executive war college › wp-content › uploads › ewc14.post_.… · early stage increases...
TRANSCRIPT
1
NASDAQ: NEO
Navigating for Growth Executive War College
May 1, 2014
2 2
Forward-looking Statements
This presentation contains statements which constitute forward-looking
statements within the meaning of Section 27A of the Securities Act, as
amended; Section 21E of the Securities Exchange Act of 1934; and the
Private Securities Litigation Reform Act of 1995. The words “may”, “would”,
“could”, “will”, “expect”, “estimate”, “anticipate”, “believe”, “intend”, “plan”,
“goal”, and similar expressions and variations thereof are intended to
specifically identify forward-looking statements. All statements that are not
statements of historical fact are forward-looking statements.
Investors and prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and that actual results may differ materially
from those projected in the forward-looking statements as a result of
various factors. The risks that might cause such differences are identified
in our filings with the Securities and Exchange Commission. We undertake
no obligation to publicly update or revise the forward looking statements
made in this presentation to reflect events or circumstances after the date
of this presentation or to reflect the occurrence of unanticipated events.
3 3
NeoGenomics Background
• Specialized Cancer-Genetics lab
• Serving Oncologists, Pathologists, Hospitals, BioPharma
• Strong growth in client base, test volume, & revenue
• About 350 full-time employees
• Most comprehensive cancer test menu in America
• NASDAQ listed
4 4
Volume doubled since 2010 and was record-setting in Q3 ’13…
Quarterly Test Volume and Revenue ($ in millions)
* * *
* Includes impact of TC Grandfather Expiration, which resulted in $1.3 less revenue per quarter. Refer to page 28 for more detail.
0.5 0.8 1.3 1.6 2.7
3.5 3.3 3.4 4.2 4.5
5.7 6.7 6.9
8.1 8.4 9.5
10.5 11.3 11.2
12.7 14.0 14.5 14.5 14.4
15.4
18.4 20.0
22.6
26.9
28.8 28.3
30.5 32.1 32.5
33.7
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
Q105
Q205
Q305
Q405
Q106
Q206
Q306
Q406
Q107
Q207
Q307
Q407
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
Q312
Q412
Q113
Q213
Q313
Millio
ns
Th
ou
san
ds
Test Volume (000's)
Revenue
NeoGenomics History of Growth
FINAL FILE TO SHOW Q4/Q1 GROWTH INFO TO FOLLOW
5 5
Dynamics in Oncology Testing
NEO
Demographics And Cancer
Physician consolidation
and in-sourcing
Regulatory Challenges
Managed Care
Technological and Scientific
Advances
Reimbursement Pressure ObamaCare
Precision Medicine
Barriers to
Entry
Volume
Drivers
6 6
Strategic Approach
• Relentless Innovation “Precision Medicine”
• Process Improvements Reimbursement-pressured industry
• Flexible Business Model Dynamic market
• Segmentation Tailored customer demands
• Engaged culture Operational excellence
7 7
Strategic Approach
• Relentless Innovation “Precision Medicine”
• Process Improvements Reimbursement-pressured industry
• Flexible Business Model Dynamic market
• Segmentation Tailored customer demands
• Engaged culture Operational excellence
8 8
• Enables physicians to better diagnose
diseases and predict therapeutic efficacy
– Clinical Benefits: Effective treatment at an
early stage increases patient survival rates
– Healthcare Savings: a) forego spending
on ineffective therapies and b) effective
intervention at an early stage generally
lowers overall treatment cost
– Companion diagnostics: being driven by
rising drug costs and an increase in targeted
therapeutics
16%17% 16%
18%
22%
25% 25% 26%
11%13% 12% 13%
16%
19% 20% 20%
0%
5%
10%
15%
20%
25%
30%
1980 1990 2000 2010 2020 2030 2040 2050
Perc
en
t O
f P
op
ula
tio
n
Age 60 and older Age 65 and older
Current
U.S. Population Demographics
Boomer Impact on Cancer
Market
Demand for “Precision Medicine”
Transformation driven by Molecular
diagnostics
Cancer prevalence expected to increase
77% of all cancers diagnosed are in people age 55
or older, the fastest growing segment of the US
9 9
2013
• 34 new Molecular tests
• 5 new NeoTYPE Panels
• Next Gen Sequencing (48 genes)
• 10 new FISH tests and profiles
• 3 new IHC profiles and tests
• Plasma/Urine-based Prostate Test
(Patent App)
• SVM-based Cytogenetics Analysis
• SVM-based Automated FISH Analysis
Relentless Innovation
2012
• 10-color Flow Cytometry
• Implemented State-of-the-art
MolDx platform in lieu of Kits
• 30 new Molecular Assays
• Proprietary method for increasing
sensitivity of Sanger sequencing
• 7 NeoTYPE MolDx Panels
• New Aperio Digital Image Analysis
• SVM for FISH (Patent App)
• Barrett’s Esoph. FISH (Patent App)
• NeoARRAY/SNP Cytogenetics
• Internalized 99% of send-outs
10 10
PNH, High Sensitivity Flow (revised) – March 25
CD52 Campath Sensitivity – December 20
FISH Molecular
ETV6-RUNX1 (TEL-AML1) Translocation, t(12;21) – January 7
TPMT Genotyping – January 15
