Investor Presentation - September 2020 - ConforMIS
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Investor Presentation September 2020
Forward-Looking Statements
This presentation contains forward-looking statements that involve substantial risks and uncertainties. All statements,
other than statements of historical facts, contained in this presentation, including statements regarding our strategy,
future operations, projected financial position, future revenues, projected costs, projected profits, projected
margins, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,”
“could,” “should,” “continue,” “grow,” “improve,” and “trend”, and similar expressions are intended to identify
forward-looking statements, although not all forward-looking statements contain these identifying words.
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you
should not place undue reliance on our forward-looking statements. Actual results or events could differ materially
from the plans, intentions and expectations disclosed in the forward-looking statements we make. The forward-
looking statements contained in this presentation reflect our current views with respect to future events, and apply
only as of the date of this presentation. We assume no obligation to update any forward-looking statements.
Our business is subject to substantial risks and uncertainties, including those referenced in certain of our filings with the
SEC under the heading “Risk Factors.” You are encouraged to read our filings with the SEC, available at www.sec.gov,
including our Annual Report or Form 10-K for the year ended December 31, 2019 filed with the SEC on March 3,
2020, as well as our Quarterly Reports on Form 10-Q. You should give careful consideration to these risks and
uncertainties.
© 2020 Conformis, Inc. Slide 2
Conformis Today
Key Statistics
• Founded: 2004
Recognized Leader in
• Headquartered: Billerica, MA Patient-Specific Expanding Portfolio of
Instrumentation and
• Ticker: CFMS Personalized Implants
Knee & Hip Implants
• Global employees: ~275
• International: Products sold
in 18 countries
Proprietary Technology Comprehensive Dossier
• Milestone: Sold >110,000 Platform with Broad of Clinical and Health
Patent Portfolio Economic Benefits
personalized knees
© 2020 Conformis, Inc. Slide 3
A Paradigm Shift in Orthopedics
A personalized solution for patients that delivers demonstrated value to physicians and payors
1 CT Scan
• Surgeon orders and sends a standard diagnostic CT scan to Conformis
2 Restore the native anatomy using 3D modeling
• Convert the imaging data into a 3D model
3 Create the patient-specific implant and instruments
• Single-use, patient-specific instruments include guides and instruments
necessary to fit our customized implants to the patient
4 Develop patient-specific pre-surgical plan
• iView allows the surgeon to visualize preoperative planning, including
measurements, orientations and anatomic variants
5 Digitally driven manufacturing
• Produce custom implant and patient-specific instruments
Patient-Specific Solution
Delivered Just-in-Time in a 6 Just-in-time delivery to the customer
Convenient Kit • Deliver implant, iJigs and iView within 6 weeks
© 2020 Conformis, Inc. Slide 4
iFit Image-to-Implant Platform Technology
iFit Design iFit 3D Additive Printing iFit JIT Delivery
Intra-Op Economic Clinical
Benefits Benefits Benefits
5
Launching a New Investment Thesis
Present Situation Our Plan
• We are the clear leader in personalized hip &
knee implants with a capital-efficient delivery Develop and launch a new ‘ASC’
1
model knee to expand our product offering
• We are an innovator of the single-use kit, sterile
delivery model of implants and patient-specific
and aggressively target the ASC and
instrumentation (PSI) hospital outpatient facilities
• We compete in a large and profitable market
2
that is undergoing a transformation Expand hip product adoption to
• Procedural shift to outpatient / ambulatory surgery further accelerate sale
centers (ASCs) creates significant opportunity
• We have experienced adoption challenges Generate value from PSI expertise &
• Lead times and lack of intraoperative flexibility have
limited new surgeon adoption and compressed 3 intellectual property portfolio
margins
© 2020 Conformis, Inc. Slide 6
1 ASC Opportunity is Compelling
This shift in elective knee procedures to ASC provides significant growth opportunity
Notable Drivers U.S. Joint Replacement Procedures in ASC settings
• Medicare / Medicaid reimbursement change 60%
Partial and Total Knee
• Bundled “Episode of Care” 50% Procedures in 2024:
~370,0001
40%
• Physician ownership: capital-efficient
requirements 30%
• Increased pressure on healthcare spending 20%
10%
• COVID-19 protocol accelerates trend
0%
• Lack of “installed base” for larger players 2016 2018 2020 2022 2024 2026
Procedure Shift to ASC2
1) Company estimates based on projected shift in elective joint procedures.
