PODCAST: Titan Medical CEO David McNally on Prototyping their Robotic Technologies
Titan Medical Inc. (TSE:TMD) (OTCMKTS:TITXF) (FRA:QTN), a robotic surgical technologies company, is currently in the advanced prototype stage with their SPORT Surgical System, which will expand the technology into underserved areas such as general abdominal, gynecologic, urologic and colorectal procedures, in a cost-effective manner. CEO David McNally tells James about the program and the recent move to Columbia University.
James West: David, thanks for joining us today!
David McNally: I’m delighted to be here, James.
James West: David, this is about our third interface with Titan Medical, and things are always happening at Titan, which is why I’m always delighted to talk to you guys. And you most recently announced that you’ve actually started with a trial installation of the SPORT Surgical System at Columbia University Medical Center.
David McNally: Yes, James, and we’re thrilled to be building upon the progress that the team has made since the beginning of this year in 2017, in quickly moving the system to the advanced prototype stage, where it can be deployed and utilized by surgeons in the laboratory. We began earlier this Fall at Florida Hospital’s Nicholson Center with very successful surgeries, and now we’re moving to Columbia as we recently announced.
James West: Fantastic. And so in terms of getting this system into broad use, where does this sort of put you in that timeline?
David McNally: We’re excited that our new executive team is on track for achieving all of its published milestones, which means that as we exercise the system in the laboratory at our three centres of excellence, including Florida Hospital, Columbia University, and the IHU in Strasbourg, France, all of which are world-renowned robotic training centres, we will continue to learn about the best procedures for us to explore when we enter the market.
We’re on track for our projection for 2019 as the year that we expect to enter the North American as well as European markets. I can say also that the early surgeon feedback is extremely positive toward our single-incision solution, and even today, procedures are currently being performed while we’re on this podcast that are showing great progress in gynecological procedures performed through a single incision.
James West: Now as I recall, the company adopted a strategy where instead of hurrying to market several years ago, you elected to delay your market debut, so to speak, in the rationale of being able to service a broader range of procedures. So is the gynecological aspect an example of that?
David McNally: Yes, it is. And I can say, James, in my 30-year tenure in the medical device industry, I’ve never seen an opportunity of this magnitude. With a multi-billion-dollar robotic surgical market standing right before us, and an opportunity for Titan Medical to have a unique position in that market, I feel like the table is set for a remarkable opportunity.
Gynecologic applications are accompanied by urologic, colorectal, and general surgery applications for our technology, and of course, from an economic perspective, this represents not only a capital equipment revenue opportunity but also service revenue as well as disposables revenue.
James West: Wow. That’s really interesting. So now, the 900-lb gorilla, the tough question that everybody always wants me to ask is, so how do you stack up against DaVinci at this point?
David McNally: We are of course thrilled that Intuitive Surgical has developed this market over the past 17 years and done a tremendous job. We’re also pleased to see that Intuitive Surgical is moving forward with a single incision offering, because that further validates our focus on single incision surgery for the future. So we have great respect for Intuitive Surgical and the DaVinci.
We believe single-incision surgery, based on what surgeons are telling us, is the next revolution, and at our early peek at the architecture of the next generation DaVinci system, which is the single-incision system, we believe that our system has some performance characteristics that surgeons will prefer over the DaVinci offering. So we see validation by Intuitive Surgical’s forthcoming offering, and we’re very excited to have our place in the market.
James West: Mm-hmm. Interesting. So then is it safe to say that Titan has sort of leapt ahead of the leading edge of the science, by taking this decision to focus on single-incision technology as opposed to sort of the path that Intuitive has?
David McNally: We believe so, and I have seen this before previously in my career working with outstanding teams to start with a clean sheet of paper in a market that already exists. We have the advantage of not being wedded to an architecture in our system that was developed over a decade ago, unlike the entrenched competitors’ product. We have the chance to start with a clean sheet of paper, use the most recent technologies that are evolving, and develop a solution that is focused on surgeon and patient needs.
