medistim – a niche marketleader within ultrasound technology
TRANSCRIPT
Medistim –a niche market leader within ultrasound technology
DNB Healthcare Conference
15th December 2020
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Kari Krogstad
PRESIDENT & CEO
Thomas Jakobsen
CFO
Disclaimer
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The information included in this Presentation contains certain forward-looking statements thataddress activities, events or developments that Medistim ASA (“the Company”) expects, projects,believes or anticipates will or may occur in the future. These statements are based on variousassumptions made by the Company, which are beyond its control and are subject to certain additionalrisks and uncertainties. The Company is subject to a large number of risk factors including but notlimited to economic and market conditions in the geographic areas and markets where Medistim is orwill be operating, IP risks, clinical development risks, regulatory risks, fluctuations in currencyexchange rates, and changes in governmental regulations. For a further description of other relevantrisk factors, we refer to Medistim’s Annual Report for 2019. As a result of these and other risk factors,actual events and our actual results may differ materially from those indicated in or implied by suchforward-looking statements. The reservation is also made that inaccuracies or mistakes may occur inthis information given above about current status of the Company or its business. Any reliance on theinformation above is at the risk of the reader, and Medistim disclaims any and all liability in thisrespect.
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● Medistim today
● Medical need and technology
● The market
● Financial performance
● Growth strategy
● Impact from the COVID-19 pandemic
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AGENDA
01 Medistim Today
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Medistim- the market leader in ultrasonic surgical guidance and quality assessment
• Established in 1984
• Headquarters in Oslo, Norway
• Subsidiaries in the USA, Germany, Spain, UK, Denmark and Norway
• Global distribution network in more than 65 countries
• Ultrasound devices made for intraoperative transit time flow measurement (TTFM) and high frequency ultrasound imaging (HFUS) in cardiac, vascular and transplant surgery
• 3,000 systems on the market
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Extensively endorsed by clinical guidelines
DGG=Deutschen Gesellschaft fur Gefasschirurgie, ASE= American Sociaty ofEchocardiography, SCA= Society of Cardiovascular Anesthesiology, STS= Society ofThoracic Surgeons, ACCF = American College of Cardiology Foundation, AHA =American Heart Association, EACVI= European society of vardiovascular imaging,EACTS = European Association of CardioThoracic Surgery, ESC = European Society ofCardiology, ACCA= Acute Cardiovascular Care Associations, EACPR= EuropeanAssociation for Cardiovascular Prevention & Rehabilitation, EHRA= European HeartRhythm Association, HFA= Heart Failure Association NICE = National Institute forHealth and Care Excellence
Transit time flow measurement (TTFM)
• 2010, 2014 & 2018 by ESC & EACTS
• 2011 & 2018 NICE
• ACCA, EACPR, EACVI, EHRA, HFA
Epiaortic ultrasound
• 2007 by ASE, SCA & STS
• 2011 by ACCF, AHA, AHA, AATS, SCA STS
• 2015 by ASE & EACVI
• 2018 by ESC & EACTS
Vascular Access surgery
• 2011 Guidelines by DGG
• 2018 ESVS Clinical Practice Guidelines
Peripheral Bypass
• 2019 SVS, ESVS and WFVS Guidelines
Carotid Endarterectomy (CEA)
• 2018 ESVS Guidelines
Cardiac surgery Vascular surgery
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3rd party products
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Revenues 2019(Mill NOK)
Medistim Products 3rd Party Products
In Norway, Medistim is representing a number ofmedical device companies as a distributor of products withinsurgery and ophthalmology
3rd party % of total Medistim business in 2019:
• 19% of revenues
• 11% of EBIT
EBIT 2019(Mill NOK)
Medistim Products 3rd Party Products
68,1
295,6
9,9
79,9
02 Medical need and technology
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How to ensure a coronary bypass graft is patent?
