Monogram Technologies - Earnings Call - Q4 2024

Executive Summary

• Monogram reported no revenue for FY 2024 and remains pre-commercial; annual operating expenses decreased 13% to $15.3M, while net loss allocable to common shareholders was $14.97M and basic/diluted loss per share was $(0.46). Cash and equivalents ended at $15.7M, down from $16.6M at Q3 but up year-over-year from $13.6M.
• Regulatory progress: the company completed all supplemental testing and submitted a formal response to the FDA’s Additional Information Request; management “does not currently anticipate further requests,” with next communication expected to be a clearance decision for the mBôs TKA System.
• India OUS clinical trial preparations advanced (robot shipped; investigator meeting held); initial live surgeries are targeted ~2–3 months post clearance, with 102 patients planned across three Shalby hospitals; expected enrollment pace to be measured initially (1–2 surgeries/day) with a three-month follow-up protocol.
• Operating discipline: CFO reiterated a monthly cash burn rate trending under $1.2M (~$1.1M), with no traditional debt and a flexible cost structure (27 FTE; variable outsourced engineering), although Q2 2025 will include notable capital outlays for IEC compliance panels, a robot cart, and testing.
• S&P Global Wall Street consensus data for Q4 2024 and FY 2024 was not available to us at this time; therefore, estimate comparisons are not included (we attempted retrieval, but access limits were hit).

What Went Well and What Went Wrong

What Went Well

• Completed all supplemental testing and submitted the formal response to the FDA AIR; management does not anticipate further requests, framing the next communication as a potential clearance decision for the mBôs TKA System: “Assuming a favorable decision... the next communication... is anticipated to be a clearance decision...”.
• Advanced OUS clinical trial readiness: robot shipped to India; investigator meeting conducted in Ahmedabad with principal investigators and surgeons; collaboration with Reliance Life Sciences and Shalby to manage regulatory submission and multicenter enrollment.
• Strengthened balance sheet via an upsized and oversubscribed $13M offering; management and related parties also purchased ~$1M of MGRM shares in the open market, signaling confidence.

What Went Wrong

• Full-year net loss increased versus 2023, with management noting 2023 benefited from a non-recurring warrant liability fair value change that did not repeat in 2024; reported net loss was $16.3M versus $13.7M in 2023 (disclosure differs from statement of operations figures, see “Financial Results” for reconciliation note).
• Q3 2024 quarterly net loss widened to $(5.0)M compared to $(1.0)M in Q3 2023, driven primarily by elevated marketing spend associated with the capital raise and the absence of a prior-period warrant liability gain.
• S&P Global consensus estimates for Q4/FY were unavailable to us due to access limits, restricting explicit beat/miss analysis (we attempted multiple queries but hit daily limits).

Transcript

Larry Holub (Director)

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 2024 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&A portion of this presentation. 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. 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-K 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, March 12, 2025, and is available in the Investor Relations section of the company's website, monogramtechnologies.com. Your hosts today, Ben Sexson, Chief Executive Officer, and Noel Knape, Chief Financial Officer, will present results of operations for the fourth quarter and full year ended December 31st, 2024.

At this time, I will turn the call over to Monogram Chief Financial Officer, Noel Knape.

Noel Knape (CFO)

Good afternoon, everyone. Glad to be with you here 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 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 $15.7 million, which was higher than the cash balance at the end of the previous year.

This is due to, you know, one, being very frugal in our spend and maintaining our monthly cash burn to around $1.2 million as it's been for some time, and also due to a successful preferred D-raise where we had an oversubscribed $13 million successful raise combined with some significant investment by senior management. This is indicative of the faith they have in the technology and the business and management going forward. We are very happy to see that. We were also able to access, with some institutional investors, access to our ATM facility to raise a little bit more there. We have a strong balance sheet going into the year and to meet our upcoming milestones. 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 Q4 as the V&V project portion of the project wound down. We are focused on getting the AIR submitted and onto our next objectives. Again, we have no traditional debt and very limited short-term warranty obligations right now, and we expect to have solid cash through the year. All things looking positive, all things going forward, and we are prepared to enter the next stage of our journey. With that, I'll hand it over to Ben Sexson, the CEO, who will walk you through the exciting things that are on the agenda and coming up shortly. Thank you.

