january’2016’ - stock picks, stock market investing | seeking alpha · 2016. 2. 29. ·...
TRANSCRIPT
January 2016
Safe Harbor Statement
Certain ma1ers discussed in this presenta7on and oral statements made from 7me to 7me by representa7ves of the Company may cons7tute forward-‐looking statements within the meaning of the Private Securi7es Li7ga7on Reform Act of 1995 and the Federal securi7es laws. Although the Company believes that the expecta7ons reflected in such forward-‐looking statements are based upon reasonable assump7ons, it can give no assurance that its expecta7ons will be achieved.
Forward-‐looking informa7on is subject to certain risks, trends and uncertain7es that could cause actual results to differ materially from those projected. Many of these factors are beyond the Company’s ability to control or predict. Important factors that may cause actual results to differ materially and that could impact the Company and the statements contained in this presenta7on can be found in the Company’s filings with the Securi7es and Exchange Commission including the Company’s Reports on Forms 10-‐Q for the quarter ended September 30, 2015 and 10-‐K for the year ended December 31, 2014. For forward-‐looking statements in this presenta7on, the Company claims the protec7on of the safe harbor for forward-‐looking statements contained in the Private Securi7es Li7ga7on Reform Act of 1995. The Company assumes no obliga7on to update or supplement any forward-‐looking statements as a result of new informa7on, future events, or otherwise.
Investment Highlights
• Stable core business with solid growth poten7al - Brands recognized worldwide (Bovie®, Aaron®, IDS™, ICON®) - Long-‐standing rela7onships with “Big 7” distributors
- Premier OEM partnerships
• Transforma7onal J-‐Plasma® surgical product targe7ng large and growing markets
• Robust R&D pipeline – significant product launches planned • State-‐of-‐the-‐art manufacturing facili7es in US and Europe;
manufacturing supplier in China
• Highly experienced management team
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Experienced Management Team
Execu1ve Joined Bovie Experience
Rob Gershon Chief Execu+ve Officer December 2013
Over 25 years of experience in health care
Jack McCarthy Chief Commercializa+on
Officer March 2014
Over 25 years of sales and marke7ng experience
Jay Ewers Chief Financial Officer June 2014
Over 30 years of financial management experience
Todd Hornsby Vice President of Sales August 2014
Over 14 years of medical device sales
Shawn Roman Vice President of Research
& Development October 2014
Over 15 years of R&D experience
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Representa7ve Core Products: Global Brand Equity “Bovie®” is referenced in all surgical procedures; it is a proprietary eponym
Electrosurgical ~ 60% Cauteries ~ 24%
Ligh1ng ~ 8%
• Design and develop specs to address partners’ innova7ons
*All figures are for the 9 months ended September 30, 2015. Total exceeds 100% as OEM is reported within Electrosurgical
OEM ~ 8%*
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J-‐Plasma ~ 4.5%
State-‐of-‐the-‐Art Manufacturing Footprint
• Three world-‐class manufacturing
facili7es - Clearwater, Fl. (owned) – Assembly,
integra7on, final tes7ng, packaging and
management of steriliza7on
- Bulgaria (owned) – Manufacturing and assembly of complex components; ini7al
tes7ng
- China (contracted) – Component
manufacturing
• Capacity to increase output from
exis7ng facili7es
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J-‐Plasma®: Transforma1onal Product
• Revolu7onary technology that ionizes helium to create stream of plasma for cupng and abla7on
• Precise cupng and coagula7on with limited thermal spread - Stable, thin, focused stream of ionized helium gas - Wide range of control with independent control of