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tΔ = t1 – t2 = proportional to blood flow (Q)
- measure blood flow with TTFM
Anastomosis
Stenosis
AnastomosisBypass graft
Instant feedback on graft functionality-TTFM data before and after graft revision
READY TO MEASURE FLOW:Medistim flow probe connected to a coronary bypass graft
INDICATORS OF A SUCCESSFUL GRAFT:Well functioning LIMA-LAD graft withsmooth flow curve, good mean flow and low resistance (PI)
INDICATORS OF A SUBOPTIMAL GRAFT:Spiky flow curve, low mean flow, borderline PI
AFTER REVISION: High flow, low PI and regular flow curve
Surgeon decides to revisethe proximal anastomosis
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Evaluate ascendingaorta prior to any
manipulation
Evaluate conduitsand coronary targets
Assess graft functionalityPI<5, DF>50%, Q>15ml/min
Evaluate morphologyof anastomosis
Reduce risk of strokes Optimize graft strategyVerify graft functionality…revise
when needed
Ultrasonic Surgical Guidance & Quality AssessmentA NEW WORKFLOW – AN EXPANDED VALUE PROPOSITION – A NEW STANDARD OF CARE
Improve surgical outcome, demonstrate qualityand increase cost efficiency
Restricted anastomosisSoft plaque
LAD with stenosis
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Surgical guidance & quality assessment is needed in vascular surgery as well
Assess graft patency in bypass and evaluate anaperipheralstomosis
Guide CEA and assess for technical imperfections
Quantify flow for guidance during AV access surgery
Carotid Endarterectomy (CEA)Peripheral Bypass AV Access
MiraQ – the latest generation
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A platform built for the future - Focus on ease of use - Application specific versions for cardiac & vascular surgery
Europe
2014 2016 2017 2019
USA China Canada & Japan
Field upgradableto imaging
The Medistim products
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MiraQ™
TTFM Systems
VeriQ™
TTFM & HFUS Ultrasound Systems
MiraQ™ VeriQC™
• Designed for intraoperative TTFM during cardiac, vascular and transplant surgery
• Fast, accurate and reproducible• Easy-to-interpret data to assist the surgeon• The system displays a real-time flow curve, the Mean
Flow (ml/min), Pulsatility Index (PI) and Diastolic Filling percentage (DF%)
• Combines high frequency ultrasound imaging (HFUS) and TTFM in a single system
• Specifically designed for cardiac and vascular surgeons• Combines quantitative, functional data (TTFM] with
qualitative, morphological data (HFUS)• The HFUS imaging modality improves the quality assessment
obtained from TTFM alone
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Probes are sold as consumables
Medistim Cardiac TTFM probes
Medistim Vascular TTFM probes
Medistim L15 High-frequency Ultrasound Imaging probe
Blood flow is measured with probes that are re-usable 50 times and are designed for different blood vessel sizes
and are adapted for Cardiac or Vascular use
To minimize manipulation of fragile vessels, the VascularTTFM probes are designed with a locking slide
The L15 HFUS probe is unique in being approved for directcontact with cardiac tissue, allowing more insight and
better image quality
The L15’s small probe head allows for acces to smallincisions not able to be reached by larger imaging probes
Alternative business models
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(USA only, MiraQ excluded)
System and probes are placed at thehospital free of charge
→ Ownership with Medistim
Customer pays per procedure and buyssmart cards that activate the system for one operation
→ Flow procedure: $250
→ Flow and imaging procedure: $470
System is leased out over a period of time
→ Ownership with Medistim
Flow probes are sold as consumables
→ € 1.800
→ Reusable 50x
Imaging probe is sold as consumable
→ € 10.000
→ Reusable 100x
Capital sales model Pay Per Procedure model Lease model
System is sold as capital equipment
→ Flow: € 45.000
→ Flow and imaging: € 90.000
