venture capitalist who thought there might be some merit. He brought me in front of other venture capitalists, and ultimately they funded NuVasive. And that process took place back in around 1997 or so. And fortunately, in that process, I encountered Jamil Obbana, who was a very talented and a little bit younger engineer at the time. And realized that he had a lot to offer and eventually asked him to join me in, in the very early stages. And we had a lot of ambitions and not enough money to pursue them. So we started with a pedicle screw system that was sagittally stable and realized after spending quite a bit of our money on this pedicle screw system that we weren't going to be able to support it and it wouldn't sustain us. And pedicle screw systems, although there are many of them, we had some unusual features in our pedicle screw which made it slightly more challenging for the surgeons to put in. And they didn't appreciate the mechanical advantages. So we made a, you know, a strategic decision that we couldn't support that process ongoing and had to revert to something else that might sustain us. And we had some early prototypes of a bone harvester, a minimally invasive, percutaneous, in fact, cancerous bone harvester. And Jamil and I together, as he indicated, did a collaborative development of the CoreX device. And we've gone through maybe a couple of iterations since then to refine it, but it's a very stable and proven device. We've probably had it used in about, I don't know, 20,000 to 30,000. Is that approximately correct, Jamil?

Correct.

Yeah. 20,000 to 30,000 procedures. And we've not had one MDR associated with a complication from using the CoreX Bone Harvester. And, you know, I'm sure that there are probably cases where there have been infections and other things, but it's really very, very low incidence of postoperative morbidity. Very low. As you might imagine with any percutaneous procedure, there's a minimal introduction of contaminant. And because we create a small circular window using a trephine, we don't really create stress risers of any consequence in the harvesting bone. It's just like a drill hole. And we're able to extract along the various axis cancerous bone through that single cortical window all percutaneously. And so I brought one demo here. This is a single patient use kit. It has— try to— it has a very sharp trocar tip on the end. Which we use to create the hole in the cortex after making a skin incision and making a small subcutaneous dissection with a closed hemostat down to the periosteum. There's a shoulder stop which prevents the trocar tip from entering into the bone any greater depth than what's needed to create the osseous channel. And after we— this is an attached feature. We dissociate the trocar tip. And after it's been dissociated, we then have essentially a tree fine, which has a beveled surface to keep it inside the tables when you're harvesting the iliac crest. There's an inner and outer table, and the cancellous bone is between those inner and outer tables. And the beveled tip maintains the device within those two inner and outer cortical surfaces. Small castellations on the tip, which are not very aggressive, but just aggressive enough to microfracture the cancellous architecture. And actually, when you're using the device, there's a lot of tactile or proprioceptive feedback that comes through the handle. And also through— you can actually hear the microfracturing of the mineralized cancellous bone. And then there's a capture mechanism. It's part of our patent, which is essentially operated by rotating the upper handle relative to the lower handle. And it allows us to extract a core of cancellous bone, which we then extrude using a plastic tamp. So we've been doing this for a while. And our primary challenge is, and Ted's very well aware of the development of BMP-2, which came out about the same time that we introduced our device in 2007. And Medtronic was very, I'll say market savvy in their introduction for a variety of reasons. Maybe not completely honest, but very market savvy. They did a lot to disparage the use of autologous cancellous bone by citing relatively dated literature on the morbidity associated with open harvest techniques. And open harvest techniques usually involved a fairly extensive incision, periosteal stripping, muscle stripping, cortical stripping, and then eventually gouges or curettes used to remove the cancerous bone within. And if you look at the old literature, The postoperative pain rates are described in, you know, 20 or 30% of the patients at, you know, 4 or 5 months, 6 months post-op and persistent pain at 12 months, altered gait, sensory disturbance, herniations. I mean, just a variety of very, I'll say, unpleasant complications from harvesting the bone. What wasn't quite clear at the time and became clear thereafter is that most of these complications occurred as a consequence of the soft tissue stripping that took place to expose the bone and the extensive and unnecessary decortication. The other problem was that particularly when posterior iliac crest was harvested, patients had a difficult time distinguishing between their persistent postoperative lumbar pain and their donor site pain. And there are a couple of good studies that were done. One asked the patients before they could examine their back, which side did your bone harvesting take place from? And they complained of a lot of bone harvesting pain, and they couldn't tell. They couldn't tell if it was from the left or the right side. They had about a 50% success rate. Another study looked at harvest site pain when the thoracic spine was isolated in fusion as opposed to lumbar spine. And the rates of donor site pain were markedly less because there was a lack of confusion with the thoracic versus lumbar spine. Versus the donor side