Good afternoon, everyone, and our next session here is going to be with SI-BONE with CEO Laura Francis. Thank you for coming out and making the time for us. We really appreciate it.
Thanks, Sam.
I think we just wanna start off with a sorta high level of the SI joint fusion market. You know, how big do you think that market is today? How fast do you think it's growing? And then, you know, what share do you think SI-BONE has within that market?
Yep. Yep. So maybe just to give a broader perspective on SI-BONE, so we are the pioneer in SI joint fusion. We really developed minimally invasive SI joint fusion, and that's how the company started. I would actually put us into a category of a high-growth medical device company. We focus specifically on what we call the sacropelvic space, and the SI joint is the core of that. But in addition, we actually work in a couple of other adjacent spaces as the leader in sacropelvic. So, we also are working in pelvic fixation as well. We received a breakthrough device designation on a product called Granite when it was initially launched in 2022. And then we also work in the pelvic trauma space as well, with sacral insufficiency fractures.
So we're really working in three different markets. If you put them all together, you were asking about SI joint fusion specifically, we believe that the total TAM in this market is over $2 billion. There's around 280,000 patients that could be treated with a surgical solution in SI joint fusion. And we are the undisputed leader in that space, and really know an extraordinary amount about the joint itself, as well as the disease state, the anatomy, the diagnosis, the treatment. And so we have these very significant competitive advantages in that space, being the market leader. Whether it's high-quality clinical data, we have over 130 peer-reviewed published papers, a couple of, I think, 4 randomized controlled trials, either completed or in process right now, many prospective trials.
So something unique about us in the space. And so we have the majority market share in the SI joint fusion space. And then I mentioned pelvic fixation. There's actually two different pieces to the pelvic fixation market. So as I said, we have a product, Granite. It was originally launched for the adult deformity market. There are around 30,000 cases in the United States of long constructs that are completed per year, and that was our original target market. But there's an additional 100,000 cases that are short constructs, and we just launched a product called Granite 9.5. First case was done in April and doing an expanded rollout this month, actually in June. And so that's targeting that 100,000 market with that product.
And then trauma, we've talked a little bit about too. We've targeted that market with a product called TORQ, which is also used in minimally invasive SI joint fusion. And that's around 120,000 patients per year that have sacral insufficiency fractures, and we will be launching another product in the fourth quarter around the trauma opportunity. So if you kinda take it all together, it's nearly 500,000 annual procedures that we're targeting in the sacral pelvic market. It's over a $3 billion market TAM that we're looking at, and if you think about the penetration in the markets that we're in, they're less than 10% penetrated, and we're the market leader with differentiated products in all of these areas.
Yeah. So definitely wanna make sure we hit on Granite and TORQ. But just to start off with iFuse and specifically, you know, you started to touch on it in your remarks there, but you've done a really impressive job maintaining share in that market as some of the largest spine organizations in the world have tried to encroach upon it.
Right.
We talked to data. Just curious if there's anything else to think about beyond data and sales as a relationships-
Yeah
... Things to think about as that have helped you maintain share against so much larger players in the market?
Yeah. Yeah, I think we really are unique. So a lot of times we're put into a bucket of being a spine company. We do work with spine surgeons. We also do work with interventional, so anesthesiologists, PM&R, interventional radiologists. We also work with general ortho trauma surgeons as well. So we're kind of put into this spine bucket, but we are really not a spine company. What we do is we identify unmet clinical needs. We're focused specifically on the sacral pelvic space, high-quality clinical data, a educational approach to our sales, and then understanding the reimbursement environment as well, and then the direct sales force. We have 85 different...
Territory managers that are extremely knowledgeable about the anatomy, the various disease states, the diagnosis, and the treatment of these various conditions that we work with our surgeons on. So we're a very differentiated asset. And if you look at us too, we're what I would call an asset-light model. If you think about a typical orthopedics company or spine company, for example, I mentioned adult deformity, it's not unusual for a surgeon to have their vendor, their spine vendor, come in with $100,000-$150,000 of assets, instrumentation into a case. Typically, we'll come in with, you know, maybe $15,000 of assets into any given case.
