Vicarious Surgical Inc. (RBOT) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to Vicarious' Beta 2 Demonstration Day. Before I begin, I'm just going to go through our disclaimer page as management will be making forward-looking statements based on several estimates and assumptions that are accurate only as of today's live webcast. For a full list of the risks and uncertainties around the business, please go to our 10-K and other reports with the SEC. With that, I can now turn it over to Adam Sachs, our CEO and Co-Founder, to kick things off.

Thanks for joining today, and welcome to Vicarious Surgical's Beta 2 Demonstration Day. Today is a really significant day for Vicarious Surgical as it marks our progression from technology through Beta 1 to Beta 2 now and then out to FDA approval. This will be the final iteration before Version 1.0 of our system, and we'll be taking all of the feedback from our hospital partners, from surgeons, and using that to refine our technology and our Beta 2 system into Version 1.0 next spring. Today, you'll be hearing from a number of speakers, including our very own Sammy Khalifa. Sammy is my Co-Founder and our Chief Technology Officer, and he'll be giving you a background today on the core technology behind what we do, the decoupled actuators and how that technology leads to key differentiators that are able to bring increased value to surgeons in the hospital systems. In addition, we are extremely fortunate to be joined today by 3 guest speakers. We're joined by David Sylvan of UH Ventures. UH Ventures is the innovation and commercialization division of University Hospitals, one of our COE partners. And as the Head of UH Ventures, David oversees their strategic initiatives, business development efforts, industry collaboration as well as a variety of other things that all further the UH mission in supporting and shaping value-adding opportunities in health care. He comes from a 30-year background in diverse [Audio Gap], including 15 years in capital markets and investment banking. Joining David today is also Kendra Gardiner. Kendra is Director of Product Strategy at UH Ventures. She's responsible for relationship management, opportunity, value assessment, portfolio and project management and ecosystem building. Kendra collaborates across the entire UH Ventures' lines of service, with strategic partners and clinical leaders in order to advance the most promising development and co-development opportunities. And Kendra has more than 20 years of diverse corporate nonprofit and economic development experience. And last but not least, we're extremely excited to be joined today by Dr. Igor Belyansky. Dr. Belyansky has been a consultant of Vicarious Surgical for the past year. And in addition to that, he also leads our surgeon luminary group. Dr. Belyansky is Chief of General Surgery at Anne Arundel Medical Center in Annapolis, Maryland, and he's a fellowship trained laparoscopic surgeon, a specialist in abdominal wall reconstruction and complex hernia repair. With over 1,500 robotic cases, he's arguably the top hernia repair surgeon in the country. Dr. Belyansky will walk you through an IPOM plus hernia repair as well as an rTAPP abdominal wall reconstruction that were performed using our Beta 2 system at Tufts Medical Center in a cadaveric model. After the prepared remarks today from each of these speakers, we'll also have time and set up a Q&A panel. All the speakers will be available. So I'll ask that you please hold your questions to the end. And before I hand it over to David, I'd also like to take just a few minutes and walk you through the why behind what we're doing and what drives us, our partners and our investors. Vicarious Surgical is founded on the mission to revolutionize robotic surgery with our own next-generation robotic technology. And through our technology, we aspire to solve for the shortcomings and drive further efficiency in surgical procedures, improve patient outcomes, and reduce overall health care costs. As just a bit of background, surgery really began with open surgical procedures. With open surgery, a surgeon takes a scalpel and quite literally opens up the patient's abdomen, making a large incision. Through that incision, they're able to operate with their own hands. They can see with their own eyes. But unfortunately, the incision cuts through all the layers of the abdominal wall and damages the abdominal wall. And that damage to the abdominal wall leads to 15% to 20% complication rates, all from the abdominal wall failing to heal correctly, not from the work done on the organs inside the abdomen. So that is what minimally invasive surgery is all about. The idea behind minimally invasive surgery is that if a surgeon keeps those incisions small enough, smaller than about 2 centimeters or even 1.8 centimeters, the surgeon can then bluntly dissect through the layers of the abdominal wall. They use a scalpel to cut through the skin and then they use a tool called an obturator to separate the muscle fibers as they push their way through the abdominal wall. And what that means is that when they remove the instrument, the fibers come back together, the abdominal wall heals naturally and readily, driving complications down to about 1% for the patient, but all at the cost of vastly increased complexity for the surgeon. The surgeon must now triangulate to a single point in the abdomen. They have to use their instruments to actually generate the motion by pivoting about the incision site. It makes the surgery incredibly complex. And even with a wrist on a stick that helps a lot with suturing, the surgeon is still creating the entire kinematic profile, the motion profile of any multiport surgical robot that they use for every procedure based on where they make the incisions and where they want to operate inside the abdomen. So there is a solution to this. It's to put everything in through a single incision. But unfortunately, every single port surgical robotic technology to date has been built on flexible robotics technology, and those systems are just far too weak to do most surgical procedures. And to even have that force level, they require large incisions at a minimum of 2.5 centimeters, again, requiring you to use open surgical technique, cut through the muscle fibers with complication rates from the incision site alone at a minimum of about 8%. So the result of all of this is, out of 39 million addressable procedures worldwide across abdominal surgery, there are -- the 39 million addressable robotic procedures, over half of them actually performed with open surgical techniques today. There are a few reasons for this. It really comes down to the difficulty of use of education and of set up, because with a multiport surgical robot, the surgeon has to generate 4 degrees of freedom of motion based on the incision site, based on where they choose to put the incision. The result is that it takes a lot of surgeries, in many cases hundreds of surgeries to really gain true proficiency in these systems. Overall, the limited capabilities of the systems limit their adoption, and the high cost, increased workflow burden, high consumable costs, service costs and capital acquisition costs all contribute to lack of availability and lower utilization overall. The total utilization within those 39 million addressable cases is about 3.2%. So when Sammy and I got together -- we were roommates at MIT. It's where I met Sammy. We were both studying mechanical engineering with a focus on biomedical engineering and robotics. And the 2 of us had lunch with Dr. Barry Greene, who's been a longtime family friend and is an incredibly experienced laparoscopic surgeon. And Dr. Greene walked us through everything that I just showed you, all of the challenges that surgeons face around robotic technology in the operating room today. And we really believed pretty early on that single port was the ideal solution. But we set out to solve the challenges fundamentally behind single port, because flexible robotics just do not have the force for any given incision size and existing rigid robotic systems have coupled motion, which is a linking of the motion between each of the joints and the arm. Sammy will go into more detail in his section. But essentially, the summary is that it causes an exponential buildup of force each joint that you go up the arm. So we set about to solve these problems. We've worked on our decoupled actuator design for a few years. And the decoupled actuators were -- once we solve that, we're really able to attract some a-list investors, including Khosla Ventures, Innovation Endeavors, AME Cloud, E15 VC and Bill Gates' Gates Frontier venture fund. We're also able to bring in some amazing partners and advisers, including Paul Hermes, who formally ran the Medtronic Hugo program; and David Styka of Auris Health. And off that, we were -- we turned our system with their advice and their support into our Beta 1 system and took our company public last year. And since Beta 1, we've buckled down, taken the feedback from our hospital partners and our surgeon partners and continued to invest in our technology to evolve Beta 1 into the Beta 2 system we'll be showing you today. We're incredibly excited about the opportunities that Beta 2 provides and the value that Beta 2 provides surgeons and our hospital partners, and we believe that they see the value, too. So with that, I'll turn it over to David Sylvan from UH Ventures.

