Jefferies Global Healthcare Conference. June 6 9th, 2017

Transcription

1 Jefferies Global Healthcare Conference June 6 9th, 2017

2 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, future financial position, future revenues, projected costs, 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, 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 speak 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 including our Form S-1 Registration Statement filed with the SEC on May 22, 2015 and the related amendments, as well as our Final Prospectus filed with the SEC on July 1, 2015 and our quarterly statements filed on Form 10Q. Investors, potential investors, and others should give careful consideration to these risks and uncertainties. 2

3 Disrupting a $15 Billion Industry 3

4 Investment Highlights Technology potentially applicable to ~ $15 billion joint replacement market Proprietary platform technology for customized joint replacement implants Clinical data supporting superior clinical outcomes Potential economic benefits over off-the-shelf implants Highly scalable business model Broad IP ~ 450 patents and pending patent applications 4

5 Patient Outcomes after Off-the-Shelf TKR 1 in 5 patients are not satisfied with the results of their total knee replacement 1 1 According to a study of 1,703 patients published by Bourne in 2009 in the peer-reviewed journal Clinical Orthopaedics and Related Research (In this study entitled Patient Satisfaction after Total Knee Arthroplasty: Who is Satisfied and Who is Not?, the overall satisfaction question was used to determine a two-category satisfaction outcome by combining patients who answered very dissatisfied, dissatisfied, or neutral into one group, and patients who answered satisfied or very satisfied into the second group. ) 5

6 Off-the-Shelf Delivery Model 5-10 costly instrumentation trays required for each procedure All instrument trays require set up, break down and sterilization Potential source of costly infections Knee Example Substantial inventory cost of instruments borne by manufacturer 6

7 Patient-Specific Industry Approach Patient-specific instruments or Robotics Standard, off-the-shelf implant Used with reusable instruments Cost of storing, sterilizing Risk of infection OR efficiency and turnover Additional robotics challenges Cost OR efficiency and turnover Does not change perceived fundamental shortcomings of off-the-shelf implants Improper implant fit, overhang, undersizing Wrong geometry, not matching patient Residual pain, functional limitations (limited range of motion, mid-flexion instability) 7

8 A Paradigm Shift in Orthopedics 8

9 ConforMIS Platform Technology ConforMIS products for knee replacement itotal PS itotal CR iuni iduo Potential opportunity to expand ifit technology to: Hip Spine Shoulder Extremities Revisions Resurfacing Digitally driven / Just-in-Time manufacturing Customized implants Patient-specific instruments 9

10 ifit Image-to-Implant Platform Technology ifit Design ifit 3D Additive Printing ifit JIT Delivery Intra-Op Benefits Economic Benefits Clinical Benefits 10

11 ConforMIS Delivery Model: Intraoperative Benefits Single-use kit Delivered before surgery One reusable tray Simplified procedure with fewer steps Reproducible 11

12 Why Patients Are Dissatisfied Post-operative Pain Poor Function Implant overhang/ under-sizing Component malrotation Limited range of motion Stiffness Knee instability Unnatural feel 12

13 Personalized Position, Shape & Fit 13

14 Implant Overhang Leads to Pain In a study of 437 total knee replacements, the prevalence of overhang 3mm was high¹ Men Women 60% 40% Overhang of 3mm in at least one zone < 3mm overhang 68% 32% Overhang 3mm associated with an almost twofold increased risk of pain at two years 1 1 Mahoney, et al; Overhang of the Femoral Component in Total Knee Arthroplasty: Risk Factors and Clinical Consequences. The Journal of Bone and Joint Surgery; 2010, 92:

15 Implant Malrotation Leads to Pain Off-the-shelf implants frequently not aligned with proper rotational axis of the knee In a published study of anterior knee pain, patients with improper component rotation were 5X more likely to experience knee pain 1 1 Barrack, et al; Component Rotation and Anterior Knee Pain after Total Knee Arthroplasty. Clinical Orthopaedics and Related Research; 2001, 392:

16 ConforMIS Respects Patient s Natural Geometry itotal recreates patient s natural geometry itotal designed to match natural curves, corrected for deformities 16

