Aurora Spine Corporation

Good day, and welcome to the Aurora Spine Third Quarter Financial Year 2024 Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Chad Klaus. Please go ahead.

Good morning, everyone, and thank you for joining us for the Aurora Spine Corporation quarterly earnings conference call. We look forward to discussing our performance for the third quarter of 2024. Before diving into the details, I'd like to remind everyone that this call will contain forward-looking statements. These statements involve risk and uncertainty, and actual results could differ materially. For a full discussion on these risk uncertainties and factors, you are encouraged to read or respond to documents on file with CDAR Plus, including those set forth in the periodic reports found under the forward-looking statements and risk factors section. Statements made during the course of this call may be considered forward-looking statements within the meaning of Section 27A of the Security Act of 1933 as amended and Section 21E of the Security Act of 1934. These statements reflect current expectations concerning future events and results. Words such as expect, intend, believe, may, will, should, could, anticipate, and similar expressions are words that are used to identify forward-looking statements, but their absence does not mean a statement is not forward-looking. These statements are not guarantees of future performance and are subject to risk and uncertainties and other important factors that could cause an actual performance or achievement to materially differ from those projected. ProRespond does not intend to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise. On this call, management referred to EBITDAG, just EBITDAG, adjusted net income, or just EPS, which are not measures of financial performance under generally accepted accounting principles or GAAP. Management believes that these non-GAAP figures, in addition to other GAAP measures, provide meaningful supplemental information regarding a company's operational performance. Investors should recognize that these non-GAAP figures might not be comparable to similarly titled measures of other companies. The measures should be considered in addition and not as a substitute for or superior to any measure of performance prepared in accordance with GAAP, reconciliation of non-GAAP measures. The most directly comparable GAAP measure in accordance with Section C Regulation G can be found in the company's earnings release. We're joined today by Trent Northcutt, our CEO, and myself, Chad Klaus, our Chief Financial Officer. We will present our overview of our financial statements following by Q&A session. I will now turn the call over to Mr. Trent Northcutt, President and Chief Executive Officer of Aurora Spine. Trent, please proceed.

Thank you, Chad, and good morning, everyone. Detailed financials for the quarter are contained in the Q3 filing and the press release filed on Thursday. I'm pleased to share our results for the third quarter of 2024, which marked a pivotal profitable with net income of $71,000. This transition to profitability was made possible by strong growth in sales and continued focus on cost control. Our strategic focus on expanding the sales force and targeting underserved markets has yielded strong results and evidence by our significant sales growth and improved profitability. On Thursday, we issued a press release detailing our financial results. Hopefully you've had a chance to review the news release, but if not, a copy can be found on our website at www.auroraspine.com under the investor section or other financial websites. I'd like to discuss some of the financial and operational highlights for the quarter. We reported a $4.8 million market marking the fourth consecutive quarter of over $4 million of sales in which represents a 21% increase compared to Q3 2023 and a 23% year-over-year. Also, a 687K increase from Q2 to 2024. The quarter benefited from strong demand in the pain management sector, particularly in the siloed TFX and the ZIP51 implant, driving by targeted sales and lab training courses. Our net income for the quarter was $0.071 million and a significant narrowing from the net loss of $2.49 million in Q3. Transition to earnings per share of 0.0 in Q3 2024. Gross margin improvement to 60% in Q3 2024, or up 59.7% in the same period last year. The margin improvement is a direct result of the increased sales of proprietary products with higher profitability, particularly in markets with favorable pricing, dynamic surgery centers and ambulatory surgery centers. Operating expenses in Q3 2024, $2.81 million up from $2.61 million in Q2 2023. Expenses represented 59% of sales in Q3 2024 compared to 66% of sales in Q3 2023. The rise in expenses was primarily due to increased commissions and travel costs associated with expanding the sales force partially offset by reductions in research R&D and research and development and professional fees. We generated 0.519 million in operating cash flow, reflecting our strong operational performance and efficient working capital management of capital. Notably, the siloed TFX sales grew by 35% from Q2 2024 to Q3 2024, reflecting the success of the Aurora's expansion into the pain management market. Zip 51 sales have doubled in 2024 compared to 2023. The robust growth is attributed to intensified marketing efforts and increased adoption among surgeons. Aurora continues to scale the sales team, directly contributing to the sales surge. The addition of new sales professionals is expected to further drive growth as they're onboard more surgeons into the Aurora's ecosystem. The company maintained its commitment to excellence by conducting advanced training sessions in cadaver labs for top orthopedic, neurosurgical, and pain management physicians, showcasing the clinical advantages of the ZIP and the silo implants. I'll now hand over the call to Chad for further discussion on the financials.