2) According to Sg2, a Vizient company.
© 2020 Conformis, Inc. Slide 7
Common Challenges for Joint Replacement in the ASC
Hospitals and other medical facilities face similar challenges
Common Challenges Conformis Solution
Limited Processing Capability
• 5–10 bulky instrumentation
• Potential source of costly
infections
• Substantial manpower costs
Limited Space
• Tray management
• Inventory storage
• Supply costs
Limited Efficiency
• All instrument trays require
timely setup, break down, and • Single-use kit, delivered before surgery
sterilization • Set of disposable patient-specific guides
• Potential source of costly • One reusable tray
infections
© 2020 Conformis, Inc. Slide 8
Expand Our Portfolio with New ASC Knee
New product offering aimed at driving greater surgeon adoption
Present Future
iTotal: Patient Specific New ASC Knee iTotal: Patient Specific
Target U.S. Launch 2H, 2021
Personalized Solution ASC Solution Personalized Solution
• Approx. 6-week lead time • Broader anatomical coverage than competitive • Approx. 6-week lead time
• 3 patient-specific poly inserts implants1 • 3 patient-specific poly inserts
• Premium priced solution • Implant size matched to patient’s knee scan • Premium priced solution
• Custom made for each patient • Approx. 3-week lead time • Custom made for each patient
• Patient-specific instrumentation • Full range of standardized poly thickness options • Patient-specific instrumentation
• Pre-packaged in a single-use, sterile kit with • Product costs allows greater pricing flexibility • Pre-packaged in a single-use, sterile kit with
an iView pre-surgical plan • Select patient-specific instrumentation an iView pre-surgical plan
• Pre-packaged in a single-use, sterile kit with an
iView pre-surgical plan
1) Company sponsored study.
© 2020 Conformis, Inc. Slide 9
New ASC Knee Offers Attractive Benefits
Target product profile intended to directly address customer feedback
Anticipated Benefits:
• New Knee with Poly Options
• Pre-select implant size to best fit patient’s knee anatomy Same Efficient
• Includes iView Pre-Surgical Plan Solution with Better
• Full range of polyethylene inserts for each surgery
• Leverage iTotal platform1 with clinical outcome data Pricing and Flexibility
• Broader anatomical coverage v. competitive Off-the-Shelf (OTS) knees2
• Shorter Lead Times
• Pre-packaged solution to be delivered within approx. 3 weeks
• Greater Pricing Flexibility
• Ability to competitively price the product given new target product
costs
• Aggressively Target the ASC Opportunity
• Leverage unique delivery model to aggressively target the hospital
outpatient and ASC spaces
1) Clinical studies on iTotal Total Knee Arthroplasty system.
2). Company sponsor study.
