corporate update - jefferies...a global, commercial stage medical technology company headquarters in...
TRANSCRIPT
(Nasdaq:EVAR)
Corporate Update
Simon Hubbert, CEO
Bill Kullback, CFO
June, 2015
Safe Harbor
This presentation contains forward-looking statements as that term is defined in the Private Securities Litigation Reform
Act of 1995, as amended. These forward-looking statements are based on management’s current expectations, but are
subject to risks and uncertainties that could cause actual results to differ materially from either historical or anticipated
results depending on a variety of factors. All statements contained in this presentation that do not describe historical facts
may constitute forward-looking statements. Statements that address activities, events or developments that we expect or
anticipate may occur in the future, including such things as our outlook, future capital expenditures, changes to the
composition or level of our revenues, cash flow and liquidity, compound annual growth rates (CAGR), business strategies,
competitive strengths, goals, the benefits of new initiatives, growth of our business and operations, plans and references
to future successes, are forward-looking statements. Also, when we use the words such as “anticipate”, “believe”,
“estimate”, “expect”, “intend”, “plan”, “probably”, or similar expressions, we are making forward-looking statements.
The following factors, among others, could cause actual results to differ from those set forth in the forward-looking
statements: risks and uncertainties relating to adverse changes in conditions in the global economy and volatility in the
capital markets, the development and commercialization of the Company’s products, the Company’s distribution network,
the cost and pricing of the Company’s products, physician education, manufacturing, competition, dependence on
collaborative partners and key suppliers, capital spending and funding policies, changes in governmental regulations,
intellectual property rights, litigation, and exposure to foreign currency fluctuations and other risk factors discussed from
time to time in the Company’s filings with the Securities and Exchange Commission (the “SEC”). These and other factors
are identified and described in more detail in the Company’s filings with the SEC, including, without limitation, the
Company’s recent Annual Report on Form 20-F and the Company’s other reports on Form 6-K.
All forward-looking statements in this presentation are made as of the date of this presentation. We do not undertake,
and expressly disclaim, any intent or duty to update these forward-looking statements whether as a result of new
information, future events or changes in expectations, other than as required by law.
This presentation is for information purposes only and does not constitute an offer of, or a solicitation to purchase or
subscribe for, any securities. You should make your own independent examination of us and consult your own
independent counsel, business advisors, tax advisors, investment advisors or other authorized advisors as to the legal,
business, tax, investment or any other matters pertaining to us or our securities.
2
An innovative vascular device company
Lombard Medical at a Glance
A global, commercial stage medical
technology company
Headquarters in Irvine, CA, manufacturing in
Oxfordshire, UK
Focused on the $1.6B abdominal aortic
aneurysm (“AAA”) repair market
Aorfix: The only globally approved AAA
stent-graft for aortic neck angles up to 90 degrees
Commercially focused in US, Europe, Japan
‒ FDA approved, formal launch Nov 2013
‒ Regulatory approval in Japan, launch in Sept 2014
NASDAQ IPO on Apr. 25, 2014 (ticker: EVAR) raised $55M
Objective – To offer Endovascular AAA repair to more patients than our
competitors 3
1 Medtech Ventures: Aortic Intervention Market (2014)
Global addressable market of $1.6B growing at a CAGR of 6% annually
EVAR Market is Attractive with Strong Growth
