September 2020
Vol 7 | Issue 336

Q&A with Jeff Conroy of Embody


Principal Series:

Embody is a medical device company focused on the sports medicine market.  We are developing collagen-based surgical implants for the treatment of tendon and ligament injuries such as Achilles, Rotator Cuff and ACL.  Embody has been funded by the Defense Advanced Research Projects Agency (DARPA) and the Department of Defense (US Army and US Air Force) with over $21 million in non-dilutive funding since 2015.  Embody has previously raised $9.3 million in Series A financing.  Embody will launch our first product, the Tapestry Biointegrative Implant, following FDA 510(k) clearance in October 2020.  We will launch four products over the next three years and build a $50 million+ revenue stream by 2025.  As we become a commercial company and a growth-stage investment, we are seeking $15 to $20 million in Series B funding to accelerate commercial adoption and product development.

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What led you to create Embody?

I was the president of a tissue bank where I learned how cadaver tissue gets processed into surgical products. In this role, I heard leading surgeons talk about limitations of these products, as well as synthetic implants, and the trend towards biologic products which stimulate new tissue formation. I decide to start a company to engineer biologic products that would address the unmet need in the market. In Michael Francis, I found a co-founder with a scientific vision and the ability to create technology and develop products on an accelerated basis. We have been fortunate that our DARPA partnership has enabled significant value creation and creating four products which will be launched over the next three years. Over the last five years, the market need for biologic products has continued to accelerate reaching $600 million and Embody has positioned ourselves as a future leader in biologics for orthopedic applications.

Why is this the time for Embody to establish a leadership position in orthopedics?

Embody’s expertise is using biomaterials and physical structure to design surgical implants that incent your body’s own cells to grow new tendon tissue. We are creating a biologic effect with our collagen-based Tapestry Biointegrative Implant. This is consistent with the overall trend in the market and opinions of surgeons regarding the beneficial effect of biologic products. The trend has been to move away from mechanical augmentation with cadaver skin or synthetic implants towards biologic or biostimulative products like Tapestry which create new tendon tissue. We are poised to be a leader in this field and we have invested in building a portfolio of surgical solutions in Tapestry, Tapestry RCR, MicroBraid and MicroBrace.

What is the most important point for a prospective Series B investor to consider today?

Embody is expecting our FDA 510(k) clearance in October 2020. We will not be taking our Series B investment until we achieve this significant inflection point. We have been planning our commercial launch, building our internal commercial team, signing distributors and recruiting surgeons for our first cases. We are ready to sell and we will be conducting surgical procedures in November. Following clearance and launch, we will be a growth stage investment seeking Series B investors to accelerate revenue growth and product development. We are ready to build a market leading sports medicine company and are seeking long-term investors who share our vision.

What is the likely exit scenario for Embody?

In the medical device market, the traditional scenario has been the “race to $20 million in revenue” which is considered to be the point where a start-up becomes an acquisition target by a larger company such as Stryker, Zimmer Biomet, DePuy Orthopedics and others. Embdy has multiple recent comparable transactions where companies were acquired for $210+ million in the orthopedic space with anywhere from zero to $17 million in annual revenue. The rationale is if Embody can sell $20 million, then a large multinational company can sell five times as much. In recent comparable transactions in the $210+ million range, the companies were single product companies. In the case of Embody, we have four products giving us confidence in our ability to create significant value for our shareholders.

We are also looking at our ability to grow Embody into a stand-alone profitable company. This would be achieved by our ability to generate $50 million in revenue near term and then move towards $100 million in annual revenue. This could be achieved as either a private company or a public company. Given historical transactions, an M&A opportunity in the 2022 range is a likely option. As we execute on our revenue goals, we will look for every opportunity to leverage value for our shareholders.

Jeff Conroy of Embody

Embody was founded by Jeff Conroy, CEO and Michael Francis, PhD, Chief Science Officer, in 2014 with the objective to create a new standard of care for tendon and ligament repair.  Together, Jeff and Michael secured our first DARPA R&D contract of $12 million based on the prevalence of tendon and ligament injuries across elite warfighters such as US Navy SEALs, US Army Special Forces and DOD’s explicit desire for advances in the field.  We have extended our DARPA and DOD relationship with over $21 million in non-dilutive funding.  Currently, we have $4 million in current signed DOD contracts which will support operations through 2021.

Jeff Conroy, CEO and Co-founder is a 30+ year medical device and life science executive.  As the President of a tissue bank, Jeff validated the need for Embody based on feedback from surgeons on the limitations of cadaver-based products and synthetic products.

Contact Jeff: