stifel 2019 healthcare conference · 2019-11-18 · guidewires, cto / sto devices, and hemodynamics...
TRANSCRIPT
©2019 Cardiovascular Systems, Inc. All Rights Reserved.
Stifel2019 Healthcare ConferenceNovember 19, 2019
Safe HarborFORWARD LOOKING STATEMENTS
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Report Act of 1995, which are
provided under the protection of the safe harbor for forward-looking statements provided by that Act. For example, statements in this
presentation regarding CSI’s strategy; growth; future financial measurements and investments; product development plans, milestones
and introductions; geographic expansion; clinical trials and evidence; professional education efforts; and market estimates and
opportunities, are forward-looking statements. These statements involve risks and uncertainties that could cause results differ materially
from those projected, including, but not limited to, those described in CSI’s filings with the Securities and Exchange Commission, including
its most recent annual report on Form 10-K and subsequent quarterly and annual reports. CSI encourages you to consider all of these
risks, uncertainties and other factors carefully in evaluating the forward-looking statements contained in this presentation. As a result of
these matters, changes in facts, assumptions not being realized or other circumstances, CSI’s actual results may differ materially from the
expected results discussed in the forward-looking statements contained in this presentation. The forward-looking statements contained in
this presentation are made only as of the date of this presentation, and CSI undertakes no obligation to update them to reflect subsequent
events or circumstances.
FINANCIAL INFORMATION
This presentation includes calculations or figures that have been prepared internally and have not been reviewed or audited by CSI’s
independent registered accounting firm. Use of different methods for preparing, calculating or presenting information may lead to
differences, which may be material.
2
Driving Sustainable GrowthBroaden Our Value Streams
Financial Goal: FY19 - FY23 CAGR of 15% - 18%
Revenue of $435M - $500M in FY23
Financial strength and the talent to execute
Grow and Protect
the Core Business
Innovation Drives
Incremental Growth
Global Expansion Accelerates
Growth of Core Business
Sustain Market Leadership
10+% Growth in Core Business
Launch 20+ New Products
$70M - $100M in FY23
OrbusNeich and Medikit
$25M - $50M in FY23
3
Fiscal 2019 Revenue Growth of 14.3%
New Product,
$3.9
$248 Million
Core OAS New Product International
New Product Revenue
$3.9 million
Drivers
Sapphire II 1.0 mm PTCA
Teleport Microcatheter
Zilient Peripheral Guidewire
International Revenue
$7.9 million
Drivers
Launched OAS in 10
countries
Over 2,000 OAS procedures
Core OAS Revenue
$236.2 million
10% increase
4
Key Events & Milestones
FY19A FY20E FY21E
Sold 80,650 OAS
International revenue = $7.9M
Launched OAS in SE Asia, Europe
and Middle East
Certified 120 OUS physicians
Launched Classic Crown and
ViperWire Flex Tip in Japan
New product revenue = $3.9 million
Launched Teleport Microcatheter
Launched ViperCath XC
Launched Peripheral ViperWire with
Flex Tip
Radial full market release
Exchangeable limited market release
81% consolidated gross margin
Enrolled first patient in REACH PVI
Enrollment of ECLIPSE passes 950
Pre-submission meetings with FDA
for hemodynamic support
Completed $350M shelf filing
WIRION acquisition
LIBERTY 360 3-Year Data
• Launch OAS in up to 10 new countries
• Certify >120 international physicians
• International revenue = $10M-$11M
• New product launches:
PAD Exchangeable full market release
CAD Nitinol ViperWire Flex Tip
• PAD Next Gen OAS with GlideAssist
• PAD JADE angioplasty balloons
• Sapphire 1.0mm over-the-wire
• Sapphire NC Plus 4.5-5.0mm
• REACH PVI enrollment completion
• ECLIPSE enrollment reaches 1500
• Hemodynamic support - First in Human
• International revenue = $15-$17.5M
• Launch OAS in Canada and other
countries
• Japan peripheral first enrollment
• ECLIPSE enrollment complete
• REACH PVI data release
• US IDE Small Vessel first enrollment
• Manufacturing transfer of WIRION
• WIRION launch in U.S.
• CAD ScoreFlex NC in U.S.