Good morning, everyone. Thanks for taking the time. And thank you for that very generous description of my background. My mother would be very proud. I'm David Sylvan. I have the privilege of leading the innovation, the commercialization and the early-stage capital deployment platform for University Hospitals. Why that's germane for today's conversation is that we act as the front door, if you will, the enablement mechanism, the conduit when it comes to matching a solution to a well-defined unmet need together with the appropriate stakeholders' domain or environment where the problem to be solved is how. So we act as a matchmaking mechanism. As I'm sure you can probably appreciate, we see literally hundreds of opportunities a year. We don't have the bandwidth, the time, the resourcing to be able to lean into all of these. We see many, many shiny objects. Our role is to define and divine those with the magnitude of the unmet need, the definition around the problem statements. And the appropriate stakeholder can all come together like hockey player and puck. And that takes a long time. That takes a process. That takes a lot of diligence. But we're fortunate in an example like this where all of those elements came together in a very elegant and seamless manner. Hence, here we stand today. So in this context, we're going to walk you through the background of who University Hospitals is because that will give some credence and some gravitas to why this type of relationship is important. We're also going to walk you through -- and I'll introduce you to my colleague, Kendra Gardiner, who's going to take you through our very impressive lineage when it comes to minimally invasive surgery. And then she'll crosswalk that to the problem statements around robotically-assisted surgery specifically and our emphasis around centers of excellence. So who are we? We are a large regional health care system, roughly $5.5 billion top line. We serve patients all the way from primary to quaternary care in a 16 county circumference in Northeast Ohio, 33-or-so thousand caregivers, a couple of hundred physician offices, 50 or so outpatient facilities and one of the country's largest ACOs with almost 700,000 lives under care. Our flagship is the Cleveland Medical Center, our quaternary care facility. We have formal affiliation and relationship agreements with Case Western Reserve University, their school of medicine, their faculty of biomedical engineering. We also have an affiliation with NEOMED, which is Northeast Ohio Medical College -- Medical University, that's in Rootstown. And then we have formal relationships with the likes of the Technion Institute in Tel Aviv, Oxford University in England with the latter 2 focused specifically around small molecule drug discovery and commercialization. And a lot of that we do in conjunction with Morgan Stanley. Our main campus also features Rainbow Babies and Children's Hospital, one of the most recognized pediatric facilities in the country, one of the highest ranked; the MacDonald Women's Hospital, which is Ohio's only stand-alone women's care delivery facility; and Seidman Cancer Center, which is part of the NCI-designated Cancer -- Case Cancer Comprehensive Collaborative. Someone had a good day with the literation. This depiction is our expansion out East, and it's strategically important for this conversation because this is roughly $0.5 billion expansion. It's going to add about 80% to our OR capacity in an outpatient setting. And along with that will come the adjacencies, the dialytics, the imaging, the endoscopic capacities, et cetera. So very important to our collaboration with Vicarious. So this all sets the stage for why UH. We lean very heavily into this living lab concept that I described before. This notion of what we offer from an organizational perspective to an early-stage med-tech is critical because if they can make it work in our facility, we act as an exemplar for systems anywhere. It can work anywhere. Research is in our DNA. Last year -- this current year that we're in, our research spend exceeded $200 million, and that included industry sponsored. We have a commitment to increase that by $700 million over the course of the next 8 years. We boast 19 clinical care delivery and research institutes, and at last count had probably more than 3,200 ongoing clinical trials or research initiatives. We're perfectly positioned as a partner to a med-tech and device company. Our core mandates as an innovation platform is discovery, design, develop and deploy, and we look to opportunities where we can do that in a collaborative design setting such as the one that we've established with Vicarious. We're very active in the centers of excellence construct as well, which makes us very excited about this opportunity. We already offer the likes of hip and knee, of bariatric, of cervical and lumbar, cochlear ear, Afib. And of course, the opportunity to lean into and build robotic-assisted surgery as an additional COE is extremely exciting. This will give you a quick graphical depiction of our throughput metrics, I think, germane to this conversation. The lower right represents blue sky. That's the disproportional number of outpatient surgical procedures. And Kendra is going to take some time to break down the case mix there as it would be specific to Vicarious. And then you'll see in the top, the number of unique patients seen. The new MRNs that we add on an annual basis, of course, adds opportunity from a heft perspective. So we're incredibly excited to be here. A very quick anecdote. Our clinical champion, Dr. Sabik; our UH Ventures Chief Medical Officer, Dr. Rothstein, they had the chance to travel here to Boston at the beginning of this relationship. And these are very, very difficult people to prove -- to impress rather. I know because very often they tell me how little I impress them. So they're very, very vocal with regard to their opinion. They both came back as giddy children. I know something important is about to happen when Dr. Rothstein summons me and if he starts a sentence with 'dude'. So 'dude' is usually followed by something that's exciting. And he began to gesticulate with his arms and candidly. I thought he was having a seizure. But he was trying to describe what he had seen in Beta 1. And that was really a catalyzing moment for us to say there's so much traction from the perspective of the users and the experts, there's something here. Remember, that was Beta 1. You're going to see Dr. Belyansky and you're going to see the demo in a second. And it is incredible. My only personal disappointment -- and Adam and Sammy, I'd be remiss in not expressing this to you now publicly -- is they won't allow me to touch anything. With that, Kendra?