pain, which is generally at the lumbosacral level. So that's just a few of the reasons why this old literature kind of condemned autologous bone harvesting. And as a result, many spine surgeons were convinced that they should avoid autologous bone harvesting and sort of get with the new technique, which was to use bone graft substitutes of various kinds, one of which, of course, was BMP-2 or Infuse, which is basically a protein that stimulates bone fusion. Now, Infuse works very well in most instances for bone fusion. It is a little expensive and it does also carry with it a number of complications. That were not fully disclosed at the time it was released by Medtronic. And there was a subsequent, actually, Senate Finance Committee inquiry regarding this issue. And eventually Yale University supervised a study at two institutions, one in Oregon and the other in England, I believe, that looked into the data for BMP2 and found that the reporting of complications from the pre-release studies were underreported considerably. And anyway, BMP2 has about the same effectiveness as iliac crest bone harvesting. But these complications are not, generally, not associated with autologous bone, including things like neuritis, heterotopic bone formation, osteolysis, subsidence, more subsidence. And this has to do with an inflammatory response that's provoked by BMP2. There was a lot of, I'll say, misrepresentations about knowing what dosage was correct for the spine. Some of that's been worked out and the amount of BMP2 used now by surgeons is less per level than it was at the time of its initial introduction. There was also— the FDA put a black box on BMP2 for cervical spine usage because of swelling around the neck, which reduced airway flow and could be precipitously hazardous. So all that said, after that, a variety of companies decided to come out with, we call them proprietary bone graft alternatives. Some of these included mineral compounds, calcium sulfate compounds, calcium phosphate compounds of various types. And then a number of companies have come out with cellular-based matrices, which are essentially allograft, which is cadaver bone which has been treated, and then mesenchymal stem cells harvested from the cadaver within 72 hours of the death, and then processed in a variety of ways to kind of purify these mesenchymal stem cells and reintroduce them into the bone graft. That is usually like a demineralized bone graft plus cancellous allograft chips. And while these do work, there aren't really robust independent studies to support their efficacy. And probably they're no more— I mean, there's a very, very good chance they're no more effective than just using DBM. And cancellous bone chips. But I think the marketing, if you will, appeal of having mesenchymal stem cells added is sufficient to warrant in the companies' and the surgeons' minds the extra cost, which becomes very close to, if not equal to, BMP2. Our device is sold and the amount of bone you harvest with it depends upon obviously the harvest repository, the skill of the surgeon in using the device and the need for the particular procedure. But the primary, the primary advantage is with percutaneous harvest, We get, I won't say no pain, which is how this was advertised. I'd put that in quotes. But we get trivial pain usually for the first week to 2 weeks, and then after that, none. I mean, it's very common. We had one surgeon who reviewed 268 patients, and their pain level on a visual analog scale of 0 to 10 was 2 at 10 days, and thereafter, 0, and this is in 268 patients and minimum follow-up was 6 months. So I think we've to a large extent solved the morbidity problem associated with autologous bone. What we haven't solved is the market perception of the morbidity associated with autologous bone and trying to get surgeons to consider bone harvesting if they don't already use it is a big challenge for us. And that's our— I'd say that's our one of our primary challenges. We're starting to— we had focused on spine and we're starting to now diversify into foot and ankle and into trauma. There are some challenges in foot and ankle because the average sale price for our device is about $1,000. And those cases generally are just not as financially rewarding. And there's just not as much revenue associated with foot and ankle cases as there is in spine, where $1,000 represents a small fraction of the procedural cost.

And foot and ankle, you're getting it from the calcaneus?

Yes.

Yeah, you can get it from the calcaneus or the— I think the proximal tibia is an extremely good site for harvesting, which is not well understood. It's not particularly popular. There are a variety of podiatrists who, who I guess in some states can't go above the ankle. But yeah, the proximal tibia, the calcaneus, the distal tibia less so, but basically any metaphyseal area or traditional area for harvesting. I like the proximal tibia a lot. I had an orthopedic partner who had a 2-level cervical fusion and he had his bone harvested with the CoreX device from his proximal tibia. And he told me, he said, "Jim, I'm not exaggerating here. I'm just telling you the truth." He said, "I couldn't tell which tibia my bone was harvested from until I saw all the bandages." And he said, "I had no pain. I had no pain." He said, "Not a little, just none." And that's not an uncommon expression for people who have just a little bit of stoicism, but essentially it's a trivial kind of insult, if you will, to the periosteum and the cortex, which are the sources of pain fibers when you're involved in harvesting with the CoreX device. So I think our big problems are market perception, and Jameel probably can tell you about other problems associated that we have not solved to our satisfaction. In terms of increasing our sales.

If I may add, Uncle Jim.

Sure, David.

