ImpediMed Limited. Entitlement Offer and Placement. Investor Conference Call - 29 April April 2010

Transcription

1 ImpediMed Limited Entitlement Offer and Placement Investor Conference Call - 29 April 2010 April

2 Today s Presenters Greg Brown Chief Executive Officer Donald Myll Chief Financial Officer 2

3 Disclaimer This presentation has been produced by ImpediMed Limited ( ImpediMed ) only and may contain forward-looking statements that are based on management s current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The forward-looking statements contained in this presentation include statements about future financial and operating results, status of our regulatory submissions, possible or assumed future growth opportunities and risks and uncertainties that could affect ImpediMed s product and products under development. These statements are not guarantees of future performance, involve certain risks, uncertainties and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Therefore, actual outcomes and results may differ materially from what is expressed herein. In any forward-looking statement in which ImpediMed expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement or expectation or belief will result or be achieved or accomplished. We are not under any duty to update forward-looking statements unless required by law. This investor presentation is not an offer of the sale of securities. ImpediMed and their respective directors, employees, associates, affiliates or agents, make no: (a) representations or warranties, express or implied, in relation to this presentation or the accuracy, reliability or completeness of any information in it or the performance of ImpediMed; (b) accept no responsibility for the accuracy or completeness of this presentation and the information contained in it; and (c) make no recommendation as to whether you should participate in the proposed ImpediMed capital raising. This presentation is intended to provide background information only and does not constitute or form part of an offer of securities or a solicitation or invitation to buy or apply for securities, nor may it or any part of it form the basis of, or be relied on in any connection with any contract or commitment whatsoever. The information in this presentation does not take into account the objectives, financial situation or particular needs of any person. Nothing contained in this presentation constitutes investment, legal, tax or other advice. Potential investors should make their own decision whether to participate in the capital raising based on their own enquiries. Potential investors are advised to seek appropriate independent advice, if necessary, to determine the suitability of this investment. This presentation does not, and does not purport to, contain all the information prospective investors in ImpediMed would desire or require in reaching an investment decision. To the maximum extent permitted by law, none of ImpediMed, their officers, directors, employees, associates, affiliates or agents, nor any other person accepts any liability for any loss, claim, damages, costs or expenses of whatever nature (whether or not foreseeable), including, without limitation, any liability arising from fault or negligence on the part of any of them or any other person, for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it or any errors or omissions in it. The distribution of this presentation in jurisdictions outside Australia may be restricted by law and you should observe any such restrictions. This presentation has not been filed, lodged, registered or approved in any jurisdiction and recipients of this presentation should keep themselves informed of and comply with and observe all applicable legal and regulatory requirements. This presentation is made only to sophisticated or professional investors under the Corporations Act. 3

4 Executive Summary ImpediMed Limited is an ASX listed company with a market capitalisation of circa A$82 million Designs, develops and sells medical devices to aid in the clinical assessment of lymphoedema Targeting to build its business on five key pillars 1. First to market - addressing a large underserved medical need in lymphoedema 2. IP protection key patents and trademarks in lymphoedema 3. Strong regulatory position - first FDA cleared device with a lymphoedema assessment claim 4. Strong reimbursement position - technology specific category 3 CPT code for lymphoedema 5. Clinical validation ten years of peer review on clinical performance, plus recent health economics ImpediMed is raising capital via a placement and a non-renounceable rights issue Proceeds from the fundraising will be used primarily to expand the US sale and reimbursement teams and for marketing programs to maximise ImpediMed s commercialisation opportunity in the US 4

5 Capital Structure Capital Structure as at 30 March 2010 ASX: IPD 12 Month Share Price Performance Share Price A$0.75 Listed shares on issue (million) $0.90 $0.85 $ , ,000 Unlisted shares (million) 1, Listed options (million) 12.5 Unlisted options (million) Undiluted market cap (million) A$81.6 Share price A$ $0.75 $0.70 $0.65 $0.60 $ , , ,000 Volume Fully diluted market cap (million) 3 Cash (million) 4 A$94.7 A$6.7 $0.50 $0.45 $ /03/200 30/05/200 30/07/200 30/09/200 30/11/200 30/01/201 50,000 - Enterprise value (million) 3 A$88.0 Volume Close Price 1 Source: ImpediMed Annual Report Performance shares 3 Includes performance shares, listed options and unlisted options 4 As at 31 December