Thank you, David. I was also on that trip with Dr. Rothstein and Dr. Sabik, when we came. And it was prior to our signing. It was part of our diligence process to determine if this was the right opportunity for us to hitch our wagon to. I was also giddy, but I also looked like I didn't know what I was doing when I tried to drive it. And I shared this with David the other day that both Dr. Sabik and Dr. Rothstein are not robotic surgeons, but to see them get on the Beta 1 system and easily be able to do it as if they've been doing robotic surgeries for their entire career was pretty impressive. So my task here with you is to share with you more -- additional information about our experience in minimally invasive surgery. And I'm going to do that by first introducing you to some of our surgical experts and innovators in our system. And then I want to talk to you about how we've grown our robotics program over the last 14 years, and give you some of the data in terms of how that shows up in terms of the mix and modality. Before I do that, though, Adam did a great job of showing my background. I think for me, this is exciting because I spent a large part of my career in actually manufacturing. And so it's not too often that I get to geek out on projects like this, where I get to blend the health care experience and bring some of my background to bear in terms of understanding the complexity of what this team is trying to accomplish and how far they come each iteration that they turn the feedback. So with that, I'd like to introduce you to 4 gentlemen. We've been very fortunate to have the likes of these men in our presence. Dr. Ponsky is famous for inventing the PEG tube as well as the minimally invasive procedure to place that tube. It's also known as the Ponsky tube. He was Former Chair of Surgery at University Hospitals before ending his career at the Cleveland Clinic. Dr. Sabik, located next to him, is the Chair of the Department of Surgery. We've mentioned him a couple of times, so I won't elaborate further there. He is an expert in minimally invasive valve repair as well as coronary artery bypass grafting. Dr. Jeffrey Marks is an international POEM expert. He also spearheads an active animal lab, where he is exploring new techniques around endoscopic procedures and devices to go with that. He also trains surgeons and residents in those techniques. Dr. Raymond Onders is another prolific innovator in our system. He has developed a minimally invasive procedure and a device for diaphragm pacing. And it had its first national spotlight when he implanted that device in the then paraplegic Christopher Reeves, also known as Superman, when he successfully transitioned him off the ventilator to breathe on his own. The next set of slides is just -- I want to take a moment to give you another snapshot of other surgical experts in our system. Each of these individuals use robotics regularly in their practice. I wish I had more time. I'm not going to go into all of them. This information will be posted publicly. And these are individuals that, in addition to others in our system, will be getting involved as we continue to move this forward. So today, UH has 8 soft tissue robotics systems in our hospital. We have 3 at our Cleveland Medical Center. We have 5 additional robots in what we call our community hospitals. It's important for us to make sure that patients have access to these tools and technology as well as our surgeons. And so getting those out beyond our quaternary medical center was really a priority for us. We started our program in 2008, and we have deliberately paced the growth of that as technology has evolved and as newer surgeons or current surgeons have asked and demanded this type of technology in our system. And they have been active in building the most recent case that was approved, a business case that was approved in 2020 -- I think that was June of 2020, where we looked to further expand our robotics program at that time. I've listed 3 key elements that were important in that business plan at the time. One is incremental growth. So this is where our surgeons became really important. Based on their conversations with their patients, their knowledge of the demand in the market, could they help us predict the incremental growth that we could expect to see by bringing in additional robots? The second was clinical excellence. We know as a system if we don't have innovative tools available to our surgeons or available to the new surgeons coming out of school, we are not an attractive hospital system. And that was really important. And the last piece, which many of you know because you cover this market, was the ability to change the way that technology was acquired. So with the removal of the upfront capital cost, moving into a pay-per-click model enabled us to make this decision a little bit easier than maybe in the past. So as a result of that, this data kind of demonstrates the growth that we've been able to see with the bringing in of those new robots in 2020. And if you compare the first 2 quarters of 2020 to 2021, we nearly doubled our growth of robotics cases in just that time period. It hasn't continued to double, but it was pretty apparent immediately that as soon as we brought these robots in, that we were immediately doing more cases. If we look over the time period, though, from 2019 to 2022, we have grown from about 800 cases to 1,900. What is interesting, though, as Adam alluded to earlier, in terms of utilization, we do know that we're still underutilizing the robotic systems that we have in-house today. Lots of questions as to why, but it's just a fact that some of them still sit idle. And we'll talk more about that later. One of the other points that I made on the prior slide was around talent attraction. And so in 2021, we were very fortunate to attract Dr. [ Hayne ] to our surgical program. And I'm introducing him to you today, because Dr. [ Hayne ] -- immediately once Dr. Sabik came back and he was very excited. He saw the technology. He realized it wasn't just a garage. We kind of joked when we were coming, like, "What is this company? We don't know that much. A lot of diligence." And he immediately thought of Dr. [ Hayne ]. Dr. [ Hayne ], I'm not going to read his background, but he is -- when he started his residency program, he immediately sought out robotics and invested a lot of his time there. And so day-to-day, I'm very fortunate that I have the leadership of Dr. [ Hayne ] to help convene the right people, have the right conversations, provide his insights, to fly out -- he was here last week with the team. And so as we continue this relationship, we'll hear more about Dr. [ Hayne ] and his commitment here. So let me break this down by specialty. These are the top 10 cases that UH completed in 2021. These are just robotic cases. I've highlighted ventral hernia just to call out the first indication that Vicarious is indicating that they're going to move forward for FDA approval. What I found really surprising about this data is that out of those 208 -- that ventral hernia is the second most completed procedure within our hospital system today, but out of the 1,200 cases approximately, that 208 only represents 17%. And so 17% of the ventral hernia cases today are done using robotics and 70% are still done open. And this really just kind of confirms the point that Adam was making earlier, that, when you get these complex cases, that tool that we have doesn't necessarily fit for that procedure or the comfort level of the surgeon doesn't match it either. When I saw this, it just reaffirmed that this really starts to confirm what we know about the unmet needs of the current robotic systems. And so I'd like to talk with you a little bit about that next. And before I jump in, a couple of things to note. What I'm about to show you is our internal perspective. It's based on a small subset relative to the country and even our system. And -- but these were all people that are experts, that have used robotics, that understand it, both from their practice, but from an administrative or supply chain perspective. I was a person that compiled all of this information. So if you want to talk to me afterwards, I'm happy to do that. But as I was compiling and understanding, I would turn back to our clinical leaders and check with other people to say "does this look right to you?" So a lot of confirmation. And I also believe that this data is only the beginning. I mean these unmet needs will evolve as technology advances as we learn more. And so I've done my best to represent that for you today. And I've broken this into 2 groups. I'm going to talk to you first about the surgical team's perspective, and I'm going to talk to you about the supply chain and administrative perspective. So I've broken this into 7 categories. And the gradient on the slide from left to right, the blue is our perspective on how well the technology today is satisfying that category. And the yellow is really the opportunity. And I'm not going to talk about all of these, the all 7 of them, but I will leave this up here long enough for you to kind of understand it. But I want to talk about the most important, at least from our perspective. Visibility inside the body is crucial. As Adam was opening, he talked about the ability to triangulate and have the multiple ports in to get the views that you need to be able to see inside of the body. But it's not enough. There are so many complex cases today that we can't do based on our surgeons perspective because you just can't see it or you just can't get there. And so visibility is crucial. The other thing that I hadn't really thought about was fluid management, and this is burdensome and time consuming as surgeons get into the body and consistently have to pull the arms off to wipe them with already a lot of moving parts. And I'm not going to talk a lot about advanced guidance today. We all know that advanced technologies are coming. They're showing up more and more in health care. We're finding utility in them. And as we start to improve visibility and these other things, layering on those advanced capabilities are just going to continue to add to things that need to be solved for inside the body, whether that's measurement systems or identifying body parts, whatever it might be. But I think once we get in there and we have the visibility, the sky is kind of the limit. The other one I want to mention is that so much of what's compared from a surgeon's perspective is what it's like when I do it open and what it's like when I do it with a robot. And today, you can't really replicate that. So how do you use technology around force and tension sensing? How do you make up for the fact that you can't actually feel what you're doing? And today's technologies don't allow you to do that. The next 2 categories I'll talk about quickly. These are increasingly important, especially in today's tight labor market, where we're consistently week by week training new people to join surgical teams. And while your surgeon may remain the same and their competency is high, they're well trained, the surgical team around them might not be. So the ability to train teams up quicker on systems that maybe are as complex but may be easier to learn will be important. We have instances now where we have highly trained surgeons that are robotic surgeons that don't have the confidence of team around them as ready yet, and so they will opt for not using robotics in those cases. And I personally can't envision or -- maybe even thinking about being a patient or I maybe want less time training, but as we think about new systems, they need to be -- they need to kind of round out the tools and technologies we have to allow people to move easily between the right tools. The next 2 are really kind of centered on a lot of that movement today. So the robot functionality, a lot of it's happening outside of the body, which ties into the bedside experience but is impacted by that, whether that is having access to the patient or creating safety hazards around the room for the people working. The last 2 here really kind of play off the former categories. We know if we can improve some of these other aspects, we'll get to better patient outcomes. And that could be that we're now doing cases we couldn't do before. So when we're thinking about the cases we already do, that will improve. I think there's enough information out at least that I've read, that, if you start to minimize the injury you cause to a patient if you make it easier for the surgeon to navigate those spaces, you will eventually impact how the patient recovers. But that's only one perspective that feeds into a business case when we're thinking about technology. And so we always wrap around and we spent a lot of time. It's been really interesting for me, again, to be partnered with Vicarious and to be able to convene these conversations. Some of these conversations that are informing what you'll see here today have happened as I've listened to the conversations between our supply chain and administrative teams with the Vicarious team. But it's also happened as I'm following up and having additional conversations myself. And so when you bring these 2 perspectives together is when you start to really inform the best way to bring new technology to the table and acquire it, which is why that is the first category on the slide. Because technology acquisition cost today are pretty prohibitive from making robotics really accessible for surgeons across lots of hospital systems. These are difficult decisions for hospital systems to make. You've got robot, consumables. And for new systems, a lot of upgrades to your facilities to even bring them in in the first place. Of course, once you have that, that's going to cost a little easier. But if you have multiple hospitals in your system like we do, it's a little more challenging. And that also plays into the cost to manage, maintain. The next 2 categories here, the footprint and mobility, really interesting conversations as I was sorting this out. Today, our systems are mobile, and it is the claim that they are mobile. They are mobile. You can move them. Unfortunately, the footprint is so large that you can't move them easily. And so while they're movable, you might not be able to actually get them into the room. It requires special teams to do that. And some of our rooms just aren't -- quite frankly, aren't big enough. And so for us, these categories really go hand-in-hand in terms of being mindful. Especially, as hospitals are kind of going through a great -- what I call the great reconciliation of real estate and space and utilization and throughput, these 2 things are going to have to be critical considerations. And these last 3 are really -- for data insights, this is really kind of opportunistic and I think it kind of speaks to "we don't know what we don't know." But as hospitals become more savvy in their use of data in terms of performance monitoring and expectations, I think systems have a real -- newer systems or even the current systems have a real opportunity in terms of being able to provide real-time access and business case support as we understand how well our systems are performing. And that can feed into then being able to view cycle times and start to understand that a little bit better. So with that -- I think I've mentioned our collaboration at least 5 times in this presentation, but I want to talk to you about what it actually is. And so we kicked off in June of 2022, about 6 months ago, and we really -- we've broken this agreement or collaboration into 4 phases. And we're technically still in Phase I, so 6 months in. And in that 6 months, I can tell you it feels like we've moved mountains. We've spent a lot of time convening a lot of conversations, providing access to our space in ORs so that the Vicarious team can come in and observe workflows, engage with folks, get insights. That has really been able to kind of translate into how they're thinking not only about their physical product, but how does that product come to you as a system, how is it used in practice. And so we're still, as the yellow star indicates, in Phase I. But we are beginning to plan for Phase II, which will be additional testing and then preparing for clinical trials and then hopefully one day expansion. So as we return to Cleveland tomorrow, I'm really excited to continue this work. The team at Vicarious is constantly on it. They're one of the best partners that I currently get to work with. And what we've got coming up is we're working on building out a surgeons summit to occur, hopefully, in Cleveland so that we can convene enough of our surgeons to further the insights gathering that will feed into Version 1. But at the top of this slide for reference, it's just kind of a myriad of the things that we have been doing in the last 6 months, the conversations we're having. Some of that might be surprising, which would include supply chain, really trying to tease out economic models and what makes sense and gather the right perspectives to make good decisions. We've convened nurses around human factors testing, which was really cool. I can tell you that project like this, where there is really meaningful progress and a really talented team leading the work, for us as a hospital system also presents us an opportunity to bring joy. And I can't tell you the number of times I have seen joy on the faces of people in our supply chain team, which never smile, like never smile, to just think about being able to be in a front row seat and seeing something so impactful being developed. And our nurses and scrub technicians that participate in some of the human factors design sessions, just like their minds are blown when you think about what they're currently dealing with in robotics to what it might be one day. And I think you'll get to see a little bit of that today with the Beta 2 Demonstration. So with that, I'm going to let the expert technology wiz come up here, Sammy, to talk more about the Beta 2. Thank you.

