On September 22nd, 2021, Kleiner Device Labs (“KDL”) announced they’d officially received FDA market clearance for their KG™2 Surge™ (“KG2”) flow-thru interbody system.
This came just in time to debut their breakthrough spinal surgical device at the North American Spine Society (NASS) annual meeting (which happened from Sept 27th – Oct 1).
The Kleiner Device Lab team shows off the KG™2 Surge™ at the North American Spine Society (NASS) annual meeting
The event is one of the key conferences for gaining visibility with the core target market: surgeons, distribution channels, and prospective corporate partners.
Over the weekend, the KDL team sent Equifund an update on how the event went.
“This is the first inter-body system to render me speechless…”
If there’s one consistent theme you’ll see in this update, it’s this: the KDL team is seeing early signs of visible enthusiasm in the marketplace.
According to Dr. Kleiner, CEO of Kleiner Device Labs…
“Despite the fact that the NASS meeting attendance was lower than anticipated due to COVID 19, it was the best meeting for KDL that we’ve ever had.
The degree of interest and enthusiasm for KG2 and the other flow-through products including our end plate preparation tool, “DragonTail,” validated our business and product development plan.
Of the 50 or so interactions we had with doctors, potential business partners, competitors, medical device companies, and biologic manufacturers, there was not a single naysayer.
Two companies who had earlier in the year gave us a “no” on further business development, changed their perception after seeing the KG2 in person, handling it, and understanding that it was FDA cleared and ready for launch.
Upon returning home and reviewing our new website, comments like the following appeared:
Message: ‘26 years in the OR as a Spine representative and this is the first inter-body system to render me speechless. I am wondering if this is available for distribution and sales in my territory. Please let me know if that is an option.’”
While we make no representation that the KG2 has (or hasn’t) reached product market fit, the reaction to the first in-person demo of the product appears to show early traction.
Even non-surgeons found the KG2 intuitive to use, confirming the KDL team’s assumptions that a simpler device could lead to easier adoption rates for surgeons and operating room staff.
According to Dr Kleiner:
the “KG2 Surge” device exceeded the expectations of everyone who visited the booth for a demonstration. Despite demonstrating this single patient use device dozens of times per day, it had no failures, worked flawlessly and I could comfortably hand it off to people who’d never seen it or anything like it before and watch them perform a mock interbody T-Lif using our demo equipment with limited instruction.
The end result? Several people were excited enough to ask to start selling or scheduling surgeries.
One surgeon – who is scheduled to be part of the initial launch – stopped by the booth, got a product update from Dr. Kleiner, and was so impressed that he was willing to move his schedule around to utilize the KG 2 in a procedure next week.
The team had to remind him that they are still manufacturing implants to meet his needs and would contact him as soon as the product was available
What this could mean for investors
While it’s still far too early to tell how this event could impact shareholders, it appears the KDL team is building momentum off the back of the recent FDA clearance announcement.
The team’s next step is to finish building inventory to support our group of alpha surgeons, who will perform and document initial KG2 Surge surgical cases.
This alpha group – and the case studies they provide – will be an important procedural step towards a potential commercial launch.
According to iData Research, it’s estimated that surgeons perform 352,000 interbody fusions – which is what the KG2 would fall under – each year.
According to KDL management…
- Current industry implants sell for anywhere from $2,000-$10,000.If an average surgeon performs six surgeries per month using even the lower end of the price range, that would mean 72 total surgeries per year that potentially generate $216,000 in annual revenue.If we assume a 7x – 10x multiple on revenue, this means every single surgeon we acquire could potentially add $1.5m to $2.1m in total valuation.
This means if Kleiner Device Labs can successfully onboard 250 surgeons, who perform a combined 18,000 procedures per year…
The company could potentially in the future generate an estimated $54 million in annual revenue and have a potential valuation of $378m – $540m!
To be clear, there is no guarantee that Kleiner Device Labs will be able to successfully launch and commercialize the KG2…
There is no guarantee they will achieve this valuation at the estimated multiples…
And there is no guarantee they will be able to create an exit event that generates returns for investors.
Any investment should be considered high risk. Please don’t invest any money you cannot afford to lose or otherwise need access to in the near future.