• PAD radial toolkit
5
Portfolio expansion will drive a
>4X increasein CSI’s addressable market
FY19 FY23
Diversification Accelerates Growth
• Millennium Research Group (2018 December) Medtech360 Market Analysis - Interventional Cardiology Devices – US –2019
• Millennium Research Group (2018 December) Medtech360 Market Analysis – Peripheral Vascular Devices – US – 2019• Millennium Research Group (2017 December) Medtech360 Market Analysis – Cardiac Assist Devices– US – 2018• CSI Internal Estimates
• * Coronary markets include device revenue attributed to PTCA balloon catheters, microcatheters / guidecatheters, PTCA guidewires, CTO / STO devices, and hemodynamics pumps. Peripheral markets include device revenue attributed to lower extremity (iliac, fempop, infrapop) endovascular procedures for PTA guidewires, catheters / sheaths, embolic protection devices, CTO / STO devices, and PTA balloon catheters
Broadens Value Streams
6
~$3.7B
$650M
CSI’s Addressable Markets (US)
Interventional Support Devices
Atherectomy
Hemodynamic Support
Current Market Dynamics Favor InnovationLarge Under-Served and Under-Treated Disease States
7
• Heart Disease and Stroke Statistics- 2019 Update: A report from the American Heart Association. Circulation. 2019;139:e56–e528• Millennium Research Group (2018 December) Medtech360 Market Analysis - Interventional Cardiology Devices – US – 2019• Millennium Research Group (2018 December) Medtech360 Market Analysis – Peripheral Vascular Devices – US – 2019• Bortnick, et. al. Am J Cardiol 2014;113:573-579; iData Research (2018 March) U.S, CSI Internal Estimates• Allie DE , et al. (n.d.). 24-carat gold, 14-carat gold, or platinum standards in the treatment of critical limb ischemia: bypass surgery or endovascular intervention? J Endovsc Ther. 2009
Coronary Artery DiseaseGrowing proportion of coronary
interventions represented by complex
or complex high-risk PCIs
16-18
million
People living with coronary
artery disease
18-20
million
People living with peripheral
artery disease in the U.S. with
2 million+ patients suffering
from critical limb ischemia
370,000Deaths annually from coronary
artery disease>740K Lower extremity PVIs
Peripheral Artery DiseaseSignificantly under-diagnosed and
under-treated patient populations
160K 525KComplex or complex
high-risk PCIsAmputations per year
Launched Q1 FY19
Radial is a Core Competitive AdvantageEnabling a Complete Peripheral Intervention from the Radial Artery
Extended Length Orbital Atherectomy
System with Low 5Fr Profile
Launched Q2 FY19 Expected Launch Early FY21
Exclusive route of access
for CSI complementary to
tibial/pedal
Expansion in portfolio of
radial support devices
Radial peripheral interventions
expand access to care and
can improve procedural
recovery time
Expected Launch Early FY21Expected Launch Early FY21
Extended length
Guidewires
Extended length
PTA Balloons
Extended length
Exchange Catheters
Extended length Radial
Access Sheaths
8
Grow and Protect
the Core Business
Supporting Complete Leg RevascularizationExchangeable Series with GlideAssist® – Our Most Advanced OAS on the Market
Patient and economic benefits with more efficient procedures aligned to market
dynamics
Future Portfolio: New 1.0 mm crown for small vessel / below-the-ankle lesions
and a larger crown intended for larger vessels like the common femoral and
iliac arteries
GlideAssist to facilitate tracking, repositioning and removal of OAD through
challenging anatomy
Exchangeable cartridges with different catheter lengths and crown options to
optimally treat patients with multi-level disease (seen ~50% of the time)
within the same procedure
Ease-of-Use Enhancements to Handle: Backloadable system facilitating easier
wire exchanges and improved tactile feel
9
Grow and Protect
the Core Business
Leadership in Clinical Evidence
600Physicians
5000+Patients
7000Lesions
Grow and Protect
the Core Business
10
ECLIPSE TrialGenerating Level One Evidence to Impact Guidelines
2000Patients with Severely
Calcified Lesions
2nd generation DES implantation
and optimization
2nd generation DES implantation
and optimization
1. Post-PCI in-stent MSA by OCT (N=~500 in imaging sub-study)
2. 1-year TVF (all subjects)1o Endpoints
2o Endpoints 1. Procedural Success: Successful stent delivery (all subjects)
