Aurora Spine Corporation (OTCQB:ASAPF) Q3 2022 Earnings Conference Call November 21, 2022 11:00 AM ET
Company Participants
Adam Lowensteiner – Vice President, Investor Relations
Trent Northcutt – President and Chief Executive Officer
Chad Clouse – Chief Financial Officer
Conference Call Participants
Tom Fedichin – Microcap Connection
Operator
Good day and welcome to the Aurora Spine Reports Third Quarter of Fiscal Year 2022 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Adam Lowensteiner, Vice President of Lytham Partners. Please go ahead.
Adam Lowensteiner
Thank you, Betsy and good morning, everyone thank you all for joining us today to review the financial results for Aurora Spine for the third quarter ended September 30, 2022. With us on the call representing the company today are Trent Northcutt, President and CEO of Aurora Spine; and Chad Clouse, CFO of Aurora Spine.
Before we begin, I would like to remind everyone that statements made during the course of this call maybe considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Act of 1934. These statements reflect current expectations concerning future events and results. Words such as expect, intend, believe, may, will, should, could, anticipate and similar expressions are words that are used to identify forward-looking statements, but their absence does not mean a statement is not forward-looking. These statements are not guarantees of future performance and are subject to risks and uncertainties and other important factors that could cause actual performance or achievements to be material different from those projected. For a full discussion of these risks, uncertainties and factors, you are encouraged to read Aurora Spine’s documents on file with SEDAR, including those set forth in the periodic reports filed under the forward-looking statements and risk factors section. Aurora Spine does not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
On this call, management may refer to EBITDA, EBITDAC, adjusted EBITDA, adjusted net income and adjusted EPS, which are not measures of financial performance under Generally Accepted Accounting Principles or GAAP. Management believes that these non-GAAP figures in addition to other GAAP measures provide meaningful supplemental information regarding the company’s operational performance. Investors should recognize that these non-GAAP figures might not be comparable to similarly titled measures of other companies. These measures should not be considered in addition to and not as a substitute for or superior to any measure of performance prepared in accordance with GAAP. A reconciliation of non-GAAP measures to the most directly comparable GAAP measures in accordance with SEC Regulation G can be found in the company’s earnings.
With that now, I’d like to turn the call over to Mr. Trent Northcutt, President and Chief Executive Officer of Aurora Spine. Trent, please proceed.
Trent Northcutt
Pleasure to be here and thanks for having us.
Adam Lowensteiner
Do you want to proceed with the prepared remarks?
Trent Northcutt
Yes, keeps cutting in and out and I get a high pitch signal going through my phone. I am sorry, I’m – it’s like echoing back and forth. I apologize.
Adam Lowensteiner
That’s okay. Chad, would you like to read Trent’s prepared remarks?
Chad Clouse
Yes, I can do that. Good morning, everybody. Earlier today, we issued a press release detailing our financial results. Hopefully you have had a chance to review that news release, but if not a copy can be found on our website, aurora-spine.com under the Investors section or other financial websites.
To layout the agenda for the call today, let me first summarize a few key events of the quarter. I will then talk a bit about the status of each of our key initiatives and products like ZIP and SiLO, as well as our initiatives on the Spine division, including our DEXA product line. And then Chad, which is me, will give a recap of the financial results.
As we anticipated, the third quarter was a bit lower quarter on a sequential basis due to the slowdown in procedures performed in the summer months due to extended vacations in the medical community. That said, third quarter was still a very productive quarter as we continue to focus on growth through product placement and education and still produced even strong revenue growth over last year and positive EBITDAC.
On a macro level, we continue to see momentum gaining in the minimally invasive surgery market, especially with regards to the reimbursement coding as insurances are embracing more procedures that can be done in a minimally invasive manner and have the patient recoup at home in a quicker timeframe. Aurora products like the ZIP and SiLO are very complementing the doctors and their patients and designed for minimally invasive procedures. I believe it is these catalysts, why our products are able to gain the traction we have been receiving.
