Monogram Orthopaedics

Growth Stage

Future of Joint Reconstruction.

Analytics

Raised to Date: Raised: $9,806,291

Aggregate Commitments $

Platform

StartEngine

Start Date

01/17/2021

Close Date

09/30/2021

Min. Goal

$10

Max. Goal

$30,000,000

Min. Investment

$251

Security Type

Equity - Preferred

Funding Type

RegA+

Series

Series A

Pre-Money Valuation

$89,000,000

Rolling Commitments $

Status

Active

Reporting Date

09/19/2021

Days Remaining

11

% of Min. Goal

98,062,910%

% of Max. Goal

33%

Likelihood of Max
unlikely
Avg. Daily Raise

$40,026

Momentum
cool
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Location

Austin, Texas

Industry

Healthcare & Pharmaceuticals

Tech Sector

HealthTech

Distribution Model

B2B2C

Margin

Medium

Capital Intensity

High

Business Type

Growth

Monogram Orthopaedics, a medical technology company, is raising funds on StartEngine through Reg A+ crowdfunding. The company is developing a product solution architecture to allow personalization of orthopedic implants. Monogram Orthopaedics is using 3D printing and robotics through automated digital image analysis algorithms. Dr. Douglas Unis founded Monogram Orthopaedics in 2016. The proceeds of the current round of funding, with no minimum target and a maximum target of $30,000,000, will be used to fund the development and pre-market submission of the Monogram total knee and robotic system. Monogram Orthopaedics has established a product-market fit and expects to start generating revenue by 2021.

Balance Sheet

Cash and Cash Equivalents

$2,319,393

Investment Securities

$0

Total Investments

$0

Accounts and Notes Receivable

$0

Loans

$0

Property, Plant and Equipment (PP&E)

$235,748

Property and Equipment

$0

Total Assets

$2,620,141

Accounts Payable & Accrued Liabilities

$541,529

Policy Liabilities and Accruals

$0

Deposits

$0

Long Term Debt

$48,000

Total Liabilities

$2,894,773

Total Stockholders' Equity

$-274,632

Total Liabilities and Equity

$2,620,141

Statement of Comprehensive Income Information

Total Revenues

$0

Total Interest Income

$0

Costs & Expenses Applicable to Rev

$0

Total Interest Expenses

$0

Depreciation and Amortization

$31,763

Net Income

$-1,796,265

Earnings Per Share - Basic

$-1

Earnings Per Share - Diluted

$-1

Auditor: Fruci and Associates II, PLLC
Financials as of: 01/17/2021
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Raise History

Offering Name Close Date Platform Valuation/Cap Total Raised Security Type Status Reg Type
Monogram Orthopaedics 09/30/2021 StartEngine $89,000,000 $9,806,291 Equity - Preferred Active RegA+
Monogram Orthopaedics 01/16/2021 StartEngine $89,900,000 $2,965,501 Equity - Preferred Funded Test the Waters
Monogram Orthopaedics 03/31/2020 SeedInvest $21,250,000 $14,588,668 Equity - Preferred Funded RegA+
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Ratings

Analyst Report

Synopsis

Last year, KingsCrowd rated Monogram Orthopaedics as a Deal to Watch. In that round, it raised $14 million through a Regulation A+ campaign. Now, this medtech company is back for another round. 

Most early-stage companies focus on refining and perfecting one product or service. Monogram Orthopaedics has two — its 3D-printed hip and knee replacement implants and its ‘state-of-the-art’ surgical robot. The robot helps doctors by using advanced imaging to mill cavities inside a person’s bones. The purpose here is to aid in the installation of patient implants. The surgical robot boasts seven degrees of freedom, variable arm speed, and a high-efficiency cutting system. It’s also capable of sensing small changes in force. All of these features are valuable in dealing with delicate surgical procedures. They also help to reduce damage to the bones that often occur when certain surgical processes are conducted manually.

The company’s implants are a different animal entirely. As opposed to the traditional one-size-fits-all implants that flood the market, Monogram Orthopaedics has come up with a new type of device. For each patient, the business conducts a CT-scan of their knees and/or hips. It then uses its own AI technology to design a customized implant that is then 3D printed specifically for that patient. The surgical robot then helps to install the implant.

The idea of a customized implant addresses several problems that exist in the space. For starters, customized fittings should reduce the number of implant failures that occur each year — currently about 10% of all knee implants and 15% of hip replacements fail. Second, while just 3% of hip replacements use cement as part of their installation process, this figure for knee implants is 92%. Between the advantages the customized implants offer and the precision the company’s robot can provide, Monogram can promote what’s called natural biologic fixation. What this means is that instead of cementing the implants where they need to be, the customized fit they offer gets them close enough to a perfect fit to allow the bones to lock them into place. This, management alleges, will be especially beneficial for younger, more active patients.

Monogram Orthopaedics has several different revenue strategies for their products moving forward. This includes selling both their navigated robot system and their cutting system. Consumables they can sell include their implants, specific navigation consumables, and drilling tools. Management also intends to look into licensing and service opportunities for their technologies. With eight patents filed for, this could lead to a lot of different revenue streams for the business down the line.

Monogram Orthopaedics’ current StartEngine raise has been rated a Deal to Watch by the KingsCrowd investment team.

Price

In order to take Monogram Orthopaedics to the next level, management is hoping to raise a significant amount of cash. In all, the firm hopes to close a round of funding in the amount of $30 million. This follows a $14.59 million round in March 2020 and a $2.97 million private round closed last month. The company hopes to achieve this new, higher round by issuing common stock valued at $6.27 per unit. The valuation management is asking investors to accept is $75 million on a pre-money basis. That amount is quite high for a business that still has not generated any revenue.

