BoneChat Call #18 - Dr Jeff Kleiner/Stew Peabody - startup solving the interbody grafting issue

Okay, we're— so we're live with Dr. Jeff Kleiner and Stu Peabody to talk about their startup, and I'm going to hand it over to Stu, I guess, first.

Uh, thanks, Tiger. Yeah, I, uh, I appreciate, uh, the, the opportunity to talk a little bit about what we're working on with the BoneChat community. I'm a BoneChat member. You know, when, when the opportunity to, to fill in for, for the audible this week presented itself, I, I thought it would be good to, to bring in Dr. Kleiner to, to speak, speak about what we've been working on. And, you know, I got involved with the company as an early investor initially, and then got more hands-on involved when they were looking to raise some outside funding. So I helped facilitate our angel round, our first real outside investment round, and then subsequently a Reg CF round, which I think, you know, we had— one of the Bone Chats had discussed a little bit, you know, previously. We had a, you know, decent success with that. We raised $1 million. But yeah, I, since getting involved on the finance side, obviously I'm not deep in the orthopedic space. My background's finance, but, you know, I thought what Dr. Kleiner had developed was really a unique solution that seemed to be You know, I, I question why it wasn't being done already. So, yeah, with, with that, Dr. Kleiner, did you want to pull up the slides and talk a little bit about your background?

Sure thing. Can everyone see my screen right now?

Yes.

Oh, okay. Well, let me just switch us over to a slideshow and then I'll give you a little bit of backstory about me. So as, as noted, I'm Jeff Kleiner. I, I'm a spinal surgeon, and during my 25 years in practice, I just got really frustrated with what industry offered in terms of being able to do bone grafting. All kinds of neat strategies and tools came out, but this was the one thing that, that just really hampered me, and it frustrated me to the point where I got together with one of my good buddies who was a Ball Aerospace engineer, and we came up with what really seemed like a solution that was so simple, it was almost stupid. And we went through a number of iterations with a bone graft delivery system, and that's morphed into a system which is now kind of a combination of implant and, and a cannula. Uh, so we kind of started off with an idea that was intended to solve a problem, and it ended up solving a lot of problems. And I'll go through that, uh, now, uh, with you here. And please feel free to, to interrupt or discuss, uh, with me whenever things come up, uh, which are questions. I'm going to pose a few as we move along here. So here's, here's what I think is the biggest issue in, in as far as bone, bone graft delivery. And that is we're really stuck with an archaic type of, of tool. The goal is to maximize the scaffold and cells to increase the likelihood of the fusion healing. And there's abundant literature which shows that that's the case. The more scaffold and cells that you deliver, the more likely that you're going to end up with a successful arthrodesis. Again, I hate this tool. It jams. As we go through my language, which I won't repeat online here, these tools end up delivering their graft material right in their path. You end up with this massive graft material. If it's not something which is easily mobilized, then you have to go in with a spatula past all the sensitive nerve tissue and then push that stuff aside. And if you don't, then you end up with an implant which is proud in the spinal canal. And what's more, the more modern materials, the materials that science tells us are going to be perhaps the best in terms of creating an osseoinductive and, uh, uh, uh, attitude, uh, you just can't pass through these round-end dispensing devices. So what do you do with those? And likewise, it's a real challenge taking what is intended to be, or thought to be anyhow, the gold standard material, the local bone graft or bone graft from, from the patient's body, because those won't go through these round-end dispensing devices. So that kind of conjures this, this challenge of getting adequate volume into the disc space. You have one chance for success, and if you don't, you end up with this what I call graft insecurity, where you just don't know if you've got enough. You don't know if you've filled up the disc space appropriately. And that concept of graft insecurity can be further exaggerated by lack of confidence in graft and the material that you're grafting. And if you have a patient with comorbidities, what are you going to do? You have someone with diabetes or hypothyroidism, then you're, you're going to end up having to use an adjuvant. And that has its own issues with expense and side effects. And the consequence of all these things is with minimally invasive approaches, which is kind of shown through this, this, this tube, 60% of MIS surgeons end up using BMP, which again adds to expense and potential complications. When we took a look at, you know, what is the limitation here, it really became apparent pretty quickly. And that is, you know, these round-end dispensing devices, which I mentioned in a deplorable fashion earlier, they don't take advantage of all of the annulus that you've exposed. So this is a site where the annulotomy would ordinarily be performed. And you can see that in this slide, that's, that's what you got. So these larger cross-sectional area cannulas, rectangular one, decrease the resistance to flow for the graft materials. And if you take a look at the cross-section of a rectangular system versus a round system, you can see that you really don't take advantage of everything. In fact, this only— these round end dispensing device systems only provide you with about 75% of the available cross-sectional area. And so it's really a simple matter of creating that physical change and you can improve your graft flow dynamics. So we took a look at what kinds of challenges there are in terms of the grafting process. And you can see that there's all of the issues here. And what we really intended to do was to, was to use the grafting process as an opportunity. And in the process, we hoped that we'd be able to accomplish other things as well. And as I'll show you, we were pretty fortunate in that regard. So if we take a look at all of these things now, the grafting process, the complexity of the procedure of avoiding tissue damage from multiple passes in and out past that sensitive nerve tissue, of surgical site infections, of making this a less time-sensitive procedure and looking at the opportunities in the ambulatory surgery center, I think we've pretty much accomplished all of those things. So let me just show you how the system works. You can see the pre-assembled implant with the attached to the cannula. And so it's just a matter of inserting it A whole host of graft materials are then, uh, can be passed through it, and then it's just a simple matter of releasing it. And all of this comes in the single-patient-use pre-assembled and pre-sterilized set. So I'm, I'm gonna kind of show you, uh, with some areas, uh, uh, blocked out in terms of our go-to-market strategy. But what we found was this system works extraordinarily well every one of the stakeholders in the spinal surgical community really is pretty satisfied. The surgeon happy with the amount of graft material they can get through and with the limitations of, of minimally invasive type of portal to the, to the disc space, able to easily accomplish that. Patients have access again to a simpler operation which can be performed with a minimally invasive approach. OR staff have essentially no learning curve, and central supply does not have to be involved because this is a single-use system which comes pre-sterilized. Equally amenable to a hospital or an ambulatory surgery center, and it's, it's, you know, frankly cheaper than what's, what's available. So we've gone through these different phases. We've enrolled our 10 surgeons have had excellent early results. We're in the midst of Phase 2 here, and our Phase 3 is up and coming, which will involve adding strategic partners and, and getting our process over to across the pond to European countries. So I'd like to open it now to discussion and see what people might think. I guess I'd throw it out to the group of listeners here. Have you folks had experience with challenges with bone graft delivery? And have you noticed how we've ended up manicuring the type of graft material to become flowable instead of something which is actually the most osteoconductive and inductive.