6 Targeting Multiple Fluid Status Markets Lymphoedema market - Arms Arms mainly breast cancer Highest awareness Estimate - US$150m+ annually Today & Near Term Lymphoedema market - Legs Legs pelvic cancer 80% of market, 65-70% unilateral Estimate -US$400m+ annually Fluid Technology Status Market platform Dialysis market Licensed by Fresenius Fluid status monitoring Future Oedema market Venous insufficiency High prevalence in elderly 6

7 Lymphoedema Current Diagnosis is Often Too Late Presently diagnosed when patients can already have irreversible changes Successful treatment and potential prevention can occur with early detection (compression sleeve) 7

8 L-Dex TM U400 s Initial Target Market is Breast Cancer Survivors Breast cancer incidence in the US Lymphoedema association with breast cancer survivors US breast cancer incidence: Currently c.250,000 cases/year Forecast to grow to c.420,000 cases/year within the next 20 years US breast cancer survivors: c.2.5 million people After mastectomy: 24-49% After lumpectomy: 4 28% After sentinel lymph node biopsy and radiation therapy: 4-17% Estimated average incidence overall approximately 20% Longer survival of breast cancer patients is estimated to cause an increased prevalence of lymphoedema 8

9 True Innovation - Current Detection Methods are Sub-Optimal Detection Method Direct or indirect measurement, volume or ECW FDA clearance for lymphoedema assessment Reproducibility/Accuracy Tape measure Volumetric calculation of limb by measuring diameter at prescribed intervals No Non-standardised and subjective measurement Water displacement Volumetric calculation of limb using Archimedes principal No Non-standardised and subjective measurement Perometer Volumetric calculation 80% of limb using an infrared scan No Standardised and objective measurement for volume only BIS Direct measure of relevant compartment - the extracellular fluid differences between limbs Yes Standardised and objective measurement specific for lymphoedema changes 9

10 Key Milestones & Events ImpediMed Events April 2008 October 2008 June 2009 November 2009 December 2009 March 2010 FDA application for L- Dex TM U400 FDA clearance for L-Dex TM U L-Dex TM devices in in US CPT code filing with AMA 70 L-Dex TM devices in US Category III CPT code approved June 2008 April 2009 November 2009 February 2010 NIH funded 5 year study early detection /treatment Cancer publication JCO health economic cost of BCRL MedCAC meeting for diagnosis & treatment of lymphoedema Swedish 10 year study July 2009 October 2009 Industry Events First US state bill for all lymphoedema Journal of lymphoedema paper proposes BIS as gold standard 10

11 Current Device Placements in the US Limited by Reimbursement There are currently 121 users of the L-Dex TM device with 71 L-Dex TM Agreements in place Targeted key opinion leaders, placements also reflective of current regional sales presence Effective reimbursement critical to drive new placements & pull through consumable revenues Key: 15+ L-Dex TM Agreements L-Dex TM Agreements 5 10 L-Dex TM Agreements 1 5 L-Dex TM Agreements No L-Dex TM Agreements 11

12 Business Model Reimbursement Critical to Drive Model Illustrative Device Economics Per Test (USD) Per Annum (USD) Assumptions (based on primary target surgeon) Target list price per test USD 45 Reimbursement¹ $100 $115,200 Consumables $45 $51,840 Net Clinic/Surgeon $55 $63,360 Clinician enrols 8 patients per month Quarterly testing over the first three years Builds to annual test volume of 1,152 tests ¹Reimbursement amount is what is targeted - indicative only Device placed in clinicians office free of charge, revenue from consumables per test Approximately 5,000 surgeons operating on the breast in the US and 4,000 radiologists Top 2,000 US surgeons treat approximately up to 60% of all BrCx patients likely ASBS members 12

13 Roadmap for Effective US Reimbursement Three Critical Components All three components are critical for effective reimbursement Coding CPT codes I,III or Miscellaneous Payment Clinician fee schedule Coverage National & local Medicare & private payers A product that can deliver the following key characteristics is well positioned to build unique coding, coverage and payment support: True innovation targeting an unmet need High economic value Clinician & patient acceptance & demand First to market 13

14 Coding Category III CPT Code Previous Position Miscellaneous CPT Code Not technology specific miscellaneous lymphoedema study Documentation required from clinician regarding procedure Not possible to have coverage statement specific to application Hence manual review process by payer often a long process New Position - Category III CPT Code BIS technology specific code 100 frequencies or greater, ECW Code states both arms and legs - limbs With coverage statement often reduced documentation needed Reimbursement subject to payer s policy payment / no. of tests Payment directly negotiated with US payers health economics Key outcomes: 1. Technology specific 2. Limbs 3. Category 14