In addition, our products offer alternative ways for doctors to treat patients with as little pain medication as possible, especially given the opioid epidemic that has hit the United States in recent decade. This too is the main tailwind for the med-tech industry. While Q3 was a little bit on the quiet side, shortly after its close, we brought up some significant momentum heading into the North American Spine Association, or NAS Industry Conference, which took place in early October. Specifically speaking, we received FDA clearance for the SiLO TFX, which was a very important catalyst for Aurora and the future growth opportunity within the SI joint marketplace. This is still in very early – in its very early innings. Obtaining this clearance proves our IP franchise, but also demonstrates that we have created a new product that offers transfixing capabilities, which is something many doctors are desiring.
We are currently moving forward on preparing initial surgeries for the TFX and if all goes well, should be ready for commercialization in Q1 2023. We will definitely keep investors updated with this progress with the TFX as we believe it will be a contributor to our growth for several years to come. The ZIP series continues to be a nice contributor for Aurora. Subsequent to the third quarter’s end, we are pleased to learn the initial positive interim results from the clinical studies in the ZIP, which was published in an abstract posted in the publication, Pain and Therapy entitled a prospective, observational, open-label, non-randomized multi-center studies measuring functional outcomes on a novel interspinous fusion device in subjects with low back pain, REFINE study. The publication discussed the results of the interim 3-month analysis, which included 54 patients, of which 82% reported improvement as a result of the procedure, while 65% of the patients demonstrated clinically meaningful improvement in their pain and function.
The publication also demonstrated that the use of the ZIP device was both effective and safe at the 3-month follow-up. This study remains active and enrollment is continuing, with more follow-up data expected in the future as more patient data is compiled. The study included results gathered from 11 doctors and was conducted on behalf of Aurora Spine to determine the utility of using interspinous fusion devices as a fusion therapy for the treatment of lumbar spinal stenosis. The treatment of lumbar spinal stenosis has a large unmet treatment need that bridges the gap between conservative measures and invasive surgical procedures.
Trent Northcutt
In this publication, it is an exciting validation of Aurora Spine ability to provide safe and effective outcomes by utilizing the Aurora’s ZIP product line. We look forward to the additional results set to be published at the 12-month collection point and believe it will be a continued trend positively for our physicians and their patients.
Last but not least, moving on to the DEXA. We have been invested heavily during the third quarter to build several surgery kits for the DEXA-C and are in the midst of placing them with doctors as we speak. We started the year initially with just two kits in our field – out in the field where we are able to ship another two earlier in the quarter, which helped incremental revenues and have DEXA represent 10.5% of total sales in the third quarter or approximately $383,000. This was up from DEXA-C sales beginning at 5.3% of revenue in the second quarter or approximately $212,000. This demonstrates that we believe DEXA-C could be a meaningful revenue source for Aurora moving forward.
As we expressed earlier, we have developed several kits for the DEXA-C and are now in possession of finalizing many of them and will have recently shipped into the initial tranche of them into the doctors. While initial deployment show successful deployments, we do want to express that not every deployment will have equate to the success of our initial team working diligently to make sure that we share these kits with doctors that will not only – will try the DEXA technology, but also will embrace it into their practice.
Also another factor to remember is pricing. Since DEXA is a proprietary product of Aurora, we should be able to have some financial flexibility regarding to the internal costs, but we can – but there will be some price variation depending on the doctor and their practices and what type of economics they use going into their procedures. Our goal is to place DEXA in the hands of doctors that embrace new technology and are looking for something that is better than – for their patients and DEXA certainly offers that more. We are very excited about the DEXA overall and we initially – as we initially launched with the DEXA-C should be a key growth catalyst moving forward.
Regarding our FDA cleared DEXA SOLO-L, which we will just shorten to DEXA-L, spinal fusion system, which will have a second DEXA product released. It’s a 3D printed standalone anterior lumbar interbody fusion device. The DEXA SOLO-L part of the DEXA technology platform is a standalone device for anterior and lateral lumbar interbody fusion or is the acronym is ALIF or LLIF for anterior lumbar interbody fusion or lateral lumbar interbody fusion procedures. And it’s the first of its kind, the device for lumbar – for lumbar spine in the world. It’s also the first color-coded bone-mimicking structure implant in the marketplace that will help doctors match the patient with the patient’s bone quality density. We are in the process of building inventory for this product and hope to have it used in initial surgeries during the first quarter of 2023. Our goal would be to launch a couple of kits in this procedure and then build out more in the second half of 2023. We will keep investors upgraded and updated on our progress.
