Monogram Orthopaedics Q4 2024 Earnings Call Transcript

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March 12, 2025
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Larry Holub
Director at MZ North America

Good afternoon, everyone. I'm Larry Holub, Director at MZ Group North America. I would like to welcome you to the Monogram Technologies fourth quarter and full year twenty twenty four financial results and business update conference call. A question and answer session will follow the formal presentation. Webcast viewers can submit written questions for the Q and A portion of this presentation.

Larry Holub
Director at MZ North America

As a reminder, this conference call is being recorded. Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions, estimates or other information that might be considered forward looking. While these forward looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward looking statements in light of new information or future events.

Larry Holub
Director at MZ North America

Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our predictions. You should also review our most recent Form 10 ks and Form 10 q for a more complete discussion of these factors and other risks, particularly under the heading Risk Factors. A press release detailing these results was issued today, 03/12/2025, and is available in the Investor Relations section of the company's website, monogramtechnologies.com. Your host today, Ben Sexton, Chief Executive Officer, and Noel Kanabi, Chief Financial Officer, will present results of operations for the fourth quarter and full year ended 12/31/2024. At this time, I will turn the call over to Monogram's Chief Financial Officer Noel Kanabi.

Noel Knape
Chief Financial Officer at Monogram Technologies

Good afternoon, everyone. Glad to be with you today. Thank you for joining us. I'm just going to dive right in and give you a review of where we are for the year from a financial perspective and then I'll hand it over to Ben to share some exciting upcoming events that are coming up in the near future. You know, as as you know, as a startup, cash is extremely important and we've done a good job of shepherding our cash this year, ending with a cash balance of $15,700,000 which was higher than the cash balance at the end of the previous year.

Noel Knape
Chief Financial Officer at Monogram Technologies

This is due to, you know, one, being very frugal in our spend and maintaining our monthly cash burn to around $1,200,000 as it's been for some time, and also due to a successful preferred D raise where we had an oversubscribed $13,000,000 successful raise, combined with some significant investment by senior management. And this is indicative of the faith they have in the technology and the business and management going forward. So we're very happy to see that. And then we were also able to access, with some institutional investors, access to our ATM facility to raise a little bit more there. So we have a strong balance sheet going into the year and to meet our upcoming milestones.

Noel Knape
Chief Financial Officer at Monogram Technologies

We are still very highly variable in our cost structure. We have 27 full time employees, and we leverage outsourced engineering talent when needed. We were able to scale back on that some in q four as the BNB project portion of the project wound down. And we're focused on getting the AIR submitted and onto our next objectives. Again, we have no traditional debt or and very limited short term warranties warrant obligations right now, and we expect to have a solid cash, you know, through the year.

Noel Knape
Chief Financial Officer at Monogram Technologies

So all things looking positive, all things going forward and we're prepared to enter the next stage of our journey. So with that, I'll hand it over to Ben Sexton, the CEO, who will walk you through exciting things that are on the agenda and coming up shortly. Thank you.

Benjamin Sexson
CEO at Monogram Technologies

Thanks, Noel. And thank you everybody for joining us today for our fourth quarter call. Appreciate everybody's time. So I'm just gonna start by really recapping what the monogram investment thesis is. And it's really pretty simple.

Benjamin Sexson
CEO at Monogram Technologies

We think that robotic penetration today is not what it will be in the future. We think it's gonna be significantly higher in the future, driven by a lot of clinical factors that we can get into. And we think that, the that we can get into the reasons for why this is that, there's one dominant player that really has demonstrated significant robotic utilization. They have the strongest market position. They're consistently growing year over year.

Benjamin Sexson
CEO at Monogram Technologies

And we think that they really have demonstrated what's valuable in orthopedic robotics specifically in in the knee replacement area which we think will grow significantly in terms of robotic adoption. And so our thesis is that, any company that really does not get its act together with a robotic knee strategy, let's say, and then moving into other applications as well, will really have a lot of an uphill climb, let's say. So, Monogram really is has always from the beginning been developing a robot that we, that we hope will address this this this market pain that we think is gonna become more and more obvious over time in our opinion. So just kinda starting out, we think that the market is currently digesting robotics as a growth driver, but not a kill shot. And what do I mean?