Thanks, Kendra. So as our UH partners just touched upon, there's an enormous amount of untapped potential to provide both technologic and economic value and benefit to surgeons and hospital systems. I'm going to take some time to walk you all through our proprietary technology and how that enables our Beta 2 system and highlight some of our key differentiators. Let's start first with our decoupled actuators. Our decoupled actuators are the key to how we're able to surpass today's -- the limitations of today's rigid and flexible robotic systems. It enables us to deliver a minimally invasive robotic platform with enhanced capabilities that addresses the unmet needs of surgeons and hospital systems, while also providing the foundation for future robotic innovation. Simply put, our decoupled actuators are an enormous engineering feat that solves for the buildup of forces within a joint. For reference, a typical joint that exists in a rigid multiport robot today is driven by a series of cables that twist and turn through a complex set of pulleys and channels as they pass through their proximal joints and ultimately end at the joint that they control. As the cables pass through these proximal joints, they impart forces on these joints that if uncorrected causes unwanted motion of that joint. To put it a bit more simply, if the system wants to control just one joint of the robot, other joints will inevitably move causing what is known as coupled motion. With today's current technology, the more joints a device has, the more cables it has running through each of those joints. And the more cables it has running through those joints, the more forces it has acting on those joints. And finally, the more forces it has acting, the more unwanted coupled motion it has. And it is up to the software system or the control system of the device to compensate for that unwanted coupled motion. At some point, however, if you keep adding more and more joints to a device, the amount of force inside that joint, and therefore, the amount of unwanted coupled motion becomes so great that the system can no longer independently control the joints. This presents a fundamental and physical limitation to the number of joints today's rigid multiport robotic systems can incorporate inside the abdomen of the patient. And is the reason why today most surgeons are forced to operate with wrist on a stick instruments that force them to triangulate their motions inside the abdomen. This restricts the range of motion of the surgeon as well as restricts the access to the patient. And requires the surgeon train to perfect the setup of these complex robotic devices as well as simply control the motion of the robot. The first several years of this company's existence was dedicated to developing these decoupled actuators. They eliminate coupled motion by optimizing joint surface, cable pathway that -- and it allows the cables to pass through the joint without imparting a force on them. As you can see in the video behind me, as one single joint is moved, only one set of cables is actuated. This level of decoupling is unprecedented in surgical robotics today. So again, by decoupling the motion of the joints, we're able to solve for that long outstanding issue of force buildup and unwanted coupled motion. This -- and because we're able to do this, we're able to incorporate 6 additional degrees of freedom relative to today's technology's pro robotic arm inside the abdomen of the patient. This enables us to fully mimic the human wrist, elbow and shoulder. Then this affords us 9 actuators in each arm, each of which correlates to an independent degree of freedom. This is important, because, in robotics, in order to fully move an object, you need at least 6 degrees of freedom, typically XYZ, yaw, pitch and roll. But if a joint -- if a robot only incorporates 6 joints, then the number of ways that it can both approach an object and then move it once it gets there is extremely limited. As a counterexample, humans have many redundant degrees of freedom in their arms that enable humans the freedom to choose the way they approach an object and then choose the way they move it once they get there. Thus, by incorporating 9 degrees of freedom, we mimic the redundancies of humans, thereby enabling our anthropomorphic robot to match the motion and dexterity of the surgeon. Overall, this provides a surgeon a much more natural experience that allows the surgeon to focus on performing the procedure rather than on how to control the robot. In addition to this human equivalent motion and improved dexterity, our decoupled actuators enable super human joint flexibility that gives the surgeon not just the ability to work forward, but also to work upwards, downwards, left, right and even facing all the way backwards towards the incision site. It's unbelievably incredible. All of this, combined with the ability to pivot externally above the incision site, provides a full true 360 degrees of anatomical access. In our testing with our surgeon partners conducted on cadavers, surgeons are able to enter the abdomen from nearly any location, work at nearly any angle and work on nearly any service without the need to manually reposition the system. Further, due to our unique design, we're able to incorporate 28 high-fidelity sensors in each of our arms. These sensors are used to estimate the force, motion and location of the arms in real time. The ability to capture this data in conjunction with our visualization capabilities lays the foundation for advanced inter-operative feedback and post-procedural education on surgeon technique and efficiency. This is the future that our team is building towards today. Another exciting aspect of our robot today is its visualization capability. For reference, the visualization ability of surgical robots marketed today is inherently limited because of the small size of the sensor that needs to be incorporated at the end of the endoscope. And the size of a sensor and the size of a lens DAC directly correlates to the quality of the image coming out of it. However, because of our unique camera and trocar design, we're able to fit a larger, much more capable camera that provides for unprecedented image quality. And again, our decoupled actuators really shine here. They enable us to incorporate 3 degrees of freedom in our camera so that our camera is able to pass through the trocar in a sideways position and then fully deploy once inside the abdomen. And again, it's the decoupled actuators that allow our camera to yaw, pitch and roll, giving the surgeon a full 360 degrees of viewing capability within the abdomen of the patient. Surgeons finally have the ability to maintain awareness of their surroundings without breaking focus on their target anatomy. In surgery today, a common problem that is encountered is a dirty camera. Kendra alluded to this earlier. The solution to that today is to simply pause the operation to extract the -- to manually extract the camera to clean it by hand and then reinsert it. This completely disrupts and delays the flow of a surgery. This is a large pain point for most surgeons today. So we decided to take it upon ourselves. And I'd like to introduce our solution to this today, which is a self-wiping feature that we like to call blinking. By adding this feature, we're able to save surgeons and operating room teams an immense amount of time and frustration. Complementing our camera's hardware is our proprietary software stack that enables a 4K high resolution, high clarity, high frame rate with auto focus, adjustable lighting and full motion tracking. In order to facilitate such an array of visualization capabilities, we have equipped our camera with a liquid cooling solution to mitigate any issues that would otherwise might compromise surgeon visualization. And again, because we're able to fit a larger camera, we have the physical space to include additional advanced sensors, sensors such as LiDAR, structured light and multi-wavelength detection. Combining this enhanced sensing capability with an advanced software stack that incorporate machine learning and artificial intelligence algorithms, we're able to do incredible things, incredible things such as overlaying the output of that multi-wavelength sensing live and over our real-time updating 3D depth map. It's absolutely incredible. As you can see, it's the real estate afforded to us by our unique hardware platform that enables us to pack in an unprecedented amount of sensing capability, which in turn creates the opportunity for incredible future software innovation. We are unbelievably excited about the capability of our visualization and sensing technology and the potential to provide surgeons with new smart features, features such as independently detecting different dyes, fluorescence, auto-fluorescence, structure identification, such as uterus or other organs and just general proximity and location tracking of our robot in real time inside the abdomen. We continue to develop all of these features and more in R&D today and expect to provide future offerings that empower surgeons to make well-informed patient decisions and perform more efficient and effective procedures. Now to take a holistic view of our system. Surgeon feedback across our centers of excellence partners as well as our surgeon luminary group has been overwhelmingly positive in regard to the robot and its capabilities that I just reviewed with you. However, there has been some clear room for improvement, particularly in the ergonomics of our Beta 1 system. Therefore, our Beta 2 system incorporates an enormous amount of feedback to improve surgeon comfort. Diving deeper, our former hand controllers of our Beta 1 system were of a free floating game console inspired design. But again, after much development testing with our partners, we decided to opt for a set of linked hand controllers with customized grips. Additionally, our earlier Beta 1 prototypes incorporated a display that either required the surgeon to wear a polarized set of 3D glasses or don on a virtual reality headset. Both of these afford the surgeon a very immersive experience. But again, after discussions with our surgeon partners, overall guidance emphasized the ability to maintain interaction with the operating room is much more advantageous. To those ends, our current Beta 2 surgeon console consists of a new stereo 3D viewer that provides -- that still provides an immersive view, but also maintains the surgeon's ability to interact seamlessly with the operator. Additionally, the Beta 2 surgeon console is fully motorized so that a surgeon can personalize the armrest position, the display height, depth and tilt to their preference and comfort. And although our Beta 2 system and likely our first go-to-market offering will not incorporate a head-mounted display, we still intend to offer it in a future release. Turning now to the patient cart. The most obvious change is the new industrial design. But more notably, our system can now be positioned and docked by a single person, and the surgeon now has complete direct control of our motorized insertion, rotation and brakes of the system. As Kendra touched upon earlier, it's valuable to both the surgeon and the hospital system to have a robotic system that is easy to use, easy to operate, it's capable of being broken down and moved if necessary. And because the majority of our robot's motion occurs inside the abdomen of the patient, our architecture is much simpler, our footprint is much smaller and our robot is much more mobile. There will be no need for a hospital system to dedicate a room or a space for our device. As you can see, with our decoupled actuators, we've been able to build a robotic platform that addresses the unmet needs outlined by our partners here today and many others. The Vicarious Surgical System provides unprecedented dexterity, anatomical access and visualization. But beyond just that, our platform forms the foundation from which we can build future value-add software and data innovation. I'm very proud of what we've accomplished with the Beta 2 system to date. The recent cadaveric labs performed by Dr. Belyansky have strongly reinforced my confidence in our ability to deliver on our vision of revolutionizing robotic surgery. And so now to give you all an overview from the surgeon's perspective, I'll invite Dr. Belyansky to come walk you through his experience driving the Beta 2 system. Thank you.

