Please note, this event is being recorded. I would now like to turn the conference over to Chad Clouse. 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 risks, uncertainties and factors, you're encouraged to read Aurora Spine's documents on file with SEDAR+, including those set forth in the periodic reports filed 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 27 A of the Securities Act of 1933 , as amended, and Section 21 E of the Securities 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 risks and uncertainties and other important factors that could cause actual performance or achievement to materially differ from those projected. Aurora Spine 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 EBITDA, adjusted EBITDA, adjusted net income or adjusted 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 the company's operational performance.
Investors should recognize that these non-GAAP figures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition and not as a substitute for or superior to any measure of performance prepared in accordance with GAAP. A 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 Clouse, our Chief Financial Officer. We will present our overview of our financial statements, followed by a 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 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 evidenced 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 revenue, marking the fourth consecutive quarter of over $4 million in sales, 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 SiLO TFX and the ZIP 51 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 $0.249 million, excuse me, in Q3, transitioning to earnings per common share of $0.00 in Q3 2024. Gross margin improvement to 60% in Q3 2024, 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 SiLO TFX sales grew by 35% from Q2 2024 to Q3 2024, reflecting the success of the Aurora's expansion into the pain management market. The 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.
Additionally, the addition of new sales professionals expected to further drive growth as they onboard more surgeons into 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 the call over 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-month period ending September 2024 was $12.8 million, up from $10.4 million in the comparative period of 2023, with a net loss of $0.35 million, with a significant increase from the loss of $1.39 million in the comparative period of 2023. The decreased net loss is a combination of pre-sales and cost controls while 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, and non-IFRS measure, was $0.38 million compared to $0.12 million in Q3 2023. This marks the fifth consecutive quarter of positive 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. A net 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 can be seen by a reduction of the trade accounts receivable by approximately $400,000. 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 trays 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. 8 million, approximately 9 million warrants expired in September 2024. These warrants were issued as part of a private placement in September 2021, with a three-year window to exercise, as expired in September 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, we'll 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 one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. But at any time, your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. And our first question comes from Tom Fedichin with Microcap 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, the SiLO 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 per month, which I think, I believe, was a target that you were seeking before you ordered more kits.
Can you speak about the robust sales of SiLO TFX and maybe speak about the addition of an additional new sixty kits that you've got? And then to add to that, how long will it take for those sixty kits to be deployed over the next year?
Thank you, Tom, for the call, and 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, and we're constantly monitoring and seeing where that's gonna land. I put out a video online, a social media post, showing that we'd received more instruments. We're also doing 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 extensive 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. Throughout the year, we were getting, you know, increasing and getting closer and up and over to 100 units a month. And we think with these additional kits and with the new feet that we wanna add on the street, going into the beginning of the year, we have homes, we think, for those additional kits that are being built out 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 kinda how it goes. You know, it's not like a cervical case or say a like a lumbar case. Typically, you can leave those kits there, and you could. 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 need the inventory, and they might have more than one customer in that week. You know, it might be four or five customers, so we'll have to ship four or five kits to that location.
Okay. And how many kits did 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 right.
Amazing.
35.
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, 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?
I think what you're saying is that, you know, who's been the most impactful, like regional sales managers?
Yeah.
Is that what you're asking me?
Yeah.
The-
Exactly.
Yeah, we've got, there'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 in your practice? Are you-- have you been interested in SI fixation or Fusion? There's obviously the reasons that we're in there. One of the things that I'll say is that, Texas has been a great location for us. We tend to do quite a few procedures down that way. Florida, Northern California, you know, 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 different people in Arizona, too.
It seems like kinda like the warm weather places in particular areas that people just wanna 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 SIs fused because now they're completely pain-free after that. And the pain goes away, like, immediately. 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 side fixed, and then they walk out that day, and they're like: It's already going away. We're really pleased with that.
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.
I think the ZIP sales, 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 do a multicenter study with ortho, neuro, and pain together in a collaboration in a multicenter fusion study. It had never been done before. We did it, and we have a really strong clinical outcomes on that. We have 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 and 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 multicenter study and some of these congresses where ortho and neuro get invited into these pain conferences. We are now starting to see a rise in our usage in the ZIP with these doctors that say: "Oh, you know, I now that I've seen it, I see you guys got the data. I'm interested in taking a look at that again." And they 'Cause it's now been tested over and over again. It's not like a fly-by-night system that people you know try once and then don't use again. It's got some good 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 of 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 know, I know we're still waiting for DEXA to get its big, big push up, but we've recently moved. We have our system, the Hydra Lumbar system, right? Which is meant for lumbar fusion. And there was an opportunity for us to work with another company that wanted to work closely with Aurora, and we started to involve their system into our system, and we rebranded their technology called Osteo Onyx. 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 roughened 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, you know, our comment, as 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 didn't recognize that in a patient's spine, they could have all healthy levels, except for one level could be affected. Just one level. So let's say, you know, L4 and L5, and this patient's got gonna 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 gonna do with that one level?