Flow probes are sold as consumables
→ € 1.800
→ Reusable 50x
Imaging probe is sold as consumable
→ € 10.000
→ Reusable 100x
03 The market
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Large untapped global coronary bypass market
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> 700,000 CABG procedures annually
Arrested heart (on-pump) Beating heart (off-pump)
Medistim owns about 33% of these proceduresCompetitors own about 7%
Medistim share of penetrated market Percent of market still open
Market value (TTFM only) NOK 1 BillionMarket value (Imaging &TTFM) NOK 2 Billion
Market share
80% 20% 80% 60%
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Cardiovascular diseases (CVDs) continue to be the number onecause of death globally
CABG remains the gold standard for multi-vessel disease
Developing economies expected to drive CABG growth
• Taking an estimated 17.9 million lives each year (2016)
• This is 1/3 of all deaths globally
• Obesity and diabetes risk factors are increasing
• The population size of 60+ years is increasing
• PCI (stents) covers > 80% of the total number ofrevascularizationprocedures today
• Large, randomized clinicaltrials document superior results with CABG over PCI for multi-vessel disease(SYNTAX 2013, Bernadetto2016, NOBLE 2016, EXCEL 2016)
• OECD countries do 47 CABG per 100,000 inhabitants
• China and India do <5 CABG per 100,000 inhabitants
Market trends
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• 220,000 procedures• 23 % market share
(314M people)
• 30,000 procedures• 7 % market share
(143M people)
• 15,000 procedures• > 80 % market share
(127M people)
• 100,000 procedures• <1 % market share
(1.3B people)
• 60,000 procedures• < 1 % market share
(194M people)
• 54,000 procedures• > 70 % market share
(82M people)
• 17,000 procedures• < 10 % market share
(62M people)
• 50,000 procedures• > 40 % market share
(1.3B people)
USA
Brazil
Germany
UK
India
Japan
Russia
China
Technology adoption varies widely
Applications Size of keymarkets Clinical needs
CEA surgery >200 000
Reduce risk of death and stroke
Improve cost-effectiveness
Peripheral bypass surgery >200 000
Improve long-term graftpatency
Improve quality of life
AV access surgery >200 000
Secure maturation ofshunt/fistula
Reduce risk of cardiacfailure and hand ischemia
Liver transplant surgery
20 000 (globally)
Increase success rate for a costly procedure
Global vascular market is > 600 000 proceduresannually
> 1 Billion NOK ofmarket opportunity for Medistim
Large global vascular market
04 Financial performance
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Financial highlights
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● 367.7 mill NOK in revenues (2019)
● Strong revenue and profit growth
● EBIT margin of 24.7 %
● Strong cash flow
● No net long term liabilities
● Equity ratio of 70.5%
● MCAP of > 4 Bill NOK
● Dividend paid since IPO in 2004
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OPERATING PROFIT (EBIT)(CAGR 18% 2011 – 2019)
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2,50 DIVIDEND PER SHARE (NOK)(CAGR 12% 2011 – 2019)
Two consecutive quarters (Q2 and Q3) with COVID-19 pandemic effect neutralize the record sales from Q1
YTD currency neutral sales development of own products:
o decrease in the U.S. with 10.3% and RoW 32.1%
o growth in Asia, up 11.5%
o flat in Europe (own products)
Sales of vascular portfolio up 20.2%
Sales of imaging portfolio down 3.5%
3rd party products down 11.2%
YTD EBIT is all time high for the period with an EBIT margin of 27.3%
Year to date September
YTD Sept 2020 % Y o Y
Revenue MNOK 268.9 (268.1) +0.3%
EBIT MNOK 73.3 (70.0) +4.7%
Currency +7.3%
Number of units sold:
Flow systems 106 +39.5%
Imaging systems 45 -33.8%
Flow probes 4 450 -15.9%
Imaging probes 76 -10.6%
Procedures (USA) 42 160 -9.8%
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05 Growth strategy
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Medistim growth strategy
Emerginghigh-growth economies(e.g. BRIC)