All right. Good morning, everyone. Thank you very much to Vicarious Surgical for asking me to speak here today. This is a great honor. My name is Igor Belyansky. I'm Chief of General Surgery at my hospital. I'm also Director of Abdominal Wall Reconstruction program. I am also -- currently, at present, probably 90% of my surgeries are performed robotically. Kind of just to give you all a perspective where my field has been. It's been a field of evolution. And 10 years ago, when I just finished fellowship and started, most of these procedures were done through an open approach. And just fast forward now, it's incredible what the patients and the hospitals have went through with the evolution and what we're doing now. In 2015, I described a procedure. It's called eTEP access ventral hernia repair. It's now been adopted all over the United States as well as the world. I have traveled kind of teaching this, lecturing about this. I've been invited to 13 countries to operate by invitation. And as a result, I teach fellows and residents on a daily basis. I also have surgeons from domestically, internationally come visit me on a monthly basis. So with that in mind, I had this opportunity. Vicarious approached me about 1.5 years ago to ask me to work with them. And for me, personally, this was an incredible opportunity to really be at the ground level and have a say and to -- or actually have to say how the future system -- robotic systems are actually developed. So I continue to be very impressed with the team itself of how they're taking some suggestions and go back and return with really value-add type of solution to the problems that we've seen. And so without further ado, in a second, I'm going to play the video that are going to show 2 different cases. The first case is going to be a robotic IPOM repair. What that is for those of you who are not familiar -- we don't have any surgeons in the room besides me I don't think -- is a repair of the hernia, where we close the defect robotically and place the mesh inside the abdomen cavity and secure the mesh usually with stitches. And the second case is going to be robotic pre-peritoneal repair. It's a more popular repair now recently, where we keep the mesh completely extra-peritoneal, and dissection for the team is a little bit more challenging. So go ahead, guys, please play the video. So the video will start with me walking in the operating room and sitting down in a surgeon console. And as the video is going to start playing in a second, as Sammy talked about, the surgeon console is completely something new that's not available in the market there. We took the best of both worlds. It's an immersive experience, where you look at this. But at the same time, you're able to maintain your peripheral vision and able to stay connected with the operating room. Currently, right now, when we do surgeries, we really don't know what's going on in the operating unless you hear what's going on. But this is a solution to it. We've now connected to our team members. The docking procedure is a little bit -- it's much more straightforward. It's a single port. And we don't have to worry about triangulating the ports anymore. So there's no learning curve anymore of actually knowing how to place the ports. One port, just dock it anywhere else. And then here you see, as Sammy talked, about the cameras. Very unique camera. Nothing like this available in the market. And the benefits of this camera is to be able to take a look around 360 degrees of just -- and here, we are looking at the defect that was created, which we're about to start closing. The next thing after the camera is introduced, you'll see me -- my left-hand being introduced, which is atraumatic grasper. You can actually grab and test with this grasper and manipulate adhesions of scar tissue if you need to. And on the right side here, this is a needle driver here. And I'm going to start suturing. And so, again -- so this first procedure is a robotic IPOM procedure. The procedure is going to start with me suturing the defect. And we're using a barbed suture. This is a standard thing that we do in surgery for those defects. One thing, as you're watching this video, please note we're actually using 2 cameras. This camera that you view -- that you get right now is the proprietary camera that we used to record this to give you guys an understanding what the robot looks like, what the motions actually look like from the side. And that camera is looking over the left shoulder of the robot. We will go transition to a surgeon's view in a second, just so you see what the surgeon sees. But as you see me suturing here, just things to pay attention to -- again, you guys not being surgeons. But if you had any experience looking at this, is looking at how the needle goes through tissue, how the instruments are able to push the needle, the fidelity of movement, the efficiency of movement, the ability of me, the surgeon, being able to place the stitches just the right interval, so away from each other. And the way we close this defect, we use what's called a shoe lace technique. We'll place the stitches. And as we go at the end, we'll tighten them up just like your shoelace your shoe. Okay? Next, in just a few seconds, we're going to see the surgeon's view. And I'll go through what the surgeon sees when they operate. So this is the surgeon's view. And this is a GUI screen. So as you're looking at this, a couple of things to look for right away. It tells you which instruments I'm using. So on the left side, it's telling me I'm using a grasper. On the right side, it's indicating that I'm using a needle driver. But the more interesting thing about -- specifically about this robot is how we are maneuvering it and understanding for a surgeon the relationship -- the 3D relationship with the robot inside the abdominal cavity. So this is the lateral view. It's showing me that I'm pitched up and the camera is rolled a little bit up. You can see the camera view right here. And on the right side, you could see the top down view. And I'll come back to that in a second, but see how the camera right now is shifted. Our shoulders are square to this defect. But you will shift to a little bit to the right because we're working from left to right of the abdominal cavity. So this is, again, a view from the left shoulder of the robot. And you see the stitches are not tied yet, but they're in place now. And now I'm going to go through where I'm going to tighten them up and so everything is going to be nice and snug. This is how you want the defect to be closed at the end. Some questions that we had sometimes: "How strong are the instruments to be able to drive in and to pull through?" And obviously, as you can see here, this is something that's achievable with the instrumentation that we have here right now. So next thing is the introduction of the mesh. And the way we introduce -- there's several ways to secure the mesh, but the way us, robotic surgeons, we do this now, we usually take a stitch and run it through. There's different ways to do it. You can take several stitches. This is a monofilament stitch, a stitch that you can pull through all the way as you take in the bite and tie it to itself again. As you do this, pay attention that I'm able to control the needle in such fashion to take just the right equal bites and just making a really nice and snug. And as you see me work here, let's just talk about how the robot moves again. So as you look here in the screen, from screen right to the screen left, what we're essentially able to do right now is to scrub the defect and continuously scrub. We call this crab walking. So essentially, here are the arms and we can crab walk to -- from left to right, from right to left and kind of suture -- and this is really helpful for somebody who is calling in front of you. If I need to, I can actually pivot and I completely turn my shoulders this way and operate in a left lower quadrant. Then I can turn completely and operate on the right upper quadrant. We can pitch the whole -- everything down and actually roll the camera up and stretch the hands up and work like this. We can do the opposite. We can pitch up and look down and work at the intestine. So, incredible degrees of freedom of movement and very unique to this specific robot. So here we are almost finished with the IPOM. Then we're going to tie this. And you see here, where I pitch-down, looking up at the end. And this is just a view from inside of the surgery. So the next procedure is the TAPP procedure. And again, this is a more -- a difficult procedure, dissection-wise is a little bit more challenging because now you try to peel away this very -- essentially paper-thin layer that lines the inner abdominal cavity. And pertaining -- even in an alive patient it's very paper thin. Now this is a cadaver model, obviously, and this is a little bit more difficult, in cadavers to reproduce this dissection. But here, we are doing this. And actually, we're diving in here, which you see laterally. We're actually diving into the space called peritoneal layer space. Sometimes you got to go one layer up just to maintain the flap and not to make those holes. So once you create the pocket, the next thing we're going to do is actually close the defect which is right there. Very cool shot to where you can see the whole robot and see when it's in action. So now we're going to start closing the defect. And again, this is -- you've seen this already once. This is a barbed stitch going from left to right. You can go from right to left, left to right. I'm right-handed surgeon, it's easier for me usually to work from left to right. You can see as I take the needle, this needle is going to go through this little hole there. It's just on the first pass. Again, it's a fine point movement that this instrumentation allows you to do. Very difficult actually to do this laparoscopically, to go through the needle through the little hole. So here, we are actually looking inside. So again, look at the left, we're pitched up and looking up towards the defect. But let's keep attention -- pay attention to the right side. And what you're going to see, you're going to see that crab walking, where we're going to stay centered, that we're going to face the defect and keep our shoulder square to the defect and transition from left to right as I close the defect. Again, this is a very unique way of controlling this and making this easier to -- see I just moved, shifted over. And it tells you that you're doing that. So it can orient the surgeon the whole time to what's going on inside the abdominal cavity. So once this defect is closed, we're going to -- not shown here, we're going to pull the stitch through and then we're going to introduce the mesh and the mesh is going to cover the defect. And we're going to use what we call cardinal stitches to secure the mesh in place to make sure the mesh does not rotate. Very cool how it just shifts over. Again, if I want to, I can then -- if I want to look at something, I can turn around completely. I can also -- without moving the shoulders, I can also just turn my head and control the camera and keep the things in place. So it's almost a, a lack of better word, humanoid type of motion. So this is the last stitch that's being placed here. We're going to cut it. And now we're going to start closing the peritoneal layer. So this step in real life sometimes is very difficult to perform because this peritoneal flap can be right front of your face. And here you are working like this. So what we're doing here, we're using the design of this equipment to actually pitch down to create extra space. So we're creating extra space by pitching down, rolling the camera up and putting the hands up. And we create the space and so now we have room to work in. A very unique solution to this problem. So once this flap is closed, this procedure is complete and the mesh is completely extra- peritoneal. Just a view outside. And again, the best way I think about the controls, my fingertips are becoming an extension of the instrument. That's how I feel when operating. And this is what the feeling is like when you do this. This concludes my presentation. Thank you very much, everyone.