© 2020 Conformis, Inc. Slide 10Product Gross Margin Improvement
Select standardization enables lower cost of goods
Validated Targeted Production Savings
Patient-Specific Knee Planned changes between platforms to reduce COGS ASC Knee
Significant cost savings 70%+
opportunities with new ASC
knee offering:
45%-50% • Eliminate implant design
labor cost
• Lower femur casting costs
• Less machining time
• Improved material costs
• Standardize production
quantities
• Less scrap
2019 2022 - 2024
© 2020 Conformis, Inc. Slide 11Conformis Uniquely Positioned to Win in the ASC
Conformis Advantage: Right Product at the Right Price
Conformis is the IDEAL
SOLUTION for ASC
Capital-Light Delivery Model Customers
• Just-in-time delivery addresses sterilization / lack of inventory space
Pre-Packaged Procedural Kit with iView
• Total knee replacement-in-a-box improves efficiencies
Attractive Target Price iView
• Lower COGS allows aggressive targeting of the ASC segment
Partnership with Stryker® Validates Approach Re-usable
Instrumentation
© 2020 Conformis, Inc. Slide 12Clinically Demonstrated Benefits
OUTCOME Publications & Conference Proceedings
• Reimann, et al. – Journal of Orthopaedics. 2019
• Schroeder, et al. – Orthopaedic Proceedings of Bone & Joint Surgery. 2019
Higher Patient Satisfaction • Katthagen, et al. – ICJR World Arthroplasty Conference. 2015
• Ogura, et al. – Knee Surgery, Sports Traumatology, Arthroscopy. 2018 Safety & Efficacy
• Schroeder et al. – The Journal of Knee Surgery. 2018
Better Alignment
• Ivie, et al. – The Journal of Arthroplasty. 2014 Demonstrated in:
• Levengood, et al. – The Journal of Knee Surgery. 2017
• Arbab, et al. – The Knee. 2018
Better Health Economic Outcomes
•
•
O’Connor, et al. – American Health & Drug Benefits. 2019
Buch, et al. – Reconstructive Review. 2019
50+
Clinical Studies
• Culler, et al. – Arthroplasty Today. 2017
• Namin, et al. – Value in Health. 2019
Better Range of Motion • Zeller, et al. – British Association for Surgery of the Knee. 2017
• Buch, et al. – Reconstructive Review. 2019 30+
• Zeller, et al. – ICJR Pan Pacific. 2016 Peer-Reviewed
• Zeller, et al. – The Journal of Arthroplasty. 2017 Publications
Better Functional Results • Wang, et al. – International Orthopaedics. 2018
• Reimann, et al. – Journal of Orthopaedics. 2019
• Koeck, et al. – The Knee. 2011
• Carpenter, et al. – The Journal of Arthroplasty. 2014
• Demange, et al. – International Orthopaedics. 2015
Better Fit • Schroeder, Lennart, and Gregory Martin (May 25, 2018)
• Meier, et al. – Clinical Orthopedics and Related Research. 2019
• Meier, et al. – Knee Surgery, Sports Traumatology, Arthroscopy. 2019
© 2020 Conformis, Inc. Slide 13Conformis Re-Defining Patient Satisfaction
Improve Patient Reported Satisfaction &
Overall Quality Measures Grow Referral Base
Patients who respond as
‘Extremely Likely’
recommend Conformis
2.1x more than OTS
2.1x
Conformis Patients 77% vs
Non-Conformis Patients 36%
p2 New Hip Platform Drives Additional Growth
Recent hip introduction doubles addressable market opportunity
2019
$8B global hip Similar to knee, life expectancy Full commercial launch
market is projected continues to increase, global of the Conformis Hip
to grow in the low population is gaining weight, and System commenced in
single digits1 individuals desire to live a more November 20193
active lifestyle2
1) 2019 Orthoworld. The Orthopedic Industry Annual Report.
2) U.N. data, 2019.
3) Conformis Hip Systems were implanted in a limited commercial launch in July 2018.
© 2020 Conformis, Inc. Slide 15Conformis Addresses Total Hip Replacement (THR) Challenges
Challenges: Notable Drawbacks with THR Solution: Apply Conformis Philosophy
• THR Traditionally is an UNGUIDED Operation • Conformis Hip Systems uses 3D imaging
• Heavily dependent on training, skill, and experience of technology to provide PRE-SURGICAL navigation of
the surgeon the patient’s specific implant for restoration of
patient anatomy
• 2D-Templating Can Be Inaccurate
• Neck angles and offsets can be dramatically affected by • Patient-specific
rotation on x-ray instrumentation
improves
efficiencies
• Standard Hips Offer Limited Neck Angles, Offsets
• iView surgical
• Capital-intensive delivery model, implant & planning tool
instrumentation helps guide
• Leg length / offset issues after THR surgical procedure
• Hip system offers
a range of femoral
• Patient Dissatisfaction1 and Revision Rates2 neck options Total Hip
Replacement-in-a-Box
1) Jones, et al., and Anakwe et al.
