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Operator
Hello, everyone. Welcome to the Q2 2024 update call with Monogram. We look forward to reviewing our quarter with you. We've got a lot of great news to go over with you and look forward to your questions at the end of the call. Let me just read through this legal disclaimer so we get it on record and then we'll get into the meat of the matter. This presentation by Monogram Orthopedics may include forward-looking statements to the extent that the information presented in this presentation discusses financial projections, information or expectations about Monogram, business plans, results of operations, products or markets, or otherwise make statements about future events. Such statements are forward-looking. Such forward-looking statements can be identified by... the use of words such as should, may, intends, anticipates, believes, estimates, projects, forecasts, expects, plans, goal, target, and proposes. Although Monogram believes that the expectations reflected in this presentation are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Thank you for letting me go through that. Okay, this is just a brief summary of the agenda for today. We're gonna give you the brief summary of the financial information for the quarter and year to date. And then Ben's gonna go over the recent milestone accomplishments, next steps in our evolution, and then we're gonna open it up to questions. So just short and sweet. Okay, so in line with how we've previously reported, Our cash position at the end of June 30th, 2024 is $7.3 million. And we have a operating cash flow of 6.4, almost $6.5 million over the six months ended June 30th, 2024. Our average monthly cash burn, as we've stated in the past and we've stuck to, is a little over $1 million a month. We've been really tight on marshaling our resources to stay at that level, and we've succeeded in that goal. It's important to note that we have 27 full-time employees and a highly variable cost structure. We still have no traditional debt and no warrant obligations at this time. A portion of our spend was related to the verification and validation phase that was ongoing through June, and that's coming to an end. So we will be able to reduce our contract labor, which is a big part of our variable cost structure, to a degree going into the third quarter. So we're comfortable where we are, and we're ready to execute the next phase of our development. So with that, I'll hand it over to Ben and he'll go through the recent milestones.
Ben
Thanks. Sure. Thanks, Noel. And thanks, everybody, for joining you for our Q2 2024 business update. As Noel said, we hit some pretty major milestones that we're quite excited about. So the first, not the least of which, is we successfully submitted our 510K application to the FDA for our embossed TKA system. The application was submitted on July 19th. It has passed administrative review. So the FDA has gone through it and it is a complete application. And now we're in what's called the primary substantial review phase, which should last approximately 60 days. So we expect to hear from the FDA on or around September 17th. So that's going to be here before we know it. Just in terms of this is not guidance, but this is from the FDA's website. The goal in 2024 for the average time to a decision is about 124 days right now. So we. are pretty excited about where we are. We are looking through this fundraiser that we're currently running and some of the other initiatives to be in a spot where we can push forward. And we are not currently expecting a clinical trial request, but as I'm gonna get into with the next key milestone, we're ready for one if that becomes necessary based on the FDA's feedback. So again, we're pretty confident with the application. We're pretty confident with the substantial equivalence of our system to the claims predicate. And we look forward to interacting with the FDA around that submission. The next major critical milestone, we have alluded to this for some time, but we were able to announce our strategic clinical trial collaboration with Shalvi. Shalvi, we're very proud to be partnering with them on the clinical trial in India. We see a lot of strategic potential kind of in the intermediate term to post-approval launch OUS. We see them as a potential partner that could be very helpful for that. They are one of the largest orthopedic hospital networks in the world. We think it's pretty validating that they like our system. We are really excited to get it into their surgeons' hands. We are going to be working with six surgeons on the clinical trial. We anticipate there's going to be a pretty, pretty quick trial. It's 102 patients is the target patient population with three month follow up. And we anticipate that we will be submitting our system for regulatory clearance in India very as soon as possible. So we're kind of on track with those timelines. The plan right now is to leverage the clinical data from outside the U.S. for post-launch marketing in the United States, as well as for launching internationally where we think we can scale quite rapidly with less working capital constraints. So it's pretty exciting to be talking to various distributors. Actually in January of next year, we're gonna be attending a major international trade show in Dubai. where we hope to continue to explore commercialization opportunities outside of the United States as we anticipate hopefully a clearance. And obviously in the United States, we also continue to look at ways to leverage our technology. And with that, I want to highlight the key upcoming milestones that we see. So We anticipate submitting the application