What about the benefits of just unmorselized bone versus morselized/desiccated bone in terms of stem cell preservation?

Yeah, so this is an area, because there are other products that are out there that harvest cancellous bone with minimally invasive techniques. But a lot of them utilize a suction which dissociates the cellular elements from the cancellous matrix. And the osteoprogenitor cells, which are embedded in the marrow of the cancellous bone, are an important component for osteoproliferation. They are if you will, the source ultimately for osteoblasts from the graft side. There's obviously host-side osteoblasts which can be recruited and activated. But when you start sucking and removing those cellular elements, which is a part of some of our competitors, those mesenchymal stem cells are extremely dependent upon their relative position. And that is both physical and chemical dependence on their relative position within the matrix for them to function. Once you take a mesenchymal stem cell, which is, which is capable of producing a variety of mesoderm tissue like fat, like fibrous tissue, like cartilage and bone. Once you take it out of its natural location in the matrix and then try to reintroduce it subsequently, you've altered its efficacy.

Yeah.

You've altered its inclination, if you will, to produce bone. And the other thing is morselizing bone is generally not a good idea if you can avoid it. You know, sometimes you have to, contour or reduce the size of the bone to fit into a cage, et cetera. But even though it may be more convenient to handle morselized bone, like, you know, people are always looking at how does the, you know, various bone graft handle. Well, I'm more concerned about how does it work. You know, handling is, is a secondary issue. And when you start fragmenting cancellous bone, you're creating additional fracture elements that have to be healed, if you will. And contiguous cancellous bone has a less likely potential for developing nonunions within the graft itself. So a number of studies which were done about, well, in the late '80s, showed that the more you handled bone, desiccated it, or manipulated it, the less active it was in producing bone when you transferred it into an animal model. They had a— they had, I think it was a canine tibial model, and they just treated bone graft in different manner. And the less they handled it, the less they manipulated it, the less they altered it, the less they desiccated it, the more effective it was at producing bone in the canine model. And so we think it's probably readily transferable that this minimal alteration desiccation is a good idea for human autograft as well. Another comment I've heard by an academic researcher was that the relationship between the mesenchymal stem cells and the hematopoietic cells, which are the blood-producing cells in the bone matrix, is very critical. And that's why in these bone— these cellular bone matrices, various allografts, which include extraction of mesenchymal cells, sometimes expanding those cells and reintroducing them, Once you've dissociated them from a home— hematopoietic complement that is naturally there and in the right proportions, you've diminished their capability for bone production. Another misconception is that these mesenchymal stem cells are immunologically privileged. That information was derived from in vivo in vitro studies, not from in vivo studies. And in fact, when you look at in vivo studies of mesenchymal stem cells in pigs, in rats, in rabbits, in mice, they all produce an immune responses. And in fact, the immune response becomes enhanced once they differentiate, if they differentiate into osteoblasts. So this idea that mesenchymal stem cells are immunologically privileged there's quite a few in vivo studies that discredit that. So part of the problem is there's not a lot of money obviously behind discrediting these proprietary allografts, which are big moneymakers in our industry. They're about, I think, close to 20% of all bone graft use in spine.

So Jim, with all of the things you stated, how does our product, CoreX, satisfy the avoidance of some of these shortcomings or less effective ways of delivering bone for the purpose of—

So one of the things we never felt we had to prove was that autograft was effective because we had 100 years of, you know, published peer-reviewed journal articles, 100 years. Showing the efficacy of cancellous autograft in bone proliferation in a variety of locations. I mean, I'm not just talking about ALIFs, I'm not talking about PLIFs, I'm not talking about posterolateral fusions, I'm not talking about just nonunions of, you know, tibial fractures, but virtually any application in orthopedics where you have a bone defect or a need for a bone arthrodesis, Autologous cancellous bone has been proven through many decades to be a very effective tool and carries with it the, if you will, the time-tested moniker of, you know, gold standard. And so we didn't really have to prove that cancellous bone, when harvested and minimally manipulated, was an excellent source for osteoproliferation. What we wanted to prove was that we had a tool for harvesting it with minimal or trivial morbidity at the donor site.

Got it. So let's just, for sake of the conversation, I mean, you've— I think you've convinced most of us that you got a better mousetrap. You have a better way of getting a nice log of cancellous bone, uh, with less pain. So let's talk about the business model. You know, what, what do you guys need to sort of, you know, I mean, there, there's a, there's hundreds of, uh, bone graft substitutes out there. They're, they're not going away. Infuse is not going away. So how do we, how do we take mindshare? And Ted's got his first hand up.

