By Thomas Kerr, CFA
READ THE FULL MGRM RESEARCH REPORT
Regulatory Update
On February 26, 2025, Monogram (NASDAQ:MGRM) announced an update regarding its 510(k) premarket filing submission to the FDA for the company’s mBôs TKA System. The company stated it had completed all supplemental testing and submitted its formal response to the Additional Information Request (AIR) by the FDA which was received in September 2024.
At this time, Monogram does not anticipate further requests for information from the FDA. Assuming a favorable decision by the FDA following receipt of the AIR, the next event is expected to be a clearance decision for the mBôs Total Knee Arthroplasty (TKA) System. If granted, that would enable the commercialization and marketing of the TKA system in the U.S.
Shalby Limited Clinical Trial
In August 2024, Monogram announced a strategic collaboration with Shalby Limited, a global multi-specialty hospital chain, to conduct a multicenter clinical trial to evaluate the safety and effectiveness of the mBôs TKA system. In January 2025, the company shipped a robot to support clinical trial training. An Investigator Meeting was held at a Shalby Hospital in Ahmedabad, India, on January 31 and February 1, 2025. The meeting was organized by Reliance Life Sciences and attended by principal investigators, surgeons, and other staff. The purpose of the meeting was to review study protocols, regulatory requirements, and operational procedures related to mBôs TKA system.
Reliance Life Sciences manages the regulatory submission and communications for the clinical trial in India. As the regulatory sponsor, Reliance Life Sciences is overseeing the submission process and engagement with India’s regulatory authorities. Monogram has submitted its system for regulatory clearance to run the clinical trial and will provide updates as they occur. The company remains confident in its submission and the strength of its strategic partnerships with Reliance Life Sciences and Shalby to support the process.
Dr. Ajaykumar Yadav, Group Head of Clinical Research at Reliance Life Sciences stated, “The Investigator Meeting was a successful milestone in the preparation for Monogram’s clinical trial. Bringing together key stakeholders, the meeting provided an opportunity for in-depth discussions on study protocols and a demonstration of the mBôs technology, reinforcing the collaborative approach to this clinical trial. Monogram has submitted a strong and comprehensive application, and we continue to support the regulatory process as expected. Reliance Life Sciences remains committed to advancing innovation in healthcare and looks forward to contributing to the successful execution of this study.”
Technology Improvements
Monogram continues to refine and enhance its next-generation technology in parallel with its regulatory and clinical trial preparations. The most significant advancement has been in the cutting system, which has facilitated an approximately 300% increase in feed rate. A video demonstrating these next-gen improvements can be found here.
Dr. Douglas Unis, Monogram’s Chief Medical Officer, stated, “The latest advancements in Monogram’s robotic system are a game changer. The new cutting system enables cutting speeds that are becoming competitive with manual surgery while maintaining the accuracy and functionality expected from robotic-assisted procedures. The performance is truly remarkable for a completely hands-free, unconstrained autonomous system. With these improvements, we are on track to deliver one of the most impressive robotic solutions on the market today.”
Monogram remains focused on developing a multi-application robotic system that is time-competitive with manual surgery without compromising accuracy or safety. The company continues to refine its technology to improve system performance and usability as it progresses toward commercialization.
CEO Ben Sexson stated, “We have completed all proposed testing with what we view to be favorable results, and we remain focused on developing a robotic platform that surgeons will want to use. Our research shows that safety and uncompromised speed are the top priorities for surgeons. We have always believed that an autonomous system could be optimized to be competitive with manual surgical times. I feel confident we are starting to get there. Like our shareholders, we are eager to bring this vision to the operating room.
He further commented, “We have built a system that we believe has the potential to disrupt the market. Our thesis is that fast, accurate, unconstrained autonomous cutting, eventually in many clinical applications, will help drive continued adoption of robotics. Our technology has undergone rigorous and extensive testing, and we have made every effort to try and ensure our system meets the highest standards.
Valuation and Estimates
Monogram has the potential to deliver strong revenue growth and positive earnings over the next 10 years after commercialization of its robotic system and customized press-fit implants. We believe the company can generate average annual revenue growth in the range of 25%-40% over the next 10 years and improve margins to industry averages over time.
Our primary valuation tool utilizes a Discounted Cash Flow process. Under the scenario described above, our DCF based valuation target is approximately $6.00 per share. Our target price may be conservative as it utilizes a high discount rate of 15.0% due to the unpredictability of earnings, higher prevailing interest rates, and the timeline of commercialization of the company’s products in the U.S.
We maintain our 2024 and 2025 estimates at this time as we await release of 4th quarter and full year 2024 results.
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