2. Strategy Success: Procedural success without crossover
1.25 mm Classic Crown followed by
balloon pre-dilation
Orbital Atherectomy Strategy
Conventional and/or specialty balloons
per operator discretion
Conventional Angioplasty Strategy
Principal Investigators
Study Chairman
Randomize
1:1
Ajay Kirtane, MD; Philippe Généreux, MD;
Gregg W. Stone, MD
~500 subjects in OCT cohort
OAS >1 mm2 superior MSA vs. POBAMSA
All subjects
OAS >5% reduction in TVF vs. POBATVF
11
Primary Endpoints
Grow and Protect
the Core Business
Consistent Reimbursement
FacilityInpatient/
OutpatientProcedure 2020 Reimbursement % Change from 2019
Hospital Inpatient PAD $11,400 - $20,548 4.4% - 4.5%
Hospital Inpatient CAD $10,542 - $19,874 4.2% - 1.7%
Hospital Outpatient PAD/CAD $9,907 - $15,938 2.5% - 3.8%
Non-Hospital Outpatient/OBL PAD (ATK) $11,582 - $14,891 (6.9)% - (7.1)%
Non-Hospital Outpatient/OBL PAD (BTK) $11,626 - $14,476 (6.6)% - (5.0)%
$0
$5,000
$10,000
$15,000
$20,000
PAD OBL
PTA Ath/PTA
Stent Ath/Stent
$0
$5,000
$10,000
$15,000
$20,000
PAD Hospital Outpatient
PTA Ath/PTA
Stent Ath/Stent
$0
$5,000
$10,000
$15,000
$20,000
CAD Inpatient
PCI PCI/BMS PCI/DES
$0
$5,000
$10,000
$15,000
$20,000
CAD Outpatient
PTCA Ath/PTCA
Stent Ath/Stent
MS-DRG 246, 247, 248, 249, 250, 251, 252, 253, 254; CPT® Codes 37225, 37227,
37229, 37231, 92924, 92933; C-APCs 5193,5194; HCPCS Code C9602
Payment amounts based on National Medicare Averages and will vary by provider.
Grow and Protect
the Core Business
12
Expansion of the Complex Coronary ToolkitDrives Incremental Revenue Opportunity Per Case
Coronary Diamondback 360®
with GlideAssist®Sapphire® Expansion
ScoreFlex NC
Sapphire® Balloons
Teleport® Microcatheter
Launched FY19Launched FY19
• Sapphire SC II PRO 1.0-4.0mm
• Sapphire NC Plus 2.0-4.0mm
Launched FY19
Expected Launches FY20
• Sapphire SC II PRO 1.0mm OTW
• Sapphire NC Plus 4.5-5.0mm
Expected Launch FY21
Adding Essentials of
the Complex PCI Toolkit
Increasing the Clinical Utility
of the Sapphire Portfolio in
the Near-Term
Continuing to Innovate around
the Complex Patient Long-Term
ViperWire Advance® with Flex Tip
13
Launched Q1 FY20
Innovation Drives
Incremental Growth
WIRION® Embolic Protection SystemSupporting Our Commitment to Complex Patients
14• Millennium Research Group (2018 December) Medtech360 Market Analysis – Peripheral Vascular Devices – US – 2019• CSI Internal Estimates
• Easier to use and more versatile than competing EPDs with
clearance for use with any peripheral atherectomy device and any
0.014” guidewire
• Demonstrated safety and non-inferiority to pre-specificed
performance goals in capturing debris with low adverse event rates
in WISE LE study
• Platform enables future innovation for potential BTK and Radial
applications
Share-Taking Differentiated Technology
Commercialization expected in FY21 following completion of the manufacturing transfer from Gardia Medical
Broadens value streams in $50M market, 50,000 devices used in the U.S.
Complements CSI’s future directional atherectomy platform
Provides assurance to physicians not using atherectomy today due to
concern of distal emboli
Synergistic with CSI Strategy and Mission
Protecting Patients During PVIs
Embolic debris can be associated with all types of peripheral vascular
intervention procedures
EPDs are typically used when treating vessels located above the knee with
long lesions, high plaque burden, and poor run off
Can provide additional assurance when treating complex peripheral
interventions and lesions
Innovation Drives
Incremental Growth
Global Distribution Network
MediKit
OrbusNeich
Key
CSI Direct Sales
ST. PAUL
Corporate Headquarters
• ≈ 800 employees
• United States direct sales
force includes 200 quota
reps and 100+ clinical
specialists
HONG KONG
Corporate Headquarters
• ≈ 600 employees
• Supplies medical devices
in more than 60 countries
on six continents
• Exclusive distributor for
CSI outside U.S. and
Japan
TOKYO
Corporate Headquarters
• ≈ 1,000 employees
• Exclusive distributor for
CSI in Japan
Global Expansion Accelerates
Growth of Core Business
15
Steady Cadence of New Geographies
16
OUS Launches
FY18 FY19 FY20E
Co
ron
ary
• Japan • Hong Kong*
• Kingdom of Saudi Arabia
• Malaysia*
• Singapore*
• United Arab Emirates
