january 2017 · • gyn onc • oncology • ent • vascular inial targeted speciales > $2...
TRANSCRIPT
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January2017
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SafeHarborStatement
Certainma1ersdiscussedinthispresenta7onandoralstatementsmadefrom7meto7mebyrepresenta7vesoftheCompanymaycons7tuteforward-lookingstatementswithinthemeaningofthePrivateSecuri7esLi7ga7onReformActof1995andtheFederalsecuri7eslaws.AlthoughtheCompanybelievesthattheexpecta7onsreflectedinsuchforward-lookingstatementsarebaseduponreasonableassump7ons,itcangivenoassurancethatitsexpecta7onswillbeachieved.
Forward-lookinginforma7onissubjecttocertainrisks,trendsanduncertain7esthatcouldcauseactualresultstodiffermateriallyfromthoseprojected.ManyofthesefactorsarebeyondtheCompany’sabilitytocontrolorpredict.ImportantfactorsthatmaycauseactualresultstodiffermateriallyandthatcouldimpacttheCompanyandthestatementscontainedinthispresenta7oncanbefoundintheCompany’sfilingswiththeSecuri7esandExchangeCommissionincludingtheCompany’sReportonForm10-QforthequarterendedSeptember30,2016,and10-KfortheyearendedDecember31,2015.Forforward-lookingstatementsinthispresenta7on,theCompanyclaimstheprotec7onofthesafeharborforforward-lookingstatementscontainedinthePrivateSecuri7esLi7ga7onReformActof1995.TheCompanyassumesnoobliga7ontoupdateorsupplementanyforward-lookingstatementsasaresultofnewinforma7on,futureevents,orotherwise.
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CompanySnapshot
Core OEM
Growth
• Privatelabelelectrosurgicalmanufacturing
• Customers:Largemedical
technologycompanies
• J-Plasma
• PlazXact• Futurenewproducts• Directandchannelpartners
• Electrosurgical• Cauteries• Ligh7ngSolu7ons• Soldthroughdistribu7on
YTDRevenue:$2.5M
YTDRevenue:$20.3M YTDRevenue:$4.4M
CoreProductExamples OEMProductExamples
GrowthProductExamples
• Advancedenergy-basedmedicaldevicecompany• Specializesindeveloping,manufacturingandmarke7ngofelectrosurgicalproducts
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ExperiencedManagementTeam
Execu<ve JoinedBovie Representa<vePreviousExperience
RobGershonChiefExecu+veOfficer December2013
JayEwersChiefFinancialOfficer June2014
ToddHornsbyVicePresidentofSales August2014
ShawnRomanVicePresidentofResearch&
DevelopmentOctober2014
4
RobSaronPresidentandDirector January1978
MosheCitronowiczSeniorVicePresident October1993
YearsofRelevantExperience
28Yrs.
34Yrs.
15+Yrs.
15Yrs.
35Yrs.
30Yrs. KCRTechnologies Sequen<alInforma<onSystems
JackMcCarthyChiefCommercializa+onOfficer March2014 28Yrs.
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InvestmentHighlights
5
GrowingCoreandOEMBusinessesinElectrosurgerywithGlobalFootprint
Transforma7onalJ-Plasma®SurgicalProductTarge7ngLargeandGrowingMarkets
RobustR&DPipeline
StrongDirectSalesforceandHighProfileChannelPartnersforGrowthSegment
HighlyExperiencedManagementTeam
HighGrowth(+28%YTD2016)andExpandingGrossMargin
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StrongMomentuminCoreBusiness
• Boviehasuniquebrandposi7onwithglobalnamerecogni7on
• Long-standingrela7onshipswith“Big7”distributors• Newproduct&privatelabellaunchesdriveincrementalgrowth
• Ac7velytarge7ngnewmarketopportuni7es(e.g.,animalhealth)
• Predictablerevenuegenerator
6
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AdvancingOEMBusiness
• InboundOEMrequestsfromindustry’stopmanufacturers
• Staggeredcustomercontractstosmoothrevenueinflows
• Benefitsfromjointdevelopmentac7vi7es
• Designanddevelopspecstoaddresspartners’innova7ons
• Producefinishedproducts
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2,038,000
1,947,038
695,171
GYNProcedures
SurgicalPlas7csProcedures
Aesthe7cPlas7csProcedures
Poten7alspecial7estotargetintheshort/mediumterm:• Cardiac• Thoracic• Urology• Generalsurgery
Sources:CDC,NIH,APGO,ASPS,ASAPS,AHA,ASPS*Assumes$375ASPfordisposablehandpiece,and$25,000ASPperJ-Plasmagenerator 8
• GYNONC• Oncology• ENT• Vascular
Ini<alTargetedSpecial<es>$2BillionTAM*--U.S.Only
SignificantMarketGrowthOpportuni7es
J-Plasma PlazXact
1,414,900
190,600
27,60022,700
1,257,600
Knee Shoulder Elbow Ankle
FuturePoten<alMarketApplica<on
Arthroplas<cProceduresfor:
U.S.andEUOrthopedicArthroplastyProcedureVolumes
Sources:MeddevicetrackerreportdatedAugust2016Note:2016Eprocedurevolumes
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• Revolu7onarytechnologyionizesheliumtocreatestreamofplasma• Precisecusng,coagula7onandabla7onwithlimitedthermalspread
- Stable,thin,focusedstreamofionizedheliumgas- Widerangeofcontrol- Noconduc7vecurrentsthroughthepa7entduringsurgery
• Allowssurgeonstosafelyperformproceduresondelicatestructuressuchas:
-FallopianTubes -Ureters -Bowel
-Esophagus -Ovaries-LymphNodes
• Protectedby38patents:
- 13USand3foreignissued
- 15USand7foreignpending
RecognizedasanInnova7onoftheYearby
TheSocietyofLaparoendoscopic
Surgeons(SLS)3YearsinaRow
9
J-Plasma®:Transforma7onalProduct
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J-Plasma®EnergyStreamforLimitedThermalDamage*
• Clinicalstudycomparedlevelsofunintendedthermaldamagetoperitoneal7ssue(membraneliningtheabdominalcavity)amongotherenergy-basedsurgicaltoolsvsJ-Plasma®
• Redareasrepresentthe
depthofthermalorenergydamageeachtoolleubelowthe7ssuesurface;blueareasrepresentunaffected7ssue
• J-Plasma®demonstratedfar
lowestamountofcollateralthermalinjurytohealthy7ssuesurroundingtheopera7vesite
*Reference:PedrosoJ,Gu7errezM,VolkerW.J-Plasma,monopolarpencil,argonbeamandCO2laserelectrosurgery:compara7veevalua7onofthermalspreadinaporcine7ssuemodel(whitepaper).BovieMedicalCorpora7on.June2014 10
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J-Plasma®Demonstra<onVideo
11
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J-Plasma®:Compe<<veAdvantages
Compara7veCaseStudy:J-Plasma®inEndometriosis600,000proceduresperyearinUS
KeyDifferences CO2Laser J-Plasma®Trea<ngpoten<allesions Treatsvisiblelesionsonly
Treatsvisibleandpoten7allesions
Tac<lefeedback Notac7lecusngfeedbackormaneuverability
Directtac7lecusngfeedbackandmaneuverability
Controlofenergy Requireslasersafetybackstop
Controlledenergy:streamdistancelimitedtosurgicalsite
ORrequirements Mul7plespecializedORrequirements(privileges,goggles,
techs,wetdrapes,etc.)
Noaddi7onalORresourcesrequired
Price Es7matedCapitalASP:$100,000+
Es7mateddisposablehandpieceASP:$425+
Es7matedCapitalASP:$25,000
Es7mateddisposablehandpieceASP:$375
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CurrentJ-PlasmaChannelPartners
• Privatelyheldmedicaldevicecompanywithdeepexperience,exper7seandrela7onshipsintheplas7csurgery/aesthe7csspace
• Non-exclusive4yearAgreementsignedJune30,2016
• Trainingandlaunchplansunderway
Plas<cSurgery/Aesthe<cs
GYNandGYNOncology
• Leadingwomen’shealthcompany(NASDAQ:HOLX)
• Pilotunderway;op7ontoexpandintoglobaldistribu7onagreement
• HologicwilladdJ-Plasma®productlinetoporwolioinGYNandGYN/oncologicalsurgeryinallU.S.andOUSmarketsitserves
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ClinicalResearchPipelineforJ-Plasma
LymphoceleReduc7on
PediatricHeartSurgery
DermalResurfacing
GYNOncology
VulvarDysplasia
ChronicWoundReduc7on
GeneralSurgeryOncology
Studies in Progress Planned Studies Es<matedTimingCategory
2017
2017
2017–2018
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ArthroscopicAblator
• Sterile,single-usedeviceforcusng,coagula7ngandabla7onofsou7ssue• Orthopedicsportsmedicinefocus• Efficient7pdesigntranslatesintothefollowingadvantages:
– Lowpowerrequirementtoini7ateabla7on– Lowerpower=lowerheat=saferforthepa7ent– Compa7blewithanygenerator
• FDAclearanceAugust2016
PlazXact™
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Targe7ngNewSpecial7es:MedicalAdvisoryBoard
• Comprisedofsurgeonthought-leaderstoadviseongrowthproductlaunchesincludingJ-Plasma®applica7onforspecialtyprocedures
• Ini7altargetspecial7esincluding:urology,cardiothoracicandcardiovascular.