for regulatory clearance in India. We expect at some point to obtain hopefully clearance for the emboss system here in the United States or to have a decision. If the decision requires clinical data, we hope to be in a position where we're ready to provide that. And we are... working very quickly towards our first live inpatient, uh, surgeries, which of course is, uh, really why we're here and what this is about. So with that, I want to open up the opportunity for, for questions from investors. Uh, if you do have a question for Noel or myself, uh, please feel free to, uh, to write it in. And, uh, with that on the right-hand side, you'll see a, uh, a chat. I'll just, uh, Let me see if I'm not seeing any chat. Let me see if folks can now chat. Perfect. So on the right there, you can see if you want to leave a question for Nolari to respond to, you can type it to the chat. The first question comes from Tom Kerr. Let me put that here. So this release says FDA decision is expected within 90 days of initial submission, but you said previously six to nine months. Are those two different timeframes? Can you clarify the FDA submission timeframe expectations? Sure. So we do not expect a decision from the FDA within 90 days. The way it works is we're right now in the substantive review period, so that takes 60 days. And how it works with the FDA is that it's like playing chess where whoever's turn it is, that's their clock. So right now we're on the FDA's clock. So they have 60 days. Then when they come back to us with questions, they stop the clock and they hand the clock to us. it's our job to respond to those questions as quickly as we can and address anything that they raise attention to. And then we provide those responses back and the clock goes back to them. So the time that they review the application, they try and have that done within 90 days. And the average, the target that they have right now per the FDA is about 128 days. So hopefully that's helpful.
Tom Kerr
Okay.
Ben
So Ramesh is asking what our relationship with Shelby is. So Shelby is going to be supporting our clinical trial. They operate a hospital network primarily in India, but they're growing internationally as well in other countries. Their hospital business is growing at a pretty rapid clip. Shelby is actually publicly traded on the Indian Stock Exchange. So you can see what those financials look like. We will say the Indian market is pretty attractive in our opinion. So yeah. One of the big players in India to date has been a company called Corexo, which is publicly traded on the Korean Stock Exchange. They have provided guidance and we invite investors to go kind of research how many robots they have sold into India. We think it's a pretty impressive company. The population, obviously, in India is very large. They look very favorably upon robotic systems. And what's attractive to us about OUS, obviously, massive clinical opportunity, massive markets. But it would be the ability to scale our revenues with minimal, not minimal, but with less of a capital, working capital opportunity. So in the United States, we're planning to, it's a little more capital intensive to distribute in the United States, obviously higher margin. So the goal is OUS to grow very quickly, pressure test the system, uprev, anything that needs to be uprev to really work through any kinks that we see kind of in the real world. For example, reliability of various components and that kind of thing. as we have a more measured growth trajectory in the United States. Really, you get only one shot at a first impression. So what's really attractive to us is that we can work with a partner in India who moves a lot of volume, has a lot of experience with robotics, and really pressure test the system as we grow in the US, which is a more competitive market for robotics. Hopefully that's helpful. So Sal's asking about our plan for raising cash in 2025. So obviously, you know, our need for cash is going to be driven by our ability to execute milestones. We think that we have been working extremely hard to... To hit our milestones, obviously submitting the 510K was a pretty significant achievement with such a small team. It was a huge amount of work. There was really no task that was too low for anybody on the team. We all really worked very, very hard. So I think it's going to be the same thing for, you know, once we get clearance, that's obviously a very critical milestone for the company. We think that certainly hitting milestones and de-risking the story will continue to enhance the capital appetite from capital allocators in our space. And as we continue to have validation from surgeons, from other strategics in the space that are saying, hey, what Monogram has is real, it's competitive, it's a solid product, we anticipate that we'll have access to more and more capital as we just keep putting one foot in front of the other and building. So would Shelby be a prospective client of Emboss Technology? So certainly in India, you know, they have a very strong presence in India. We think that they would be a great partner in the Indian market. And obviously, it depends really kind of it's going to be market dependent. We're taking one step at a time. They they're a very ambitious company. We are very close to their management team. We think that they have a very impressive group of surgeons that they work with. So certainly in India, a great opportunity for us. But we you know, we're really taking one step at a time in terms of how we're going to be moving forward. so um you know there's a number of questions about the current uh offering um so we're not making any uh comments on that at this point uh but uh