15 Payment & Coverage Delivered Through US Healthcare Payers US Health insurers by covered lives (2007) United Humana 6% 3% Uninsured 16% others 4% Aetna 5% BCBS 33% Kaiser 3% CMS 15% Cigna 3% Wellpoint 12% Approximately 800 plus payers of US Healthcare, multiple delivery systems 15

16 Coverage Strategy - Targeting Major Payers (max. coverage quickly) Greater than 30 million covered lives Greater than 18 million covered lives Greater than 14 million covered lives HCSC only - greater than 12 million covered lives Greater than 9 million covered lives Greater than 45 million covered lives Five key private payers responsible for 83 million covered lives 30% of US population CMS covers 45 million lives 15% of US population 16

17 Estimated Health Economics of L-Dex TM Aids Coverage & Payment Govt. financed healthcare in US (CMS) is mandated by law to be budget neutral with new technology 2 yr estimate of economic burden of breast cancer related lymphoedema (BCRL) Matched cohort analysis showed that the BCRL group had significantly higher medical costs (US$14,877 to US$23,167) Annual payer of 20 million covered lives, estimated L-Dex break-even analysis is $518 Covered Lives 20,000,000 BCRL Cost (Shih 2009) US$9,500 Estimated BrCa cases < 65 yrs 7,929 L-Dex Reimbursement US$518 Incidence Rate of BCRL 22% Annual L-Dex Cost (x4) US$2,072 BCRL cases 1,744 Cost OTS Sleeve/Gauntlet US$80 Current estimate for a payer (20 million lives) - cost related to BrCa lymphoedema: Estimated break-even cost using L-Dex for new diagnosed BrCa patients only: Model estimates payment at $518 per test for payer to break even Company is targeting a payment of approximately $100 per test US$16,570,863 US$16,570,863 US$0 17

18 External Factors Supporting Coverage - Legislative Support State by State Coverage for Third-Party Payers to Offer or Provide Lymphoedema Treatment (Mastectomy only) 1999: Federal Women s Health Rights Act - Mastectomy : State Numerous state laws have been put in place requiring specified third-party payers to offer or provide coverage for lymphoedema treatment - Mastectomy Key: State laws in place requiring specified third-party payers to offer payment for the treatment of all forms of lymphoedema State laws in place requiring third-party payers to offer or provide coverage for lymphoedema treatment incidental to breast cancer (Mastectomy) No state laws in place requiring third-party payers to offer or provide coverage for lymphoedema treatment incidental to breast cancer 2009: North Carolina Mandatory coverage for every health benefit plan to provide coverage for the diagnosis, evaluation and treatment of all lymphoedema Present activity Working to update WHRA act for all lymphoedema Lymphoedema Diagnosis and Treatment Cost Saving Act of 2010 before Congress 18

19 How IPD Builds Coverage on its Code to Drive Placements & Sales Placements estimated to increase as the business model develops through effective reimbursement Expand direct managed care resources reimbursement is a critical requirement to drive sales Expand sales team and support teams Registry expand program for legs and arms and apply for Medicare reimbursement Working with Avon for a sponsored program for screening underserved populations Key: 15+ L-Dex TM Agreements L-Dex TM Agreements 5 10 L-Dex TM Agreements 1 5 L-Dex TM Agreements No L-Dex TM Agreements 19

20 Targeting Broader Lymphoedema Patient Registry Medicare Evidence Development and Coverage Advisory Committee (MEDCAC) MEDCAC panel meeting clinical evidence for the diagnosis and treatment of secondary lymphoedema (September 2009) Key suggestions: need for a standardised metric & patient registry (arms/legs) Possibility to have Medicare reimburse testing for registry Approaching Key US Surgeons to aid administration Targeting key clinicians to coordinate clinician participation into a registry IPD currently beginning discussions with key clinician groups Approaching National Lymphatic Disease and Lymphoedema Patient Registry Feinstein Institute supported by LRF looking to collaborate with broader registry Objective - a central database of patient history & clinical outcomes Stanley Rockson MD (Stanford) is LRF Principal Investigator for the registry The establishment of a patient registry using BIS technology for assessment of lymphoedema is likely to support adoption of the technology among clinicians across the US market 20