Yeah, I think, Jim, you've got a marketing problem. You need a bigger budget. You know, you're up against, you know, the viable, you know, Trinity from Orthofix or the one, whatever the one was called, the new invasive Inclearis has now.

Yeah.

Osteocell Plus or something like that.

Osteocell, right. And then, and then of course BMP. But, yeah, just for clarification, can, can you, clarify how you're different. The one other product I'm familiar with is, is Mike O'Neill's company Paradigm Biodevices.

It's—

yes, Quick Draw.

How are you different to what he's been doing? Because, you know, he's obviously been able to sustain some momentum at least, or, you know, flatline or whatever he's been able to do. Get on it. I checked his website real quick, 40,000 procedure. Is that morselized where you're not morselized?

We're not morselized. We don't use any suction, and the cortical window is created with the integral trocar tip, which is part of the device.

So no hammering and no hammering, right, Uncle Jim?

Oh, no hammering. Yes, no hammering. And it's, it's all, it's all manual. So the tactile perception. Yeah.

Okay.

What's the size of the log you can get out of, you know, a large—

we have two different diameters. The outer diameter is 9 and 7 millimeters on our two sizes, which produces a cylindrical, slightly compressed, cancellous plug of 7 or 5 millimeters in diameter. And the length really just depends upon the harvest site. So in the proximal tibia, the length might be in the order of 5 centimeters, whereas in the iliac crest, it might be as much as 10 to 15 centimeters. Got it.

And just on the marketing side, I'm thinking strategic— strategically, have you guys engaged, you know, to collect some data and get it into some kind of publication or presentation you can put out there to to highlight your differences?

Yeah, so that's— Jameel is— that's in process. We're basically tapping our largest users who have the greatest experience to respond to a questionnaire and provide us with their impressions. That's where we had this one surgeon who did 268 cases and described what he perceived as patient levels of pain, as well as, you know, reported pain, as well as incision sizes, time to harvest, and perceived cost savings versus alternatives. And so that's kind of what we've been doing. It's not formal enough, I think, for you know, the more prestigious journals, it would be more of a white paper or perhaps an online publication.

And we have a white paper from in the foot and ankle space as well. Right? Yeah. Gunderson Health. They were harvesting from the calcaneus.

But it's certainly not not prominent, you know, the kind of reporting we've done so far.

Yeah.

What's your sales and distribution look like? Are you using 1099s that are in these cases, or do you have your own reps?

Jamil can answer that. I think in general the answer is yes.

Mostly 1099 reps that already have a relationship, existing relationship with a spine surgeon and are looking to add a product. Our product has been appreciated by surgeons that understand the benefit of using autologous cancellous bone. Also, it's been an add-on to procedures where other synthetic alternatives are used. And sometimes the challenge is the conflict of interest where the rep has the opportunity to sell a more lucrative product than a harvester. There are some demands on the surgeon. This last report that we got with the 266 patients, the surgeon was able to report that the skin-to-skin time was under 5 minutes, which is not a big demand to ask of the surgeon. The challenges is that we have a single product that is not coupled with these add-on alternatives that these reps look for in order to basically create a bigger sale. So in addition to the upfront, the challenge of convincing the surgeons that harvesting bone is not as it has been viewed or deemed for all these years that BMP2 was marketed, we definitely We were told we have best in class in terms of harvesters compared to the other harvesters in that we have all the features all included in the harvester. You don't need additional tools. You don't need suction or power or drills or hammers. And the design of the device allows you to harvest and deliver without disassembling the device in order to retrieve what you got. So we have a good product, but we're still running into challenges of getting it in front of surgeons. And we're considering some really aggressive marketing not marketing, but sales promotions that I could share with the group and kind of get a sense from you, uh, what your thoughts are. And it's really stems from our belief in, in the product. We're considering to approach our existing rep base and new reps and offer basically 100% commission for any new surgeon that uses the product in 3 clinical cases within the first 90 days. And the important aspect of more than one clinical case is to make sure that the rep takes the time to onboard and train the surgeon. Though the device is easy and simple to use, it doesn't stop somebody from using it incorrectly or suboptimally. So we put a lot of emphasis on using it correctly the first time so they have a favorable experience. And so this is something we're considering in doing. You know, I'm getting feedback that it's as good as it gets. But the challenge is really finding those reps that have the existing relationships with the surgeon to get this in front of them and hopefully not run into too many scenarios where there's a conflict of interest that prevents them from really offering our product in addition to the products they already sell.

Got it. Got it. I like that promotion. Go ahead, Asher.

This is kind of a follow-up to Tiger's question on the sales and marketing and distribution side. You know, how do you guys overcome the challenge that you're effectively competing with your distributors by selling a product that makes them less money and theoretically could involve more time where they have to harvest the bone versus just opening up a peel-packed, you know, like something on the shelf, you know, ready-to-go biologic solution.