Benjamin Sexson (CEO)

Thanks, Noel, and thank you, everybody, for joining us today for our fourth quarter call. Appreciate everybody's time. I'm just going to start by really recapping what the Monogram investment thesis is. It's really pretty simple. We think that robotic penetration today is not what it will be in the future. We think it's going to be significantly higher in the future, driven by a lot of clinical factors that we can get into. We think 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. We think that they really have demonstrated what's valuable in orthopedic robotics, specifically in the knee replacement area, which we think will grow significantly in terms of robotic adoption.

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. Monogram really has always, from the beginning, been developing a robot that we hope will address this market pain that we think is going to become more and more obvious over time, in our opinion. Just kind of starting out, you know, we think that the market is currently digesting robotics as a growth driver, but not a kill shot. And what do I mean? 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.

I think the key question is, where is this going to be as we move forward? When you think about it from a clinical perspective, especially Mako, which utilizes a personalized CT scan, robotics enable more personalized surgery. They enable different types of alignment. 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 press-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. If you just look at the demographic trends, 70% of fellowship programs have access today to a Mako. At 60% of orthopedic surgeons will be over the age of 65 by the year 2031.

We have seen forecasts that suggest that one out of two knee replacements will be robotic within the next five years. If that is just setting the table for where the market is going, it is important to look at where we are now. There are a lot of factors. Obviously, Stryker is a—what you see here is stock prices for various players in our space. Stryker is the one in black and some of the other publicly traded companies. We do not think it is any coincidence that around the time that Mako was cleared for total knee, Stryker's outperformance has gone parabolic. Obviously, they have made a lot of really smart moves, and they are a well-diversified business and probably the most well-diversified of any of the orthopedic total joint reconstruction players. That aside, it is clear that they have done something right.

I don't think that the market has fully understood what exactly it is that they've done right. Understanding that is really fundamental to the Monogram investment thesis. This is just to stress the point even more. When you look at robotic knee replacements, 88% of robotic knee replacements use a Mako system, and 73% of press-fit knee implants. This is per the Orthopedic News Network. Our press-fit and that market's owned by Stryker. In our opinion, the market has spoken. If you talk to surgeons, and we talk to a lot of them, you're going to 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. I think that that certainly may be true and may be a contributing factor.

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. 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 efficiently do the surgery by themselves. We know a lot of surgeons that do not even use retractors. You have safety boundaries, and you can efficiently cut bone with safety constraints. There is just no other system on the market today that has been able to efficiently cut bone with safety constraints in the way Mako has. The primary reason for that is their IP portfolio and the complexity of executing this problem without infringing on that IP portfolio.

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. It really is going to be that simple. We announced not too long ago, we had a press release, and in that press release, we had a video that I do not think has been fully digested by the market. The Mako system does not utilize external fixation, meaning the surgeon does not have to bolt the bone down. It is not like a CNC. It is a real-time system, and the bone is free to move. They utilize something called haptics, where the surgeon is actually—it is surgeon-initiated cutting. The surgeon is the one moving the robot around. 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. 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. This is our next-gen end effector that we will be deploying in our clinical trial, which we hope to talk more about. We can now pull this up. This is a very—one of our larger-sized 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 (CFO)

It's frozen, Ben. At eight seconds.

Benjamin Sexson (CEO)

Okay. 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. We are now cutting the bone and blade time—blade-on-bone time is two minutes and 47 seconds, right? This is with an unconstrained saw. 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 going to 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 because I do think it's helpful for folks to see what our system is actually going to be capable of.

I'm just going to play this here real quick. Okay. This was made public in the press release, but I don't think a lot of folks really caught on to this. I'm going to try sharing and see if that works. Okay. Just sharing here. I'm going to press play. Hopefully, this does it. There's a couple of things I just want you to notice. Can you see it, Noel?

Noel Knape (CFO)

No. Still on the presentation. I'm not sharing your screen.

Benjamin Sexson (CEO)

Yeah. It says I'm sharing. Okay. I'll drop a link in here. Here's the link for folks to see it later. There we go. Thanks, Chris. 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. 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. 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. We think we have something that's going to be very, very competitive for total knee.

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. That is really the Monogram thesis in a nutshell. 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, I know that folks are eager to get an update on this, and I am just as eager as everybody else. A lot of this is really out of our hands at this point. I will kind of restate what has happened and try and give folks an update.