21 Patient Awareness Will Work With Avon / Susan Komen Upper extremity lymphoedema is one of the most dreaded sequelae of breast cancer (BC) treatment J Clinical Oncology, Vol 27, 2009 The psychosocial impact of lymphoedema has been described to be as distressing as the initial diagnosis of BC J Clinical Oncology, Vol 27, 2009 Patients with breast cancer related lymphoedema (BCRL) have been found to have a lower quality of life, a higher level of anxiety or depression, a higher likelihood of chronic pain & fatigue, & greater difficulty functioning socially & sexually compared with BC women without lymphoedema J Clinical Oncology, Vol 27,

22 New Products Targeted to Drive Market Expansion Status Alpha site trials completed Beta site trials targeted for second half 2010 US Gynaecologic Oncology Group Pricing List price will target US$35,000 Targeting US$30 per reading (purchased device ) Targeting US$45 to $49 for L- Dex TM agreement Stand or wall mounted Retractable arm Locked in active electrode Patent protected 22

23 Estimated News Flow Next 18 Months News Flow Pipeline: 2H10 1H11 2H11 Unilateral Leg Filing Announcement of first coverage statement Expansion of sales team and managed care team Publish Category three code in AMA coding book Announcement of 20 million covered lives Registry announcement GOG Clinical Trial for bilateral announced FDA clearance of unilateral leg Announcement of 50 million covered lives, first 500 surgeons FDA filing of bilateral leg assessment 23

24 Risk Management Key Risks Risk to Lymphoedema Opportunity Major clinical trial outcomes - legs Bilateral lymphoedema approaches Registry and CMS reimbursement Reimbursement and Regulatory Strategies Securing FDA unilateral and bilateral leg clearance for U400 and UB500 Maintaining coverage with private payers on miscellaneous code & transferring to category three Category three coverage by US third party payers critical to drive sales Payment of $100 on the category three Intellectual Property Ability to protect position Competitor challenges to intellectual property Advancing Technology Competitor threat of new technology approaches Competitor launch a BIS device Supply threat key component redesign due to end of life parts Sole third party manufacturer at present Product Liability Liability risks that are inherent in research & development, preclinical studies, clinical trials, manufacturing & the use as a medical device for assessment/monitoring conditions Fluctuations in currency exchange rates 24

25 Offer Summary Offer Size Up to A$[20.1] million to be raised via a combination of a placement and nonrenounceable pro-rata entitlement offer Fixed price of A$[0.65] for both placement and entitlement issue Wilson HTM and RBS Morgans Joint Lead Managers Placement/Entitlement Offer Placement to raise approximately A$[10.0] million Placement participants are eligible to participate in the entitlement offer 1 for 8 non-renounceable pro-rata entitlement offer to raise up to A$[10.1] million Discounts based on close 30 March 2010 (A$0.75): 21.8% to the 1 month VWAP (A$0.83) 24.3% to the 10 day VWAP (A$0.86) 18.9% to the 5 day VWAP (A$0.80) 13.3% to the last close (A$0.75) 10.7% to the TERP (A$0.73) 25

26 Expected Use of Funds Expand reimbursement and sales teams in the US Expand the training and technical support team and the senior executive team in San Diego Marketing program (including for a patient registry to potentially include ASBS members, SSO and Stanford) To complete the research and development of the UB500 General working capital purposes 26

27 Indicative Timetable Placement Date Trading halt 31 March 2010 Bids into placement book by 4:00 p.m. (Sydney time) 31 March 2010 Recommence trading 1 April 2010 Settlement 8 April 2010 Allotment of placing shares 9 April 2010 Entitlement Offer Date Announcement of the Entitlement Offer 1 April 2010 Record Date to determine entitlements for the Entitlement Offer (by 7:00 p.m. Sydney time) 15 April 2010 Offer opens 19 April 2010 Offer closes. Last day for acceptance and payment (5:00 p.m. Sydney time) 7 May 2010 Expected date for despatch of holding statements for New Shares 17 May 2010 Expected date for commencement of trading of New Shares 18 May

28 Summary Large Markets Several hundred million dollar consumables market First Mover First technology for routine fluid status monitoring IP Protected Patent protected technology platform (BIS) Validation Over a decade of clinical peer reviewed science FDA Clearance First FDA cleared device for lymphoedema Reimbursement Cat. 3 technology code - US Federal & State laws 28