Summary. To summarize, I am extremely proud of the team’s performance and staying focused on building this company. We are well positioned to take advantage of growing markets with several new priority products. We remain focused on penetrating these markets further with a year through continued training, succession and clinical trials. Looking to the long-term, we will have – we will be well positioned for success especially as we have new products, more clinical studies, proving our technology and teaching more doctors to use Aurora products. We remain highly focused at the opportunity that we are – is in front of us and we continue to invest in our growth with each of our major platforms, ZIP, SiLO and DEXA.
I will now turn over the call to our CFO, Chad Clouse, Aurora Spine CFO and will return – review the third quarter financial numbers. Chad?
Chad Clouse
Thank you, Trent. Thank you. With numbers highlighted in detail in the press release, just let me focus on a few of the areas. Revenue during the third quarter of 2022 was $3.6 million, a 26% increase from the $2.9 million at the third quarter of 2021 and a 10% sequential decrease from the $4.1 million in the second quarter of 2022. The improvement in revenues from the prior year was driven by strong use of proprietary products, especially ZIP and SiLO devices as well as the addition of DEXA-C.
Revenues were sequentially lower due to lower procedure volumes due to extended vacations in the medical industry. Gross profit in the third quarter was $1.9 million, an increase of 43.2% over $1.4 million in the third quarter of 2021 and a $9.3 million decrease from $2.1 million in the second quarter of 2022. Gross margin was 53.2% in the third quarter of 2022 up from 46.8% recorded in the same quarter year ago and compared to approximately 52.6% of revenue in the second quarter of 2022. Gross margins showed continued progress and improvement on a year-over-year basis as more proprietary products are part of our revenue. We believe over time that the margins have the capability to continue to expand beyond these levels, especially if their primary product sales increase.
Total operating expenses in the third quarter were $2.1 million, which is sequentially lower from the second quarter of 2022, which was $2.4 million due to the completion of some R&D expenditures. As the company continues to make key investments to grow the business which include new salespeople, conducting clinical studies, training sessions in R&D, expenses towards new products, investors should anticipate these levels to remain at these levels in the coming quarters. We do believe these investments will put the company in the proper position for accelerated growth and sustained profitability.
EBITDAC in third quarter of 2022 was $151,000 improved from the second quarter, which was $96,000, and a loss of $171,000 when compared to the same quarter a year ago. Net loss in the third quarter was $116,000 or $0 per basic share and diluted share, an improvement from the second quarter which was a loss of $160,000 or $0 basic diluted shares and the improvement from a net loss of $368,000 or negative $0.01 compared to second quarter of 2022 results. These improvements come directly from sales of proprietary products and lower expenses.
Turning to the balance sheet, the company ended the quarter with approximately $650,000 in cash and cash equivalents. We believe these levels are sufficient to fund the company in the coming quarters. Accounts receivable decreased sequentially to approximately $3.7 million from $4.1 million in the second quarter due to improved collections. Excuse me – we believe we are on our way to receiving additional funds in the coming months. We are consistently monitoring our receivables and working diligently to collect in a timely fashion. Our inventories have for now plateaued as it will continue – as we completed building our DEXA-C kits, which are now being deployed. We continue to monitor our expenses and tight controls of our costs. We should have some continued savings from lower R&D expenses now that the SiLO-TFX has been improved and we believe that we have the necessary capital to move the company forward as we improve collections and accounts receivables toward improved cash flow – to improve cash flow from operations.
This concludes my comments. I will now turn the conversation back to Trent.
Trent Northcutt
Thank you, Chad. Before we open the call for questions, I would like to include that we continue to make improvements initially to make sure that we remain on track for sizable revenue growth. In the interim, we are in the midst of improving our sales team, especially now they have had several new products to take the company to the next level. We are also working on moving into a new office to accommodate all of our employees putting everything underneath one roof and operating in an internal training lab to host medical professionals with our sales team in our office.