obviously we think that uh it's it's uh you know we we think it's attractive just given where the the stock is currently trading and and the preferred offering is uh trading obviously We're offering those shares at $2.25. So we're hopeful that that is an opportunity for our investors. But we haven't made any public comments on how that offering is going at this point. We have said that we plan to close that offering in early September, and we still are on track to do that. It's really nice having that as an option. We're really kind of innovating in that space. It's capital for small companies from institutional players. It really comes down to de-risking and moving the ball forward. And we think that as we continue to execute, we hope that it'll get easier and easier to access bigger pools of capital. God, have you tried reaching out to our investor relations? So, you know, the big the big difference is that we're offering preferred shares and what's publicly listed are common shares. So we would invite you to we've tried to send a couple of explainer emails, but I would invite you to try and read those emails where we try and explain the difference between the offerings. So Gary's asking, when do sales start once we're FDA cleared? So it really depends on the market. Our goal is to OUS. We expect that the market ramp can be quicker than in the United States, just given how things work in the United States with COVID. Legal contracts and hospital groups can be slower moving. One of the things that's very attractive about Shelby is they are very fast moving. So we do anticipate once we get clearance, our goal is to ramp outside the U.S. as quickly as possible. But we're positioning ourselves to be launching in the U.S. as well. We know which accounts we want to go to and which surgeons we want to start out with. But it really is hard to negotiate with hospitals before you have a cleared product. So there is some time that it will take us to ramp up. Hey, Tim. So Tim's asking, regardless of FDA requirements for clinical evidence, it sounds like you are pushing forward anemia for actual clinical patients. Yes, so... You know, one of the things that, especially for the U.S. market, right, surgeons, nobody wants to be the first person to try a new system on their patients. So we're going to have a post-clearance marketing through this clinical trial, be able to show them, hey, look, you know, here's... Here's the outcomes for 102 patients. So we think that'll be really helpful for helping to scale in the US, especially kind of some of those first movers that we're targeting. So Andrew's asking, he says he sees the stock has remained below three bucks. Do you believe after successful human debt would increase? You know, so I think, Andrew, you know, one thing we want to say, and I'm sure there's a lot of investors on the call who are just kind of frustrated with the stock price performance. Obviously, it is it can be a little bit frustrating. You know, the way we kind of think about it is. When you look at comps in the space, post-clearance, when you look at what companies have been acquired for, you know, I think we had – I don't know if we – So you can see this is a table that shows what some comparable companies have been acquired for post-clearance. When you think about just kind of an expected value, right? So in terms of how we think about it, we think about what is the probability that we get clearance times what we think the company would be worth post-clearance. And then what is the probability that we don't get clearance? You know, and what would the company be worth if we didn't get clearance? And we certainly think that the market is, I would say, being very conservative about our clearance strategy. That's how I would interpret it. I think that we have presented a very reasonable approach to how we're gonna get clearance. And so we have, not only do we have a really solid submission that we've already done, we're gonna hear back from the FDA pretty soon in September, but we also have a backup plan in terms of clinical trial with Shelby. So I really do think that we have done a very good job de-risking clearance as much as we can. The cost to run the clinical trial in India is very, not only is it quite a bit less than it would be in the United States, but the working capital required to do so is considerably lower. And that's because Shelby purchased Consensus Orthopedics, which is the manufacturer of the Empress implant. So we're using our implant in India for the clinical trials. So that's really a very attractive thing for us. um so hendrick's asking um how many uh surgeries do we uh see occurring on a weekly basis to achieve that so uh hendrick we have uh three sites and six surgeons and uh the the amount of uh surgeries that uh Shelby does annually, we disclosed that number, I think it was 14,000 knees a year, which is a lot of knees. So we think that we can move through the clinical trial pretty quickly. Obviously, we don't want to rush through it. We want to take our time and make sure that we do things right. But we don't anticipate the data collection will take very long once we have everybody enrolled. And we don't anticipate that the enrollment is going to be very time consuming either.
Tom Kerr
So let's see here.
Ben
A lot of questions about just kind of, you know, time to initiate sales post clearance. I think we've, we've touched on that. I think there's a lot of kind of just logistical questions that our investor relations firm can answer. So Tom's got a good question here. He's just asking, you know, if this is a good bird rate per quarter assumption. Noel, any comments on that? It looks like you're muted, Noel.