Yeah, I mean, this is the challenge, and oftentimes we find ourselves thinking about, you know, where is the hospital administrators into this? Where is the value analysis committee aspect of adding their own demands of what is used in the OR. And also appealing to the clinical efficacy of doing, you know, what's best for the achievement of the surgical objective, which to achieve fusion and without the potential consequences of using BMP2 that Dr. Marina talked about. So, yes, it's all of that. And at the same time, we're fighting this real-life situation where there's a conflict of interest the rep is faced with. I could sell a synthetic alternative for $5,000 a level versus, uh, Corex for, uh, $1,200, uh, even though there's a CPT code where the surgeon can actually, uh, earn anywhere from $250 to $350 for harvesting from an alternate site. We thought that would be a source of appeal. It's less so for spine surgeons. Maybe it was more so for other disciplines. But yes, this is, you know, you're describing the challenge that we've been facing, and we're definitely continuing to look for ways to overcome that challenge.

Got it. Since you mentioned value analysis committees, we have the Value Analysis Whisperer online. So are you in some value analysis committee work right now?

The answer is, um, we had him, uh, I had the privilege of having a very, very, uh, pleasant and, and, uh, meeting with Mark, uh, last Saturday. And, uh, just listening to him, I was convinced that I'd like to employ his talent to look at our hospital packet, if you will, that we provide to our reps to answer most of the basic questions that are part of the value analysis committee interaction, but I think we have an opportunity to have it restructured and bolstered further with the knowledge and talent of somebody like Mark. So that's already in the works.

Oh, good. You're, you're connected to the right person.

We're meeting with him in 2 weeks, actually. So yeah, he's a great resource.

Perfect. All right, Mark's got a comment or a question.

Uh, so Great, uh, presentation, Dr. Marino and team. Uh, tell me about your 1099 sales force. Is it mostly spine guys, general guys, total joint guys, foot and ankle guys? Obviously the independent orthopedic distributor sales force has followed the subspecialization trends of the MDs over the last 20 years.

Yes, mostly spine, uh, guys historically has been for us. Uh, in the last 3 years we felt that the foot and ankle industry could still utilize our product. And we have two sizes, a 9mm that works well for spine and a 7mm works well for foot and ankle. We faced a situation where the reimbursement associated with foot and ankle may require us to lower our cost of the product, and that may be conveniently done on the smaller size, the 7mm, even though In full disclosure, they both cost us the same, but we feel like we have to cater to the needs of that particular industry with a lower cost for the foot and ankle.

And trauma as well, right, Jamil? Trauma, even craniofacial, we've had, and orthopedic oncologists who biopsy from the femur using the Corax as well. Just any surgeon who needs cancellous bone.

Gotcha. Well, I like the— I like your extreme idea about the commission for at least for a short-term evaluation because you got to break through that level of inertia. And there's a couple of constants that I've seen. First of all, doctors sell doctors. But if you don't have that going strong, then you've got to come up with something else to break through the noise level. The ASP for spine guys is so high that I don't think you can compete with something that's kind of normal. You gotta really get outta the box. Something that I've seen successful is to get people that are not necessarily in spine, show them an opportunity like this, and let them basically shake up the spine guys. Let, you know, let a foot and ankle guy or a general guy go talk to the spine guys. And then let that spine rep, you know, feel some pressure for a change.

Where—

I have another business and they're— my foot and ankle guys are doing that right now to some sports guys. And they are making the Arthrex guys scared for the first time.

Yeah, what you're describing is consistent with the inherent challenge that we have in that the reps Yeah, already have a more lucrative product that they're pushing. So by introducing this variable, it does help in that direction. The one other leg that I include— I'm including in this promotion is that at the end of the 3 clinical cases, if the surgeon feels that he's seen a favorable impression of the product and he wishes to do 2 more clinical cases for a total of 5, that we would be happy to pay for an hour of consultative work for the surgeon to fill out a 10-question questionnaire. It's a one-page questionnaire. So now I've included something enticing for the rep with 100% commission for the 3 cases, but also there's something in for this, for the surgeon to value their time and to document their feedback as well.

Okay, one more question. So the CoreX is obviously an autograft harvester product, and I'm a strong believer in that from day one in this business. I heard, you know, orthopedic instructors tell the residents, first year, bone is your friend, and stability, stability, stability, stupid. And it was always about autograft. So how does it come— do you ever couple it with bone marrow aspirate, or does the BMA only go with the synthetics? I think it's obvious, but I wanted to ask.