plasma power and gas flow rate - No conduc7ve currents through the pa7ent during
surgery
• Allows surgeons to safely perform procedures on delicate structures such as:
• Protected by 20 patents:
- 9 issued; 11 pending
- Fallopian tubes - Ureters - Ovaries - Bowel
Recognized as an Innova7on of the Year by
The Society of Laparoscopic Surgeons
(SLS)
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J-‐Plasma® Energy Stream for Limited Thermal Damage*
• Clinical study compared levels of unintended thermal damage to peritoneal 7ssue (membrane lining the abdominal cavity) among other energy-‐based surgical tools vs J-‐Plasma®
• Red areas represent the
depth of thermal or energy damage each tool les below the 7ssue surface; blue areas represent unaffected 7ssue
• J-‐Plasma® demonstrated far
lowest amount of collateral thermal injury to healthy 7ssue surrounding the opera7ve site
*Reference: Pedroso J, Gu7errez M, Volker W. J-‐Plasma, monopolar pencil, argon beam and CO2 laser electrosurgery: compara7ve evalua7on of thermal spread in a porcine 7ssue model (white paper). Bovie Medical Corpora7on. June 2014 8
J-‐Plasma® Demonstra1on Video
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J-‐Plasma®: Compe11ve Advantages
Compara7ve Case Study: J-‐Plasma® in Endometriosis 600,000 procedures per year in US
Key Differences CO2 Laser J-‐Plasma® Trea1ng poten1al lesions Treats visible lesions only
Treats visible and poten7al lesions
Tac1le feedback No tac7le cupng feedback or maneuverability
Direct tac7le cupng feedback and maneuverability
Control of energy Requires laser safety backstop
Controlled energy: stream distance limited to surgical site
OR requirements Mul7ple specialized OR requirements (privileges, goggles,
techs, wet drapes, etc.)
No addi7onal OR resources required
Price Es7mated Capital ASP: $100,000+
Es7mated disposable hand piece ASP: $425+
Es7mated Capital ASP: $20,000
Es7mated disposable hand piece ASP: $375
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J-‐Plasma®: Poten1al Annual Procedures in Ini1al Targeted Special1es
2,038,000 440,000
Ini1al Targeted Special1es > $1 Billion TAM* -‐-‐ U.S. Only
GYN Procedures
Plas7c Surgery
Poten7al special7es to target in the short/medium term: • Cardiovascular and cardiothoracic • Urology • General surgery • ENT • Oncology
Sources: CDC, NIH, APGO, ASPS, ASAPS, AHA *Assumes $375 ASP for disposable hand piece; and $20,000 ASP per J-‐Plasma® generator 11
J-‐Plasma Commercializa1on Achievements for 9M15
• ~$1 million of sales for 9M15, vs $209,000 for all of 2014
• Direct salesforce hired and trained in early 2015, leading to rapid achievement across key metrics: – 62 generators in use – 132 surgeons using J-‐Plasma
– 121 Scrub POs – 59 Hospital VAC approvals
• 10+ White Papers
• In VAC approval process with addi7onal 64 hospitals 2016 will represent inflec1on point for J-‐Plasma, with daily sales from established user base
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Targe1ng New Special1es: Medical Advisory Board
• Board of surgeon thought-‐leaders to advise on rollout of J-‐Plasma for specific procedures in their special7es
• Target special7es from board to ini7ally include cardiovascular, cardiothoracic and urology
• Founding member: Dr. Vipul Patel, world renowned robo7c surgeon, Medical Director of Global Robo7cs Ins7tute, Florida
• Addi7onal members: • Dr. Husam H. Balkhy, Director in Minimally Invasive and Robot Cardiac Surgery, Duhossois
Center for Advanced Medicine, Chicago
• Dr. Robert J. Cerfolio, Sec7on Chief of Thoracic Surgery in the Division of Cardiothoracic Surgery at the University of Alabama Hospital in Birmingham
• Expect to have 6-‐9 surgeon members
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World-‐Class R&D Capability as Growth Catalyst