On February 26th, 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 30th. The clock had stopped about 73 days into the submission timeline. The clock restarted on February 26th. We had full support from IQVIA, which was our CRO, formerly MCRA. They helped us review all of the documentation, make sure we had a really solid package. The team worked really, really hard. What I could 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. 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. We submitted to the Indian regulatory agency in October. We are working with a CRO called Reliance Life Sciences, which is one of the largest private companies or a subsidiary of one of the largest private companies in India. We are going to be doing the clinical trial with Shalby Limited. The principal investigators will be surgeons that are employed by Shalby. We will be doing the clinical trial at three of Shalby's hospitals across India. We have already shipped a training system to India. Dr. Unis, myself, and other Monogram employees were in India in late January for training and for the investigator meeting, which was successfully held late January, early February. The communications with the Indian agency are ongoing. The CRO really are the experts in terms of that process.

We feel like we've submitted a strong application. We did a lot of testing, obviously, for the FDA submission. We're eager to hear back. 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 authority. Those are the two regulatory updates. Obviously, we want to hear back just as much as all of our investors. We're very eager to move forward. I will say that we're not sitting by idly. 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. You can't make major changes to the system subsequent to initiating the clinical trial. We're going to be releasing the higher feed rate.

It is significantly faster cutting time. To give you some sense, it is almost a 300% increase in feed rate. We are actually cutting—it almost looks like you are cutting manually with our system now. 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 fewer surgeries a day to use your robot, it really is hard to drive adoption. The fact that we can cut this fast and the accuracy of our system is really, really good right now. Just to give you guys some sense, the RMSE, in terms of the cut accuracy in the—and this is in non-clinical testing. This is not—this is in cadaveric testing with the protocols—was around 1.1 millimeters.

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 really, really started to have it dialed in. We 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. 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. 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. With that, we want to make sure we give everybody an opportunity to ask questions.

I'm seeing a lot of questions about the FDA timeline, but beyond what we said, there's not really much more we can say.

Larry Holub (Director)

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 of your platform. Ben?

Benjamin Sexson (CEO)

Sure. Let's start with Jason.

Hi.

Jason, how are you doing?

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

Yeah, that'd be great.

I appreciate all the color in terms of what's going on with the regulatory bodies. I think you gave a lot of color here. I'm just curious, in terms of once you get those approvals, how long do you anticipate the trial to run in India? In the U.S., let's assume, 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 believe, a semi-autonomous device potentially in the U.S. What does that mean for you guys?

Sure. I'll start with India. From the day we get clearance to the first surgery, that time is going to be about two months, give or take. We have 102 patients that are going to be enrolled in the study. Once we get clearance, we anticipate that we would start enrolling patients probably about four weeks after getting clearance, maybe more, maybe four to six. Clearance plus, let's just call it two to two and a half months, something like that, before first live in human. From there, it really is a function of enrollment and how Monogram is the bottleneck. As Noel said, 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.

The constraint is the number of systems we have in India and the personnel we have to manage those systems and how aggressive we want to be in terms of actually executing the system. We know for sure, obviously, we're going to be sending one robot to India. We have a PO for a second robot, and we anticipate that we may send two robots to India, which would speed things up. It's really the constraint of hardware and personnel, not so much enrollment. The hospital we're working with does huge volumes. Doug and I have actually been in the operating room, and it's incredible how many surgeries they do a day. It's not uncommon for the surgeons we're working with to do 15 surgeries in a day. They've even done more than that.

Really, the one thing with enrollment that is a little bit different than maybe in the U.S. is that a lot of people, because Shalby is pretty well recognized in India, a lot of patients do travel from outside of the cities that we're going to be working out of to have surgery, and then they go back to wherever they live. That can be—we can't enroll those patients, but still, we don't see that to be a huge blocker. It's really how hard we want to push it. I would say initially, we're going to be kind of a little bit slow and careful. Once the first couple of weeks, I would say we're not going to be doing five surgeries a day. It's probably going to be a couple of surgeries a week and just make sure that everything is going exactly to plan.

From there, we're going to scale as we get, let's say, the first 10 surgeries under our belt, then we'll start to scale. The robot is going to be—it is unlikely that we will be running multiple sites simultaneously. It is most likely that we will start at kind of the main site in Ahmedabad, do maybe on the order of 50 surgeries there, and then it will be a mix of maybe like 30, 20, the other two, something like that. I think we're going to get through it in a reasonable amount of time, but it is not going to be—we want to have a really good trial, and we want to do a really good job. Hopefully, does that help give some color?