Thank you, Trent.

I'll now take you through some additional financial details. Sales for the nine-period month ending September 2024 was $12.8 million, up from $10.4 million in the comparable period of 2023. With a net loss of $0.35 million, it is a significant increase from the loss of $1.39 million in the comparable period of 2023. The decreased net loss is a combination of increased sales and cost controls as we continue to expand the sales force. expenses represented 64.3% of sales in the nine-month period of 2024 compared to 69.8% of sales in the period of 2023. EBITDA, a non-GAAP measure, a non-IFRS measure, was 0.38 million compared to 0.12 million in Q3 2023. This marks the fifth consecutive quarter of problems with EBITDA. We ended the quarter with $0.88 million in cash and cash equivalents, up from $0.37 million at the end of Q1. This increase is due to strong operational cash flows with prudent capital management. And that income of $0.071 million was increased by a reduction of accounts receivable and increase of payable offset by an increase of prepaid and inventory. The company has increased collection efforts, which we can be seen by a reduction of the trade accounts receivable by approximately $400,000. Inventories remain steady. Inventory levels remain steady, and the company has not had supplier delays in replenishing inventory. The company is currently manufacturing zip and TFX implants in our facilities along with the TFX instrument. The company invested $69,000 in instruments and trades in the current quarter. These instruments will support the increased sales of Aurora's implants. The increase in accounts payable is nominal and a product of the increased business. The company issued no shares during the quarter and recorded $28,000 in expense for stock-based compensation. The company issued 87,500 stock options and 212,500 options were forfeited in Q3 2024. Approximately 9 million warrants expired in September 2024. These warrants were issued as part of a private placement in September of 2021 with a three-hour window to exercises expired in September of 2024. I'll now turn the discussion back to Trent.

To summarize, we are very pleased with our performance this quarter. Our strong results reflect the hard work of our team and our commitment to executing our strategy. We are optimistic about our growth prospects, and we are confident in our ability to deliver the value back to our shareholders. Operator will now open up the floor to questions.

We'll now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2.

At this time, we will pause momentarily to assemble our roster.

And our first question comes from Tom with Micro Cap Connection. Please go ahead.

Hey, good morning, guys. Congratulations on a fantastic quarter. You know, we saw record sales of 4.767 million. and earnings of $71,000, which is a big sigh of relief for a lot of investors seeing profitability. Now, siloed TFX sales were 48% of all sales, or $2.3 million. And if I reverse engineer it based on $7,000 per implant, that was 328 implant sales completed the last quarter, which is over $100,000 Um, per month, uh, which I think I believe was a target that you were seeking before you ordered more kits. Uh, can you speak about, uh, the, the, um, the, the robust sales of silo TFX and maybe speak about the, the addition of an additional new 60 kits that you've got. And then to add to that, how long will it take for those 60 kits to be deployed, um, over the next, uh, over the next year?

Well, thank you, Tom, for the call. Thank you for calling in for the question. Yeah, the TFX sales are expanding and we were keen on that. We knew that we would be building out new inventory. We're constantly monitoring and seeing where that's going to land. I put out a video online, a social media post showing that we'd received more instruments. We're also doing some some modifications to the kit for positive things that we just found that are better for us to tweak in the system to make it just a little bit slicker. And so we're happy about those changes. It's not an expensive change. It's just part of the process of call it a 2.0 upgrade to the system. It's going really well. And yeah, we are right on the mark with the deliverables to get those trays up and out. Uh, we are, uh, have, have, have throughout the year. We were getting, you know, increasing and getting, getting closer and getting up and over to the a hundred units a month. Um, and we think with these, these additional kits and with the new feet that we want to add on the street, uh, going into the beginning of the year, um, we have homes, we think for those, uh, additional kits that are being built out as we're, as we're speaking.