Benjamin Sexson
CEO at Monogram Technologies

I mean, if you look at the market today, in total knees, robot utilization is still low as you can see here. It's not like the majority of knee replacements are not robotic. Maybe the key question is where is this gonna be as we move forward? When you think about it from a clinical perspective, especially Mako, which has utilizes a personalized CT scan, robotics enable more personalized surgery. They enable different types of alignment.

Benjamin Sexson
CEO at Monogram Technologies

They help with press fitting of implants. So, instead of putting an implant in and cementing it down, they can help with, let's call it a more precise bone prep surface which can accommodate breast fit implants. Systems like Mako have safety boundaries that we think are really imperative for helping to minimize the risk of cutting soft tissues or adverse outcomes. Then if you just look at the demographic trends, seventy percent of fellowship programs have access today to a Mako at sixty percent of orthopedic surgeons will be over the age of 65 by the year 02/1931. So, and we've seen forecasts that suggest that one out of two knee replacements will be robotic within the next five years.

Benjamin Sexson
CEO at Monogram Technologies

So if that's kind of just setting the table for where the market's going, it's important to kind of look at where we are now. And there's a lot of factors. Obviously, Stryker is a, what you see here is a stock price stock prices for various players in our space. Stryker is the one in black and some of the other publicly traded companies. And we don't think it's any coincidence that around the time that Mako was cleared for total knee that Stryker's outperformance has gone parabolic.

Benjamin Sexson
CEO at Monogram Technologies

And obviously, they've made a lot of really smart moves and they're a well diversified business and probably the most well diversified of any of the orthopedic total joint reconstruction players. But that aside, it's clear that they have done something right. And I don't think that the market has fully understood what exactly it is that they've done right. And understanding that is really fundamental to the monogram investment thesis. And this is just to stress the point even more.

Benjamin Sexson
CEO at Monogram Technologies

When you look at robotic knee replacements, eighty eight percent of robotic knee replacements use a Mako system and seventy three percent of PressFit knee implants. This is per the Orthopedic News Network are press rate and that market's owned by Stryker. So in our opinion, the market has spoken. If you talk to surgeons and we talk to a lot of them, you're gonna hear a whole bunch of different reasons why that is. I think the most common reason you'll hear is because Stryker had a significant first mover advantage with Mako.

Benjamin Sexson
CEO at Monogram Technologies

And I think that that certainly may be true and it may be a contributing factor. But when you dig into the details, there are things about the Mako system that are unique to the Mako system that nobody else really can do. And we've, in terms of taking a complex problem and trying to distill it down into what actually makes it different, I think it really boils down to the fact that with Mako, a surgeon can officially do the surgery by themselves. We know a lot of surgeons that don't even use retractors. You have safety boundaries and you can efficiently cut bone with safety constraints.

Benjamin Sexson
CEO at Monogram Technologies

And there's just no other system on the market today that has been able to efficiently cut bone with safety constraints in the way Mako has. And the primary reason for that is their IP portfolio and the complexity of executing this problem without infringing on that IP portfolio. And so that is the Monogram Investment Thesis in a nutshell, is that we think that we have a system that can efficiently cut bone very accurately with safety constraints. And it really is gonna be that simple. And we announced not too long ago, we had a press release.

Benjamin Sexson
CEO at Monogram Technologies

And in that press release, we had a video that I don't think has been fully digested by the market. So Mako the Mako system does not utilize external fixation, meaning the surgeon doesn't have to bolt the bone down. It's not like a CNC, it's a real time system and the bone is free to move. And they utilize something called haptics where the surgeon is actually, surgeon initiated cutting. The surgeon is the one moving the robot around.

Benjamin Sexson
CEO at Monogram Technologies

What Monogram is doing is fully autonomous cutting. The challenge of this, which it's never been done before, is nobody's ever done it with two things. One, nobody's ever done it with a saw as we're doing it, and nobody's ever done it unconstrained with a saw. So what we put out in that video not too long ago, and I'll just upload that, is we can now very, very efficiently cut with a SAW. And this is our next gen end effector that we will be deploying in our clinical trial, which we hope to talk more about.

Benjamin Sexson
CEO at Monogram Technologies

But we can now this is a very one of our larger size femurs. You can see that with this new upgraded end effector, I don't know if it's frozen on your side, it's not playing on my side. Can you see it, Noel? Is it playing for you? Or is it frozen?

Noel Knape
Chief Financial Officer at Monogram Technologies

It's frozen, Ben.