So really unique from a lot of these different perspectives, and that's actually helping to drive us very rapidly toward profitability as well. So, we're very close at this point, and you can see it, you can see it coming here, in the foreseeable future.
Mm-hmm. So you started to talk about the interventionalist side of the, you know, doctor relationships that you have.
Yeah.
Help, help us understand, you know, where do those doctors sit today, whether it be in terms of doing procedures or along the referral pathway?
Yeah.
One of your newer competitors to this space has talked a lot about shifting the actual fusion procedure-
Yep
to that doc population.
Yeah.
How do you think about how that side of the market could evolve?
Yeah. So, if I talk about the market overall, there are around 7,500 spine surgeons that are target surgeons for SI joint fusion procedures. If you look at interventional, there are around 4,500 who are targets. But of the 4,500, there's probably only around 1,000 that do procedures, right? The other 3,500 are more doing needle-based procedures, so not necessarily, you know, where you make an incision, place a device, you know, close a wound. And so the majority of, you know, those physicians that are performing these sorts of procedures are spine surgeons. But those 1,000 that I mentioned that are regularly performing procedures, we've been working with for the last 18 months.
So, we work with them with our TORQ product primarily, and TORQ is a threaded implant, 3D additive manufactured, so that it provides bony ongrowth, ingrowth, through growth for immediate stabilization of the joint and ultimate fusion of the joint. It's placed laterally. It's coded under CPT code 27279, which is where all of the clinical data is located, which is, quite frankly, most of it is SI-BONE's-
Mm-hmm
... data. And the health economics are quite good for that procedure, for the patient, for the physician, for the hospital, and for the, the payer as well. So, so that's, that's how we differentiate ourselves. The work that we're doing with interventionalists right now, we have a study going on called STACI, S-T-A-C-I, and we've actually met our primary endpoint in terms of enrollment already for that study. So you should see some results from that study coming out toward the end of the year. These are key opinion leader interventionalists, and what they appreciate about, about SI-BONE is the depth of knowledge that we have with this joint. So understanding, once again, the anatomy, understanding the disease state, understanding the diagnosis, and understanding the treatment.
So we have direct territory managers that go into the operating room with the interventionalists and really have an in-depth knowledge of the procedure. And for an interventionalist, this may be new to them, to be working with the market leader and just the knowledge of the reps is at a completely different level than, you know, other companies that are targeting the market currently.
I'm safe to say that, you know, if the market were to shift to more of the interventionalist, proceduralist doctors doing these procedures, it's not as if you're not present in that market and-
No, and we, we've been working with key opinion leaders, like I said, for the last 18 months. We do primarily sell to spine surgeons, and they have been terrific customers for us and provide high-quality solutions. But there's also a certain subset of interventionalists that certainly are interested in the procedure and have good hands that can perform these procedures. We did launch a product as well, called Intra, into the market earlier this year, and that product is a dorsal allograft product and more targeted toward those physicians that don't necessarily feel comfortable with a metallic implant. So what we're trying to do is provide options for physicians depending upon what their needs actually are.
Yeah, that's... I want to ask on that, but of the—let's just say, of the 1,000 or so proceduralist interventional pain docs, do you, do you have a sense of how many ... You know, I think you have 1,300 or so active, active physicians right now. Do you have a sense of how many of those docs you have a relationship with or, or some level of rapport with?
So, I mean, we've been in this market for 15 years, and the patients have historically been treated conservatively, and they're typically working with pain management. And so our sales force has always had relationships with those physicians that are in pain management as well as the spine surgeons.
Great. And then on Intra, you know, this isn't the first allograft product that SI-BONE has had out there. So just, you know, you mentioned it, it's a-
Right
-dorsal allograft. Can you just level set us on how does Intra— It was Bone— SI-BONE's bone product, right? It was the-
It was iFuse Bone, yes.
iFuse Bone.
Yes.
Yeah. Um-
We still have iFuse Bone.
Yeah.
So iFuse Bone was historically used by spine surgeons in conjunction with a lateral SI joint fusion with either iFuse 3D or with our TORQ product. And in the case of Intra, Intra is used on a standalone basis in a posterior trajectory.
Got it. And, a couple of MACs put out LCDs on posterior-
Right
-allograft, about two and a half months ago now, so.