• Progressinrobo7cs
• Expecttohave6-9surgeonmembers
16
Dr.HusamBalkhy,Director,MinimallyInvasive&RobotCardiacSurgery,DuhossoisCenterforAdvancedMedicine
Dr.RobertJ.Cerfolio,Sec7onChief,ThoracicSurgeryUniversityofAlabamaHospital
Foundingmember:Dr.VipulPatel,worldrenownedrobo7csurgeon,MedicalDirectorofGlobalRobo7csIns7tute,Florida
Dr.CraigMcCoy,Women’sWellnessCenter,ColumbiaMO.Obstetrics&GynecologySpecialist
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• DevelopingnewgrowthproductstocomplementJ-Plasma®andboostgrowthincorebusiness
• Cadenceofproductlaunches
J-PlasmaPrecise360™
BovieUl<mate®
IDS-310™
DERM101™DERM102™
17
PlazXact™Ablator
World-ClassR&DCapabilityasGrowthCatalyst
J-PlasmaPrecise
• NewGrowthproducts• SelectnewCoreproducts• FDAclearancesfornewindica7ons
• J-Plasmalineextensions
2014 2015 2016 2017
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State-of-the-ArtManufacturingFootprint
Clearwater,FL Sofia,Bulgaria China
Size 60,000sq.u. 16,000sq.u. • 70,000sq.u.
Owned/Contracted
Owned Owned Contracted
Capabili7es
• Assembly• Integra7on• FinalTes7ng• Packaging• Steriliza7onManagement
• Manufacturing• ComplexComponent
Assembly• Ini7alTes7ng
• ComponentManufacturing• Sub-Assemblies• FinishedMedicalDevices
(Electrodes)
Thecompanyalsorentsofficespaceof3,650sq.G.inPurchase,NY
Capacitytoincreaseoutputfromexis2ngfacili2es
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StrongFinancialPerformance
$7.8$10.1
$21.2
$27.1
41.3%
50.3%
42.6%
48.2%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
Q32015 Q32016 YTD2015 YTD2016
GrossM
argin
Revenu
e($inmillions)
Core&OEM J-Plasma GrossMargin
• Over20%growth–drivenbyJ-Plasma• 900basispointgrossmarginimprovementinQ3• CashflowneutralinQ3
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HistoricalFinancials
($in000's) PY Q3 YTD9/302015 2015 2016 2015 2016
Revenue $29,520 $7,823 $10,063 $21,226 $27,133RevenueGrowth 6.6% 15.2% 28.6% 5.0% 27.8%
CostofGoodsSold 16,963 4,594 5,001 12,183 14,049
GrossProfit $12,557 $3,229 $5,062 $9,043 $13,084GrossMargin 42.5% 41.3% 50.3% 42.6% 48.2%
OperatingExpenses 19,543 5,042 5,307 14,678 15,832
LossfromOperations ($6,986) ($1,813) ($245) ($5,635) ($2,748)
CashonhandasofSeptember30,2016 $9,329
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ExpectedShiuinBusinessMix
88.4%74.7% 68.6%
<40%
7.2%
16.0%17.5%
8%- 12%
4.4% 9.3% 13.9%
>50%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
2015 2016YTD Q32016 Target
%ofTotalRevenue
Core OEM Growth
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FinancialAppendix
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FinancialPosi<on:Assets
*All figures in thousands
23
September 30, December 31,2016 2015
(Unaudited)
Current assets: Cash and cash equivalents $ 9,329 $ 11,805 Restricted cash 779 839 Trade accounts receivable, net 3,869 2,925 Inventories, net 5,930 5,957 Prepaid expenses and other current assets 564 516 Total current assets 20,471 22,042 Property and equipment, net 6,498 6,810 Brand name and trademark 1,510 1,510 Purchased technology and license rights, net 242 323 Goodwill 185 185 Deposits 123 123 Deferred tax asset - 25 Other assets 119 430 Total assets $ 29,148 $ 31,448
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FinancialPosi<on:Liabili<esandStockholders’Equity
24
September 30, December 31,2016 2015
(Unaudited)
Current liabilities:Accounts payable $ 1,650 $ 1,214 Accrued payroll 216 321 Accrued vacation 454 228 Current portion of mortgage note payable 239 239 Accrued and other liabilities 1,666 2,119 Total current liabilities 4,225 4,121 Mortgage note payable, net of current portion 2,754 2,934 Notes payable 140 140 Deferred rent 14 18 Deferred tax liability 564 564 Derivative liabilities 822 267 Total liabilities 8,519 8,044 Stockholders' equity:Series B convertible preferred stock, par value $.001; 3,588,139 issued and 1,975,639 outstanding as of September 30, 2016 and December 31, 2015.