Benjamin Sexson
CEO at Monogram Technologies

Okay.

Noel Knape
Chief Financial Officer at Monogram Technologies

At eight seconds.

Benjamin Sexson
CEO at Monogram Technologies

Okay. Looks like looks like the video is frozen, but it is, we did have a If you look at our last press release, I'm not sure why it's not playing, sorry about that. If you go to our last press release, we can drop a link here. But we are now cutting the bone and blade time or blade and bone time is two minutes and forty seven seconds, right? So this is with a unconstrained saw.

Benjamin Sexson
CEO at Monogram Technologies

The the feed rates let me see if I can maybe play it from the presentation. I know that has a link too. No, it's not gonna play here. There might be one more option, I might be able to play it in our YouTube and share the screen. Let me try that real quick.

Benjamin Sexson
CEO at Monogram Technologies

Because I do think it's helpful for folks to see what our system is actually going to be capable of, so I'm just gonna play this here real quick. Okay. And this was made public in a press release, but I don't think a lot of folks really commented. So I'm gonna try sharing and see if that works. Okay.

Benjamin Sexson
CEO at Monogram Technologies

So just sharing here. I'm gonna press play. Hopefully, this this does it. But there's a couple of things I just wanted you to notice. Can you see it and all?

Noel Knape
Chief Financial Officer at Monogram Technologies

No. Still on the the presentation.

Benjamin Sexson
CEO at Monogram Technologies

Okay. I'm

Noel Knape
Chief Financial Officer at Monogram Technologies

not sharing your screen.

Benjamin Sexson
CEO at Monogram Technologies

Yeah. It says I'm sharing. Okay. I'll drop a link in here. Here's the link for folks to see it later.

Benjamin Sexson
CEO at Monogram Technologies

There we go, thanks, Chris. So the impact of this end effector release and getting to cutting speeds that are starting to be competitive with manual surgery, we think has not really been fully digested. And what Monogram has really been working to put together is a system that can very efficiently do a total knee replacement with uncompromised safety and uncompromised accuracy. And so our system is really designed for a surgeon to have a very easily with a minimal learning curve come in and do a total knee replacement. And we think we have something that's going to be very, very And we think we have something that's going to be very, very competitive for total knee.

Benjamin Sexson
CEO at Monogram Technologies

And then from there, we have a seven joint arm, which is a really high degree of freedom arm that we think is going to be pretty scalable to other clinical applications where we see similar opportunities for robotics to make a clinical difference. And that's really the monogram and thesis in a nutshell. And you look at the impact of what Mako had for the Stryker brand, And we are hoping to do the same thing in orthopedics with a fully autonomous robot. In terms of updating on the regulatory side, so I know that there's folks are eager to get an update on this and I'm just as eager as everybody else. And a lot of this is really out of our hands at this point.

Benjamin Sexson
CEO at Monogram Technologies

So I will kind of restate what's happened and try and give folks an update. So, on February 26, we announced that we had formally responded to the FDA's questions about our system. The FDA responded to us with those questions on September 30. So the clock had stopped about seventy three days into the submission timeline. So the clock restarted on February 26.

Benjamin Sexson
CEO at Monogram Technologies

And we had full support from IQVIA, which was our CRO, formerly NICRA. They helped us review all of the documentation, make sure we had a really solid package. The team worked really, really hard. What I can say is that I think that we have done, we've made every possible effort to address the FDA's questions. And we are eager to hear what they think of our submission.

Benjamin Sexson
CEO at Monogram Technologies

So, at this point in time, that's really what we could say. There's not much more we can say, it's fully in the FDA's hands to provide their clearance decision. In parallel to that, we are working on trying to get clearance to initiate our clinical trial. So we submitted to the Indian regulatory agency in October. We're working with a CRO called Reliance Life Sciences, which is one of the largest private companies or subsidiary of one of the largest private companies in India.

Benjamin Sexson
CEO at Monogram Technologies

We're gonna be doing the clinical trial with Shelby Limited. So the principal investigators will be surgeons that are employed by Shelby. We will be doing clinical trial at three of Shelby's hospitals across India. We have already shipped a training system to India. Doctor.

Benjamin Sexson
CEO at Monogram Technologies

Yunus, myself and other Monogram employees were in India in late January for training and for the investigator meeting, which was successfully held late January, February. And the communications with the with the Indian agency are ongoing. This is the CRO really are the experts in terms of that process. But we feel like we've submitted a strong application. We did a lot of testing, obviously, for the FDA submission.