Will those kits remain stationary or are you still planning to move them around?

Well, for now, we are still moving some kits around. That's just kind of how it goes. You know, it's not like a cervical case or, say, like a lumbar case. Typically, you can leave those kits there and you don't have to ship them out as often. But some doctors only have you know, one or two a month, some have more. And so those kits need to get up and get shipped out in different parts of the country. And there's, you know, there's different regions, right? There's different regions why, you know, who needs the inventory and they might have more than one customer in that week, you know, might be four or five customers. So we'll have to ship four or five kits to that location.

Okay. And, and you've, how many kits that you have in use in Q3 to obtain the 2.3 million?

I think we're only at 35. Chad, you can correct me if I'm wrong on the number, but I think it's about 35 kits, only 35 kits. Amazing. Yeah, that sounds amazing.

Well, again, if you reverse engineer $7,000 per implant, it works out to 328 implant sales or turns, as you call it, or 3.13 turns per month per kit. So, again, very, very good. Congratulations there. Thanks. Now, Art, And I've got a few questions from some others here as well, by the way. Can you speak about, you know, the deployment, I guess, of the kits and the relationship to some of the new sales directors that you have, what the impact is of these sales directors on TFX?

Well, I think what you're saying is that, you know, who's been the most impactful, like regional sales managers? Is that what you're asking me? Yeah, we've, uh, we've got, um, there's, it's, it's always in the front of everyone's topic. So when they're out talking to different surgeons or different interventional doctors, we're asking questions like, is this something that you normally do and you're in your practice? Are you, have you been interested in SI fixation or fusion? Um, there's obviously the reasons that we're in there. One of the things that I'll say is that, um, Texas has been a great location for us. We tend to do quite a few procedures down that way. Florida, Northern California, we've seen kind of an uptick there. And so other areas in the Midwest that seem to be real responsive to having this procedure done in their location. The The different people in Arizona, too. So it seems kind of like the warm weather places in particular areas that people just want to get back on their feet. We've seen that we're getting a lot of revision, meaning they get their one side done. The patient gets so much relief off their one side that we turn around and do the contralateral side and get both of their SI's fused because now they're completely pain-free. Um, after that and the pain goes away like immediately, um, and people come in with an ache, you know, they can't even sit still in the surgery center or hospital and they get their, uh, get their side fixed and, and then they walk out that day and they're like, it's already going away. Um, we're really pleased with that. And, um, so yeah, just different, different parts of the country, typically warm weather. There's many pockets of the country that, you know, like two thirds of the country, we're still not covering.

Amazing. Amazing. Are you seeing a correlation with the uptick with zip sales in relation to the addition of these new sales reps as well? It's not just the TFX that is benefiting.

Well, I think the zip sales are, is that it's been, it's really what opened the door for us in the interventional market, because, you know, as you know, we were the first company to, to do a multicenter study with ortho neuro and pain together in a collaboration in a multicenter fusion study had never been done before. We did it, and we have really strong clinical outcomes on that. We have a high success rate with that. That gives us kind of that crown, you know, jewel in our crown to be able to talk about at trade shows and conventions. Like, we can look everyone in the eye and say, look, we did this. We did this to prove it to ourselves, but we did this to prove it to the industry. And ultimately, we had a goal of offering a screwless procedure to patients across the country, you know, Pedicle screws continue to drive, you know, lumbar fusion that's dictated by, you know, surgeons that, you know, that's just what they're trained in, what they're most comfortable with. And we're trying to show them that there's another way. And we've actually started picking up because of the multi-center study and some of these congresses where they get ortho and neuro get invited into these pain conferences. We are now starting to see arise in our usage in the ZIP with these doctors that say, oh, now that I've seen it, I see you guys got the data, I'm interested in taking a look at that again. Because it's now been tested over and over again. It's not like a fly-by-night system that people try once and then don't use again. It's got some good traction to it.

Nice, nice. Let's move on to the DEXA-C. I understand you hired a new sales director previously. How has sales gone? Are you starting to see some traction? And maybe you can give us an idea what we can expect come year end. Also, Sergio has asked me to ask you about the osteoporosis market. Is this a market you plan to go after given your unique advantage with the DEXA line?