2 2
Common stock, par value $.001 par value; 40,000,000 shares authorized; 27,285,297 issued and 27,142,218 outstanding as of September 30, 2016 and 27,194,251 issued and 27,051,172 outstanding as of December 31, 2015
27 27
Additional paid-in capital 43,512 42,859 Accumulated deficit (22,912) (19,484) Total stockholders' equity 20,629 23,404 Total liabilities and stockholders' equity $ 29,148 $ 31,448
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IncomeStatement
25
2016 2015 2016 2015
Sales $ 10,063 $ 7,823 $ 27,133 $ 21,226 Cost of sales 5,001 4,594 14,049 12,183
Gross profit 5,062 3,229 13,084 9,043
Other costs and expenses:Research and development 682 583 1,941 1,534 Professional services 292 427 1,045 1,070 Salaries and related costs 2,192 1,929 6,492 5,749 Selling, general and administrative 2,141 2,103 6,354 6,325
Total other costs and expenses 5,307 5,042 15,832 14,678
Loss from operations (245) (1,813) (2,748) (5,635)
Interest expense, net (36) (40) (125) (120)Change in fair value of warrant liabilities, net (683) 266 (555) 1,800 Total other income (expense), net (719) 226 (680) 1,680
Loss before income taxes (964) (1,587) (3,428) (3,955)
Income tax benefit, net -- -- -- (8)
Net loss $ (964) $ (1,587) $ (3,428) $ (3,963)
Accretion on convertible preferred stock -- -- -- (222)Gain on conversion of warrants and preferred shares, net -- -- -- 13,956
Net income (loss) attributable to common shareholders $ (964) $ (1,587) $ (3,428) $ 9,771
Income (loss) per shareBasic (0.04) (0.06) (0.13) 0.42 Diluted (0.04) (0.06) (0.13) 0.31
Weighted average number of shares outstanding- basic
27,075 27,051 27,059 23,414
Weighted average number of shares outstanding - dilutive
27,075 27,051 27,059 26,346
September 30, September 30,Three Months Ended Nine Months Ended
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Reconcilia<onBetweenGAAPandNon-GAAP
26
(Amounts in '000's except earnings per share) 2016 2015 2016 2015
Net income/(loss) GAAP basis (964)$ (1,587)$ (3,428)$ (3,963)$ Accretion on convertible preferred stock - - - (222) Deemed dividend on conversion of warrants and Series A convertible preferred toSeries B convertible preferred stock - - - 13,956 Net income/(loss) attributable to common shareholders (964)$ (1,587)$ (3,428)$ 9,771$ Net income/(loss) per share - basic (GAAP basis) (0.04)$ (0.06)$ (0.13)$ 0.42$
Other non-GAAP adjustments: (Gain)/loss on change in fair value of derivative liabilities 683$ (266)$ 555$ (1,800)$ Accretion on convertible preferred stock - - - 222 Deemed dividend on conversion of warrants and Series A convertible preferred to Series B convertible preferred stock - - - (13,956) Adjusted non-GAAP net income/(loss) (281)$ (1,853)$ (2,873)$ (5,763)$
Income/(loss) per share - basic on: (Note 1)
(Gain) on change in fair value of derivative liabilities - (0.01) - (0.08) Accretion on convertible preferred stock - - - 0.01 Gain 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 (0.01)$ (0.07)$ (0.11)$ (0.25)$
Weighted average number of shares outstanding - basic 27,075 27,051 27,059 23,414Weighted average number of shares outstanding - diluted 27,075 27,051 27,059 26,346
(Note 1) Amounts reflected in the presentation of EPS calculations may be impacted by rounding
Three Months Ended Nine Months Ended
September 30, September 30,
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J-Plasma®US-OnlyMarket
Sources:CDC,NIH,APGO,ASPS,ASAPS,AHA*(5,000hospitals)27
GYNMarketProcedures #ofAnnualProcedures 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 $162,000,000TotalGYNProcedures 2,038,000 $375 $764,250,000
Capital* 5,000 $25,000 $125,000,000TotalGYNAvailableMarket $889,250,000
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J-Plasma®US-OnlyMarket
Sources:CDC,NIH,APGO,ASPS,ASAPS,AHA*(5,000hospitals) 28
Plas7cMarket
TotalAvailableMarket
ProcedureType #ofAnnualProcedures ASP
SurgicalPlas7csProcedures 1,947,038 $375 $730,139,250Aesthe7csPlas7csProcedures 695,171 $375 $260,689,125
TotalPlas7csProcedures 2,642,209 $375 $990,828,375
Capital* 5,000 $25,000 125,000,000TotalPlas7cAvailableMarket $1,115,828,375
GYN:TargetedProcedures 2,038,000 $375 $764,250,000Capital 5,000 $25,000 $125,000,000
Plas7c:TargetedProcedures 2,642,209 $375 $990,828,375Capital 5,000 $25,000 $125,000,000
TotalAvailableMarket 4,685,209 $2,005,078,375