Benjamin Sexson
CEO at Monogram Technologies

So we're eager to hear back. But again, just like with the FDA, the timeline is really not in our hands at this point. We're eagerly waiting to hear back from the Indian regulatory authorities. So those are the two regulatory updates. Obviously, we want to hear back just as much as all of our investors.

Benjamin Sexson
CEO at Monogram Technologies

We're very eager to move forward. I will say that we're not sitting by idly. So the time it's taking to get clearance in India in some ways plays to our favor because once we ship our clinical trial system to India, that design is frozen. So you can't make major changes to the system subsequent to initiating the clinical trial. So we're going to be releasing the higher feed rate.

Benjamin Sexson
CEO at Monogram Technologies

So it's significantly faster cutting time. So to give you some sense, it's almost almost a 300% increase in feed rate. So we're actually cutting it almost looks like you're cutting manually with our system now. And the cut times are significantly reduced, which in our research is the number one driver for surgeon adoption is how long does it take. If a surgeon has to slow down, do less surgeries a day to use your robot, it really is hard to drive adoption.

Benjamin Sexson
CEO at Monogram Technologies

So the fact that we can cut this fast and the accuracy of our system is really, really good right now. So just to give you guys some sense, the RMSE in terms of the cut accuracy in the and this is in non clinical testings this isn't cadaveric testing with the protocols was around 1.1 millimeters and the limb alignment was less than a degree in the testing we ran in cadavers. Obviously, not a clinical claim, but in the cadavers, we feel like we have a really, really started to have it dialed in. So we're keep making the system better. We're making a lot of software upgrades, a lot of upgrades to the guidance application, a lot of upgrades to the case management application.

Benjamin Sexson
CEO at Monogram Technologies

So the team is working very, very hard to make sure that we have a product that's going to be well received by the market when we launch. So in terms of just timing, it's not all negative that it's taken time for India to clear. It's given us time to really make sure we have an A plus product. And with that, we wanna make sure we give everybody an opportunity to ask questions. I'm seeing a lot of questions about FDA timeline, but beyond what we said, there's not really much more we can say.

Larry Holub
Director at MZ North America

At this time, we will be conducting a question and answer session. If you'd like to ask a question, please submit your question by typing it into the webcast viewer platform. Ben?

Benjamin Sexson
CEO at Monogram Technologies

Sure, let's start with Jason. Hi. Jason, how you doing?

Jason Wittes
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

Hi, Ben. Noel, thanks for all the color here on this call. I had a few questions, if I could kick it off.

Benjamin Sexson
CEO at Monogram Technologies

Yeah. That would be great.

Jason Wittes
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

I appreciate all the color on in terms of what's going on with the regulatory bodies. I think you gave a lot of color, but I'm just curious in terms of what once you get those approvals, how long do you anticipate the trial to run-in India? And in The U. S, let's assume, you know, in terms of the potential outcomes here, how should we think about that? I mean, it seems like you're actually on the cusp of getting an approval at least for, I I believe, a semi autonomous device potentially in The US.

Jason Wittes
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

What does that mean for you guys?

Benjamin Sexson
CEO at Monogram Technologies

Sure. So I'll start with India. So, from the day we get clearance to the first surgery, that time is gonna be about two months, give or take. And then, we have a hundred and two patients that are going to be enrolled in the study. So once we, once we get clearance, we anticipate that we would start enrolling patients, probably about four weeks after getting clearance.

Benjamin Sexson
CEO at Monogram Technologies

Maybe maybe more, maybe four to six. So, kind of clearance plus, let's let's just go with two to three two and a half months, something like that, before, first live and human. And then from there, it really is, a function of enrollment and how monogram is the bottleneck. So, as Noel said, you know, we're we're really trying to count pennies and be really careful about not getting over our skis in terms of spending money after we've actually realized milestones. So the constraint is the number of systems we have in India and the personnel we have to manage those systems and how aggressive we wanna be in terms of actually executing the, the system.

Benjamin Sexson
CEO at Monogram Technologies

So we know for sure, obviously, we're gonna be sending one robot to India. We have a PO for a second robot, and we anticipate that that we may send two robots to India, which would speed things up. But it's really the constraint of hardware and personnel, not so much enrollment. So the hospital we're working with does huge volumes. So, Doug and I have actually been in the Operating Room and it's incredible how many surgeries they do a day.