Yep. Yeah.
Any updated views? I know we've talked about it before, but any updated views on how that allograft portion of the market develops relative to-
Yeah
-to fusion?
Well, as I said, all of the data is with the 27279 devices, and it's primarily SI-BONE that has that data. So the LCDs very clearly are stating 27279 is considered to be safe and effective. 27278, which is dorsal devices, whether it's allograft or a metallic device, do not have sufficient data. And so that's the position right now from three of the MACs out of the seven here in the US. And from our perspective, you know, what we wanna do, as I said, is just provide options, and so we have an option for posterior device.
We also have an option for our TORQ product, and the vast majority of the sales into interventional have been with our lateral Torque implant under 27279. So, you know, ultimately, what we wanna do is just serve the needs of the physicians, regardless of if 27278 is not covered, the 27279 will be covered, and we do see an appetite with interventionalists to do those procedures. And I also think that some of the interest in this area is actually further highlighting what SI-BONE is doing, right? We have, as I said, we've had the majority of market share here for a long time. We competed very effectively with Medtronic in this space.
We competed very effectively with Globus in this space, so much larger companies that we've competed with over time. Once again, this is a situation where it just highlights the differentiation of SI-BONE versus the other companies that are out there. What I believe that we're seeing is interest in truly penetrating this market that right now is less than 10% penetrated, and we're in the position to really capitalize on that.
Then last, last quick one on Intra. Can you just remind us of the price point of Intra versus
It's similar to the lateral devices.
Got it. Wanna touch on Granite and TORQ, but just a quick one on guidance and as much a philosophical question as anything. But, you know, you've been typically growing in the 20%, 20%+ range over the past few years, excluding COVID.
Yep.
Looking at guidance for this year implies-
Mm
high-teens growth
Yep
-on a two-year stack, and one Q grew about 60%.
Yeah.
And so-
Yeah
... toughest comp of the year.
Yeah.
Sort of an implied deceleration through 2Q in the back half. Can you just-
Yeah
Walk us through the puts and takes on that guide and how you're thinking about the rest of the year as
Yeah
as it progresses, especially with the short construct launch?
Yeah, I think what you're highlighting is Q1 was actually a tough comp for us. So the year before, we had grown at 46%. This year, we grew at 16%. I was thrilled with the performance based on, you know, -
Can't go from 16-
Getting over that hurdle, right? It was quite a feat, and... But it just shows the strength of the business that we have here. And in terms of how we're thinking about the rest of the year, what we try to do is remain conservative on our guidance. You know, for example, we didn't take into consideration Intra or Intra sales into our guidance 'cause we wanted to see how that would develop. We were very careful about, you know, what we were gonna incorporate on Granite as well, given that we were launching a new product, and then Trauma as well. So what we tried to do is just stay conservative.
With that said, with the launch of Granite 9.5 and of Intra, you know, on the first and second quarter of this year, what it does is it creates a huge opportunity for us to accelerate that growth. And you are gonna see accelerated growth for the rest of the year with our sales. So I think we're in a terrific position for the rest of the year, as well as 2025, positioned really well to win here on a go-forward basis.
So let's talk a little bit about 9.5.
Mm-hmm.
Remind me when that... that launched in April, correct?
Our first case was done in April, and then we did an expanded rollout just this past month. So you'll start to see some of the results of that coming out in the second quarter, and we are really excited about what we're seeing right now. So what Granite 9.5 does, as I said, is it really gets at the opportunity with short constructs, these 100,000 cases. But I think what's really important to understand is, in the first quarter alone, we had 1,100 surgeons who did at least one procedure, and their core practices are around degenerative spine procedures.
We have this opportunity not just to further penetrate with new physicians, but also to increase the number of cases per active physician going forward, because Granite 9.5 gives them the opportunity to use pelvic fixation in those degenerative spine cases. Our intention going forward is to continue to grow the number of surgeons and physicians doing the procedure, but it's also to grow the number of procedures each one of those physicians is doing, right? If we can go from having the average surgeon going from 4 cases a quarter to 8 cases a quarter, right? There's a huge opportunity for operating leverage for the business and growth as well by doing that.