While there are some near-term costs for these improvements, we believe it will be beneficial for the long-term. We obviously have more work to do, but the company is in a solid position to capitalize on IP improvements. We have stabilized the past 2 years. It is truly amazing to see the opportunity – our organization grow. We are highly successful in creating new proprietary products. And now it’s time to demonstrate that we can scale the company on a commercial side of the business.
I appreciate everyone’s patience and believe that we are in the early stages of reaping the rewards of our efforts. So far, we are very pleased with the progress of these initiatives and very excited about the remainder of the year and beyond.
And with that said, operator, we are ready to take any questions.
Question-and-Answer Session
Operator
[Operator Instructions] The first question today comes from Tom Fedichin with Microcap Connection. Please go ahead.
Tom Fedichin
Hey, good morning, guys. Congratulations on another successful quarter. Want to dig into the doctor vacations, how that impacted sales and have sales rebounded since?
Trent Northcutt
Yes, the two parts to answer – hi, Tom. Two parts of it. Yes, we have seen getting the procedures that were drawing the most new revenue for the company that was like SiLO and getting the ZIPs back on track that – those came back to those doctors who went out on holiday came back and now are doing those procedures. The hesitation that I have on the Q4 is the T code or the Category 3 code, with the posterior allograft systems and that coding reimbursement that there was a concern there for a bit and that ran all through late spring, early summer all the way up until the current day, the conversation was out there in the field and then indeed, they made the announcement that they are going to, I don’t have the data off the top of my head. They made the announcement they are going to move the allograft into a Category 3 T code.
But with that, it didn’t change the economics behind it. So, there wasn’t anything that really told the doctor that they were going to lose money or they wouldn’t make any money or they shouldn’t do the procedure, there was nothing that said that, it just that they are going to add modifier to that code that Category 3 will be added to the coding reimbursement. So with that said, we have since no one has been affected directly by any type of financial impact on doing the procedure, we see that it’s kind of steady with that, but there has been that pause, where we have seen some doctors that we would say that would do 6 of these a month now are looking at this, like well, maybe I will just do 3 and see where it falls in the beginning of the year, because they are not going to make any additional announcement of any – major announcement until July of next year on the allograft system.
And then just let me just add to that, because it’s important to note that we have submitted the SiLO-TFX and we do not believe the SiLO-TFX will be affected by the Category 3 code, because we believe it falls within a different guideline of SI joint fusion. This actually would turn into a real winning opportunity for Aurora, because it would be kept in the same reimbursement codes as SI-BONE and Medtronics and others of that category. So we are seeing this as a mixed – blessing mix opportunity and we think that it could be really, really substantial for us especially that we are making good progress on getting the TFX instrumentation completed so we can initiate our first alpha procedures with TFX. I realize I answered a much bigger question to your question – initial question but in Q4, I remain positive we can pull some numbers together for the Q4. I am going to be affected this week in sales, because we do a lot of surgery in upstate New York and as many of you know, they have moved the whole NFL football game from two different state because of that, so this week is going to be tremendously slow on top of the Thanksgiving holiday, but hopefully we can make this all back up this week.
Tom Fedichin
Okay. Can you tell us about the DEXA sales? You did 10% of the entire company sales were from DEXA-C, how many kits were handed out? What did that equate to like, was it 4 kits that equated to 10% of the entire sales or was that was 10 kits, how many kits were outstanding?
Trent Northcutt
Roughly about 4 kits out there, but now we will have 40 – up to 40 kits available in completely in everyone’s hands with some extra say 35 will be out in the field or 30 plus be out in the field with a couple of 5 or more in the office to be able to maneuver as needed. But the sales team is moving those kits into position with a couple of key people, especially that we had 9 surgeons come to San Diego for a DEXA review – roundtable review with a blend of ortho and neuro doctors and all 9 of those accounts are receiving their DEXA inventory. And we are working with their hospital to make sure we are approved at their facility for the pricing and approved on to the hospital contract itself, because it’s a newer product and it’s now finally in their hands and sometimes the hospitals don’t allow you to get approval on the products until it’s actually available. And so now that it’s available, we have some work to do on it, but that’s part of the process and we plan on keeping those kits all out in the field all through fourth quarter and going into beginning of the year and encouraged by that and that can be a real revenue generator for us.