I have led teams to successfully do this in existing markets in the past, and it’s a thrill to have the opportunity to do it again.
James West: Your directional change and the sudden news that you’re now in use case at Columbia University is reflected in your share price, which has reversed course after a sort of long, slow decline. And I’m wondering, what is the significance of the fact that you announced a $2.9 million placement led by US Robotics surgeons? That strikes me as somehow meaningful and kind of an inflection point.
David McNally: We are thrilled that these surgeons share our vision for the future of robotic-assisted surgery, and that their enthusiasm has conveyed an investment in the company. We’re so excited – this is confirmation that the future of robotic surgery is indeed single-incision surgery. So even as meaningful as the amount of the capital is the fact that these are surgeon investors that are experienced robotic surgeons.
Looking forward, this also sets the stage for the confidence of the market to realize that these surgeons, having seen our system in the laboratory, are enthusiastic, and that Titan Medical is providing material evidence that its system indeed is more than a very exciting concept; that the technology is actually being demonstrated in the pre-clinical environment, and we are marching ahead in a planned cadence towards commercialization.
James West: Interesting. David, let me ask you: from a patient perspective and from a layperson’s perspective, how is single-incision technology a benefit or of value to me as a patient, who might be undergoing a robotic surgery procedure?
David McNally: James, the concept is that with a single incision, there are fewer opportunities for complications, both intraoperatively and post-operatively. Many patients don’t realize that even the creation of the incisions with certain instruments can pose risks of internal organ damage during the surgery. So by creating only a single incision, that risk is reduced significantly, versus creating three or four incisions with present, multi-port robotic surgery.
Then when we think about the healing of those incisions postoperatively, of course, a single incision poses only one opportunity for complications due to infection, and what’s known as wound dehiscence post-operatively, the re-opening of the wound.
So with a single incision, we have the benefit of reducing the number of incisions obviously in the body, but also a sense of well-being that surgeons are telling us that patients feel when a surgery, and perhaps a complex surgery, is performed through a single incision. They feel a better sense of well-being and frankly, most likely less post-operative pain, as opposed to multi-port incisions, which would be the case in not only multi-port robotic surgery but also minimally invasive laparoscopic surgery, where multiple incisions are used to deliver not only the operating instruments but also the camera and light source.
James West: Okay. So it’s just plain better?
David McNally: Yes. And now the key here, of course, James, is better means we have to be able to deliver through a single incision multi-articulating tools. That is, tools that can triangulate on the space. As you can imagine, operating through a small incision, we call it a keyhole to the body, and then triangulating on a space, is much more difficult than doing so through multiple incisions spaced around the abdominal cavity.
James West: Wow, fascinating stuff. David, one final question here: how much more capital is Titan going to need to reach a point where it’s self-sustaining financially?
David McNally: We have publicly disclosed that we will need another $50 million USD to take the product through early commercialization in 2019. Now, that includes the regulatory process in the US, with the USSCA, as well as for the CE mark in Europe. As I mentioned earlier in the podcast, this is a huge opportunity, and we’re committed to doing this right. So with $50 million, we expect to get to the point where we are performing human surgeries with the Sport system, with experienced surgeons in our centres of excellence, as well as a few initial sites in 2019 demonstrating the effectiveness of the system and the patient benefits.
So that is our focus presently. If we succeed in doing that well, then we believe that the economics will follow, but we want to make sure that 1) we develop a system that’s the best it can be at market launch, and if that takes a little longer than originally projected prior to my arrival at the company in January of this year, that’s okay. But we’re on track with our recently renewed milestones as of 2017, and we’re focused on doing this right.
James West: Well that’s great, David. I congratulate you on joining the company and turning the ship around, as it were. We’re going to keep following with interest, and we’ll catch up with you in the studio here in a quarter’s time or so. Thank you very much for your participation today.
David McNally: You’re welcome, James, and I look forward to our next interview together.
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