Sure. No, we don't need or believe there's any value in supplementing it with bone marrow aspiration. The cells are already there, and our desire is to minimally disturb the cells from their natural locations.

Thanks. Good, good, Cope.

Well, uh, thanks Tiger for talking about me earlier. That was very nice of you again. But yeah, we're— I, I'm meeting with these guys in 2 weeks and I'm sort of chomping at the bit because after talking to them last Saturday and, and my background in spine, um, I'm sort of excited to see if I can't really help turbocharge some of this. One of the things that, um, didn't come up during this is a couple of market trends that we're seeing everywhere. Um, hospitals and insurers, which is interesting. So I'll give you guys an example. Aetna, particularly if you're in the Philadelphia area, if surgeons book an anterior cervical, they want autograft or allograft. They do not— well, they will not pay for PEEK or titanium cages. And they're driving— they're forcing surgeons to use something that I don't you know, it's great to, it's great to actually talk to you here, Dr. Marino, but I don't know what, where you are, but like, that's, that is something that's sort of a trend that disappeared that is being forced by an insurer. And I'm still not sure exactly why, but a lot of hospitals are pushing back on two major infus and the cell-based DBM saying, hey, we're not getting reimbursed for that. We're not paying for that in certain patients. And there's this whole pushback from the health systems onto surgeons, and, um, which has almost driven people back into some of the demineralized bone matrix, which sell for— depends, like, I don't, I don't know what people get in Texas or California, but I can tell you on the East Coast, 10 cc's of that is around $1,300 to $1,700. Those reps make around 25 to 30%. It's nobody— I don't think they're getting rich on DBM. I think having an alternative is an option, and particularly with the way you guys are going to juice the commissions early on. But I, I think you'll, you'll turn heads. But I think— I actually think you might have some silent salespeople in hospitals and health systems, and it's the administrators and Plus, I think there's some procedural— we'll talk all about that in a couple weeks, but I just think like there's some trends you guys, some tailwinds you might actually be able to take a little bit of advantage of that might help you get some surgeons interested.

You know, Mark, we'll ask you, but what about hospital-based systems that employ surgeons? You know, like a Kaiser's, et cetera, are they more likely to, if you will, require their surgeons to observe more fiscally responsible utilization of resources?

Generally, absolutely, yes. Specifically to this, less so, but it's coming because it's already here. I actually anticipate— now, this is just me looking into the future.. But based on what some of us experienced that were in pharma, I anticipate formularies and it's going to either come from the hospital health system or the insurance plans where they're, they're going to be saying, this is your first line agent. And there's no better first line agent than the gold standard and the bone that that patient came into the hospital with based on all the data., but that's not here yet. But I can tell you, if I were selling your product, and we'll, again, we'll be talking about this in 2 weeks. If I were selling your product, I'd be talking to supply chain saying, hey, you guys are always complaining about all this and you don't know what you're spending. And is this a ceramic? And is this a— because none of them know. I would suggest, I would have you consider having an algorithm like you do with everything else., and it's hard for, it would be hard for a surgeon who's employed to say, no, no, no, no, I'm going to use, um, Orthofixes that sell base for $4,500 versus the, the allograft. I, I would think if I came and talked to you about that, Dr. Marino, you would probably go, I don't know, but it's logical. Maybe I should be thinking about this sometimes. In those 3-level ACDFs, in those post-laminectomy patients where we don't have much bone, sort of some of those, and see if I could find a place there. And if I'm your rep, uh, and the foot and ankle guy comes and talks to you about it, I'm gonna be trying to elbow him or her out of the way. So yeah, it is happening though. It's definitely happening.

This is very promising, Mark, and it's something I myself have found myself thinking about it in terms of you know, what type of effective and honest lobbying a small company like us can do within the circles of the insurance companies and the administrations of hospitals. And we thought that the Kaisers would be a great environment for us to, to go to with, with this perspective. And I like what I'm hearing from you is that there is a possibility for these new trends for us to basically align our message and our efforts with them and could be a good thing.

Yeah, good comment.