Operator
No, I think that's a good assumption. We've been running a little bit over $1 million a month, and we're going to be able to reduce that a little bit with the variable cost structure going down with our contractors that were involved with the V&V. And that'll be somewhat offset by the clinical trial costs that are very reasonable, as you noted. So that's a reasonable burn rate, and we expect to be successful, as you noted, in our continued capital raise efforts through the same time period. So we're comfortable in our position.
Ben
Perfect. Robert's asking, how can folks buy at $2.25? So if you go to our website, monogramorthopedics.com or monogramtechnologies.com, it's right there on the homepage. You'll see how to purchase shares. So you'll be buying preferred shares that pay a dividend that are convertible into common shares, which is what's listed on NASDAQ. So if you ever wanted to sell, it's pretty straightforward to do that.
Operator
And today I believe the price is $260, around $260.
Ben
Yeah, so Mark's just asking if we have to wait for FTA clearance until we can start building robots. Yeah, so not until we start building robots. We anticipate that we're going to be building inventory before we launch. but we do need to have the clearance to legally sell our products. So obviously in med tech, there's very high barriers to entry. It's very, very expensive and difficult and challenging, time consuming to commercialize a robotic system. But that's really where we think the value is. Once you have a system that's cleared, obviously that's a huge, huge achievement. especially if the system has attractive product market fit. So we have a question here about... One quick second. So I have a question here about why we're not targeting China versus India. So one thing about India is that it's, that I think China is currently, you know, probably developing more of, but India has a very well-established infrastructure for running clinical trials. Uh, it's actually, uh, very sophisticated. The CROs in India are very knowledgeable. Um, and, uh, the FDA is pretty, uh, comfortable with India. Um, we, we actually, in our pre-submission, uh, shared our clinical trial, uh, protocol with the FDA in detail and, uh, discussed, uh, the Indian population. And, uh, they, they, um, they just do a really good job with running clinical trials, but obviously China's a, you know, a huge market and, uh, Shelby, uh, does have a pretty ambitious growth plan. So certainly China's a huge market. Uh, it also, unfortunately has been, you know, more and more difficult for us companies to, um, just technology companies in, in China. That's, uh, that's not, uh, the easiest thing, uh, market to, to penetrate.
Tom Kerr
Okay. Let's see here.
Ben
So we have a question here from William about when we expect to have results from Shelby. So we're really in the final stages of submitting to the Indian regulatory authorities. What's been communicated to us from our CROs that their review period is about 90 days, after which we would get clearance. We would expect to get an import license before that. The time to get an import license is a little quicker. So our goal is to be as ready to go as possible for once the Indian authorities clear the system for the trial. Andrew is asking about ethical concerns surrounding the clinical trial in India. I mean, no, because we're actually planning to commercialize in India. So having a clinical trial in India and having data will support the clearance in India. And we think India is a very attractive market for our products, as evidenced by Correxo and what's publicly available in terms of how many units they've been selling in India. Yeah. So Stuart Stuart's asking, you know, just kind of for maybe a little more detail on that. So to put in perspective, we've seen guidance from from Grexo, which is in India. This is from 2013 of placing 100 units in 2013 or sorry, 2023. So obviously, that's a pretty attractive market size. We think that India has a lot of potential. And then obviously, there's a lot of markets around the world that there's a need for robotics. In the United States, the market opportunity is, as everybody knows, huge. We do about a million knees a year in the United States. And then obviously, there's hips, shoulders, spine, ankles. So there's really it's a... It's a huge market. Our primary addressable market is about $20 billion, and that's adult joint recon. And then if you add in extremities and spine, it's about $30 billion. So it's a very attractive market in the United States as well. So I think, you know, we just have some similar, you know, just questions about the stock price. And obviously it's, you know, it's the market. The market is seems to be taking a wait and see approach in terms of, you know, getting getting clearance. But I think our job is really to keep building. Our job is to keep finding people, surgeons and partners who are attracted to what we're developing. We think we have a differentiated product. We think our product, there's a need for our product. And so we continue to think that there's something here, here. That's what we're doing. We're going to focus, put our heads down, and the price is what it is. There's only so much we can control that. Obviously, we do think that over time, if we continue to execute, hopefully we see that turn. OK, looks like, you know, just a number of questions here. You know, Robert's asking about how he can purchase this. So, Robert, you would if