Tom Fedichin
And would you say on average a doctor, I know we discussed this in a different call that an average practice would use 10 such device products in a month per doctor, that’s – is that something you are seeing off of the 4 doctors currently right now?
Trent Northcutt
Yes, it won’t come off that – won’t change that. It’s definitely the ability to do 10 procedures not including level and we saw procedures, it’s 10 is very fair. Yes, perfect, so…
Tom Fedichin
Okay.
Trent Northcutt
One particular facility actually has really good pricing that we know of and they are going to actually give it to their entire educational department. So it’s not just one, say one doctor, the whole department is going to be using the system and that’s we are really proud about. We are not going to say who it is because the competitor wouldn’t like it, but we are going to – we are definitely going to benefit from that.
Tom Fedichin
Wonderful. And on average, a device implant for DEXA-C is $3,000, is that fair to say approximately?
Trent Northcutt
It is now for right now that price will definitely be adjusted, because if you look at, like an HCA cervical price can be as little as say $800 per unit, but we are not running to all the HCA facilities, we are going to different facilities, because it’s new technology and it’s not old technology. So we are not – we are trying to stay away from that older price technology. We are trying to stay on new technology track.
Tom Fedichin
Okay. How many kits do you think it’s possible to have out in the field for 2023 of the DEXA-C?
Trent Northcutt
Well, possible would be if all 40 of the kits are turning and we can’t keep the product on the shelf and I have no problems with double down on the inventory, there is no reason why you are waiting, it’s a very high volume procedure and with really high success rate, it’s got a plus 96 – 90% plus success rate. And we think we just made it better. So with that said, we plan on bringing all those kits out. And if I have to put 80 sets in the field or 140 sets in the field, I will do it.
Tom Fedichin
Yes, okay. Now you’ve got your DEXA-L, which is the secondary DEXA line, our DEXA product will be coming on out in Q1, you will be starting your beta rollout, is that correct and do you feel you will have the similar success as you have seen with DEXA-C?
Trent Northcutt
I do. I do. It has a really, really strong price point. It’s an average selling device of over $6,500 per unit. And so it has a very low cog, very high yield and a lot of procedures because it competes in the world of pedicle screws and pedicle screws is a 48% to 52% of all revenues of all spine companies. So it’s the mega product. And if we can get some people as excited about the cervical and we will use the cervical data that we are coming out with and in the biomechanics data and in a single arm multi-center study with the DEXA-C and the write-ups that we are getting from these physicians using the cervical and we will apply that right over to the lumbar and start talking more – to more and more doctors about the success that they are having with cervical that they should carry this over to their lumbar practice. And some doctors do very high volume of lumbar procedures where they can do depending on the doctor of course, but they can do multiple procedures in a week. And they can do – that they can do this procedure use with DEXA-L technology and they can roll the patient over from an anterior position and roll them over on to a prone position and actually backup this patient and use the ZIP implant in conjunction with the DEXA-L implant. So, now you could – the doctor is able to do a double billing on that where they can bill for anterior and posterior work, they call it a Spine 360 procedure. And then Aurora can actually bill for the DEXA-L and for the ZIP separately. So, that would change that pricing from $5,500 procedure to a $10,000, $12,000 procedure and more.
Tom Fedichin
Now, with the DEXA – with the new rollout of DEXA-C, and of course DEXA-L coming and potential of – we have seen billing code changes. Do you feel in Q4 and even in Q1 moving ahead, that DEXA-C will by far make up any last sales that you could potentially see a slowdown in sales in Q4 coming ahead?
Trent Northcutt
I really do. And in fact, that was one of the things that we were during the summer when were getting the sets ready and cued up is that we talked about the T-code and the category three code and what – how is that going, what was that looking like and how is that slowing down on top of summer vacation and like people were just taking a pause and procedures doing well, patients doing well on the posterior SI procedures. But this T-code made everyone kind of think a little bit. So, for us, we said, well, look cervical the codes haven’t changed and reimbursements haven’t changed and surgical procedures are increasing. So, we said that since we are not – we are going out to brand new customers, many of these doctors are using the DEXA-C, these were brand new customers for us because we have another surgical device in our portfolio which is called Discovery and Discovery implant is still widely being used in our company. So, we are trying to work with the doctors that are not using our Discovery implants and that want to use our – the new DEXA-C implants. And again, this also lead to new DEXA technologies for doctors to try as we go along.