Benjamin Sexson
CEO at Monogram Technologies

You know, it's not uncommon for the surgeons we're working with to do 15 surgeries in a day. And they've even done more than that. So, really, the the one thing with enrollment that is a little bit different than maybe in The US is that, a lot of people, because Shelby is pretty well recognized in India, a lot of patients do travel, from outside of the cities that we're gonna be, working out of to have surgery. And then they go back to wherever they live. And that can be, we can't enroll those patients.

Benjamin Sexson
CEO at Monogram Technologies

But still, we don't, we don't see that to be a huge blocker. It's really how how hard we wanna push it. I would say, initially, we're gonna be kind of a little bit slow and careful. So, you know, once first couple weeks, I would say we're not gonna be doing five surgeries a day. It's probably gonna be a couple surgeries a week.

Benjamin Sexson
CEO at Monogram Technologies

And just make sure that everything is going exactly to plan. And then from there, we're gonna scale as as we get, you know, let's say the first ten surgeries under our belt and we'll start to scale. But the robot is is going to be, we're we're it's unlikely that we will be running multiple sites simultaneously. So, it's most likely that we will start at kind of the main site in Omnipod. Do maybe on the order of 50 surgeries there.

Benjamin Sexson
CEO at Monogram Technologies

And then, it'll be a mix of maybe like thirty, twenty, the other two. Something something like that. So, you know, I think I think we're gonna get through it in a reasonable amount of time, but it's it's not gonna be, we wanna have a really good trial and we wanna do a really good job. So, hopefully, that does that help give some color?

Jason Wittes
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

Yeah. That that gives some color.

Benjamin Sexson
CEO at Monogram Technologies

Yeah.

Jason Wittes
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

I

Jason Wittes
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

mean, it sounds like it sounds like there's some moving it's hard to pinpoint, but it's a relatively quick enrollment. I mean, it's it's under your control for relative quick enrollment. I don't know if you venture to guess whether, you know, in terms of months, it's I know I know you said it's basically two months to get it going. Is it another three to six months to complete the trial, generally speaking, to get a hundred patients or is that right?

Benjamin Sexson
CEO at Monogram Technologies

You know, I think that sounds like a reasonable that's that sounds like what we're kind of planning internally, with the caveat that, you know, if, if anything came up that was unexpected, that could slow it down.

Jason Wittes
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

Sure.

Benjamin Sexson
CEO at Monogram Technologies

You know, we're not gonna be crazy aggressive in terms of just hitting it with five surgeries a day from day one. Mhmm. But we're gonna, you know, scale kind of in a measured way. And so I think, maybe at the peak, I will do maybe two surgeries a day. I don't anticipate we're gonna go more than that.

Benjamin Sexson
CEO at Monogram Technologies

And they do operate, on, you know, weekends as well. So

Jason Wittes
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

Got it. No. I mean, I it makes perfect sense that you you want a clean dataset. And then and then in The US

Benjamin Sexson
CEO at Monogram Technologies

Just, don't discount the time it takes for the data to be processed. So, you know, once we once we, and obviously, I think we're gonna have opportunities to give feedback on how we think it's going. But that data does need to be basically, this is a, you know, protocol. So we're gonna need a protocol report summarizing the findings of the study. And, it's a three month follow-up.

Benjamin Sexson
CEO at Monogram Technologies

So, you know, we're gonna start really kinda knowing how we're how we're doing. But there's gonna be, some some period where we're just gonna have to wait for that follow-up on the back end. So Okay.

Jason Wittes
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

Okay. I understand. Yeah.

Benjamin Sexson
CEO at Monogram Technologies

Yeah. So then in the in the in The US so, just to be honest with you, the performance of the upgraded end effector has far exceeded our expectations. You know, when when the we we didn't expect that we would be able to get the feed rates to be this fast, honestly. It's very impressive. And so, in light of that, you know, our thinking was that autonomy was a major selling feature of our system.

Benjamin Sexson
CEO at Monogram Technologies

And a lot of companies have a kind of, let's call it a multi generational product release strategy, where they'll try and get a five ten k on a gen one version of a system with the goal of submitting a subsequent one to to move the ball forward to the ultimate, let's say, market competitive product. I think that with the new cutting system, if we can upgrade the system that has been submitted to the new end effector, which we are confident we can without too much of a regulatory lift, we think what what we would be getting clearance on would be pretty competitive. So So Yeah. We What was that? Sure.