Yeah, there's two things that you, you know, I know we're still waiting for Dexter to get its big, big push up, but we've, we recently moved, uh, we had, we had another, we have our system, the hydro lumbar system, right. Which is, um, it's meant for lumbar fusion. And, um, we added in there, there was an opportunity for us to work with another company that, that wanted to work closely with Aurora. and we started to involve their system into our system, and we rebranded their technology called OsteoOnix. We moved that into our portfolio, and it's going really, really well. What that does, that product is a product that adds an enhancement to the Hydra system by this rough-and-surface technology where patients that have lesser bone quality The roughened surface allows bone to attach to these implants with a more rigid fixation to the implant. There are studies out there that validate this and verify this. We thought that that was really interesting to us because it matched what we were trying to do with Our comment is, you know, bone density matters, right? That's one of our taglines. We really believe that because we know that not all bone density is equal, not all bone quality is equal. There's just differences between patients that are of different age groups. And the other thing that we fell into as we started to expand on our DEXA technologies, we then recognized that in a patient's spine, they could have all healthy levels of except for one level, could be affected, just one level. So let's say, you know, L4 and L5, and this patient's going to have a two-level lumbar fusion. On L4-5, on that particular level, that could be an osteopenic or osteoporosis level, where the level above it, L3, and the level below it, the L5, is green, meaning it's in the normal bone category, where it actually has a healthy T-score. That was really interesting to us because that meant that what are you going to do with that one level? Are you going to be able to treat that level with the same old one product density fits all or one implant that doesn't have any special bone characteristic, adhesion characteristics to it? You're just going to just hope that that level works. And we said, well, this is a really keen idea for Aurora. We can really focus here. It gives us that door opening opportunity with that surgeon, say, have you thought about this doctor? Did you know that? And they all know it. But there's never been a solution for them. And the fact that we can walk in there and get a solution for that. And that's why we said, you know, we've got a lot of pain-focused people in our group, which has been very fruitful for us. We need to get back to where we came from, which is in our orthopedic and our spine, you know, history. And so Ron Echols came in and he's doing a terrific job. We're already starting to see an increase in spine sales. We got more spine surgeons taking a closer look. And I think Ron's going to have a real breakout year just coming into 2025. I think he's going to really, he's going to take spine up a notch and it could start to outperform even our pain division in a short period of time.

Impressive. What is the potential of osteoonyx? What do you see as a potential? I see it as a market size. Yeah, sorry.

Oh, well, so this is a lumbar system. It's a lumbar screw. So it's the pedicle screw market. So the doctors that say, you know, why would I want to use just another screw? We have a reason for them to say, look, this is why it's got this rough and surface technology. It's going to help give your patient a little advantage. It's going to help you as a clinician to help treat that patient. And then I didn't finish answering your question with DEXA then. We have the DEXA-C, which is being integrated into, it's in a multi-center study. The DEXA-C study is going actually really well. We're gonna be able to put out more of that data that's been collected so far. And that's gonna help us, exactly what we do with Zip. We're gonna show the doctor, look at the data supporting what we're saying. And then we're in package sterilization with our DEXA-L, which is the lumbar standalone system. And we're close to getting the DEXA, what we call DEXA-SD or DEXA-PLIF, T-LIF cages that are for posterior inner body devices that go in there. And these implants go in between the vertebral body to be used with Hydra, Hydra-Osteonics, and even VIP for doctors, surgeons that use inner body to restore lumbar height and restore the balance of that spine using an inner body cage. Our cage will be the first one that will feature DEXA technology, and right now it started, obviously, with our cervical technology. So these things are starting to snowball together. It's kicking together as we wanted it to.

And as for potential for the year ahead, how big do you think osteo-onics could be for you? Because it's new. That's why I asked. Nobody's really heard of it until the press release.

Yeah, I think in a short period of time, I think in the beginning of the year, going into Q1, Q2, we're going to start to see Oceanics add in over half a million dollars a month in sales for us. Wow. Just on that product alone. Wow.

Awesome. Now, we'll switch gears here and talk about your accounts receivables, if you could. They declined year over year, which is great. can you speak about some of the long-term accounts receivables that you've had? I understand one of the larger debtors has been paying it down, but maybe you can talk about the average time span for your debt, how old it is, and how you're keeping on top of your accounts receivables.