4
~500,000 patients diagnosed annually
Untreated AAA can rupture and cause death
Current AAA treatment
‒ Minimally invasive EVAR = 75% of procedures
‒ Open repair surgery = 25% of procedures
EVAR is growing vs. open surgical repair
‒ Lower mortality rate
‒ Lower morbidity/fewer complications
‒ Shorter hospital stay (approx. 3 days vs. 9 days)
‒ Shorter recovery period (2 weeks vs. 12 weeks)
Tortuous Anatomy is a significant issue
‒ 20% of AAA patients have neck angles
>60 degrees
‒ 10% of AAA patients have tortuous iliac vessels
EVAR market drivers
‒ Aging patient population
‒ Increase in AAA screening
‒ Better outcome vs. surgery
$1.9 Billion by 20181
‒ 2015 WW market = $1.6B1
‒ 6% CAGR growth annually1
$1.4$1.5
$1.6$1.7
$1.8 $1.9
2013 2014 2015 2016 2017 2018
EVAR MarketOverview of AAA
$B
illio
ns
Flexible halO™ Design Offers Unrivalled Flexibility
Competitors' “Z” type metallic ring designs are more rigid, may kink in tortuous anatomy increasing re-interventions and poor
clinical outcomes
5
Source: Images courtesy of Musgrove Park Hospital, Taunton
Unique Design to Address Tortuous Anatomy
Aorfix can provide better outcomes for patients with tortuous vascular anatomy
Proprietary halO Stent Technology™ featuring helical and circular design
promotes flexibility
6
Before procedure 12 months after
procedure
Company AAA Stent-GraftMax Approved US
Neck Angle Indication
Lombard Aorfix ≤ 90°
Medtronic Endurant ≤ 60°
Cook Zenith ≤ 60°
Gore Excluder ≤ 60°
Endologix Powerlink ≤ 60°
TriVascular Ovation ≤ 60°
Broadest Global Indication
7
“Potential to expand physicians’
on-label practice by ~20%”
13th leading cause of
death in US and the 10th
leading cause of death in
US men aged 65 years
and older
Each year, 200,000
patients are diagnosed
with AAA
High EVAR volumes and
higher selling price
2nd largest standalone EVAR
market in the world growing at
an average rate of 18%
Highly developed and lucrative
market with high barriers to
entry
~400 physicians at 200 clinics
performing EVAR and it is
estimated that approximately
55% of Japanese AAA
patients are treated using this
method
Market was estimated to be
$477M in 2014; growing at an
average growth rate of 6%
Germany and the United
Kingdom are two of the
three largest and the
most receptive EVAR
markets
Lombard is Focused on Three Key Markets
8
United States
~ $714M1
Europe~ $477M2
Japan
~ $158M2
Global EVAR Market Landscape
1 iData Research Inc.: US Market for Peripheral Vascular Devices and Accessories (2013)2 Medtech Ventures: Aortic Intervention Market (2014)
US Commercial Strategy
US is the largest AAA market valued
at an estimated $714M in 2014
Aorfix FDA approved - full commercial
launch November 2013
Build out experienced sales force to 35 in mid-2015
‒ Recruiting experienced EVAR reps or those with strong endovascular
experience
‒ Equipped with most advanced field training tools
Aorfix cases completed in almost 150 US centers since launch
using least invasive technique across all neck angles:
‒ ~50% below 60 degree neck angulation
‒ More than half performed percutaneously
9
1 Medtech Ventures: Aortic Intervention Market (2014)
Japanese Commercial Strategy
Japanese Market Dynamics
‒ World’s second largest AAA market
‒ ~8,000 AAA procedures in 2014
‒ Well reimbursed ~$14,0001
Launch of Aorfix in Japan
‒ Partnering with Medico’s Hirata
‒ Medico’s Hirata has significant experience in EVAR and a direct sales force trained in the Japanese AAA market due to a prior relationship with another AAA stent-graft company
‒ Unique regulatory approval for Aorfix to treat angulation ≤90 degrees granted in August 2014
‒ Formal launch in September 2014. Strong start, tracking toward 5% market share in Q2/3 2015
‒ Approval of latest Aorflex™ delivery system received in Q1 2015
10
Spain and Italy
are supported by
a sales manager
in each country
Direct-markets with sales
team of 10
Expect to
increase sales
force in Germany
Direct
Distributor
Spain
U.K.