DevelopingMedistim markets(e.g. USA, UK, France)
StrongMedistim markets(e.g. Jp, Nordic,Germany)>50% CABG share
CABGsurgery
(2 BNOK)
Vascularsurgery
(>1 BNOK)
Other openheart surgery
(1BNOK)
1. Convert the routine Flow market to a Flow-and-Imaging market by establishing Surgical Guidance and Quality Assessment as the new standard of care through
→ Early adopter & KOL support
→ REQUEST study
→ Ease conversion from flow to imaging with MiraQ
2. Achieve routine use of both Flow and Imaging by fighting ignorance, indifference and ease-of-use objections through
→ Clinical marketing, guidelines and educational programs
→ Product innovation for ease of use
→ Increased sales force capacity
3. Offer an entry-level solution to reach emerging, price-sensitive, high-growth markets
4. Build and strengthen position in vascular surgery→ Dedicated system (MiraQ Vascular) & probes
→ Build position with societies and KOLs
5. Expand our direct market coverageAPPLICATION AREAS
GEO
GRA
PHIE
S
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06 The COVID-19 pandemic
The COVID-19 pandemic
No significant negative implications on Medistim’s operations
o Healthy employees
o Intact supply chain
o Production running as normal
o Cost containment
o Best operating profit for the first three quarters ever
o Solid MNOK 54.4 cash from operations YTD September, giving a total cash position of 114.9
Negative effects on sales revenues in Q2 and Q3
o Lock-downs, travel and hospital access restrictions
o Hospital resources and capacity focused on, and keeping ready for, COVID-19 patients
o Elective surgeries postponed
o Medistim consumables sales negatively affected by the reduced activity level
o New sales projects delayed due to less access to customers
Light at the end of the tunnel
o Serious medical conditions such as heart disease and risk of stroke cannot be left untreated for too long
o Lack of treatment capacity and reluctance amongst patients to seek care have had serious consequences
o But still, uncertainties due to current development in infection rates and deaths
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Appendix
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Implementing the strategyto establish TTFM & HFUS
as the new standard of care
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Prof. DP TaggartOxford University
Prof. G DiGiammarcoUniversity of Chieti
Dr. J PuskasMount Sinai St Luke’s
Dr. D WendtUniversity of Essen
Dr. G TrachiotisGeorge Washington University
Dr. T KieserUniversity of Calgary
Prof. DP TaggartOxford University
Prof. AP KappeteinErasmus MC Rotterdam
Clinical Registry Study
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Restricted anastomosisSoft plaque
LAD with stenosis
REQUEST protocol
Evaluate ascendingaorta prior to any
manipulation
Evaluatemorphology of
conduits & coronary targets
Assess graftfunctionality PI<5,
DF>50%, Q>15ml/min
Evaluate morphologyof anastomosis
1 2 3 4
(J Thorac Cardiovasc Surg 2020;159:1283-92)
Four endpoints:
1. Any CHANGE in planned surgical procedure
2. Type of CHANGE (aorta, coronary target, conduit, anastomosis)
3. Number and reason for anastomotic revisions
4. MACCE (during hospitalization)
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• HFUS of aorta, conduits & coronary targets: Changes in 25% of patients
• TTFM & HFUS of anastomosis: Revision rate 3%
MACCE 1.9%• Mortality 0.6%• Stroke 0.9%• Repeat
revascularization 0.1%
REQUEST conclusions
Quality AssessmentSurgical Guidance In-hospital Outcome
In the hands of experienced cardiac surgeons (40% off-pump CABG and 55% of patients with 2 or more arterial grafts) andstate-of-the-art surgical procedure, HFUS & TTFM for surgical guidance and graft assessment was associated with a 25% changeto planned surgical strategy, 3% graft revision rate and low-level in-hospital MACCE rates; especially mortality and stroke.They should therefore be considered as a routine procedural aspect during CABG.