Thank you so much, Dr. Belyansky. I've seen that video, I don't know, probably 2 dozen times at this point, and it never gets old for me. I really love watching it. I also wanted to further emphasize that both of the views, both of the cameras in the abdomen there -- actually, every intra-abdominal view you saw was shot with our camera technology. We put 2 of our cameras into the abdomen in this case, one for the third person view so that we could show you all today. So I'm incredibly proud of our team, and I wanted to thank everyone for the amazing work to get us to this milestone today. We committed to this milestone a few years back, and I feel incredibly proud of what we've delivered. Next, we'll be looking to our -- all of our system, taking all of this feedback and turning it into that initial manufacturing production build that will be V-1.0. We'll be then -- then over the course of 2023, going through a variety of different tests, everything from sterilization, biocompatibility, human factors, electromagnetic compatibility, just to name a few, all to ensure that our technology and our device is safe and effective before human use. This will allow us to obtain the ISO 13485 and NRTL certifications that we need to take our device to the FDA. And at the same time, we'll be building out our entire supply chain -- continuing to build out our entire supply chain as we ramp production of sterile devices into our clinical trial build. So I'm incredibly excited and proud of all of the work that our team has done overall. And as you've seen, there's an incredible opportunity with our core technology that we've proven out with Beta 2, and we've proven out how much value this technology can have to surgeons and our hospital partners to ultimately improve patient lives. So thank you, everybody, so much for joining today. We're going to take just a couple of minutes to set up for our Q&A panel.

So I think we're going to get started with Q&A. Looks like Ryan's got one upfront right now. So coming over with the mic.

Congrats, Vicarious, on all the development. Ryan Zimmerman with BTIG. A couple of questions for me for the University Health people. You talked about 8 systems that you have in place right now. Talk to us about why it makes sense to potentially switch at some point, whether that be economic, logistically? And how you manage having multiple systems in your organization?

Yes. Great question. For us, it's always important to ensure that there isn't so-called concentration risks. So when we look at exemplars, for example, in imaging and radiology, very common for us to see magnets from a variety of manufacturers. So there's Siemens in-house, there's Medtronic, there's J&J, there's et cetera. So I think for us, it's important to ensure that there isn't concentration risk. And it's also critical for us to ensure that we now have systems that meet and match the criteria of our new physical plant configurations. And what we have and what we will continue to use by and large can't be moved. And we really have to lean into what our future needs to look like from the perspective of expanding our center of excellence when it comes to robotics. And that's going to imply mobile systems. And candidly, we're also -- it's incumbent upon us to lean into innovation. It's part of our mandate from the standpoint of where is the technology going and how do we cater to the needs of the pull from a surgical perspective. The final piece will be the clinical outcomes, whether it's 0 defect, whether it's the notion of 'do no harm' or the broader implications around value care and access. Those all tie very neatly back to our relationship here with Vicarious. We're very comfortable with the management of redundancy around multiple systems, multiple offerings. Anything to add?

Okay. Very helpful. And then for Dr. Belyansky. For you, talk to us about what speaks to you most about the system? Is it the ability to tack a mesh in the abdominal wall with full range of motion? Is it the anti kind of fogging features that they're introducing now? What's going to resonate with you? And what kind of gains would you think, whether that be operationally, economically from having that capability relative to existing systems on the market today?

Yes. Sure. It's not going to be one particular thing. I mean, as you've seen, there's so many different ways that Vicarious Surgical is providing solution. I mean, we'll start with just kind of going from the top, single incision platform. Novice surgeons do not have to learn how to triangulate and how to place the port. So it's kind of a much more dynamic way of placing the port wherever you need to. Docking, simplified. Then once -- the triangulation happens inside automatically. Camera, which is now allowing me to -- not having to clean and able to see everything inside. Instrumentation, which, again, is very dexterous, as you've seen. So it's -- and then the next thing is, like you have to think about for surgeons, access, right? Like what access the surgeons have to robotics? And so this is an alternative here. And somebody like me would be very interested in using a system like this in the future.

Adam Maeder, Piper Sandler. This has been great and congratulations on the progress. A couple from me. And maybe just to start, probably most applicable for the University Health folks, but would love to ask about just kind of capital budgets as we head into 2023. Obviously, it's a very topical item. We may be heading into a recessionary type environment. So just any color on how your system is thinking about budgets next year?

Carefully. I think as the first answer, yes, certainly, what you point out is what we're all facing from an industry perspective. There's no one that's left unscathed. And that forces you as a system to be very discrete with regards to where you do place your bets and where you don't. What is unwavering is our need to lean into patient care and outcomes, and that does trump all. So from the perspective of making go/no-go decisions in a zero-sum game, the decision to lean into clinical care is never going to falter. So that always takes priority. And given the breadth of the physical clients, the number of hospitals, there are lots of choices, fortunately, to be able to be made from the perspective of what we might curtail, what we might store, what we might look to from the perspective of an alternate business model. Not everything needs to be capital intensive. And we've begun very early exploratory theoretical conversations with Vicarious around what might that look like in a more capital-light type environment.

And then maybe for the follow up, this is kind of a bigger picture question probably for University Health as well as Dr. Belyansky. But how do you think about single port robotics versus multiport versus endoluminal? How do you see the robotics landscape shaping up over time? Are these things complementary? Are they cannibalistic? Will this be kind of bifurcated by indication? Just any kind of big picture thoughts there would be helpful.

