the new surmodics leading peripheral ......† includes revenue from creagh medical and normedix...
TRANSCRIPT
THE NEW SURMODICSLEADING PERIPHERAL VASCULAR DEVICE INNOVATION
Gary MaharajPresident and CEO
Andy LaFrenceVice President of Finance, Information Systems, and CFO
MAY 2017
SAFE HARBOR
Some of the statements made during this presentation may be considered forward-looking statements. Statements that are not
historical or current facts, including statements about beliefs and expectations regarding our performance in the near- and long-
term, including our revenue, earnings and cash flow expectations for fiscal 2017, our fiscal 2017 priorities, our strategy to become
a provider of whole-product solutions, including our SurVeil drug-coated balloon and other proprietary products being developed,
are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and important factors could
cause actual results to differ materially from those anticipated, including (1) our ability to successfully develop, obtain regulatory
approval for, and commercialize our SurVeil drug-coated balloon product; (2) our reliance on third parties (including our customers
and licensees) and their failure to successfully develop, obtain regulatory approval for, market and sell products incorporating our
technologies; (3) our ability to successfully identify, acquire, and integrate target companies, and achieve expected benefits from
acquisitions that are consummated; (4) possible adverse market conditions and possible adverse impacts on our cash flows, and
(5) the factors identified under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended
September 30, 2016, and updated in our subsequent reports filed with the SEC. These reports are available in the Investors
section of our website at www.surmodics.com.
THE NEW SURMODICS
Leverageable Platform
Strong cash flow generation from core businesses and
leverageable platform
New Product Innovations
Well-stocked R&D pipeline with multiple new product launches
planned over next 5 years
Strong Balance Sheet
Attractive cash flows to fund growth strategy with $46.3 million of cash and
investments as of March 31, 2017
Whole-Product Solutions
Designs, develops, manufactures differentiated products for uptake
and distribution by key medical device customers
Experienced Leadership Team
Passionate, entrepreneurial, disciplined and experienced
management team
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OUR BUSINESS FOCUS
Leveraging science and expertise to offer world-class coatings and drug delivery
IN VITRO DIAGNOSTICSSURFACE TECHNOLOGIES
Providing critical components for in vitro diagnostic tests and microarrays
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WHOLE-PRODUCT SOLUTIONS
Developing highly differentiated vascular device solutions
Xtreme™Catheter
Surmodics PTA Balloon Catheters
SurVeil™ DrugCoated Balloon
Serene® Hydrophilic
Coating
© 2017 Surmodics, Inc. CONFIDENTIAL All rights reserved.
CAUTION SurVeil™ Drug-Coated Balloon is an investigational device. Limited by Federal (United States) law to investigational use.
SURMODICS VISION
VALUE PROPOSITION: We are an innovator – with the technology, design capability and agility of a startup and the operational excellence, manufacturing and process engineering to create sustainable margins for long-term growth and profitability.
MISSION: To improve the treatment and detection of disease.
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INVESTMENT THESIS
INCREASE R&DINVESTMENT
DRIVE COREREVENUE
INCREASESHAREHOLDER
VALUENEW PRODUCTINNOVATIONS
Continue to generate maximum revenue growth
from our core medical device and in vitro diagnostics
businesses
Execute medical device whole-product solutions provider
strategy via organic R&D and operational excellence
Well-stocked R&D pipeline leads to multiple differentiated product launches and uptake by
customers
Optimize strategic investments for long-term value creation,
with the short-term generation of earnings = BALANCE
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THE MARKET NEED
F O C U S E D O N P E R I P H E R A L V A S C U L A R
PATIENTS OUTCOMES CUSTOMERS
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WHOLE-PRODUCT SOLUTIONS
TOTAL MARKET OPPORTUNITIES
Pedal
Radial
FemoralSuperficial Femoral Artery (SFA).035 / .018
Arteriovenous(AV) Access30 ATM RBP*
Coronary
.014
INTERVENTIONAL ACCESSDRUG COATED BALLOONS
$2 Billion
BALLOON AND CATHETER TECHNOLOGIES
Below-the-Knee (BTK)
.014
*Demonstration of capabilities only. *Atmospheric Pressure (ATM), Rated-Burst-Pressure (RBP)8
CUSTOMER OPTIONS
I N T E R N A L D E V E L O P M E N T F U L L Y D E V E L O P E D P R O D U C T S O L U T I O N
C U S T O M E R
- OR -
Surmodics designs, develops, manufactures and maintains its product innovations through the entire product lifecycle. Customers receive a fully developed and de-risked product solution with demonstrated clinical effectiveness and secured regulatory approvals.