I'll let Chad jump into this one. Go ahead, Chad. Yeah, I'll take that one. So we've

tried to put a hard push on receivables because they're growing. And I actually ended up hiring a individual whose job is nothing but collecting money. And, well, reason for other things, but his main job is collecting money. And he's done a very good job of collecting not only, you know, things that are due, but things that are extremely past due. You can tell that our, you know, everything over 60 is way down from what it was. And that's not from write-offs. That's from collectings. The large debtor that we were talking about, they had been paying us about $100K a month. They've paid themselves down below 90 days now, so we're thrilled about that, collecting all that money. Yeah, I think we've just been a hard push and constantly reminding people that when their bills are due, it's paid off. We've collected a lot of very old receivables over the last six months, and we've on top of things so that they're not just slipping into over 60 days now.

Perfect. Can you speak about concentration? Is there any large holders of your accounts receivables that make up a good percentage, or is it really spread out now amongst many companies and it's just really an ongoing trend? constant flow of regular normal business with, you know, accounts receivables being paid and, of course, new ones being added.

Yeah, I think that's what's really happening is we've got, you know, we're increasing our sales, we're collecting better on those sales, you know, just that constant flow. I think we've got one person who's probably in the 10% range of receivables, but they pay on time and have been, you know, churning business for almost the whole year at this point, so I'm not concerned about that 10%. But, yeah, it's just constant sell and collect, sell and collect. We're doing great with it.

Fantastic. No, that's great. And I know we're going to switch back to the business again here. Um, if you could speak about the new sales directors that you brought on over the course of the last year, how many were brought on and how many do you expect to have over the course of the next 12 months? How many new hires?

We had a couple of people who didn't, uh, who didn't make goals. So we, we professionally parted ways with them. Um, and we were have in the field, we have, uh, six regional sales directors. That came down because we had some people that just, like I said, couldn't hit the number. We have three direct territory managers in the field. So they're more direct, like focused in a specific territory where the regional sales directors cover a broader area. We have two VPs. There's a VP East, VP West. And then that's All Falls underneath Matt. We also added Ron Echols. And his sole purpose for Aurora is just to focus on its spinal equipment, its spinal hardware, spinal studies, and everything related to the development and furthering of our spine division. And then he'll start to add people underneath him into 2025. So right now we're just finishing up our budget for 2025. And we put a headcount in there for an additional nine new sales directors in 2025.

Perfect, perfect. Now your training programs with these many new sales directors planned and the new ones that added this year, obviously more doctors and specialists are being introduced to Aurora Spine. I have to believe that the training, the demand for training is only going to increase. Do you have enough staff in place to oversee an expanded training program?

Well, do we have enough staff? No. We know that we need to build out more infrastructure with headcount in the office. And I'll digress for a second. I've got to give my hats off to how the internal staff works. worked with the field staff and the internal staff were just absolutely lights out in Q3. They were tap dancing across the whole country, getting sets brought into place, making sure we made that training lab on time, making sure we had the right trainer at that location. We sometimes call many of these training positions away from their homes that weekend so they can go be at a lab course to train some new people. Some people are even getting new, getting retrained again because they kicked the tires but never got started. And now they want to kind of see it again because they're starting to see that the industry is growing. They see that their peers are using the devices and getting some great clinical results. We're showing good clinical outcomes. So we have to build more infrastructure internal inside the office, some more man and woman power inside the building. That's for sure. And that's going to be part of that build out of inventory. And we are working on that budgetary itemized list to start to have the right budget in place and make sure we have the right headcount in place.

Okay. A couple more questions. Can you speak about Veteran Affairs? Have you made any inroads this past quarter? And what do you expect as we move forward here with the VA?

We have. We've actually done some surgeries now in the Navy facilities and different VA hospitals in the country, mainly in California. These procedures have gone exceptionally well. We're really, really encouraged by this because once you get started, it can snowball into a positive direction. And we have actually gotten in there and had some really good outcomes. That's a great population, too, right? It's a population of people that are really focused on getting well and getting better. And then there's people who just need to get better, right, because they're part of either a VA system or they're actually active duty and they have to get back to their post, right? So we're really honored and thrilled. And so far, it's gone really, really great.