Tom Fedichin
Okay. As for doctor training and increasing the amount of doctors selling your products, how is that going? How many doctors did you train this quarter? What do you plan on training for the balance of 2022? And for that matter how much for full year 2023, do you – how many do you plan to train?
Trent Northcutt
I don’t know yet. And I am just going to answer honestly on that. I don’t know how many we plan on for training next year. We want to see what the – how the excitement is for the DEXA, sorry, for the SiLO-TFX. We think it’s going to be quite extensive. We think a lot of people are going to really want to be trained on this product. We would add it into our current protocol of training and education, which is doctors who come in for the ZIP, the SiLO and the SiLO-TFX training, they will be part of the comprehensive training. One of the things that we are considering doing is we want to add to that training, because we have been essentially just kind of feathering it in as an overview, but not necessarily as a topic on full – like a full breakdown didactic session. But breaking down a full didactic session on DEXA technology as an introduction to some of the pain interventional doctors that don’t normally follow osteoporosis, osteopenia as a part of their practice, but to give them an education on implants that are better suited for bone density and density driven implants such as DEXA implants. And adding that as part of –as an overview, obviously, you don’t need a cadaver lab to teach cervical implants, the implants are intuitive and so the doctors don’t need surgical training on that and same with the ALIF, because the procedure has really been known now. So, there is no cadaver lab needed for the ALIF DEXA implants. But an overview might be important. So, as far as what the headcount is going to look like, maybe Chad knows how many we did this quarter. So, I am not sure how many we have done this quarter. Honestly, it was north of 20 doctors and say Q3 to current date. But it could have been even higher than that they got trained on ZIP and SiLO implants. But we started to narrow the trainings because we were watching the category three coding. So, we slowed some of the trainings down a little bit just to make sure that in case there was a major changes that really affected the coding and reimbursement to the point where they weren’t going to do the procedure. And we didn’t know that for a fact that they weren’t going to do that until mid-summer, and because it was being sorted through with the AMAs and the CPT code reimbursement and committees and so forth.
Tom Fedichin
Do you – when you have got 60 monthly purchasing doctors as of our last call? Do you feel it’s plausible to double that number from now during the end of 2023 to 120?
Trent Northcutt
Well, it’s fair question. Part of that was, the numbers that we had that were ZIP and SiLO and current customers, here is the group of doctors that we are already working with to the – and surgeons we were working with now with DEXA, these will be some brand – some of these will be brand new doctors have never used our system before. So, this would be – this would improve that monthly headcount of users in our daily sales report and quarterly sales report. Also there is a lot of doctors out there that we obviously do not work with. And we think that that number will really help Aurora because it will help us once we get the TFX out and available because we were being contacted pretty regularly through our salespeople, when is TFX going to be available, because I will start switching to that. And these are current users of other competitive systems. So, we are going to be able to pick up a new – a very robust well trained group of doctors that are already using competitive products. And we couldn’t be more excited about that, because we will have, we think the best implants available for them with all the latest technology that’s going to give them that extra feeling of fixation and ease of use and get their patients back up on their feet out the door.
Tom Fedichin
Would you say that the SiLO-T effects will provide at least the same results that SiLO did per doctor, per device products sold per month? Will doctors – can we expect to see similar numbers on the SiLO-TFX, as we saw out of the SiLO for 2022, for 2023. And of course, with the new products rolling out, and of course, newer doctors coming onboard, do you expect to see sales growth surpassing what we saw in 2022?
Trent Northcutt
I think TFX will outperform SiLO by a multiple of 10x. I think it’s going to blow SiLO out the door.
Tom Fedichin
Okay. Will you discontinue SiLO as a…?
Trent Northcutt
No, not unless the coding tells us that it’s not going to be used anymore, but we don’t see that happening. So, we think it will just be nice. It will be nice to have options. Some people like fish, some people like chicken, but we all have an option here, right and we will give them that option.
Tom Fedichin
Okay. Moving on to the ZIP, you have got – you have received FDA approval for the lumbar, ZIP lumbar. Will we see that in 2023? When do you expect that will start to roll out?