And before I answer [Audio Gap] going to see the evolution. But the products like Vicarious makes you think that there is going to be a big space in single-incision platform surgery, especially as the trocar size is really down [Audio Gap]. I think my mic is out. The smallest trocar inside that is going to be if going -- commercial is going to be -- available commercially. So I think there is going to be a big space for this, and it will be interesting to see how things continue to evolve. But things -- like as functionality doesn't change, I think -- I mentioned having access, surgeons having access. Like why not more surgeons are using robot? Some of it is access, some of it is capital economics. I'll let the people who understand this much better answer that question. But having systems available to the hospital systems perhaps at a competitive price is going to be something that is going to lead to surgeon adoption as access increases.

As I stated, I'm not a surgeon. But I think what's been really interesting for me and engaging with robotic and non-robotic surgeons in our system is that I think in looking at the system, you start to open up a world of possibility where we haven't really been able to take robotics yet. And so I do think there will be a little bit of cannibalization of how we're doing current open procedures, but to the benefit of reducing -- or making better -- bigger impact on patient outcome and impact to the hospital over time. So I think there will be a rebalancing of sorts when you start to introduce new technology that allows you to do things that nobody could imagine or has had access to before. So I think it will be interesting.

If I wasn't clear. What I think is going to happen is more open cases are going to be done robotically as we move forward. I mean it's happening already, but it's going to happen even faster with companies like Vicarious coming onboard.

Josh Jennings from Cowen. Maybe a question for David and Kendra from UH and also Adam and Bill from Vicarious. Just thinking about cost effectiveness of robotic surgeries. I think, Kendra, you mentioned in your presentation that, that wasn't a huge consideration or it's becoming a bigger and bigger consideration. But maybe just talk about the collaboration, how much -- how important cost effectiveness is of a system to UH? And how much you've kind of emphasized that in your feedback to Vicarious? And then maybe for Adam or Bill. Bill, just the cost effectiveness dynamics of the Vicarious system, anything from faster procedure times to the future of disposable costs and capital costs?

I can speak to what I understand about previous business cases and making these kinds of decisions before. Open procedures today remain to be the least cost effective to do. And so cost has always been a consideration and how you look at that cost per case over time is a really important input in terms of how our system evaluates bringing in new technologies. It's not the only variable, but incremental growth and being able to expand cases is really important in today's environment. In terms of how we're discussing this today, which is pretty exciting. I mean, we're years away from commercialization. And so to start to be able to kind of talk back and forth about how we look at those models and being able to develop models to put the information into the models and make -- and help feed that back to our partner in terms of helping them figure out how to really democratize this and take it into more centers, I think, is going to be really valuable.

Let me just add that the total cost of care equation is debilitating. It's untenable right now. We as a system are very meaningfully moving from volume to value. And the only way we can do that is to look at each of the base ingredients from a procedural perspective and work down cost as something that would be manageable when it's bundled. The other element that you can never lose sight of -- that we should never lose sight of is 0 defect and harm. So the extent to which a robotic procedure is proven -- and the delta and the metrics were shown in some of Adam's earlier slides. The extent to which we can improve outcomes from the perspective of risk reduction, harm reduction, the cost there is immense, of course, notwithstanding the implications from a family, an individual and a patient perspective. So those components are a little bit more hard to quantify. We certainly know that our risk oversight functionaries are very intrigued with what can be done when it comes to risk reduction.

I'm just going to add a tiny bit to that. I totally agree with everything here. And I'd really emphasize the total cost of care. And I think our cost of goods structure gives us a lot of flexibility, frankly, to work with our partners on how to do this. And it's really exciting to be able to work now on exactly what that model is, tease out across the entire hospital system where the value is. And then to be able to create a product offering that delivers better total value and reducing total cost of care.

One follow up for Dr. Belyansky. Just wanted to hear your impression of the ergonomics of the Beta 2 system relative to other robotic systems. And particularly, the ventral hernia cadaver case that you just showed us and the rTAPP element as well. How efficient is the Beta 2 system relative to other robotic systems? And the ergonomics, I guess, of the 2 elements I was curious about.

So when someone says ergonomics to me, that to me means my comfort level operating at a surgeon console. So it is very comfortable. And I do, like I mentioned before at the end of the video -- it feels like the instruments truly are an extension of my fingertips. That's the kind of the best way I can -- so it is -- so it's comparable. Essentially, I was able to go from one system to this one, and the learning curve here was very short, very short.

And the efficiency of the -- of the dexterity? Just...

Yes. I thought the movement -- the efficiency of movement, the dexterity, I mean, it was excellent. Yes.

Kyle Rose, Canaccord Genuity. Just first question, I guess, Sammy, is just -- obviously, you've got Beta 2 here today. Can you just talk us through the milestones that are going to happen before you get to, I guess, full lock of the device when we think about moving towards the FDA and trials and things?

Yes, absolutely. Adam did touch a little bit on this earlier, but I'll -- we've got our upcoming V-1.0 version of our robot that we will put that through a pretty rigorous set of testing through our V&V-- our initial V&V, including sterilization testing, packaging testing, EMC, basically, all of the things that we need to do to ensure the device is safe and effective. Yes.

Great. And then just one last one is -- maybe this is for the UH team, is, there's a lot of talk about data analytics and the sensors that the technology has. Can you just talk about how you think about and how your -- the health system thinks about utilizing and collecting that data and evaluating it over time?

The waste in hospital systems is incredible. I'm not just talking about durable equipment and I'm not just talking about people's time. We waste all of the data that we gather. And so we have a very concerted effort from a system-wide perspective to harness data for insights gathering to inform outcomes, to inform the manner in which we go to patient care, so to speak. We've entered into some formal arrangements with both AI companies and data aggregated platforms to give some underscoring to the importance of which we put to the data components. It's a totally unharnessed, unutilized, unleveraged asset right now in many respects. So what's potentially offered here through V-1 is very intriguing to us from an insights gathering perspective.

I also want to add, though, that, that data, I think, is going to present itself in different ways. And so for the surgeons specifically working on that system, I think having access to information that gives them insights that they can't get today that will better help them navigate the surgical landscape inside is going to be pretty powerful. I think once we get outside of the system to what you were speaking about is going to be really important in terms of performance and utilization and ways that we can improve and feed that back into our partners as we continue to make the technology better over time.

Just to add on a little bit. I think this is an incredibly important part of our strategy, and access to data and insights is obviously a priority for you guys. It's also something we've heard from some of our other partners as well as very high up on the list. And it's not just -- I mean, I completely agree about the existing data in health systems today is, I'd say, underutilized probably. And I think that partly comes from quality of data. And that really comes back to our sensing strategy and why we fundamentally believe from an engineering standpoint that data and analytics and insights, it's all -- candidly, it's all great buzzwords, right? But to actually generate what you need from it, you need it to be the right data, the right sensors collecting that information and at the right time. So we're building all of that out from a hardware standpoint I think, as Sammy mentioned, not just the physical space, but the actual thermal management profile to be able to run a pretty high power data collection system from inside of the patient's body.

I'm Matt Miksic from Barclays. So a follow up, if I could, just on -- maybe from Dr. Belyansky around where you see some of the initial traction of the system as it gets closer to market? It just become sort of just like a really powerful single procedure, hernia procedure, sort of traction and interest? Or is there truly this sort of cost structure benefit sort of unleashing additional demand through just a more cost-effective platform? Then I have one follow up.

Yes, sure. As you know, the original FDA application process is for ventral hernia. So that's where the focus is right now. But if I was -- on my own extrapolate where you can use it, there's a variety of things that you can do with this. And you can -- ventral hernia, incisional hernias, gall bladder surgery, inguinal hernias, prostatectomy and GYN surgery. I mean, so I can keep going. So all these procedures can potentially be addressed with the system. And that's up to the company later on to decide what they want to do.

Then if I could just follow up on -- you're talking about data, Adam, and kind of the data these systems can -- you can pull off these systems for analytics. But your larger competitor in the marketplace has a pretty well-established ecosystem. And it's not something that anyone should expect you to be able to sort of snap your fingers and have with a small and growing installed base. But what similarities would you hope to accomplish with a similar ecosystem concept? And how should we think about that kind of growing as the installed base grows?