you go to our website, you can purchase the stock at two dollars and twenty five cents. And then you'll have the shares will be held by our transfer agent. And all you have to do is give the statement to your broker. You ask them to convert the shares into common shares and then give that statement to the broker and they'll transfer them to Fidelity or whoever your broker is. So it's a pretty straightforward process. The preferred shares are convertible one-to-one at the shareholders whenever they want to do that. So, I mean, you know, theoretically, you know, they, well, that's what I'll say there. So, Robert's just asking about, you know, the competitive landscape. You know, I think what's, pretty a pretty interesting opportunity is that we haven't really seen you know we've monograms been developing since 2016 and um we really uh have not seen anything uh that's similar to what we're doing um there's really not many with the exception of mako uh robots with a saw based cutting end effector a saw is a very efficient way of resecting bones for a total knee replacement we think that what we have is pretty compelling. If you listen to our prior call, we explain the value proposition of our system that's available on our website, on our IR link. But to cut a long story short, Mako is the dominant player in haptic robotics. So that's kind of user-initiated cutting. The user, in this case, the surgeon, grabs the end effector and quickly and efficiently resects bone quite accurately. So Monogram is going to try and own active robotics. So that would be... a paradigm where the user is not required to move the robot end effector around. And we think that we have solved a very, very difficult robotics problem that nobody else has really solved. Any other active system on the market utilizes a rotary tool. which is a less efficient way to resect bone. A lot of those systems require, for example, external fixation. There's issues with potentially thermal necrosis. They require irrigation. We also have a very, very robust soft tissue module. So we think we have a really robust system end to end. And the VNV demonstrated the accuracy of our system. We're excited for the clinical trial to demonstrate that further. So I think we have something really, really pretty compelling. We're getting a lot of questions here. I think maybe, Noel, what we need to do is hold a webinar so, so that we can address all these questions. Uh, I have a hard, I have a hard stop. I'm already 10, almost 10 minutes past. So I, maybe we get one more, one more question, but we'll hold a webinar and it'll be, uh, we'll give, we'll give folks who have a lot of questions and opportunity to ask more questions. Um, William Morrissey, uh, I can see you'll avoid which questions does he say we're avoiding? Who is the transfer agent? Equity stock transfer? You seem to be avoiding the question on pre-IPO stock. I'm not sure I understand what the question is. So we're listed on NASDAQ. Okay. So I think we need to do a webinar. No, there's a lot of questions from folks. And not all of it's really kind of tied to quarterly updates. But I guess just to really summarize, the team executed on our goal to submit the 510K on a very aggressive timeline. I mean, we're a very lean team, 27 employees, full-time employees. And this was a huge amount of work in a very small team. We've been able to keep the burn down and be very aggressive about developing in a capital-efficient manner. And so now it's really about continuing to execute. The clinical trial is moving forward. That's, I mean, putting a clinical trial together is not a trivial task, but we think we have, we're in the finishing stretches of having that. We have a really solid partner in Shelby who are working with a really solid CRO as well. So that's going to be a pretty significant step achievement, our first live inpatient surgeries. We were very excited to kick that off. But I do think we need to put together a webinar. So we'll do that. We'll take that feedback. There's a lot of questions here.
Operator
I completely agree. Let's just get that scheduled for September and and get all these questions teed up prior. So we're ready to have the discussion. So there's a lot of information out there and I can see where we could go. We can go on and on and on about it. So I think it's a really good idea.
Ben
Perfect. So with that, we, we thank you everybody for your time. Uh, thank you for your support. Uh, we've had a lot of questions about, uh, how to invest. I'm going to drop, uh, I'm going to drop a link here. So, um, Here we go. I'm just going to drop the link to the investment. If you go to the website, I just posted our website, monogramtechnologies.com. All you have to do is click on the Invest Now button and you'll see all of the details about that offering available.
Operator
Yeah, I'd just like to make a quick comment for everybody just as a reference. We recently had a couple of surgeons who are familiar with our offering with our robotic system do an interview, and that's been posted. That's out there on the web. You could track that down and look at it. You get a really good sense of how the surgeons are looking at this technology as an advancement in their space. And they're super excited about it. And that makes us excited about it being a product that is ready for a good market opportunity. So I would hope that you would take the time to try and find that and have a look.
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