Trent Northcutt
You don’t have to move that. You are talking about the ZIP-Flex?
Tom Fedichin
Yes.
Trent Northcutt
Yes. So, just because of the – I think because of the excitement of DEXA and DEXA-L. We have also – we have been letting the cat out of the bag in a fun way that we are also working on once we get the TFX out and running and get it really going. We already have the study protocols being put in place, IRB submission. So, we will go into a multicenter study. The very first, call, week of trials that we do with the TFX will be in starting in a multicenter study. And it’s no secret that once we get the TFX out and running, we are going to – we have already been working behind the scenes to make the TFX into a DEXA implant. So, that will give us, our third implant that will have DEXA, we would call it DEXA-fied. And we will be the only game in town. So, we think that’s going to be a real win for us. And so with all that said, my focus has been, let’s stay on track with the ZIP multicenter study. Let’s see where the SiLO goes. We got the TFX that we need to roll out. And we have got DEXA-L that needs to roll out and with TFX being converted over to a DEXA portfolio, I think that the ZIP-Flex although it’s a pet project of mine, for sure and same thing with Laszlo, our Chief Technology Officer. But I think it’s better suited for us to push that back towards the end of the year and see where we are pausing to the priorities once we get the other priorities in line because we are not in a big R&D phase in the company anymore. We are more in getting the implants that we have worked so hard on last number of years to get them out and commercialize and shows real successful numbers because then we can build off those numbers right into some future technology. And we do, we have a nice portfolio behind this. We don’t talk about that keeps the pipeline full. But I want to execute on these implants of ZIP-Flex is definitely going to take – it’s going to be pushed back another year for us because it’s just not – it’s not ahead of the real priorities.
Tom Fedichin
Okay. Now, you spoke about margin expansion in the press release. What sort of margins could we see as newer proprietary technologies implants are released?
Trent Northcutt
So, one of the conversations that’s happening, and again, I don’t speak for any of these committees. I am only a participant on the coding, the reimbursements like the rest of the vendors. But they are saying that the coding could increase in posterior, posterior lateral SI fusions and that there could be some modifications to it that actually allows the facilities to get a bill from say, $15,000 to as high as like $20,000 to $24,000. So, that would be a significant increase, obviously, and if that’s the case, that’s where that would come from. And this is something that was presented by coding reimbursements that have physician consultants that are not affiliated with Aurora, they are part of a committee that’s trying to find the right balance of what the coding reimbursement needs to be for these new technologies.
Tom Fedichin
Okay. Last question is moving forward, looking at Q4, yes, of course, coding has played a bit of an issue with doctors’ confidence. But do you feel we are back on track? And do you feel that we could see $4.5 million to $5 million this quarter, is that realistic?
Trent Northcutt
It’s too soon for me to tell on them. I am pausing on it only because I want to – just want to see how this folds out to the rest of November. But I do plan on having an early December call that I am going to be scheduling with Adam, because I want to keep investors in the light, so that way, they are not sitting back guessing on it. We have – there is – I have made some changes. I wasn’t pleased with some of the business strategies. And so I made a decision to part ways with my Vice President of Sales, mostly on the spine side. So, I parted ways with him. And I am adding some new sales talent in some areas that I felt like we needed to focus on. The rest of the team is completely intact and engaged, and excited and bullish about what we are doing. But I needed to get a focus back on some of our spine technologies versus our pain technologies. And I wanted to get back on track with that. So, if you will bear with me, and let me come back to everyone in December. I will put that call together throughout and then we will get back out to everyone after we close out November.
Tom Fedichin
Okay. Thank you, guys. Appreciate it. I will let others to jump in.
Trent Northcutt
Thank you.
Operator
[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Trent Northcutt, for any closing remarks.
Trent Northcutt
Thank you for joining us. We appreciate your time and interest in Aurora Spine. We are very excited about what’s ahead of us in 2022 and beyond. We look forward to speaking with many of you in the weeks ahead. And if you have any questions, please feel free to reach out to Adam at Lytham Partners. And we would be happy to schedule any follow-up calls. Thanks again everyone, have a great rest of your day.
Operator
The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
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