That gives some color. I mean, it sounds like there's some moving, it's hard to pinpoint, but it's a relatively quick enrollment. I mean, it's under your control, relatively quick enrollment. I don't know if you ventured to guess whether, in terms of months, 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 100 patients, or is that really?

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

Sure.

We're not going to be crazy aggressive in terms of just hitting it with five surgeries a day from day one. We are going to scale kind of in a measured way. I think maybe at the peak, we'll do maybe two surgeries a day. I don't anticipate we're going to go more than that. They do operate on weekends as well.

Got it. No, I mean, it makes perfect sense that you want a clean data set. And then in the U.S..

Just don't discount the time it takes for the data to be processed. Once we—and obviously, I think we're going to have opportunities to give feedback on how we think it's going. That data does need to be—basically, this is a protocol. We're going to need a protocol report summarizing the findings of the study. It's a three-month follow-up. We're going to start really kind of knowing how we're doing, but there's going to be some period where we're just going to have to wait for that follow-up on the back end.

Okay. Okay. I understand.

Yeah. Yeah. In the U.S., just to be honest with you, the performance of the upgraded end effector has far exceeded our expectations. We didn't expect that we would be able to get the feed rates to be this fast, honestly. It's very impressive. In light of that, our thinking was that autonomy was a major selling feature of our system. 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 510(k) on a Gen 1 version of a system with the goal of submitting a subsequent one 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 we would be getting clearance on would be pretty competitive. Yeah, we expect.

What's that?

Sure.

Sorry, Ben. That means.

Yeah, yeah. Go for it.

The FDA might approve what you submitted, and then it's a relatively straightforward addendum, etc., or something to that effect.

Exactly. Yeah.

To get it approved.

Exactly.

Okay.

Yeah. Basically, we've changed—we've made upgrades to the cutting system. The nice thing is that for India, there's a lot of accuracy studies that we've had to do and a lot of V&V work that has had to go into that that can be leveraged to improve the Gen 1 system. We think it could be pretty competitive out of the gate.

Okay. Maybe.

So yeah.

No, that makes a lot of sense. I didn't mean to interrupt you. I just wanted to.

Oh, yeah. Yeah. Sure.

One follow-up related to that. It sounds like you guys have a lot of innovation going on here. One other area, which 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 how should we be thinking about how you're approaching that problem?

Sure. This is a biased non-clinical claim, Jason.

Fair enough.

I think the new end effector on our autonomous system is extremely competitive with the current state of the art. I think right out of the gate, we have something that's really compelling. In terms of upgrading the navigation system, we've come a really long way. It's a really hard problem. I think that similar to what we've done with Gen 1, Gen 2 on the robot, we're going to have to do a similar approach with the navigation. Just so everybody knows, what Jason is referring to is what we call mVision. mVision is a technology that Monogram's developing to try and go with fiducial-less tracking. A pretty significant pain point in the industry is registration and tracking. You have to place bone pins to originally mount arrays that are tracked.

It starts to become like if you can optimize cutting and you can optimize planning, it's really the long pole in the tent in terms of really driving throughput for robotics is registration and that setup time. It's really hard. The fundamental problem, Jason, is if you had a supercomputer in the operating room, we could do it. But the amount of compute needed to track with a low enough latency is really tricky. We anticipate there needs to be an intermediate step where you have sort of, let's call it a marker light, what 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, maybe is subject to less occlusion. 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 difficult.

Fair enough.

Yeah. It's something that dazzles when people come look at it. Realistically, it's going to take us a little bit of time to get it robust enough.

Okay.

To work in a clinical setting.

Maybe if I could just ask one last question, I'll jump back in queue. I know you have other questions. That is, what was the cash burn this quarter? 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.

Sure. Noel, do you have that?

Noel Knape (CFO)

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

Benjamin Sexson (CEO)

Yeah. I will say that we have some big cash outlays coming. The system has to be IEC 60601 compliant. That required a special type of panel that could pass this impact test. There are all these tests that it had to pass. The most efficient way for us to basically, the only way for us to have a sellable product is to make panels that pass this, and that requires tooling, which is very expensive. We are going to have to put an outlay for that. We have another robot cart that we are making at the moment. That is significant. In the second quarter, we are going to be aggressively doing testing for the India trial.