UGT1A1 Genotyping – January 21
PDGFRa Mutation Analysis – February 4
KIT / PDGFRa Molecular Reflex Panel (GIST) - February 4
HRAS Mutation Analysis – February 11
Chimerism/DNA Fingerprinting Analysis – February 18
PTEN Mutation Analysis – February 25
MYD88 Mutation Analysis – March 4
CD79B Mutation Analysis – March 11
CARD11 Mutation Analysis – March 18
NeoTYPE Lymphoma Profile – March 18
RUNX1 Mutation Analysis – March 25
NeoTYPE MDS/CMML Profile – April 1
CBL Mutation Analysis – April 1
SRSF2 Mutation Analysis – April 1
U2AF1 Mutation Analysis – April 1
ZRSR2 Mutation Analysis – April 1
NOTCH1 Mutation Analysis – May 1
NeoTYPE™ Spliceosome Mutation Profile – May 6
NeoTYPE™ AML Prognostic Profile, add RUNX1 – May 11
NeoTYPE™ CLL Prognostic Profile, add NOTCH1 – May 11
NeoTYPE™ Solid Tumors, add PTEN Mutation & FISH - May 11
HOXB13 Genotyping – May 13
EZH2 Mutation Analysis – May 20
TET2 Mutation Analysis – June 3
ACSF3R Mutation Analysis – June 17
PTPN11 Mutation Analysis – June 24
STAT3 Mutation Analysis – July 1
ETV6 Mutation Analysis – July 15
MLH1 Promoter Methylation Analysis – August 5
GNAS Mutation Analysis – August 12
MGMT Promoter Methylation Analysis – September 30
IHC Panels + ISH
ROS1 FISH – January 28
NeoSITE Melanoma FISH – March 25
Eosinophilia, MPN FISH (new) – April 8
AML, CLL, MDS FISH (revised) – April 8
PTEN FISH – May 7
IgH/MAFB t(14;20) – May 7
1p/19q Deletion FISH for Gliomas – July 15
High-Grade/Large B-Cell Lymphoma FISH Panel – November 4
XY FISH for Engraftment – November 4
MDM2 FISH for Liposarcoma – November 4
Heme IHC Panels (3 new & 6 expanded) – March 18
CMV ISH – August 26
High-Grade/Large B-Cell Lymphoma IHC Panel – November 4
FLOW
Relentless Innovation New Assays Launched in 2013/2014
IHC Panels + ISH
NEXT GEN SEQUENCING
Solid Tumor Profile
MDS Panel
CALR
11 11
Future Relentless Innovation
• NeoTYPE Next-Gen Cancer Profile (48 Genes, 54 Genes to follow)
• NeoSCORE Prostate Test (Plasma Based) - Diagnostic, Prognostic, Inform Therapy
- Based on licensed SVM technology
• Additional SVM-based NeoSCORE Tests – 2014 (Plasma Based) - Colon, Pancreatic
• Automated Cytogenetics Analysis System based on SVM
• Constant Stream of new Molecular Tests
12 12
Strategic Approach
• Relentless Innovation “Precision Medicine”
• Process Improvements Reimbursement-pressured industry
• Flexible Business Model Dynamic market
• Segmentation Tailored customer demands
• Engaged culture Operational excellence
13 13
Higher Productivity vs. Lower Reimbursement
(1) Productivity calculated as the average number of lab tests completed per month per laboratory FTE. (2) The expiration of the Medicare Technical Component (TC) Grandfather Clause took effect on 7/1/12 and resulted in an ~11% YoY Reduction in Avg Rev/Test.
47.3% 48.4% 46.1% 44.7% 44.6% 43.9% 44.5% 44.8% 45.2%
47.1% 47.2%
41.5% 43.2% 46.3% 45.9% 48.4%
50.0%
-23.4%
56.5%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%Q
4 0
9
Q1
10
Q2
10
Q3
10
Q4
10
Q1
11
Q2
11
Q3
11
Q4
11
Q1
12
Q2
12
Q3 1
2
Q4 1
2
Q1 1
3
Q2 1
3
Q3
13
Q4
13
Gross Margin % Cum Change in Avg Rev/Test(2) Cum Change in Productivity(1)
14 14
Lower Costs and Higher Profitability
Operating Cost per Test & Adj. EBITDA Margin
$723
$642 $642 $671
$649 $618
$576 $565 $555
$531 $512 $526 $482 $478 $464 $466 $439
-12%
-1% -2%
-5%
0% -1%
5% 6%
8%
12%
12%
6%
10% 11% 12% 13%
15%
-15%
-10%
-5%
0%
5%
10%
15%
20%
$0
$100
$200
$300
$400
$500
$600
$700
$800
Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413
Cogs Cost/Test G&A Net of R&D Cost/Test S&M Cost/TestR&D Cost/Test Total Cost/Test Adj EBITDA Margin %
15 15
Future Process Improvements
• “Digital Lab”
• Automated Platforms
• Lean Manufacturing
• Information Technology
16 16
Strategic Approach
• Relentless Innovation “Precision Medicine”
• Process Improvements Reimbursement-pressured industry
• Flexible Business Model Dynamic market
• Segmentation Tailored customer demands
• Engaged culture Operational excellence
17 17
Flexible Service Offering
• Cytogenetics
• Flow Cytometry --- Global or Technical Only
• Immunohistochemistry --- Global or Technical Only
• Digital Pathology --- Global or Technical Only
• FISH --- Global or Technical Only
• Molecular --- Individual genes, panels, Next Gen
• Information Technology, Informatics, Assay Development
18 18
Technical-Only Services
• NeoGenomics performs either global or the technical
component (and our partners perform the professional
component)
• Allows Community & Hospital-based pathologists to be involved
• Extensive menus for IHC, Flow Cytometry and FISH
• Extensive training and client education available
19 19
Flexibility through Facilities and Coverage
Sales Representatives Facilities
Irvine, CA
25k sf
Ft. Myers, FL
49k sf
Nashville, TN
5k sf
Tampa, FL
6k sf 27 Sales and Business
Development Professionals
covering the U.S.