Jason Wittes
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

Sorry. Sorry, Ben. I so that Yeah.

Benjamin Sexson
CEO at Monogram Technologies

Yeah. Go for it.

Jason Wittes
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

The FDA might rule might approve what you submitted, and then it's a relatively straightforward, Adenium or etcetera or something to that exact.

Benjamin Sexson
CEO at Monogram Technologies

Exactly. Yeah. To get a different okay. Yeah. So, you know, the basically, we we've changed we've we've made upgrades to the cutting system.

Benjamin Sexson
CEO at Monogram Technologies

But the, the nice thing is that we for India, there's a lot of accuracy studies that we've had to do and a lot of BNB work that has had to go into that that can be leveraged to to improve the Gen one system and then it we think it could be pretty competitive out of the gate. Okay. So yeah.

Jason Wittes
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

No. That makes a lot of sense. I didn't mean to interrupt you. I just Oh, yeah.

Benjamin Sexson
CEO at Monogram Technologies

Yeah. Sure.

Jason Wittes
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

One one follow-up related to that. It sounds like there's you guys have a lot of innovation going on here. One other area that I know you've mentioned in the past and I don't know if you can give us an update on is the mapping and tracking and the registration. Is there any movement there that you can disclose today or, you know, how should we be thinking about how you're approaching that that problem?

Benjamin Sexson
CEO at Monogram Technologies

Sure. So, you know, this is a biased nonclinical claim, Jason.

Jason Wittes
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

Fair enough.

Benjamin Sexson
CEO at Monogram Technologies

I think the new end effector on our autonomous system is extremely competitive with the current state of the art, with so I I think right out of the gate, we have something that's really compelling. In terms of the upgrading the navigation system, we we've come a really long way. It's a it's a really hard problem. I think that, similar to what we've done with gen one, gen two on the robot, we're gonna have to do a similar approach with the, within navigation. So just so everybody knows, what Jason is referring to is what we we call Envision.

Benjamin Sexson
CEO at Monogram Technologies

So Envision is a technology that Monogram is developing to try and, go with fiducial less tracking. So a pretty significant pain point in the industry is registration and tracking. You have to place bone pins to, ridgially amount of rays that are tracked. It it it's it starts to become like if you can optimize cutting and you can optimize planning, it's really the the long pole in the 10 in terms of really driving throughput for robotics is registration and that setup time. It's it's really hard.

Benjamin Sexson
CEO at Monogram Technologies

The the fundamental problem, Jason is, you know, if you had a supercomputer in the operating room, we could do it. But it it it the amount of compute needed to to track with a low enough latency is really tricky. So we anticipate there needs to be an intermediate step where you have sort of, let's call it, a marker light. We we're we're calling it approach where maybe you can, do something that doesn't require bicortical fixation of a bone pin. That's a lot faster.

Benjamin Sexson
CEO at Monogram Technologies

Maybe has is subject to less occlusion. But, I would say don't bake it into your numbers. Right now, it's a very sexy demo. But jumping from a demo to a clinical product is is difficult. So Yeah.

Benjamin Sexson
CEO at Monogram Technologies

It's it's something that dazzles when people come look at it. But, realistically, it's gonna take us a little bit of time to get it robust enough. To work in a clinical setting.

Jason Wittes
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

And maybe if I could just ask one last question, I'll jump back in queue. I know you have other questions. And that is, so what was the cash burn this quarter? And it's I don't know if you can give any kind of outlook for what the cash burn might be for the remainder for 2025 as we look forward?

Benjamin Sexson
CEO at Monogram Technologies

Sure. Noel, do you have that?

Noel Knape
Chief Financial Officer at Monogram Technologies

Yeah. So we were able to reduce the third party contract spend a bit, that we've been really focused on getting the robot ready for the India clinical trials and then going through the the AIR submission. So we reduced it. We're we're running under the 1.2 a month burn rate that we've been on for the last year or so, but probably in the 1.1 area and we hope to keep it around there going forward.

Benjamin Sexson
CEO at Monogram Technologies

Yes. I will say that we have some big cash outlays coming. So the system has to be IEC 6,601 compliant and that required a special type of panel that could pass pass. There's an impact test. There's all these tests that had to pass at, the most efficient way for us to basically, the only way for us to have a a sellable product is to make panels that pass this, and that requires tooling, which is very expensive.

Benjamin Sexson
CEO at Monogram Technologies

So we're gonna have to put it out late for that. And then we have another robot cart that we're making at the moment. So that's significant. And then we're in the second quarter, we're going to be aggressively doing testing. So for the V and V for the India trial.

Benjamin Sexson
CEO at Monogram Technologies

So to, you know, to to actually run the clinical trial in India, there's some some more testing that has to be done on the fully autonomous version of the system that cannot be cherry picked from the Gen one testing that was done. It's not going to be as heavy as the Gen one which had, you know, we we have at its peak, we had quite a few contractors. It was a really big push. A lot of surgeons came in. We have we had on the order of 20 surgeons come in.

Benjamin Sexson
CEO at Monogram Technologies

Obviously, that contributed to the elevated burn. But I would I would expect Q2 to be on the heavier end. And then, but in terms of baseline, you know, the headcount, we were holding it pretty steady right here. And we're really not going to be counting our eggs before they hatch. So we need to hit the milestones and actually have them on our belt before we keep growing and increase the burn, let's call it the baseline burn.

Jason Wittes
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

All right. Got it. Thanks so much for all this detail here. I will jump back in queue. Sure.

Benjamin Sexson
CEO at Monogram Technologies

Thanks, Jason. Appreciate it. And then next up, we have Tom Kerr, who's with Saks. Hey, Tom. How are you doing?

Tom Kerr
Senior Research Analyst at Zacks Small Cap Research

Good. How's it going?

Benjamin Sexson
CEO at Monogram Technologies

Good. Good.

Tom Kerr
Senior Research Analyst at Zacks Small Cap Research

Couple clarifications. I think the answers just you gave were pretty thorough, but on the clarification on the spending, you know, the normalized 3,200,000, three point three million quarterly burn rate, is that inclusive of the 1,200,000.0 spent on the India trial or is that on top of that? Does that make sense?

Benjamin Sexson
CEO at Monogram Technologies

So the incremental spend on the clinical on India is not, yeah, go for it, Noel.

Noel Knape
Chief Financial Officer at Monogram Technologies

Oh, no, I was just going to say that that is included. We're just taking kind of an average rate for the Indian trial. It will be more sporadic, but we've just kind of averaged it out over the year. We anticipate that to be about 1,200,000 for the entire project. So we've just we're seeing that as $100,000 incremental over the year.

Noel Knape
Chief Financial Officer at Monogram Technologies

That's kind of being offset from previous run rate of the lower third party spend. So it's inclusive.

Tom Kerr
Senior Research Analyst at Zacks Small Cap Research

Okay. It's not like it's $3,300,000 quarterly burn plus $1,000,000 on top of that.

Noel Knape
Chief Financial Officer at Monogram Technologies

That's right.

Tom Kerr
Senior Research Analyst at Zacks Small Cap Research

That's good news. Going back to the FDA, this is a big picture question, but with the recent administration federal cuts, you know, FDA wasn't immune to that. Have you heard any scuttlebutt or rumors on how the FDA cuts would affect clinical trials? I know it's probably hard to answer that, but.

Benjamin Sexson
CEO at Monogram Technologies

Yeah, sure. So, our CRO, IQVIA, is pretty well connected with FDA. They actually talked to them not too long ago about this specifically. And the feedback was that the orthopedic devices branch that's reviewing their application, is there, they haven't they don't see an impact at this time, but, you know, that's, we certainly could be impacted by that. He didn't anticipate there would be one from it.

Benjamin Sexson
CEO at Monogram Technologies

Okay. We actually have confirmed with the lead reviewer that the application is being reviewed and there's nothing's been flagged.

Tom Kerr
Senior Research Analyst at Zacks Small Cap Research

And can a AAR, is that a one time event? Or could they come back and say, here's a second AAR, here's a third AAR, etcetera?

Benjamin Sexson
CEO at Monogram Technologies

That's a one time event. Okay. Yeah. So, we expect the next communication to be a clearance decision.

Tom Kerr
Senior Research Analyst at Zacks Small Cap Research

Okay. And then just following up on that one, more, and talked about this in the last few minutes, but once FDA approval, clarify again what happens the next day. And when we have robots in the hospitals, what is the month? Is it similar to India or kind of how does that work?