Asher. Yeah, just jumping in to kind of add to what Mark said, knowing that you guys can simultaneously increase CPT reimbursement for the surgeons that are employed by the hospitals and also decrease costs, I wouldn't even bother going through distributors. I mean, obviously you have to pay the distributor to cover the case, But your efforts selling to distributors, whether it's a spine distributor who already has that surgeon's biologic business or, you know, trying to get an ortho or foot and ankle surgeon to sell to a new surgeon, I feel like that's— it's a path that is not your path of least resistance. And so you're going to waste a lot of sales efforts trying to chase somebody who doesn't really have an incentive to sell your products, whereas you can just go to the hospital and say, we can increase reimbursement, we can decrease your cost. It's a win-win. And as long as the surgeon's on board with that additional time to use your product, I feel like that's a much easier sales pitch. I think you're going to really struggle from my own, like, you know, bias subjective experience. I've seen a lot of people try to get into spine who don't have that spine background, who don't have that existing relationship with the surgeon. It is a hard business to break into, especially when you come from outside of spine where you— it's much easier to sell other products. You already have like example here in foot and ankle, it's a much easier to sell foot and ankle products to foot and ankle surgeons if you already work in foot and ankle. Than it is to learn spine, learn spine anatomy, learn spine competitors, and then try to forge a relationship with a guy who's been basically— I mean, it's called mailbox money for a reason, but who they've been using a certain biologics for sometimes years on end and trying to change that dynamic. That is a much harder sales pitch than going to the hospital and saying, we have a better solution, it helps the surgeon, it helps your bottom line, and then working with the surgeon to make that adjustment. And I think, you know, like what Marcus kind of said, and we'll probably talk to you guys about, like, that's a much more straightforward, much more financially sound sales model than trying to go through these distributors that already have the business and in many cases stand to lose if you actually close the deal. And then, Jamil, to your point on selling, you know, like the hyper commissions or 100% commissions, I don't know what other people's experiences are, but one of my experiences is that that might work for those 3 cases. But as soon as those 3 cases are done, there's no more incentive. And you don't really want to come into a situation where you're trying to incentivize short-term sales that is not a long-term sustainable sales path because you're going to get a lot of these guys trying to abuse the system of asking their doctor or their friend to try out a couple cases, get a nice paycheck, and then as soon as that hyper-commission is over, then go right back to what they were currently doing. And you may find yourself spending a lot of money chasing not onesies, twosies, but threesies, three-and-done kind of cases. And so that's just, again, something very subjective from my experience, but I figured I'd share because it's relevant to what you guys are trying to do.

Thank you very much, Asher. The hope is, I think, that if the surgeon has 3 or 5 cases and they see the merits, if you will, of the product, they'll at least consider it going forward, even if their rep is not particularly enamored with the idea of subsequently lower and more traditional commissions.

But I would just give it away for free then. Do a 3-case trial. It's much more affordable. And then you can cut out the rep completely where you just go to the hospital and say, hey, look, we'll give you 3 cases on a trial. It's cheaper for you. You don't have to sign a contract. You don't have to worry about getting involved with the politics of the rep side then.

What about including something for the surgeon to fill out a formal questionnaire. Yeah. Does that— is there anything there that's questionable in terms of anti-kickback or anything like that? Well, we're giving it for free, so that's not an issue.

No, I mean, you can give it for free. I mean, I would just say, look, we're giving it a free 3-case trial. All we ask in return is that after those 3 cases or after each case, you fill out a 1-page form giving us your feedback. If you're not paying the surgeon, there's no issues with consulting payments or anti-kickback statutes. I mean, it's a trial. It's pretty standard, you know, as far as onboarding a new customer.

Yes, right, right. Cope, you're back.

Yeah, I was going to say, I actually think the most effective salesperson for this product is the guy who presented for the first 20 to 25 minutes. Like, surgeons will listen to surgeons who know what they're talking about. And part of it, I told you guys, I can't wait to sink my teeth into this. Part of the strategic plan I would have is trying to get interested spine, foot and ankle surgeons, whomever it is you're targeting that group, on things like webinars where Dr. Marino can talk clinical to clinical at the highest of levels. And I always think going in with some modesty, saying, hey, we're not trying to get rid of all these, you know, infuse the Great Choice certain places or whatever. But there are certain patient types that it's very logical for you to consider, um, autograft. And, and I just think, like, a word from— I mean, look, let's be honest, a word from Dr. Marino is worth 10,000 words from the best salesperson on the planet. Um, and I just think like, yeah, I just think like that, that, that would be, that will be part of the marketing strategy that I would urge, and I will urge on Friday, that whatever it is, the 23rd, because I think you're on to something.

Hey, Mark Maloney.

Well, um, like I said earlier, and I agree with Mark, doctors sell doctors. I mean, that's been my mantra since my first startup. And I got that advice from Dr. Tony Russell in Memphis, Tennessee. And, and I never forgot it. The, I think the, the unspoken objection, which is maybe the biggest one sometimes, maybe time. The, the time it takes to harvest, I think is something that your sales expert or your doctor advisor has to really talk about from the very beginning because that will kill deals. And I know personally because I was one of the first guys to bring surgical navigation to the United States, and I lost a lot of money on it because I hugely underestimated the desire of the American doctor to do 6 cases in a day or 6 totals rather without navigation than 4 with navigation. And just because I had sold myself on 20-year-old out on 20-year futures outcomes based on everything I heard in Germany and Italy and France. And I, that dog did not hunt here.