20 20
Information Technology Flexibility
20
Online Ordering
• Request Orders Online and reduce overall error rates and increase Specimen Tracking and Logistics Visibility
• Integration of 3rd party utilities to streamline redundant processes and capture all necessary patient data in a centralized location
Remote Printing
• Remote accessioning capability
• Increased efficiency
Testing Alerts
• Faxing, Email and text notifications.
Bar Coding
• Sample tracking with bar codes
• Track specific Specimens with Bar-coding labels while supporting Specimen Tracking Needs
System Integrations
• System integrations/interfaces with EMR/EHR systems
• Capability of interfacing with Clients EMRs to maintain contiguous and closer to real time patient updates
• EMR Orders may be linked to the Online Orders Request to minimize redundancy
Web Based LIS System
• Software customizable to your workflow.
• Scalable as your practice grows.
Report Capabilities
• Interfacing of results via HL7 (any proprietary system)
• Secure Batch transmission of PDF reports
• Comprehensive Report Building pulling different methodologies into one page summary report.
• Available with any testing referred to Neo, not just bone marrow samples.
Access Control
• User Access Control (granular system access per user)
• Granular Client Access (Covance & Covance Sub Clients)
21 21
NeoGenomics - Current Market Share
22 22
More Industry Consolidation Dynamic Market
• Less than 5 publicly traded cancer Genetic Labs left in the U.S.
Date Acquiror Target Value Value/Revenue
6-12 LabCorp MEDTOX $250 2.2x
10-11 Miraca Caris Life Science 725 3.5x
3-11 Quest Celera 344 2.4x
2-11 Quest Athena 740 6.7x
1-11 Novartis Genoptix 470 1.6x
11-10 Sonic CBL Path 124 1.5x
10-10 GE Clarient 580 5.3x
9-10 LabCorp Genzyme Genetics 925 2.5x
Transactions – since 2010
23 23
Strategic Approach
• Relentless Innovation “Precision Medicine”
• Process Improvements Reimbursement-pressured industry
• Flexible Business Model Dynamic market
• Segmentation Tailored customer demands
• Engaged culture Operational excellence
24 24
Segmentation by Customer Type
Pathologists & Hospital Pathology Groups
• Sophisticated tools and tests to enable community Pathologists to practice
• Web-based Lab System & Innovative technical component (“tech-only”) services
• Ability to offer one-stop-shop cost effective testing
• Extensive training programs
Oncologists & Clinician Groups
• State of the art testing menus
• Comprehensive Disease Profiles
• Electronic interface to EMR Systems
Clinical Trials for BioPharma Industry
• Exclusive partnership with Covance to offer comprehensive WW clinical trials lab testing
25 25
Segmentation by Customer Type
NEO
Pathologists
Large Systems
Other Clinicians
Managed Care
Academic Centers
Oncologists Hospitals
BioPharma
26 26
BioPharma Segment
• Leverages Pathologists expertise, Lab systems, Tech-only
model, comprehensive menus for new segment.
• Ability to expand into world-wide markets
• Potential for developing companion diagnostics
27 27
Strategic Approach
• Relentless Innovation “Precision Medicine”
• Process Improvements Reimbursement-pressured industry
• Flexible Business Model Dynamic market
• Segmentation Tailored customer demands
• Engaged culture Operational excellence
28 28
Values
Quality
Integrity
Accountability
Teamwork Employee Focused
Customer Focused
Results Focused
29 29
30 30
Employee Satisfaction
Employee Survey
Results
2010 2011 2012 2013
Total Survey
Respondents 170 253 252
Overall Satisfaction 72% 81% 82% 91%
Would recommend Neo
as a good place to work 78% 92% 87% 90%
Willing to give extra
effort to help Neo
succeed
97%
Employee Retention 66% 79% 81% 86%
31 31
NeoGenomics Share Perfomance
32 NASDAQ: NEO
THANK YOU!