Are you gonna be able to treat that level with the same old one product density fits all, or one, you know, implant that doesn't have any special bone characteristic, adhesion characteristics to it? You're just gonna 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 Eccles 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 gonna have a real breakout year just coming into 2025 . I think he's gonna really. He's gonna 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 Osteo Onyx? What do you see as the potential?
I see a potential-
Market size. Yeah, sorry.
This is a lumbar system, it's a lumbar screw, so it's the pedicle screw market. The doctors 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 roughened surface technology. It's gonna help give your patient a little advantage. It's gonna 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, you know, being integrated into... It's in a multicenter 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 to say exactly what we do with ZIP. We're gonna show the doctor, "Look, 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, you know, PLIF, TLIF, cages that are for posterior interbody devices that go in there. And these implants go in between the vertebral body to be used with Hydra, Hydra Osteo Onyx, and even ZIP, for doctors, surgeons that use interbody to restore lumbar height and restore the balance of that spine using an interbody cage.
Our cage will be the first one that will feature DEXA technology, and right now it's started, obviously, with our cervical technology.
Mm-hmm.
These things are starting.
Perfect.
To snowball together. They're, you know, it's caking together as we wanted it to.
Mm-hmm. And as for potential for the year ahead, how big do you think Osteo Onyx could be for you? Because it's new, that's why I asked. It's nobody's really heard of it until the press release.
Yeah, I think it's gonna. I think in a short period of time, like, I think in the beginning of the year, going into Q1, Q2, we're gonna start to see Osteo Onyx, you know, add in over, you know, $500,000 a month in sales for us.
Wow!
Just on that product.
That's impressive.
Just on the product alone. Yeah.
Wow. Awesome. Now, can we-- 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 tried to put a hard push on the receivables because they were growing, and I actually end up hiring an individual whose job is nothing but collecting money, and well, we use him 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 collecting. The large debtor that we were talking about, they had been paying us about $100,000 a month.
They've paid themselves down below 90 days now, so we're thrilled about that, collecting all that money. But yeah, I think we've just been a hard push and constantly reminding people that, you know, when their bills are due and it's paid off, and we've collected a lot of very old receivables over the last six months, and we've been on top of things so that they're not just slipping into the over 60 days now.
Perfect. Can you speak about concentration? Is there any large accounts or holders of your accounts receivables that make up a good percentage? Or is it really spread out now amongst many, you know, companies, and it's just really an ongoing 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, and it's just that constant flow. I think we've got one person who's probably in the 10% range of receivables, but they're. They pay on time and have been, you know, churning business for almost a whole year at this point, so I'm not concerned about that 10%.
Mm-hmm.
But yeah, I mean, it's just, it's just constant sell and collect, sell and collect. We're doing great with it.
Fantastic. No, that's, that's great. I know we're gonna switch back to the business again here. 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 twelve months? How many new hires?
We had a couple people who didn't make goals, so we professionally parted ways with them. We have in the field 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 all falls underneath Matt. We also added Ron Eccles, 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.
Okay, 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?
Do we have enough staff? No. We, you know, we know that we need to build out more infrastructure with headcount in the office. And I'll digress for a second. I gotta give my hats off to how the internal staff worked with the field staff. The field staff and the internal staff were just absolutely lights out in Q3.
They were tap dancing across, you know, the whole country, getting sets, you know, brought into place, making sure we made that training lab on time, making sure we had the right trainer at that location. You know, we have to 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 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 gonna 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 to make sure we have the right headcount in place.
Okay. A couple more questions. Can you speak about Veterans 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 at the Navy facilities and in different VA hospitals in the country, mainly in California. These procedures have gone exceptionally well. We're really, really encouraged by this because it's, you know, once you get started, you know, you just, it can, 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 in a 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 taking 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, like, you know, the per doctor, or is there something else that really stands out that you would like investors to know?
It's been 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, "Missed no surgery." Like I said, we don't wanna 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 wanna make sure we're there. There was some really great resiliency coming out of the hurricane down in Florida, where we were able to, 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, and 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 been real active with the different congresses and conventions. You know, we, you know, in the big orthopedic markets, we're still, you know, finding our path there, and the DEX has really helped us there. 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 market, where we go in there with a lot of thoughtfulness.
And we don't turn our back onto those interventional pain doctors 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 gonna 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 great clinical results. Then there is more than one way to fuse a 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 wanna 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 million, $4.2 million dollar range to close to $4.8 million. Is this something we can expect going forward, seeing revenues in the $4.8 million-$5 million dollar range for the next quarter or two, three as we move forward?
Well, we're always humble about, you know, 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 pleased with the way things have already kicked off in Q4. Now we've got to charge hard for the next... You know, because we're almost done here with October.
We 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 wanna 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 wanna get there sooner versus later. And we do think that going into 2025 , 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, Tony.