Germany
Italy
Well Established European Union Strategy
Four main EU markets are: UK,
Germany, Spain and Italy
‒ Direct-markets: UK and Germany
‒ Key distribution markets: Spain and Italy
‒ Primarily utilize country-specific
distributors for smaller EU countries
Aorfix high angle approval in 2009 –
7% UK market share in 3 years
Western Europe direct market sales
increased 14% in 2014 to $3.4M
11
0
0.5
1
1.5
2
2.5
3
3.5
4
Q1 2013 Q1 2014 Q1 2015
$M
0
2
4
6
8
10
12
14
16
18
20
2012 2013 2014 2015
$M
Lombard Revenue Contribution by Geography
12
Accelerating Revenue from US and Japan Launch
JP Market
ROW Distributor
Markets
US Market
W Europe
Direct Markets
US Market
W Europe Direct Markets
2015 Projection ($18-20M)
JP Market
ROW Distributor
Markets
Platform Technology with Strong Development Pipeline
Aorfix™Plus size range extension FDA approved to 36mm
‒ Ability to treat patients with larger anatomies
‒ Allows treatment of up to 10% more patients with Aorfix
‒ US launch of 34mm stent graft in Q1 2015
Next-generation delivery systems
‒ Lower profile design – treat patients with narrow access vessels
‒ Exchange sheath – reduce vessel trauma
‒ Intuitive & compact – ease of use
‒ Regulatory submission of next generation IntelliFlex™LP system anticipated 2H 2015 with expected approval within 90 days of submission
Thoracic stent-graft
‒ Potential to develop technology to expand indications within endovascular surgery
• To treat thoracic aneurysms (TEVAR)
• To treat complex short neck anatomy (FEVAR) 13
New Product Development
iData Research Inc.: US Market for Peripheral Vascular Devices and Accessories (2013)
Market Size
EU US
Units
Thoracic EVAR (TEVAR) Market
Aorfix technology can be applied to TEVAR segment
US market forecasted to grow by 79% from 2013 – 2018
Aorfix flexibility should offer significant advantages over competitors in
thoracic arch
14
TEVAR Stent Business Opportunity
$287
2013E 2018E
$450
23,504
2013E
38,395
2018E
$M
1.Aortic Endografts Market 2015 Report
2.Company Estimates based on currently available published studies
Fenestrated EVAR (FEVAR) Market
Aorfix technology has the potential to address the FEVAR segment
Aorfix technology may offer significant advantages over competitors
‒ Compliant construction allows fenestrations to have mobility and reduces ‘No-Go’ areas for fenestration
‒ Off-the-shelf devices could treat many more anatomies
‒ Flexible construction eases angulation restrictions placed on existing commercial FEVAR IFUs
Fenestrated and branched aortic endografts in 2014 totaled $50M in global sales and is expected to grow1
Several studies have shown that the average incidence of short necks (<10mm) is at least 20% of the $1.4B aortic endograft market2
15
$280M market opportunity which is currently underserved
FEVAR Business Opportunity
Financial Highlights – Q1 2015 and Guidance
Total 2015 first quarter Aorfix revenue grew 66% to $3.4M compared to revenue of $2.1M in the first quarter of 2014. US Aorfix revenue grew to $1.1M in the first quarter of 2015, up 125% from $0.5M in the first quarter of 2014.
Gross margin for the 2015 first quarter was 46% compared to 34% for the prior year period.
In April, the Company entered into a $26M secured term loan facility with Oxford Finance LLC. Lombard Medical received $11M in proceeds at the loan closing on April 24 with additional funds becoming available upon achievement of near-term revenue milestones. Cash at March 31, 2015 was $45.1M.
FY 2015 Guidance
‒ Revenues of $18M - $20M
‒ Procedure numbers to more than double in four key markets (US, Japan, Germany, UK)
16
Conclusion: A Differentiated Growth Opportunity in AAA
17
Focused on attractive $1.6B global EVAR market forecast to grow at
6% CAGRLarge Addressable
Market Opportunity
Aorfix is the only globally-approved endovascular stent-graft for neck
angulations up to 90°
Platform technology can expand into new indications and areas
Approved and Highly
Differentiated Product
Strong clinical data from US IDE study (PYTHAGORAS)Strong Supporting
Clinical Data
Strong Aorfix revenue growth
Public market track record and $45.1M in cash (3/31/15)
Strong Financial
Profile
Highly experienced management team with significant medtech experienceExperienced
Management Team
Geography – expand US sales force and accelerate roll out, launch in
Japan, expand presence in Europe and Asia
Product – Enhanced Aorfix delivery systems; thoracic stent graft
Clear Strategy
for Growth