• EU
• Indonesia
• Kuwait
• Lebanon
• New Zealand
• Thailand
• Vietnam
Pe
rip
he
ral
• France
• Germany
• Hong Kong*
• Malaysia*
• Singapore*
• Spain
• Switzerland
• EU (Austria, Belgium, Czech
Republic, Denmark, Finland,
Iceland, Ireland, Italy,
Netherlands, Norway,
Romania, Sweden, UK)
• Indonesia
• Kingdom of Saudi Arabia
• Lebanon
• New Zealand
• Thailand
• United Arab Emirates
• Vietnam
1 9 Up to 10
FY19 - FY23 Revenue Growth
Targeting $25M - $50M in International Revenue in FY23
$1.8M
$7.9M
$10M-$11M
$15M - $17.5M
$25M - $50M
FY18 FY19 FY20E FY21E FY23E
Bold – OAS launched
* Coronary and Peripheral OAS launched
Italic – Anticipated OAS regulatory approval
Global Expansion Accelerates
Growth of Core Business
Platform for Growth
~$250MFY19-FY23
R&D Investments
Maintain focus on current customer, vessel
preparation and procedure support
Organic growth and opportunistic portfolio
management
R&D investments increase to 14%-17%
of revenues in FY21
Gross margins in the range of 78%-80% in
FY21
Launch 20 new products by FY23
17
Cardiovascular Systems, Inc. Creating Shareholder Value
Leveraging a
Strong Core Business
A Compelling
Growth Strategy
Creating
Competitive Advantage
Financially Strong
with the Team and
Talent to Win
Expanding into
new geographic markets
Driving market leading
performance in orbital
atherectomy
Launching an innovative
portfolio of new products
Positive cash flow, strong
cash position and no
long-term debt
Sustaining double digit
growth
with strong gross margins
Positioned to invest
in organic growth
A Mission driven organization
with the leadership and
talent to succeed
Innovation and robust
medical evidence
Highest quality
products, services
and relationships
Medical education
and superior clinical
support
Serving large and
growing markets
Proprietary
core technology
Improving outcomes for
complex coronary and
peripheral artery disease
18
Appendix: Q1 FY20 Highlights
Highlights
Financial
Revenue Growth +15% vs. LY
Gross Margin 80.4%
SGA Expenses +13% to $46.8M
R&D Expenses +46% to $10.8M
Net Loss of $(5.8)M
Cash and marketable securities
$105M
No long-term debt
Operational - Peripheral
• Strong case support drove
strength in hospitals and office
based labs
• OAS innovation – pedal, tibial,
radial access - including
increased adoption of 5Fr radial
access device and launch of
exchangeable PAD device are
expanding treatment options for
physicians
• Three-year results of LIBERTY
360° study presented at AMP
Operational – Coronary
• Continued adoption of coronary
toolkit featuring OAS with
GlideAssist, 1.0mm Sapphire
angioplasty balloons and
Teleport Microcatheter
• 60% of coronary accounts
ordered procedure support
devices
• FDA approval of nitinol
ViperWire with Flex Tip
• Increased number of dedicated
coronary reps to 30
• Achieved 20% market share in
Japan
• ECLIPSE enrollment >1000
Other
• Sold ≈21,200 OAS units
• Certified 79 international
physicians
• Hosted product pipeline update
at TCT highlighting how
innovation expands our
addressable markets. Radial
and exchangeable peripheral
OAS broaden our competitive
advantage. Directional
atherectomy targets large ATK
atherectomy market. Shared
pVAD images and angiogram of
animal study. Reiterated FY23
revenue target of $435M-$500M
19
Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20
Appendix: Q1 FY20 Financial Results ($ in millions)
Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20
$15.0$16.0
$18.2
$20.0$19.0
$48.3$45.2$44.2
$41.2
$45.5
Worldwide Peripheral Revenue Growth Worldwide Coronary Revenue Growth
Gross Margin
Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20
80.3%80.8%80.9%81.2% 80.4%
Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20
Cash and Marketable Securities
$105.0$113.9 $119.2 $115.7 $122.7
10%
growth
in Q1
26%
growth
in Q1
20
Appendix: Consolidated Statements of Operations
Dollars in thousands, except per share and share amounts
22
Investor Contact:
Jack Nielsen
651-202-4919
CSI®, Diamondback®, Diamondback 360®,
GlideAssist®, ViperWire®, WIRION® and
ViperWire Advance® are trademarks of
Cardiovascular Systems, Inc.
© 2019 Cardiovascular Systems, Inc.
OrbusNeich®, Teleport® and Sapphire® are
trademarks of OrbusNeich Medical, Inc.
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