And part of that's because the longer construct is more targeted towards the sort of specific long construct, KOL-type doctors-
They do-
As opposed to the more-
Tend to be these KOL doctors from academic medical centers. They are still ortho, ortho and neuro spine surgeons, so it is the same call point. But you know, the majority of those 1,100, and if you look at, by the way, all of 2023, over 1,600 surgeons did at least one case with us, right? And so how do we actually see the incremental opportunity from this base of very loyal customers that we've developed? And we think that Granite 9.5 is a great solution for that.
So-
In addition, it's a breakthrough device, and there's an NTAP associated with it of approximately $9,800 too. So there are a lot of reasons that we have a better technology, and the health economics make sense for everybody.
Remember that, that 9,800, is that per case or per-
It is per case.
Per case. Correct.
It is per case.
One of the differences between the long and short is in the shorter or 9.5 cases, you'll be using 2 implants, right? Versus the 4 you might use in a longer construct.
That is true. So the shorter constructs, on average, will typically use two implants-
Mm-hmm
... because it's overkill to use more than that for pelvic fixation and fusion. But what we're seeing early on, and one of the things that we're really excited about, is that we're seeing more of our surgeons that have been performing these cases using 4 implants in the case.
Mm-hmm.
The reason being is they have more what's called real estate. They have the ability to place four implants, versus there may have been certain anatomies where they really felt that they could only fit two.
Yeah.
So we have a lot of. We have the incremental opportunity on short constructs. We have surgeons that were saying that the original Granite was larger than they would have liked. "Come back to me when you have a smaller diameter implant." So we're going after those surgeons. And then we have the opportunity for the physicians to use four implants so that they not only get fixation, but they get fusion as well, which is an opportunity for our business.
Okay. And then I know, I know you don't break out TORQ versus Granite versus iFuse or traditional iFuses. But as you—you know, I think it's safe to say trauma and, and TORQ a little bit earlier in the, in the ramp-up into, into that market than, than Granite and, and SI Joint Fusion. But STACI data coming-
Yep
into this year. New product
Yep
... coming into this year.
Yep.
You know, is that a market that you think it's safe to say, you know, when it does inflect, it could inflect more meaningfully-
Very much
-and quickly?
Yeah. And there's really three things that we're focused on with the trauma market right now. First of all is having a full product offering for sacral insufficiency fractures, and we believe that this incremental launch in the fourth quarter is really gonna meet that need. Secondly is clinical data. So we have our SAFFRON study. We should have data from that study published before the end of the year. And given that this is a situation where the patients are treated with conservative care, rehab, basically, instead of performing a procedure, the clinical data is important. The third thing is actually, we have started to work pretty significantly with third-party agents, especially with our pelvic fixation business.
We've gotten a lot of leverage on our sales force, going from $1 million a couple of years ago in rep productivity to $1.6 million at the end of the first quarter, and agents are doing that for us. We believe that something similar is going to be important with the trauma market, too, to be working with third-party agents to be reaching ortho trauma surgeons specifically. So those three things together, you know, product, clinical data, and distribution, we really think will drive the business in that area in 2025.
Great. And then on margins, we're coming up on time here, but on margins-
Okay
... you've done a really impressive job on-
Yep
... on operating leverage, even-
Yep
... even in spite of some gross margin contraction.
Yep, yep, yep.
EBITDA is improving, getting to line of sight to positive Adjusted EBITDA.
Yep.
Just this year, I think OpEx growing at about half of the rate of revenue growth.
Yep.
Is that a sustainable algorithm for SI-BONE over the, call it, medium term?
I think for the medium term, yeah. And it's just. It's not anything unnatural that we've done with the business. It's basically we've gotten to that stage. As I said, our sales are targeted to $164 million-$166 million for this year, and it's that point where we're able to get operating leverage. We've built the R&D function, we've built the sales and marketing function, we've built the G&A function, and now we're getting operating leverage on it. And it's gonna pay off by seeing us flip to profitability here in a very short period of time and cash break-even as well.
Profitability on a EBITDA basis, or?
Adjusted EBITDA is specifically the KPI that we're using.
Great. We're at time, but thank you so much, Laura, and hope you have a great rest of your conference.
Thanks, Sam.