17 One Patient - One Implant Recreate and respect patient s natural geometry Personalized shape & fit Eliminate implant overhang or under-sizing Eliminate implant malrotation 17

18 itotal CR: Bone Preserving Design Thickness of All* Bone Resections 1 ConforMIS itotal CR (n=54) 36.3 mm Difference of total thickness is 27.6% (p<0.001) Off-the-shelf 50.2 mm (n=66) Total thickness of bone resections in mm Implant design advantage 2 : customized bone cuts, minimized for the geometry of each individual patient. * Femoral cuts: distal & posterior. Tibial cuts: medial & lateral 1 Source: William B. Kurtz, MD. Patient- Specific Knee Replacement Implant Preserve Bone and Decrease Blood Loss & Swelling. Presented at BASK Source: Slamin, J.E. et al Optimizing Knee Femoral Component Strength and Bone Preservation with Finite Element Analysis. Poster presented at ORS

19 itotal CR: Ligament Preserving Design Ligament releases 1 ConforMIS itotal CR (n=35) 5.7% Off-the-shelf (n=35) 20.0% 0% 5% 10% 15% 20% 25% % of patients with ligament releases p= Source: Katthagen et al; International Congress for Joint Reconstruction WAC

20 itotal CR: More Natural Motion vs. Off-the-Shelf Implants In multiple clinical studies itotal CR patients have demonstrated better kinematic results compared to OTS systems (Zimmer Biomet NexGen, Stryker Triathlon, and Zimmer Biomet Vanguard): More Normal Lateral Roll Back with Deep Knee Bend 1 More Normal Lateral Roll Forward with Chair Rise 2 No Lift-off in Early/Mid Flexion During Knee Bend 3 Abnormal lift-off Increased load & wear 1 Source: Zeller, Komistek et al; International Congress for Joint Reconstruction Pan Pacific Internal data analysis. Zeller, Komistek et al; International Congress for Joint Reconstruction Pan Pacific Source: Zeller IM, Sharma A, Kurtz WB, Anderle M, Komistek RD, Customized Versus Patient Matched Cruciate Retaining Total Knee Arthroplasty: An In Vivo Kinematics Study Using Mobile Fluoroscopy, The Journal of Arthroplasty (2016) 20

21 Clinical Results: Range of Motion Patient Reported Outcomes average of 16 Months Follow-up ( Fast-Track Protocol) 62 patients (32 itotal CR, 30 off-the-shelf), comparable age, sex, BMI ConforMIS itotal CR Off-the-shelf p-value ROM 120 degrees (%) 84% 45% ROM < 100 degrees (%) 0% 14% Overall ROM significantly higher among ConforMIS patients (p<0.001) Source: Richard G. Buch, M.D., Robert W. Eberle, Jason Davis, M.D., and Rylie Buch, MS. Does Implant Design Affect Hospital Metrics and Patents Outcomes? TKA Utilizing a Fast-Track Protocol 21

22 itotal CR: Patient Satisfaction Patient Reported Outcomes 1 Year Follow-up 70 patients (35 itotal CR, 35 off-the-shelf), matched pair analysis (age, sex, deformity) % Off-the-Shelf ConforMIS itotal 50.0 Patient Satisfaction p = 0.04 Knee Injury and Osteoarthritis Outcomes Score p = Source: Katthagen et al; International Congress for Joint Reconstruction WAC

23 itotal CR: Clinical Benefits Bone Preserving Design Less Ligament Releases Natural Motion of the Knee Higher Range of Motion Higher Patient Satisfaction 23

24 Potential OR Cost Savings vs. Off-the-Shelf TKA $$$$ Instrument trays 5 fewer trays 2 Set-Up and Tear Down Time Surgery time 15 minutes less 1 Surgeon OR Staff OR Staff 1 Katthagen et al; International Congress for Joint Reconstruction WAC Mont. J of Knee Surgery Single Use Instrumentation, Cutting Blocks and Trials Decrease Contamination during TKA 24