Again, if you have a question, please press star, then one. Our next question comes from Lindsay Leeds with Microcap Opportunities. Please go ahead.
Hi, and congratulations on a phenomenal quarter. 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 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?
Thank you, Lindsay, for, you know, joining the call. Yeah, it's still with the FDA, so obviously I, you know, 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, a $3.8 billion market opportunity. The facet market is the number one treated segment within the pain interventional market. That's the area and the patients they treat the 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 SI-BONE at $2.5 billion market. So this is how, you know, 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 as soon as we get the 510(k) approval, we'll rapidly move towards manufacturing all the setup for this implant to be manufactured from set design, implant design, cadaver labs that have already been hosted on. They've all gone really, really well. We're just waiting for that 510(k) 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, have 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, say, in November or October. Sorry, November or December.
Okay. Awesome. Thank you for that. This is maybe a newbie question, but what kind of physician would be doing a facet surgery?
Actually, it's a crossover product. It would be ortho spine, neuro spine, 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 we would be focusing on the lumbar area, so L1 through S1. So you have just by that right there, that gives you, you know, ten facets to work with, right? Because 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 gonna be so, it's gonna be so simple, which is, you know, our tagline. I'm not trying to sound cute 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 be able to walk in and walk out the same day.
Wow!
Incision size about the size of even smaller than a dime, the 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 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 very last step is lumbar fusion. And this gives them that facet fusion, where they can actually... They've even done, let's say, nerve stimulators, and they've done some additional ablation in the facet.
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 keeps 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 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 buy that patient five years, ten 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, but it's not. Facet fusion is not new. It has been around for a long time, over forty 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 facet, older facet systems.
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 applied that to our to the facet system. So we know that the fact that the doctors can use our SiLO TFX system, the SiLO TFX system, if you can use that system, then you're gonna 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?
I think that the SiLO TFX is gonna continue to grow. I do think that the 51 is gonna 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 gonna see spine fusion with ortho and neurosurgeons, especially the ones that we like to work with, that we can help, they can help be part of the collaboration with the interventional space, people who are doing the training courses and being part of that bigger picture, getting everyone to, you know, play well in the sandbox, if you will.
We think that spine is gonna grow, and that's one of our big targets right now for Q4 and going into the beginning of the year. You know, if we're doing well over $1 million a month in pain, and that's growing, let's get our spine division up over $1 million. And if we do those things, then, you know, now we're like I said, we're putting the $5 million quarters in our rearview mirror, and then we're now on our way to $30 million a year.
That's what we're focused on in 2025 , is to be way up and over, you know, 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 $1 million a month, and then growing off those markets, both of them.
Okay. Is, is this kind of... I, I see TFX revenue growth is up 92% year over year, which is just a phenomenal number. Is, is that kind of growth even possible that it could continue, or is that just a crazy number that it's gonna have to slow down?
Well, I think there's plenty of room to grow in this market. The market's still expanding. You know, credit to SI-BONE, you know, they evaluate the market at $2.5 billion. They say that there's over 289,000 estimated procedures that can be performed in the SI joint. We see it a little bit differently. We, 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-BONE 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, you know, 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.
Wow!
That's the number that we're focused on. That's the number that made us get into the interventional market, that if that one point two million dollar-- I'm sorry, one point two 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 one point two million injection count 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's this is why the SI joint market is going to expand. There'll certainly going to be some more competition coming into it, but competition sometimes, you know, rises all tides, right?
Keeps everyone focused on the market, and we got to keep doing what we're doing, but we're getting great clinical results with the SiLO TFX. So we're not gonna sit back just because we've had some good quarters with it, the good rollout with it. We're, we are now in two stages of a multicenter study with the SiLO 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 gonna be able to put out unbelievable biomechanical and clinical results. The biomechanical papers actually just got its publication notice, so it's gonna be published. It got accepted by the Neuro Journal, so that's gonna hit all the events, you know, posters and publications.
We're gonna 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 that these multicenter studies are gonna be with ortho, neuro, and pain as a collaboration, because we really, that's just our belief, and we think we're gonna do a good job with it.
Fantastic. The DEXA study results, I think you guys were targeting for September. Did those come out already?
We have not put them out yet, but we are gonna put them out here before the quarter ends, here at Q4. We'll be able to put out information on the DEXA, and it's super positive. Like, we're super encouraged by it, and we're gonna expand onto that. We recently worked agreement with a company that does multicenter studies. We worked with them on our ZIP study, and Dr. Pope and some other key people are gonna be really key on that, where we're gonna be leading these different studies, SiLO TFX, a ZIP 51 study, a DEXA-C study continued, and then we'll go into DEXA-L studies, which would be lumbar studies.
So Aurora would be able to really build off robust data that would support that what we're doing is working, you know, not just our marketing problem, but our actual here's the commitment to data and research. And 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, you know, 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 our call today, and that's all my questions.
Thank you.
Thanks, Lindsay.
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. You may now disconnect.