To actually run the clinical trial in India, there's some more testing that has to be done on the fully autonomous version of the system that cannot be cherry-picked from the Gen 1 testing that was done. It's not going to be as heavy as the Gen 1, which had at its peak, we had quite a few contractors. It was a really big push. A lot of surgeons came in. We had on the order of 20 surgeons come in. Obviously, that contributed to the elevated burn. I would expect Q2 to be on the heavier end. In terms of baseline, the head count, we're holding it pretty steady right here. We're really not going to be counting our eggs before they hatch.

We need to hit the milestones and actually have them under our belt before we keep growing and increase the burn, let's call it the baseline burn.

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

Sure. Thanks, Jason. Appreciate it. Next up, we have Tom Kerr, who's with Zacks. Hey, Tom, how are you doing?

Tom Kerr (Analyst)

Good. How's it going?

Benjamin Sexson (CEO)

Good. Good.

Tom Kerr (Analyst)

Couple clarifications. I think the answers just you gave were pretty thorough. On the clarification on the spending, the normalized $3.2-$3.3 million quarterly burn rate, is that inclusive of the $1.2 million spent on the India trial, or is that on top of that? Does that make sense?

Benjamin Sexson (CEO)

The incremental spend on India is not yeah, go for it.

Noel Knape (CFO)

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 $1.2 million for the entire project. We're seeing that as $100,000 incremental over the year that's kind of an offset from previous run rate of the lower third-party spend. It is inclusive.

Tom Kerr (Analyst)

Okay. It's not like it's $3.3 million quarterly burn plus $1 million on top of it.

Noel Knape (CFO)

That's right.

Tom Kerr (Analyst)

That's good news. Going back to the FDA, this is a big-picture question, but with the recent administration federal cuts, 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)

Yeah, sure. Our CRO, IQVIA, is pretty well connected with the FDA. They actually talked to them not too long ago about this specifically. The feedback was that the orthopedic devices branch that's reviewing their application does not see an impact at this time, but we certainly could be impacted by that. He did not anticipate there would be one from it. We actually have confirmed with the lead reviewer that the application is being reviewed, and nothing's been flagged.

Tom Kerr (Analyst)

Can an AIR, is that a one-time event, or could they come back and say, "Here's a second AIR," or, "Here's a third AIR," etc.?

Benjamin Sexson (CEO)

That's a one-time event. Yeah. We expect the next communication to be a clearance decision.

Tom Kerr (Analyst)

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)

Yeah. It's going to take a little bit of time, right, because we're going to have to ramp the working capital needed to support. We have KOLs that really like what we're doing. There's only one shot at a good first impression. We don't want to launch, we want to upgrade the system to the new end effector. There's going to be a little bit of work required to do that. I think kind of what you're thinking with India is sort of a reasonable thought. We think it's going to be a pretty competitive solution with a new end effector. It wouldn't be too aggressive initially, just as we the company is going to need more capital for an aggressive launch.

Tom Kerr (Analyst)

Okay. That was one of my questions. Sales and marketing would increase, and that would be funded by new capital and so on and so forth, right?

Benjamin Sexson (CEO)

Yeah. Yeah. Exactly.

Tom Kerr (Analyst)

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

Benjamin Sexson (CEO)

Sure. Appreciate it.

Yeah. I mean, just looking at the chat here, obviously, I see there's investors who are frustrated with how long it takes to 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 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 can do. I'm sorry it takes a long time. Obviously, the team is 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 had 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. I hear the frustration. At this point, the company has done everything it can do to try and get this thing cleared. Now it's in the FDA's hands. As I said, the clock at the time we submitted was 73 days. 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 million in sales.

You cannot get to $100 million in sales with $14 million, unfortunately. I just have to be fully transparent, folks. This is, we've developed what I think is going to be a very competitive system. It is obviously very difficult. I think the product itself is going to be game-changing for the orthopedic market, but it has to get cleared. That is where the rubber is going to meet the road.

Larry Holub (Director)

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

Benjamin Sexson (CEO)

Appreciate it. Thanks so much.

Noel Knape (CFO)

Thank you.

Benjamin Sexson (CEO)

So, I just have to be fully transparent, folks. We have developed what I think is going to be a very competitive system. It is obviously very difficult. I think the product itself is going to be game-changing for the orthopedic market, but it has to get cleared. That is where the rubber is going to meet the road.

Larry Holub (Director)

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

Benjamin Sexson (CEO)

Appreciate it. Thanks so much.