Wonderful. Now, there's a lot of positives from this quarter. Like it's, again, the best quarter in your company history. So having said that, without repeating the items that we know of, like the TFX sale taken off, is there anything that really stands out that you're really quite proud of that maybe hasn't been mentioned, whether it be increased doctor count, the amount of turns per doctor, or is there something else that really stands out that you'd like investors to know?

Well, the collaboration has been the key part where, like I said, the internal staff and the field staff really pulled together to make sure that, you know, we have a slogan inside the building, Miss No Surgery. Life's our thing. We don't want to miss a surgery. You know, this is somebody's, you know, mother, brother, sister, friend on the table ready to get that procedure done on them. We want to make sure we're there. There was some really great resiliency coming out of the hurricane down in Florida where we were able to get, you know, get out and get in front of things. And when obviously priorities down there were to make sure that people were back in their homes and safe, that we were able to still actually get into surgeries in the surrounding area to help support those local areas. So we did a good job there. And then we've, we've been real active with the different Congresses and conventions. You know, we, know in in the big orthopedic markets we're still uh you know finding our our path there and the dex has really helped us there um we've certainly stood out in the interventional market because of the data that we've collected and how we've been true to the to the market where we're going there with a lot of thoughtfulness um and we we don't turn our back on to those uh pain interventional doctors uh when you know somebody might be an orthopedist, and they just don't like the fact that now interventional doctors are now doing this procedure. We made this commitment. We're standing by it. And we think that this is going to be a win because all these groups can come together and really help patient care and really help their patient population and their community. And we know that we're getting correct clinical results. Then there is more than one way to fuse your patient in your si there's more than one way to fuse your patient in your cervical and in your lumbar and we're trying to come up with these new devices get these new devices into the marketplace where doctors see this as this is the option that i want to provide to my patient so as far as like extra you know secret ingredients in the sauce i think it's just been great determination and focus right the focus has been there on analyzing the number, making sure that is it a good ROI for us? Is it a good event for us to be at? If not, then we're off to the next meeting and off to the next account if we just can't seem to make an impact in that area. And that's what the field representation does between Florida, Arizona, Texas, people just getting after it and making sure that When we walk in there, they see that those people are carrying the Aurora flag all the way across the finish line.

Wonderful. My last question now is, given you've had such a wonderful quarter, is this the new norm that we can expect going forward? You've taken a major step jump from the $4.2 million range to close to $4.8 million range. Is this something we can expect going forward, seeing revenues in the $4.8 to $5 million range for the next quarter, two, three, as we move forward?

Well, we're always humble about where we come from. So we know that we did real well in Q1, and we had a little bump in Q2. Obviously, we had a nice spike in Q3. And we are now watching what can happen in Q4. Q4 is one of those unique months where all the holidays start to stack together. I feel really encouraged about how we've already started in Q4. So I'm really, really pleased with the way things have already kicked off in Q4. Now we've got to charge hard for the next, because we're almost done here with October. We've got to really charge hard through the rest of the quarter. But I'm super pleased with how we've gotten started in Q4. And, you know, they know that 4.7 million, 4.77 million, they know that that was a great milestone and they know that they want to beat that number. And that's what we're striving towards because we've been talking about hitting that $5 million quarter for the last, you know, year and a half, two years. And we want to get there sooner versus later. And we do think that going into 2020, We know that in 2025, we'll be able to put $5 million a quarter into the rearview mirrors, but let's get there first. Perfect.

Well, again, guys, congratulations, and thank you for taking my call. Thank you, Tom.

Again, if you have a question, please press star, then 1. Our next question comes from Lindsay Leeds with Microcap Opportunities. Please go ahead.

Hi, and congratulations on a phenomenal quarter. I'm super pleased with the progress on revenue, accounts receivable, and fantastic net income for the first time. I wanted to ask about your facet system that I think has been maybe spoken about on seeking our Alpha Wolf YouTube interview and maybe somewhere else. Are we still expecting an FDA approval in 2024? And what kind of work would be done towards an eventual product launch for that product?