Yes. So I mean, it's absolutely true that there is a moderate footprint of surgical robots out there today. And I think -- again, it's kind of looking at the specific data that are collected in surgical procedures is really important. So what's collected today is primarily just video data and then relative position movements, right? Not actually knowing exactly where the end effectors are, but rather just the relative movement of them compared -- relative to each other. But it's really limited what you can do with that information. And that's why we've seen relatively limited insights that have come out of intraoperative data. I think it's kind of a black box in surgery today despite the number of procedures that have been performed. So that's why we're building out our camera system that has all of these additional sensing modalities, can map the abdomen in 3D, can actually use fluorescent imaging real time throughout the entire procedure with multiple dies and multiple wave lengths so that we know every structure that the surgeon is working with every tissue. We actually know what they're doing from kind of a mechanical hardware sensing standpoint. With that, I'll pass it over to Sammy to answer more about how that works.

What I'll just add is that it's not just about -- our unique architecture makes us well suited to not just capture more data, but also better quality data. And it's the combination of those 2 that probably uniquely poises us to do much better in terms of the insights that we can gather from the data that we're collecting. And that's something that really excites me and it's something that I think is going to really excite surgeons once they see what we can do.

Adam, for you. We didn't hear anything today on the clinical trial from the FDA. I don't know if you don't want to break some news or anything to us today. But any insights there, I think, would be helpful in terms of what you've learned since the last public forum.

Yes. So what I'd say so far is the conversations with the FDA have been really wonderful. It's -- they've been very collaborative, I think, is the word I keep using. But it's exactly right. They are directly engaged and they're helping us through this process to make sure that we set up the process for success and to ensure that our device is safe and effective. We're going to keep working with them until we get to exactly the right answer here and something that, frankly, they sign off on. And once we have that sign off, we'll share it. But it's been really positive.

Mike Polark of Wolfe Research. For Dr. Belyansky, curious, do you have an estimate -- on the cadaver cases or case that you've done, how much faster that is on the Vicarious system versus multiport? And then the follow up is, have you ever tried that case on the existing single port technology?

Yes. So I'll answer your last question first. I've never used existing single port technology ever in my practice. When we were doing a lab here, the purpose of the lab is really for development, learning and kind of going backwards and forward. So even this last lab, we're not timing to see how fast on the -- if you'll then afterwards looking at the video and actually looking to see how long it take, it takes about the same. It took me about like just under an hour to do each of the procedure. So it's very similar to how it is in kind of real life when I do a multiport robotic system. So it's similar.

A follow up on -- for the UH folks. I'm curious. You talked about waste in the system limiting utilization of your robot fleet, which, if I'm doing the math right, 1,900 robotic procedures across 8 robots, that's about 240 a year. I would describe that as kind of average for the global installed base of Da Vinci's -- it's a 2-parter. What can that number be from your perspective? 240 sounds like it's too low? How would you model your North Star there? 300 beyond? Yes, that's the question. Just kind of -- when you dream your dream on your robot strategy, how many cases a year can be done for a single system?

Well, I don't think either David or I could answer that. But if I were to guess, it would be 100% utilization on anything that you invest in. I think there's so many limiting factors on why things are not utilized, though. I talked about -- we talked about earlier just the talent market. We've got a lot of turnover. Every hospital system is dealing with that. Sometimes that will limit your ability to use advanced technologies where the learning curve is high. And then case mix, complexity of cases. Some of those will not allow for you to use a robotic system even though your team might be trained. But if I had to guess, I would imagine that our North Star would be 100% utilization of any -- very capital intensive.

There's always going to be the minimum threshold, that hurdle that we have to attain from a business model standpoint. We're going to have to lean very heavily into the answer to your question just to get to the point to motivate why we would move forward with anything. And so it's definitely part of the collaborative build right now, is to understand throughput, understand efficiencies from a setup and breakdown perspective. And then bring in the human factors when it comes to training and the fungibility of skills from a training perspective.

I do want to add one thing, though. I do know from that business case that we set out, that we've met the performance metrics that we set in terms of expanding our robotics program. So while the utilization may seem low, we've exceeded the targets that we set as a result of bringing those robotic systems in. That's good and bad. I mean it just makes you question like what more can be done and what more needs to be solved for to increase that utilization when you make those kinds of investments. But as a system, we've been very pleased with what we've seen as a result of bringing in those robotics programs in. And I think that sets the table nicely as we consider evaluating new technologies such as the one we're talking about today.

I'm Sofia from Evercore. I was just wondering if you could talk about how you're thinking about the revenue model for this first version. Will hospitals be able to lease the robot? And then how are you thinking about competitive pricing?

Yes, I think I'm going to pass it to Bill, our CFO.

Yes. It's a good question. I would say in terms of the revenue model, maybe getting back to Josh's question a little bit, because there's the revenue model, there's cost of acquisition, et cetera. Thinking first, everything you've seen today probably starts with decoupled actuators, right? And so in addition to all the benefits that you've seen today, it has a tremendous cost advantage. So what that enables us to do is to obviously -- compete obviously in a cash sale model, but also compete in other different business models. And as we've talked about, we're in discussions obviously with many of our hospital partners to accomplish that. So we're nimble in terms of the business model. I would say in terms of the acquisition cost, one of the side benefits as well is that we're poised to be priced lower than any of the existing alternatives. If you look at Intuitive, it might be a $2 million plus acquisition costs. We're looking to have a list price of about 1.6 and probably look to sell that for about 1.2 realistically. So we're incredibly competitive just on a cash basis there. The disposables -- the instruments and accessories are designed to be disposable, eliminating a significant cost and burden for the hospitals. And those -- the price point there will be about $1,500 per procedure. And then as well, we have a 10% annual support. So we're able to do that there. And then I think Dr. Belyansky was talking about maybe the comparable time. I think he's incredibly gifted and incredibly fast, I would say. I did hear after that procedure, I think, you thought you want to do it in 35 minutes. So I think one of the things we should be able to offer, particularly to the average surgeon and the novice surgeon is the ability to do faster procedures. And so while hospitals are particularly focused on cost and lower acquisition costs, lower cost of consumables and all those sorts of things, one of the things we hope to be able to do is drive more procedures per day with that fixed cost of a fixed surgical team, technicians, OR, all those different things. If we can drive top line as well as have the nimbleness of the business model and the lower acquisition costs, I think we're able to address hospital concerns on multiple fronts.

That was really helpful. But I guess one quick follow up -- sorry about that -- one quick follow up, maybe more for Adam. You guys talked a lot about hospitals, but not a lot about the ASC setting, which has been a huge focus. Is that an area you're focusing on? And how will your robot be better suited for that area than the existing robots in the market?

So that's a very good question. The answer is from -- I'd say from a fundamental level, we have a huge potential advantage there. It's our cost of goods, our footprint, the overall efficiency, all of that, that makes us much better suited for the ASC setting. And that being said, there's still -- if you look at the market today, there are -- almost all surgical robots, especially in the United States, are installed in the hospital setting, either hospital inpatient or hospital outpatient. So while ASCs are really interesting opportunity and one that we will target, we're going to target the low hanging fruit first, candidly. It's -- there is, as you heard, a lot of unmet need today in the hospital setting and it's the setting that already has experience with surgical robotics. It's a business model that is already established. And despite not being exactly what people want it, it does work and it does meet the business objectives for the existing surgical robotic technologies even if it leaves a lot of room to be desired. So we're going to focus on that first, and then we're going to expand out. That's a very long way of saying that.

Alexandra Higashi-Howard also from Evercore. Dr. Belyansky for you. Just thinking about -- you were talking about the needle driver and kind of the tactile experience of doing those procedures. Can you talk maybe about the limitations you see on kind of tissue types that you could possibly like go for, for procedures, kind of the experience of what it would like to be using that in the cadaver model, obviously? And just like how that differs from a normal open procedure and like what that tactile experience feels like?

It's actually -- the experience -- as we continue to progress -- so like this -- the current model that we have or the current product, the experience is very similar. I mean that's the best way I can answer that question. And that's it really. I don't want to make this answer too long. It's just a very simple answer. It's a very similar experience and it works.

So on the drive -- like, again, on tissue, the driving, like you don't see any limitations to that?

No, no, absolutely not. No.

Any more questions? Great. Well, that concludes our Q&A session. So thank you, everyone, for joining us today. If you stay for the next 10 minutes, we'll be able to open up an OR and you can take a look.