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COMPETITIVE ADVANTAGE
STRATEGICS
INTERNAL R&D
OEMs START-UPS
DESIGN SERVICES TECHNOLOGY STARTUPS
Efforts focused on key strategic interests
Likely slow progress due to competing priorities
Ability to work like a start-up and move quickly
Focused on broader market needs and unsolved problems
LIM
ITAT
ION
SSO
LUTI
ON
Design to spec services
Limited technology capability
Independent problem solving
Fully staffed, in-house drug delivery and coatings technology
Limited capabilities
Limited resources
Focused on specific technology solution
Post-acquisition brain-drain
Comprehensive capabilities
Well-resourced
Ability to identify broad spectrum of market needs
Complete product lifecycle support
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M E D I C A L D E V I C E B U S I N E S S M O D E L E VO LU T I O N
RELEVANCE
IDEAS / NEEDS
TECHNOLOGY CAPABILITIES
CLINICAL / REGULATORY
VALUE
SHAREHOLDER VALUE
TECHNOLOGY ENABLER
TECHNOLOGY ENABLER + MANUFACTURING
DEVICE DEVELOPER
PAST PREVIOUS CURRENT FUTURE
DESIGN, DEVELOP & MANUFACTURING
Customer-Driven Customer-Driven Customer-Driven Clinically-Driven
Coatings Technology Coatings & Contract Services Whole-Product Solutions Design, Develop & Produce
Master File Reference Data Regulatory Support Assist in Regulatory Filings Regulatory Cleared Device
Royalty / License Model Royalty / License + Services Royalty / License + Device Manufactured Product
💲 💲💲 💲💲💲 💲💲💲💲💲
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SURMODICS SURVEIL™ DCB
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• Proprietary drug / excipient coating provides increased drug effect with lower drug dosage
• Paclitaxel drug dose (2.0 µg/mm2) provides wider therapeutic window which creates higher margin of safety
• Improved coating consistency and durability protect against distal embolization from particulates
• U.S. Early Feasibility Study (EFS) enrollment completed
• Planning to initiate the next phase of clinical study to obtain data for US and OUS regulatory approvals
Uniform drug topcoatPaclitaxel + proprietary excipient2.0 µg/mm² drug load360°coating coverage
0.035” OTW PTA platform4–7 mm x 40–150 mm
Shaft coatingSerene® hydrophilic coating
Proprietary PhotoLink® basecoat
© 2017 Surmodics, Inc. CONFIDENTIAL All rights reserved.
CAUTION SurVeil™ Drug-Coated Balloon is an investigational device. Limited by Federal (United States) law to investigational use.
“Some may see Surmodics’ decision to initiate human trials on their
drug-coated balloon in the U.S. as a bold move. Those of us who have
followed the development of this product are confident in its
potential given its performance in pre-clinical studies.”
— Renu Virmani, MD
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H I G H LY D I F F E R E N T I AT E D B A L LO O N C AT H E T E RS
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• Highest-pressure conventional catheters on the market
• Provide optimal deliverability, trackability and conformability
• Broad range of sizes for various clinical applications
• XtremeTM technology utilizes proprietary coiled/braided shaft construction
• Ultra-thin walled delivery technology with unsurpassed flexibility, kink-resistance, torque control and radial strength
• Control every step of the process to produce high-quality, reliable balloon catheters under rigorous testing
State-of-the-art facility with capacity for balloon catheter design, development and high-volume commercial manufacture
Surmodics PTA Balloon
Catheters
Xtreme™
Catheter
Hemostasis
Valve
PRODUCT MILESTONES
CAUTION: SurVeilTM Drug-Coated Balloon is an investigational device. Limited by Federal (United States) law to investigational use.