2) Labek, et al.
© 2020 Conformis, Inc. Slide 16Developing a Multi-Line Hip Portfolio
Capital efficient delivery model remains central to the product offering
iView Pre-Surgical Plan Patient-Specific Instrumentation Product Portfolio
Proprietary iView Personalized guides and Customer Preference Guides
provides a personalized bone models streamline Level of Customization
surgical roadmap the surgical procedure
© 2020 Conformis, Inc. Slide 17Anticipated New Product Cadence
Robust pipeline drives growth
2020 2021 2022
1st half 2nd half 1st half 2nd half 1st half 2nd half
Hip Hip Line
Conformis Additions Hip Fit
• Total Hip Product Analysis
Total Hip 2nd Stem
• Hip Line Additions System Software/ (LMR)
• Cordera Standard Hip Stem (FMR) Cordera Cordera
Standard Match
• Hip Fit Analysis Software
Stem
• 2nd Hip Stem Design
Knee Constrained Poly
Identity
Cementless
• Identity CR Identity (FMR)
• Identity PS iTotal New ASC
(FMR) Knee New ASC
• Constrained Poly Options CS/PS Identity (LMR) New ASC
Cementless Knee Knee:
• Identity Cementless System Cementless
(LMR) (FMR) (LMR)
• New ASC Knee
LMR = Limited Market Release; FMR = Full Market Release
© 2020 Conformis, Inc. Slide 183 Strategic Partnership: Stryker
Collaboration adds another profitable growth driver
1
Conformis will develop, manufacturer, and supply patient-specific instrumentation for use in connection with
Stryker’s knee implant offerings, including the market-leading Triathlon Total Knee System
Leveraging the strengths of the respective organizations to further
expand personalized care into low-cost, site-of-care settings / ASC
1) Stryker is a registered trademark of Stryker Corporation.
© 2020 Conformis, Inc. Slide 19Stryker: Private Label Opportunity
Significant revenue and profit potential
Collaboration: Leadership Position: ASC Opportunity: Revenue Potential:
Capitalizing on Partner’s Strengths U.S. Primary Knees1 Trend in Knee Procedures2,3 Drive Incremental Growth
$30M
• $14 million upfront ~30% Share
• up to $16 million in
milestone payments ~240,000 Units
10%–20%
• Long-term supply
agreement
Partnership validates Stryker is a leader in Projected shift in knee Revenue from private
Conformis’ expertise in the U.S. primary procedures to ASC label products offers
design, development, knee reconstruction offers significant potential to drive 10%–
and manufacturing market opportunity 20% of Conformis’ overall
excellence of PSI revenue by 2024
1) 2019 Orthoworld. - the Orthopedic Industry Annual Report and management estimates prior to the emergence of COVID19.
2) Management estimates based on projected shift in elective procedures.
3) According to Sg2, a Vizient company.
© 2020 Conformis, Inc. Slide 20We Plan to Create Significant Shareholder Value
2024 Financial Targets
$160M - $190M 60%+ $15M - $30M
Revenue Gross Margin Profit
Committed to double digit Deliver improved Generate meaningful
revenue growth gross margins operating income
• New product introductions • Growing contribution of • Scale business, leverage
• International market expansion higher margin knee and hip operating expense
into India, China, and Japan products • Improved cash flow
• Supply of private label products • Introduction of profitable • Accelerates time to breakeven
private label products
© 2020 Conformis, Inc. Slide 21Conformis
New Growth Drivers Create a Compelling Investment Thesis
1 New knee targets ASC procedure growth and
drives gross margin expansion
2 Anticipated hip product adoption further
accelerates revenue growth
3 Private label products drive additional
profitable growth
© 2020 Conformis, Inc. Slide 22Thank You!
You can also read