Implementing the strategy to achieveroutine use in the USA
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Performance USA
Revenues in USD are down 10.3% YTD September due to COVID-19, but recovered somewhat with 6.5% growth in Q3
Total number of procedures are down 9.9% YTD reflecting the lower surgical activity level:- Flow procedures down 10.4%- Imaging procedures down 7.4%
Capital systems sales still good:YTD September there was 23 capital sales compared to 25 last year
Continued growth in new customers- 10 (6) new accounts in Q3- 18 (22) new accounts YTD
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Number of procedures per yearCAGR (2013 – 2019) = 12.3%
Number of procedures per quarter
Implementing the strategy to buildand strengthen our position
in vascular surgery
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Vascular business performance
Carotid Endarterectomy
Peripheral Bypass
AV Access
Results YTD September
33.9 MNOK in sales revenues, a growth of 20.2%
Vascular sales revenues make up 15.2% of total sales of own productso Nordic countries & Germany are leading markets
The CIDAC study was published in March 2020o Comparing angiography to ultrasound as
completion control in Carotid Endarterectomy in 150 patients
o Ultrasound came out better than angiography
o Detected more of the major defects
o Lead to more intraoperative revisions
o Had higher inter-observer reliability
Clinical engagements:→ REQUEST with 1016 patients
→ CiDAC – CEA study with 150 patients
Medistim History
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Pioneers in TTFM→ First flowmeter 1994
→ QuickFitTM probes 2001
→ European Guidelines 2010
→ UK’s NICE endorsement 2011
→ 3,000 systems in clinical use worldwide
Product History→ VeriQTM (flow only) 2003
→ VeriQ CTM (flow & imaging) 2009
→ MiraQTM Cardiac 2014
→ MiraQTM Vascular 2015
→ MiraQTM Ultimate 2015
CIDAC
Oslo, Norway
Shareholders list
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(per 10.12.2020)
Rank Shareholder Holding Stake Citizenship Type of account
1 INTERTRADE SHIPPING AS 2 000 000 10,9 % Norway Ordinary2 SALVESEN & THAMS INVEST AS 1 862 500 10,2 % Norway Ordinary3 VERDIPAPIRFOND ODIN NORDEN 1 800 000 9,8 % Norway Ordinary4 State Street Bank and Trust Comp 1 170 611 6,4 % United States Nominee5 Skandinaviska Enskilda Banken AB 1 034 107 5,6 % Sweden Nominee6 FOLLUM CAPITAL AS 970 000 5,3 % Norway Ordinary7 Skandinaviska Enskilda Banken AB 517 028 2,8 % Denmark Nominee8 BUANES 479 936 2,6 % Norway Ordinary9 State Street Bank and Trust Comp 446 221 2,4 % United States Nominee10 FD INVT TR: FD SRS INTL SML CP FD 382 845 2,1 % United States Ordinary11 SKANDINAVISKA ENSKILDA BANKEN AB 378 446 2,1 % Luxembourg Nominee12 Skandinaviska Enskilda Banken AB 304 723 1,7 % Sweden Nominee13 State Street Bank and Trust Comp 299 569 1,6 % United States Nominee14 Danske Bank A/S 258 310 1,4 % Denmark Nominee15 State Street Bank and Trust Comp 254 120 1,4 % United States Nominee16 The Bank of New York Mellon SA/NV 250 000 1,4 % Denmark Nominee17 BNP Paribas Securities Services 239 188 1,3 % Italy Nominee18 Skandinaviska Enskilda Banken AB 238 314 1,3 % Sweden Nominee19 Danske Invest Norge Vekst 228 000 1,2 % Norway Ordinary20 The Bank of New York Mellon SA/NV 216 500 1,2 % Ireland Nominee
Total 20 largest shareholders 13 330 418 72,7 %
Total number of shares: 18 337 336
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