Benjamin Sexson
CEO at Monogram Technologies

Yeah. It's gonna take a little bit of time, right, because, we're gonna have to ramp the working capital needed to to support, but we have KOLs that really like what we're doing. We we there's only one shot at a good first impression. And, and so we don't wanna launch, we wanna upgrade the system to the new end effector. So there's gonna be a little bit of work required to do that.

Benjamin Sexson
CEO at Monogram Technologies

But, you know, I wouldn't I would I think kind of what you're thinking with India is sort of a reasonable thought. But we think that, we think it's gonna be a pretty competitive solution with a new end effector. But I wouldn't be too aggressive initially just as we, you know, the company is going to need more capital for an aggressive launch.

Tom Kerr
Senior Research Analyst at Zacks Small Cap Research

Okay. That was one of my questions.

Benjamin Sexson
CEO at Monogram Technologies

And just

Tom Kerr
Senior Research Analyst at Zacks Small Cap Research

to develop sales and marketing would increase and that would be funded by new capital and so on and so forth, right?

Benjamin Sexson
CEO at Monogram Technologies

Yeah. Yeah. Exactly.

Tom Kerr
Senior Research Analyst at Zacks Small Cap Research

Okay. That's all I have for now. Thank you.

Benjamin Sexson
CEO at Monogram Technologies

Sure. Appreciate it. Yeah. I mean, just looking at the chat here, obviously, I see, you know, there's investors who are frustrated with how long it takes to do do this. I don't think that there's an appreciation for how difficult it is to autonomously cut unconstrained within 1.1 millimeter and less than a degree of accuracy.

Benjamin Sexson
CEO at Monogram Technologies

And the engineering accomplishment that that is, we've submitted what I believe is a very strong application. We've had the leading CRO in the world, IQVIA, support the application. They've told us it's a strong application. We're doing everything we could do. I'm sorry it takes a long time.

Benjamin Sexson
CEO at Monogram Technologies

Obviously, the team is I I wish that when you submitted something to the FDA, it was a five minute turnaround. It's not, it's a lot of paperwork that they have to go through, a lot of testing they have to go through. The reason I was highlighting how many pages have been submitted is because it takes the FDA time to go through all of this testing and make sure that the company has done a good job proving safety and efficacy of the system. So, I hear the frustration. But at this point, the company has done everything it can do to try and get this thing cleared.

Benjamin Sexson
CEO at Monogram Technologies

And now it's in the FDA's hands. And as I said, the clock at the time we submitted was seventy three days and we welcome folks to go online and try and see what the FDA's average turnaround times are. Yes, I see a question about needing capital. Yes, you should go and look at what medical device companies, how much capital it takes to launch a product. You cannot become when Mako was acquired, they were doing 100,000,000,000 in sales.

Benjamin Sexson
CEO at Monogram Technologies

And you cannot get to $100,000,000 in sales with $14,000,000 unfortunately. So I just have to be fully transparent folks, this is we've developed what I think is going to be a very competitive system, but it's obviously very difficult. I think the product itself is going to be game changing for the orthopedic market, but it has to get cleared. And then that's where the rubber is going to meet the road.

Larry Holub
Director at MZ North America

This concludes today's conference call webcast. Thank you again for your participation.

Benjamin Sexson
CEO at Monogram Technologies

Appreciate it. Thanks so much. One Unfortunately. So, I just have to be fully transparent folks, we've developed what I think is going to be a very competitive system, but it's obviously very difficult. I think the product itself is going to be game changing for the orthopedic market, but it has to get cleared.

Benjamin Sexson
CEO at Monogram Technologies

And then that's where the rubber is gonna meet the road.

Larry Holub
Director at MZ North America

This concludes today's conference call webcast. Thank you again for your participation.

Benjamin Sexson
CEO at Monogram Technologies

Appreciate it. Thanks so much.

Analysts
    • Larry Holub
      Director at MZ North America
    • Noel Knape
      Chief Financial Officer at Monogram Technologies
    • Benjamin Sexson
      CEO at Monogram Technologies
    • Jason Wittes
      Managing Director & Senior Research Analyst at Roth Capital Partners, LLC
    • Tom Kerr
      Senior Research Analyst at Zacks Small Cap Research
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Earnings Conference Call
Monogram Orthopaedics Q4 2024
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