Yeah, I, I think from my experience, this is Anthony Squaboda, uh, speaking, uh, I, I had some early on experience with a lot of pliffers and using more of an I-beam pliff concept, and it was usually just the bone funnel and the tamp. But yeah, you couldn't, necessarily get it, get the graft material up front, um, in specifics, uh, it was just very difficult. So yeah, there was additional instruments to help push the graft forward, um, to where you thought it would be in a safe place. So Anthony, I'm not sure your background, are, are you a surgeon or, uh, uh, yeah, so I'm a, you know, 20-plus years spine medical device you know, sales and marketing person.

You know, and I think that one of the other things that we were really surprised to see is that the volume of graft material that you can apply once you put the implant in first, because it adds a distraction to the disc space, which you ordinarily would not be able to to account for if you apply the graft material first. And Anthony, I'm not sure if you've had any experience with that or if anyone else has in terms of, you know, the backfill type of process because you're further crippled with kind of a cocktail straw to try and deliver graft material then. Any thoughts there?

Yeah, that's right. And specifically, I mean, this was you know, down in Australia where they invented the hourglass or the R90. So it was more of an I-beam, so a very thin inner body implant. So get the devices in, get your set, your lordosis put in place, and then fill as you could.

Anyone else have any thoughts or comments on that? And then I, I'd, you know, I'd like to discuss some of these other things which are on the list here, which, which we've encountered.

But also on the TLIF, I had, yeah, you do try and that, that picture you had on the third slide, I believe. Yeah, you get the graft material and then you're like, well, the, the back end of the implant is sticking out and you're trying to push it forward. Yeah, there you go. Where the back end of the implant's out and it's not forward because you put bone— 'cause with a TLIF, you know, that's the idea is getting as much bone graft as you can up to the front. And that's the only way surgeons have done it. Put it in first, then put the implant in. And then, but you know, you may or may not have the back of the implant sticking out.

Anyone else have experience with this kind of frustration?

So maybe I could jump in here. I know that the group has a broad background in orthopedics, not necessarily specific to spine. I know there are some discussion items, Jeff, that we wanted to cover that would apply across the orthopedic space, but specifically around kind of the changing landscape around the distribution model. My experience, you know, from discussing with folks in the industry is, you know, the landscape's changed a bit from when surgeons had a lot more power with respect to selecting the devices that they wanted to use and getting them into the systems. One of the areas that we've kind of been bumping up against and looking for innovative ways to surmount it is, you know, getting through— once you have an interested surgeon, getting through the kind of institutional resistance, if you will, with respects to getting on the— you know, getting through the VAT and getting onto the approved vendor list. A number of Number of systems are consolidating vendors, and, you know, if you're a startup with a specific, you know, a small product portfolio of market-ready devices, it can be a challenge. And, you know, we've experienced that you have one of two less than ideal options. One is leaning on the surgeon to champion and kind of put political capital on the line to get your device through the internal systems, the internal processes at the hospital systems. And that's asking a lot of your customer, right? And then two, you know, the other option is lean on an independent rep, and that's assuming you're operating off of a model where you don't have direct in-house reps. And they, they have a full bag of products from, you know, other companies. And it can— that, that's a challenge that I was looking to the group to see if you guys have had.

Yeah. So let me, let me, let's switch to unplugged discussion so that the record will turn off the recording now. I mean, it's like, let's assume, um, that the product works and it delivers a better, a better amount of graft and you get a higher level fusion. So now how do we build this business to work? Time out. You've just watched the front end of a BoneChat member discussion before we went deeper into an open, honest discussion around the topic. In order to participate in the growing BoneChat entrepreneurial community, you must become a subscriber. You can join today at bonechat.com and your first month is free. When you subscribe, you will get access to both the private Slack channel and be able to participate in these weekly Zoom calls. Hope to see you there. Thanks.