• World-‐class R&D capability
• Developing new products to complement J-‐Plasma® and boost growth in core business
• Six notable product launches in last 12 months:
• Value in patent and product poryolio can be realized with minimal expenditures
J-‐Plasma Pistol Grip Bovie® Ul7mate™ IDS-‐310 DERM 101/DERM 102 Freezpoint™
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Solid Balance Sheet to Fund Growth Strategies
• In March 2015 raised $11.5 million of proceeds
• Unrestricted cash and cash equivalents were $13.2 million at September 30, 2015
• Funds primarily earmarked for commercializa7on of J-‐Plasma® and growth of core business
• Visible pathway to profitability without need for addi7onal capital
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Growth Strategies
• Drive sales momentum of J-‐Plasma®/extend product line offering
• Launch new products that are complementary to J-‐Plasma®
• Grow Core business at a sustainable pace - Add new products that “fit” core competencies
- Leverage OEM rela7onships to grow current and new products
- Con7nue to penetrate new markets and expand interna7onally
• Commit to ongoing R&D investments to maintain market leadership and unlock poryolio value
• U7lize financial discipline in pricing and to improve margin performance
• Maintain a solid balance sheet which will fund future growth ini7a7ves
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Financial Appendix
Financial Posi1on: Assets
*All figures in thousands
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September 30,
December 31,
2015 2014
(Unaudited)
Current assets: Cash and cash equivalents $ 13,202 $ 5,733
Restricted cash 839 899
Trade accounts receivable, net 2,524 1,992
Inventories, net 6,130 5,727
Current portion of deposits 172 210
Prepaid expenses and other current assets 826 804
Total current assets 23,693 15,365
Property and equipment, net 6,985 6,947
Brand name and trademark 1,510 1,510
Purchased technology and license rights, net 350 431
Deposits, net of current portion 140 165
Other assets 444 415
Total assets $ 33,122 $ 24,833
Financial Posi1on: Liabili1es and Stockholders’ Equity
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September 30, December 31,2015 2014
Current liabilities: (unaudited)Accounts payable $ 2,341 $ 1,553 Accrued payroll 113 197 Accrued vacation 257 181 Current portion of mortgage note payable 239 239 Accrued and other liabilities 1,712 1,596 Total current liabilities 4,662 3,766 Mortgage note payable, net of current portion 2,994 3,173Deferred rents 20 23 Deferred tax liability 563 564 Derivative liabilities 266 12,613 Total liabilities 8,505 20,139 Series A 6% convertible preferred stock, par value $0.001; 3,500,000 shares authorized, zero issued and outstanding as of September 30, 2015
-- 3,190
Stockholders' equity:Series B convertible preferred stock, par value $.001; 3,588,139 issued and 1,975,639 outstanding as of September 30, 2015
2 --
Common stock, par value $.001 par value; 40,000,000 shares authorized; 27,194,251 issued and 27,051,172 outstanding as of September 30, 2015 and 17,995,409 issued and 17,852,330 outstanding as of December 31, 2014, respectively
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Additional paid-in capital 42,664 29,334Accumulated deficit (18,076) (27,848) Total stockholders' equity 24,617 1,504 Total liabilities and stockholders' equity $ 33,122 $ 24,833
Income Statement
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2015 2014 2015 2014
Sales $ 7,823 $ 6,788 $ 21,226 $ 20,214
Cost of sales 4,594 4,869 12,183 13,662
Gross profit 3,229 1,919 9,043 6,552
Other costs and expenses:
Research and development 583 368 1,534 1,019
Professional services 427 142 1,070 686
Salaries and related costs 1,929 1,653 5,749 3,980