Okay.

Yeah.

They experienced that. Yeah. With the pedicle screw, we, our pedicle screw was substantially more, um, mechanically advantaged over all the polyaxial screws. In fact, at one NASS meeting, we said, we'll, We'll give anyone a Ferrari if— and we had a side-by-side, you know, test, basically a manual test where you could overcome every polyaxial screw and you couldn't overcome ours. We said, you find any polyaxial screw you want, we'll put it side to side against ours in this test, and we'll— if the polyaxial wins, we'll give you a Ferrari. And we had no takers. And, but the problem was our screw required a little more time, maybe 15% more time than a standard polyaxial screw to associate with the connecting rod. And boy, that was just impossible to get the guys to just, you know, there was a few takers, but there were too few for us to make it a commercial success.

It's the good old days when you give away Ferraris. Anthony's up.

Uh, yeah, have you guys looked at, uh, licensing or partnership opportunities with spine companies that, you know, don't have biologics at all, uh, to kind of complement their screws and cages, etc.? Are there any of any size that don't have biologics? I'm not familiar with any of them. There may be, but I just don't know them. Yeah, there's, there's plenty of small ones out there that just, you know, have the cage and screw offerings and that's it, or ACDF. Yeah, aren't they, I mean, aren't they in sort of the same boat we're in? I mean, they're small and I don't know if they can do much more than we're likely to do, especially if it's just another product for them to offer. But, you know, they may have more than we have so that there's something to be said for that if we can find the right partner, acquire partner.

Good idea. Just got to find— you got to find the little, little guys with hardware. How many users do you guys have right now? How many hospital users consistently using CoreX?

Like 30,000?

Under, under 100.

Under 100. Okay. So if you could get to 200, that would be a big game changer. And then 400. Yes, it will be. So I kind of like what Asher was saying earlier. My tendency is to always go direct if possible and use social media to go direct. I don't— I, you know, if you have a better mousetrap and you can ship it directly to hospitals and you can reach the surgeons on, you know, on their cell phone where they're surfing around, I mean, you may be able to go from 100 to 200 pretty quickly, or at least get into a bunch of new value analysis committees quickly.

What position in a hospital would be our best position to target? You know, we got surgeon, we've got the rep, within the hospital administration value analysis committee, maybe that's gonna be part of what we're gonna talk to Mark about. Exactly. I think, you know, now I'm a little foggy on Which position is it the same in all hospitals? Is it different in different hospitals? Yes, there's a lot for us to learn there to add to the different parties that we're historically have been trying to talk to.

I mean, 'cause you're really fighting mindshare. You know, most surgeons have never heard of Core-X 'cause you guys are a little person. So I'd love to talk to David maybe offline and just, you know, social media is free. And most surgeons, most hospital administrators, most nurses get all their information online now. When they're— and I would love to sort of drive awareness through videos because I'm sure if it's being used every day in the hospital, you have an opportunity for somebody to video the case and show how easy it is, the 5 minutes of harvesting Show how easy it is and then maybe follow up with how well the patient's doing. Anyway, I, I'm a big fan of social media because everybody uses it and it's free. I mean, it's literally free.

Yeah, I see an opportunity for some brief interviews with Dr. Marino to tackle a variety of questions relating to this topic and having them done in a way where they could be part of our social media campaign to bring awareness and familiarity.

Absolutely, absolutely.

Yeah, yeah.

In fact, uh, this promotion that I was thinking about with the offering 100% commission, there's a few criteria. One, it has to be 3 clinical cases within 90 days. There has to be a questionnaire that's filled out with each one of the cases, and also a 45-second to 60-second video showing the capture of the bone and delivery of the bone without violating patient confidentiality.

So I love that.

So those are, and yeah, and to be fair to the rep, I said if you don't do the 3 clinical cases, you did 1 in 90 days, then it defaults back to the 25% commission. That way, you know, we are fair with all parties that we work with.

Yeah, I love that idea. Well, we're kind of, bumping up on the hour. Sure. Any other comments, questions? Hopefully this was helpful.

It was. Thank you very much. We appreciate it. Thanks for all of your time. We really appreciate it.

Yeah, I, I love the device. Just got to get it, get more exposure. It, it works. If it were me, I would want a Core-X. I wouldn't want something peeled out of a box or infused, you know. So yeah, it's still the gold standard. Thanks, guys.

Thank you, everybody.

Yeah, good stuff.

Stay here.

Good conversation.