Well, thank you, Lindsey, for doing the call. Yeah, it's still with the FDA. So obviously, I don't have a crystal ball in front of me. That's just one of those things with the FDA. You never know. But our biomechanics were you know, truly off the chart. They were so impressive. We see this as a market opportunity of $3.8 billion market opportunity. The facet market is the number one treated segments within the pain interventional market. That's the area and the patients that they treat the very, very most. So we're really focused on this. We see it as a huge market opportunity. That $3.8 billion market opportunity is larger than the SI joint market that's been evaluated by SIPhone at $2.5 billion market. So this is how pertinent it is to us and why we think this is a good strategy for our team to take a closer look at. And if we can get – as soon as we get the 510K approval, we'll rapidly move towards manufacturing all the – set up for this implant to be manufactured from set design, implant design, cadaver labs that have already been hosted on have all gone really, really well. We're just waiting for that 510K approval and then we'll start to go into a manufacturing phase. The manufacturing phase based upon quotes that we've received from different sources, had some reasonable timelines to it. So it would be something that would come out in the beginning of Q1, or sorry, mid to end of Q1, if we got the FDA approval in November or October.

Sorry, November or December.

Awesome. Thank you for that. This is maybe a a newbie question, but what kind of physician would be doing a facet surgery?

Actually, it's a crossover product. It would be orthospine, neurospine, and pain interventional market would use a facet fusion system. And as I mentioned, the facet section of the patient's body is the number one treated location in the interventional market. That's the one they treat the most. And obviously you got 24 vertebrae, right? So you, we would be focusing on the lumbar area. So L1 through S1. So you have just by that, just by that right there, that gives you, you know, 10 facets to work with, right? Cause you each level. So each level out of the five levels, you'd be able to put an implant in there to get a facet fusion.

Okay. Is that a hard procedure for a pain physician to learn?

Not the way that we've made the product. I think the way that we've made the product is going to be so simple, which is our tagline. I'm not trying to sound accused here, but we simplify the complex. That's our tagline in the company, and I really think that we've done that. We've simplified a very complex procedure and made it something that you could do in an outpatient setting. surgery center setting, patients would go to walk in and walk out the same day. An incision size about the size of even smaller than a dime, an incision size.

So how does that compare to the treatment that's on the market today?

it falls into the same category as lumbar fusion. So it sits in that marketplace. But this would be a minimally invasive alternative to, you know, big giant screws, right? It would be one of those marketplaces where the patient's been worked up. They've done all the, the clinician has done all the right things by that patient where they've done physical therapy and they've done injections and they've worked the patient all the way to the point where the last step is lumbar fusion. And this gives them that, that, uh, to set fusions where if they can actually, uh, they've even done the same nurse stimulators and they've done some additional ablation in the facet. So they've really worked this patient all the way through to the point where now they just got to fuse the level because the level, uh, keeps, uh, every movement in that level keeps causing pain for that patient. This would be a way for them to get right there into that same facet that they've already been treating between electrodes or, or ablations or injections, they're going right into that same location and they'll be able to put our implant in there and then fuse that level and either by that patient five years, 10 years or more before the obvious, which would just be a big lumbar fusion, which you can't come back from once you do that.

Okay. Are you the only minimally invasive solution for this surgery today or is there other players in this space already?

There's a few other players in the space. It's not... Facet fusion is not new. It has been around for a long time, over 40 years, if you will. But the way that the older implants that were designed were more complicated, and that's really... When facets were introduced to the market, like I said, a long time ago, pedicle screws essentially were born out of older facet systems. And what we did is we took a look at it And we saw some international companies that were working on products overseas that didn't need an FDA, you know, approval. And we just took a closer dive on it and said, you know, I think we have some, we have some technique advantages if we do it this way. And we've learned a lot of that from our SI space and we apply that to our, to the, to the cassette system. So we know that the fact that the doctors can use our, silo system, silo TFX system, if you can use that system, then you're going to be able to use the new Aero Facet system.

The Aero is A-E-R-O. Okay.

When I look at your non-silo TFX revenue base, it's kind of been stable the last several quarters. Do you see any products that might break out and kind of add some additional revenue in the coming quarters?