Selling, general and administrative 2,103 2,123 6,325 4,923
Total other costs and expenses 5,042 4,286 14,678 10,608
Loss from operations (1,813) (2,367) (5,635) (4,056)
Interest expense, net (40) (41) (120) (111)
Change in fair value of liabilities, net 266 (1,676) 1,800 (9,820)
Total other income (expense), net 226 (1,717) 1,680 (9,931)
Loss before income taxes (1,587) (4,084) (3,955) (13,987)
Provision for (recovery of) income taxes, net -- 1,350 (8) 1,895
Net loss $ (1,587) $ (2,734) $ (3,963) $ (12,092)
Accretion on convertible preferred stock -- (242) (222) (668)Gain on conversion of warrants and preferred shares, net
-- -- 13,956 --
Net income (loss) attributable to common shareholders
$ (1,587) $ (2,976) $ 9,771 $ (12,760)
Income (loss) per share
Basic (0.06) (0.17) 0.42 (0.72)
Diluted (0.06) (0.17) 0.31 (0.72)Weighted average number of shares outstanding- basic
27,051 17,780 23,414 17,727
Weighted average number of shares outstanding - dilutive
27,051 17,780 26,346 17,727
September 30, September 30,
Three Months Ended Nine Months Ended
Reconcilia1on Between GAAP and Non-‐GAAP
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2015 2014 2015 2014(unaudited) (unaudited) (unaudited) (unaudited)
Net Income/(loss) GAAP Basis (1,587)$ (2,734)$ (3,963)$ (12,092)$ Accretion on convertible preferred stock - (242) (222) (668) Deemed dividend on conversion of warrants and Series A convertible preferred to Series B convertible preferred stock - - 13,956 - Net income/(loss) attributable to common shareholders (1,587)$ (2,976)$ 9,771$ (12,760)$ Net income/(loss) per share - basic (GAAP basis) (0.06)$ (0.17)$ 0.42$ (0.72)$
Other non-GAAP adjustments: (Gain)/loss on change in fair value of derivative liabilities (266)$ 1,676$ (1,800)$ 9,820$ Increase in inventory E&O reserve and other inventory adjustments -$ 796$ -$ 1,639$ CFO transition costs -$ -$ -$ 340$ A/R write off and other administrative charges -$ 175$ -$ 175$ Other administrative expenses -$ -$ -$ 43$ Accretion on convertible preferred shares -$ 242$ 222$ 668$ Tax impact on non-GAAP adjustments -$ (378)$ -$ (1,663)$ Gain on conversion of warrants and Series A convertible preferred to Series B convertible preferred stock - - (13,956) - Adjusted non-GAAP net income/(loss) (1,853)$ (465)$ (5,763)$ (1,738)$
Income/(loss) per share - basic on: (Note 1)
(Gain)/loss on change in fair value of derivative liabilities (0.01)$ 0.09$ (0.08)$ 0.55$ Increase in inventory E&O reserve and other inventory adjustments -$ 0.04$ -$ 0.09$ CFO transition costs -$ -$ -$ 0.02$ A/R write off and other administrative charges -$ 0.01$ -$ 0.01$ Other administrative expenses -$ -$ -$ -$ Accretion on convertible preferred shares -$ 0.01$ 0.01$ 0.04$ Tax impact on non-GAAP adjustments -$ (0.02)$ -$ (0.09)$ Deemed dividend on conversion of warrants and Series A convertible preferred to Series B convertible preferred stock - - (0.60) - Adjusted non-GAAP net (loss) per share -basic (0.07)$ (0.04)$ (0.25)$ (0.10)$
Weighted average number of shares outstanding - basic 27,051 17,780 23,414 17,727
(Note 1) Amounts reflected in the presentation of EPS calculations may be impacted by rounding
Three Months Ended Nine Months EndedSeptember 30, September 30,
J-‐Plasma® US-‐Only Market
Procedures # of Annual Procedures ASP
Endometriosis 600,000 $375 $ 225,000,000
Adhesiolysis 300,000 $ 375 $ 112,500,000
Myomectomy 65,000 $ 375 $ 24,375,000
Condylomas 360,000 $ 375 $ 135,000,000
Cesarean(Repeat) 280,000 $ 375 $ 105,000,000
Hysterectomy 433,000 $ 375 $ 162,000,000
Total GYN Procedures $ 764,250,000
Capital *5,000 $ 20,000 $ 100,000,000
Total GYN Available Market $ 864,250,000
Plas7cs: Skin Resurfacing 440,000 $ 375 $ 165,000,000
Total Available Market $ 1,029,250,000
Sources: CDC, NIH, APGO, ASPS, ASAPS,AHA* (5,000 hospitals) 22