FY 2017 GOALS
FY 2018 – FY 2020
• Initiate clinical trials for SurVeil™ DCB
• Obtain regulatory clearance of .014” and .018” balloon catheters
• Obtain regulatory clearance of first microcatheter
• Complete manufacturing scale-up at Irish facility
• Complete BTK DCB preclinical development; demonstrate early clinical safety & effectiveness
• Assess clinical viability of AV access drug coated balloon
• Obtain regulatory clearances on at least eight new-to-the-world vascular devices in areas of unmet clinical needs
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OUR TEAM
S U R M O D I C S TA L E N T
1 in 3 employees is a scientist, engineer, or manufacturing specialist
15 percent of employees have advanced degrees
8 yearsis the average employee tenure
335 patentsU.S. and International patents held as of Sept. 2016
41 patentsAverage number of patents issued to SRDX annually
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MANAGEMENT TEAM
Gregg S. Sutton
Vice President of Research and
Development
(2016)
Gary R. Maharaj
President and Chief Executive Officer
(2010)
Andrew D. C. LaFrence
Vice President of Finance and Information
Systems and Chief Financial Officer
(2013)
Bryan K. Phillips
Senior Vice President of Legal and Human
Resources, General Counsel and Secretary
(2005)
Timothy J. Arens
Vice President of Corporate Development
and Strategy
(2007)
Charles W. Olson
Senior Vice President of Commercial and
Business Development, Medical Devices
(2001)
Joseph J. Stich
Vice President and General
Manager, In Vitro Diagnostics (2010)
Thomas Greaney
Executive Vice President of
Medical Devices
(2015)
INSERT PHOTO
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OUR ADVISORS
C L I N I C A L & S C I E N T I F I C A D V I S O R S
Ken Rosenfield, MD Chair Advisory Board — Interventional CardiologyMassachusetts General Hospital
Gary Ansel, MD, FACC Clinical Advisor — Interventional CardiologyOhio Health Research
Laura Mauri, MD, MSc Clinical Research Advisor— Interventional CardiologyBrigham and Women’s Hospital; HCRI
Marianne Brodmann MD, PhD Clinical Research Advisor— Interventional CardiologyDivision of Angiology Medical University Graz
Michael Jaff, DO Clinical Advisor — Vascular MedicineNewton Wellesley Hospital
Mike Dake, MDClinical Advisor — Interventional RadiologyStanford Health Care
Chris White, MD, FACC, FAHA, FSCAI, FESCClinical Advisor — Interventional CardiologyOchsner Medical Center
Renu Virmani, MD, FACCClinical Research Advisor — Cardiovascular PathologistCVPath
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F INANCIALS
FINANCIAL PERFORMANCE
INSERT PHOTO
$20.0
$18.2 $17.8 $17.5
Q3 2016 Q4 2016 Q1 2017 Q2 2017
QUARTERLY REVENUE (MILLIONS)
$57.4 $61.9
$71.4 $65.0 –$68.0
2014 2015 2016 2017E
ANNUAL REVENUE (MILLIONS)
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FINANCIALS BY SEGMENTMISSION: To improve the treatment and detection of disease.
Strong balance sheet and attractive cash flows to fund growth strategy
• $46.3 million of cash/investments as of March 31, 2017
• Operating cash flow of $25.2 million and adjusted EBITDA of $26.5 million in fiscal 2016
M E D I C A L D E V I C E S
75%
C O R E B U S I N E S S R E V E N U E
I V DB U S I N E S S
25%
MEDICAL DEVICE IN VITRO DIAGNOSTICS
† Includes revenue from Creagh Medical and NorMedix
$43.1M$45.9M
$53.2M
0
10
20
30
40
50
60
2014 2015 2016†
REVENUE (MILLIONS)
$14.4M$16.0M
$18.2M
0
2
4
6
8
10
12
14
16
18
20
2014 2015 2016
REVENUE (MILLIONS)
Growth 7%4% 16% Growth 11%(4%) 14%
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2017 GUIDANCE
Total Revenue: $65 million to $68 million
Diluted Earnings (Loss) per Share: $(0.02) to $0.08
Non-GAAP Earnings per Share: $0.15 to $0.25
Capital allocation in fiscal 2017 to invest in research and development is consistent with execution of our whole-product solutions strategy
2017 Financial Guidance
Long Term Objectives
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THE NEW SURMODICS
Leverageable Platform
Strong cash flow generation from core businesses and
leverageable platform
New Product Innovations
Well-stocked R&D pipeline with multiple new product launches
planned over next 5 years
Strong Balance Sheet
Attractive cash flows to fund growth strategy with $46.3 million of cash and
investments as of March 31, 2017
Whole-Product Solutions
Designs, develops, manufactures differentiated products for uptake
and distribution by key medical device customers
Experienced Leadership Team
Passionate, entrepreneurial, disciplined and experienced
management team
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I N V E S T O R R E L AT I O N SFor additional inquiries, please contact:
Andy LaFrence • 952-500-7062