Well, I think that the TFX, the silo TFX is going to continue to grow. Uh, I do think that more, I think the zip 51 is going to continue to grow. And I think that now that we've added Ron Eccles into the spine division, the spine division is now you're going to see spine fusion with ortho and neurosurgeons, uh, especially the ones that we like to work with that we can help, um, they can help be part of the, uh, the collaboration with the, uh, with the interventional space, people who are doing the training courses and being part of that bigger picture, getting everyone to play well in the sandbox would be well, uh, we think that spine is going to grow. Um, and that's one of our big targets right now for Q4 going into the beginning of the year is, uh, you know, if we're doing well over a million dollars a month in pain and that's growing, uh, let's get our spine division up over a million dollars. And if we do those things, then, Now, like I said, we're putting the $5 million quarters in our ruby mirror, and we're now on our way to $30 million a year, and that's what we're focused on in 2025 is to be way up and over the $20 million mark and then getting past $5 million quarters with a balance between the pain market over $1 million a month and the spine market over a million dollars a month and then growing off those markets, both of them.

Okay.

Is this kind of, I see TFX revenue growth is up 92% year over year, which is just a phenomenal number. Is that kind of growth even possible that it could continue or is that just a crazy number that is going to have to slow down?

Well, I think there's plenty of room to grow in this market. The market's still expanding. Credit to S.I. Bone, they evaluate the market at $2.5 billion. They say that there's over 289,000 estimated procedures that can be performed in the S.I. joint. We see it a little bit differently, and we see it because They focus mainly on the ortho and neuro market, and we focus on ortho, neuro, and the pain market as a whole. In the pain interventional market, and this is also in the SI phone stats that they promote out when they talk about the size of the market, they say the amount of the procedures that can be performed is over 289,000. They say the market size is 2.5 billion. And they also list on there that there's over 1.2 million SI joint injections annually. That's the number that we're focused on. That's the number that made us get into the interventional market. If that $1.2 million, I'm sorry, 1.2 million injections annually, and I've asked many of the interventional space, including the interventional neuro, interventional radiologists, and people that are involved in this space, they think that that 1.2 million injection count is is soft. They think it's actually greater than. So I'll take my chances in that marketplace all day long. And I think that this is why the SI joint market is going to expand. There's certainly going to be some more competition coming into it, but competition sometimes rises all tides, right? Gives everyone focus on the market and we got to keep doing what we're doing, but we're getting great clinical results with the TFX. So we're not going to sit back just because we've had some good quarters with it, a good rollout with it. We are now in two stages of a multicenter study with the siloed TFX, which we've already got our IRB approval, and we'll be entering into those studies here this year and going into next year. So we're going to be able to put out unbelievable biomechanical and clinical results. The biomechanical paper's actually just got its publication notice, so it's going to be published. It got accepted by the NeuroJournal. So that's going to hit all the events, you know, posters and publications. We're going to be able to put that out there on press releases and stand by our superior biomechanics that we have. And then the multicenter studies will be in line with that. And these multicenter studies are going to be with orthoneuro and pain as a collaboration because that's just our belief and we think we're going to do a good job with it.

Fantastic. The DEXA study results that I think you guys were targeting for September, did those come out already?

We have not put them out yet, but we are going to put them out here before the quarter ends here at G4. We'll be able to put out information on the DEXA, and it's super positive. It's super encouraged by it, and we're going to expand onto that. We recently worked agreement with the company that does multi-center disease. We worked with them on our ZIP study and Dr. Pope and some other key people are going to be really key on that where we're going to be leading these different studies, TFX, a ZIP51 study, a DEXA-C study continued, and then we'll go into DEXA-L studies, which would be lumbar studies. Aurora would be able to really build off robust data that would support that what we're doing is working, not just our marketing problem, but our actual, here's the commitment to data and research. We can look other doctors in the eye and say, look, we want you to be part of this multicenter study. We want to be part of this study. We want to prove it. We'll have evidence-based medicine, evidence-based devices that are actually not just clinically successful as far as volumes or unit volumes, but patients are actually getting better, and we can show that data that says this is why doctors should be using our products.

Fantastic. Well, thank you so much for the call today, and that's all my questions. Thank you.

Thanks, Lizzie. That concludes our question and answer session. I would like to turn the conference back over to Trent Northcutt for any closing remarks.

Thank you all for joining us. We appreciate your time and interest in Aurora Spine. We are very excited about what's ahead in 2024 and beyond. Everyone have a great day. Thanks again.

The conference is now concluded. Thank you for attending today's presentation.