Market

The market opportunity for Monogram Orthopaedics is not particularly large, though it is healthy. According to one source, the hip replacement market in 2018 was worth $7.13 billion globally. By 2026, it’s expected to climb to $10.51 billion. This implies an annual growth rate of 5%. The largest market for hip replacements right now is North America at $2.52 billion. The knee replacement market is even larger. Our source pegs the opportunity at $9 billion in 2019. By 2026 it should climb to $16.2 billion. That’s based on an annualized growth rate of 34.7%. The largest market opportunity is in the US specifically. Our source puts the US opportunity at about $4.64 billion.

A broader way to look at the opportunity is to look at the joint reconstructive device market. One source we found pegs the space at about $19.38 billion as of 2017. With an annualized growth rate of 5.1%, the expectation is for the industry to rise to $28.47 billion by 2025. There is also the robotic surgery aspect to the business. One source we dug up indicated that this opportunity was worth about $6 billion in 2020. By 2025, it should rise to $11.1 billion based on an annualized growth rate of 13.1%.

All in all, there is plenty of room for Monogram Orthopaedics to carve out a healthy niche for itself.

Team

Monogram Orthopaedics has an extensive team working on it. At present, in fact, the company has 16 full-time employees and at least four contractors. At the helm of the business, though, are its two co-founders: Dr. Douglas Unis and Benjamin Sexson. Dr. Unis currently serves as the company’s CMO (Chief Medical Officer). He also works as a Board-Certified Attending Orthopaedic Surgeon at Mount Sinai Health System. He has also held other roles, such as Chief of Quality Improvement at Mount Sinai West and Surgical Consultant at an unnamed think tank. His medical experience — particularly his emphasis on orthopaedic surgery — is excellent to see. 

Sexson, meanwhile, operates as Monogram Orthopaedics’ CEO. Previously, he founded and was the CEO of Brides & Hairpins. Before that, he was the Director of Business Development at Pro-Dex Inc. He has also worked as a VP of PPRR Modeling and Analytics for the Corporate Treasury at MUFG Americas. None of this experience relates to orthopaedics. However, Sexson does bring business acumen and entrepreneurial experience — both important attributes for Monogram’s potential success.

Differentiators

Differentiation is perhaps one of the most difficult aspects to view the business from. On one hand, its customized, 3D-printed implants and the robotic surgical machine are clearly superior to the bulk of what is on the market today. Analysts seem to agree that the future of surgery is robotic in nature. One source, for instance, says that by 2027 50% of knee replacement surgeries will be done using robotic assistants — a substantial increase from just 11% in 2019. While Monogram Orthopaedics is different from the majority of the market, though, it’s not the only player in this space.

The market leader in knee and hip replacements is a giant named Stryker. In 2019, the company’s orthopedics segment generated revenue of $5.28 billion. In this, its knee implant business generated revenue of $1.82 billion, while its hip replacement unit generated sales of $1.38 billion. In the US, its knee business was $1.35 billion in size, while its hips business was $882 million. If Stryker were focused solely on the old way of conducting these procedures, it wouldn’t be worrisome. But in recent years the company has made solid strides in the same direction that Monogram Orthopaedics is focused on.

Its Mako robot, for instance, boasts more than 1,000 installations since launch. This device operates as a CT-based preoperative planning machine. The company is also focused on customized, 3D-printed implants for both knees and hips. In fact, the firm recently invested $225.8 million toward a facility expansion dedicated to R&D on this market. And in November of 2020 it acquired Wright Medical for $5.4 billion. Wright Medical designs implants and technologies to help with the extremities of the human body. This competition from Stryker should be worrisome for shareholders in Monogram Orthopaedics.

Performance

Since we last wrote about Monogram Orthopaedics, the company has had some nice traction. True, it is still pre-revenue and generating net losses. However, management is forecasting that it can begin to monetize its implants this year. It has already executed agreements with two different distributors. This process was vastly accelerated by the ability of the firm to open up a cadaver lab of its own in November of last year. There, the company has performed surgeries using its devices. Monogram is also going to be presenting its product system to the American Academy of Orthopaedic Surgeons in August of this year. Though it is still quite far behind Stryker at this time, this progress is encouraging. In addition, it would be a boon for shareholders if the company can begin generating revenue this year.

Bearish Outlook

At present, there are some bearish things for investors to be aware of. For starters, the company’s valuation is awfully high. It’s one of the highest we have seen, and it’s exceptionally high for a business with no revenue. The market opportunity is neither particularly large nor small. In addition, investors should expect the business to have to raise additional funds in the future, which will serve to dilute investors further over time. There is also growing and significant competition from the industry leader, Stryker. That’s definitely an issue to be concerned over.

Bullish Outlook

Monogram Orthopaedics has a strong bullish case. It’s clear from the data that the company’s business model is the way the industry is moving. It’s certainly one of the earlier movers and, as such, has the opportunity to fare well. The industry is growing at a nice clip, and the company’s management team is robust. Throw in its filed patents and the prospect that revenue generation should begin this year, and it’s difficult not to see this as an interesting and viable prospect.

Executive Summary

At this moment, the data paints a rather interesting picture of a business in a race against time. The situation involving Stryker is especially worrisome, but on the whole Monogram Orthopaedics looks to be an appealing prospect. After all, the industry does have room for more than one winner. In a sense, Stryker is proving what kind of market opportunity really does exist for Monogram Orthopaedics. Management’s traction in recent months is also a plus. Taken all together, Monogram Orthopaedics remains a Deal to Watch at this time.

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com

Analysis written by Daniel Jones.

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