25 Days Clinical Results: Hospital Discharge Comparison 62 patients (32 itotal CR, 30 OTS), comparable age, sex, BMI ( Fast-Track Protocol) Conformis itotal Off-The -Shelf 1.0 p= Ave length of stay Source: Richard G. Buch, M.D., Robert W. Eberle, Jason Davis, M.D., and Rylie Buch, MS. Does Implant Design Affect Hospital Metrics and Patents Outcomes? TKA Utilizing a Fast-Track Protocol; 25

26 Clinical Results: Hospital Discharge Comparison 62 patients (32 itotal CR, 30 OTS), comparable age, sex, BMI ( Fast-Track Protocol) 120% 100% 97% 80% 60% 66% 80% Conformis itotal 40% 20% 30% Off-The - Shelf 0% <24 Hrs Discharged to home p=0.006 p=0.049 Source: Richard G. Buch, M.D., Robert W. Eberle, Jason Davis, M.D., and Rylie Buch, MS. Does Implant Design Affect Hospital Metrics and Patents Outcomes? TKA Utilizing a Fast-Track Protocol; 26

27 itotal CR: Potential for Economic Savings $2,500 $2,000 $1,500 $1,000 $2,200 A - attributed to a shorter length of stay by 1.1 days. 1 B - attributed to fewer patients discharged to rehab (skilled nursing facility). 2 C - excludes OR savings $500 $1,100 $1,100 $0 A. Hospital Stay Savings B. Discharge Disposition Savings C. Potential Total Savings 27

28 itotal CR: Clinical and Economic Benefits 248 patients (126 itotal, 122 off-the-shelf) 50% 40% 42% >$900 total cost of care savings to payer 1 Off-the-Shelf ConforMIS itotal 30% 30% 20% 12% 14% 16% 18% 10% 2% 3% 5% 8% 0% <3 LOS* Transfusion* Adverse Events (at discharge)* * Indicates Statistical Significance 1,2 Rehab/Post-Discharge Acute Care Facilities* Adverse Events (90 day)* 1 Culler et al; Comparison of Adverse Event Rates and Hospital Costs between Customized Individually Made Implants and Standard Off-the-Shelf Implants for Total Knee Arthroplasty. Submitted for publication. 2 Culler et al; International Congress for Joint Reconstruction WAC

29 Economic Benefits Summary Hospital and Payer Savings OR time Reusable instrument sterilization costs Length of stay Adverse events Discharge to home vs post acute care facilities Rehab cost 29

30 Market Expansion: $7.5B Knee Replacement 1 Cruciate-Retaining (CR) and Partial Knee Replacements (PKR) Posterior-Stabilized (PS) full launch in Q Knee Replacement Market, US, by Revenue, Revision & other 16.6% Revision & other 16.6% PKR 5.6% CR 22.0% PS 55.8% PKR 5.6% CR 22.0% PS 55.8% PS launch nearly triples ConforMIS addressable market from ~ 28% to ~ 83% of knee market 1 Orthopaedic Industry Annual Report idata Research US Market for Large Bone and Joint Orthopedic Devices

31 Targeted Regional Commercial Strategy Targeted Regional Commercial Strategy Target local markets with goal of achieving more than 10% market share Select based on Procedure / surgeon density ASP CJR Focus on high-volume influential surgeons Marketing strategy to increase consumer awareness Market Adoption 2014: 10% market share in 12 US MSAs 2015: 10% market share in 22 US MSAs 2016: 10% market share in 26 US MSAs Source: Based on ConforMIS estimates Provo-Orem, UT Medford, OR Cedar Rapids, IA Miami-Fort Lauderdale-West Palm Beach, FL Port St. Lucie, FL Huntington-Ashland, WV-KY-OH Casper, WY Nashville-Davidson--Murfreesboro-- Boston-Cambridge-Newton, MA-NH Albany-Schenectady-Troy, NY Battle Creek, MI Boulder, CO Las Vegas-Henderson-Paradise, NV Dayton, OH Gainesville, GA Mobile, AL Colorado Springs, CO Naples-Immokalee-Marco Island, FL Canton-Massillon, OH Riverside-San Bernardino-Ontario, CA Bay City, MI Lewiston-Auburn, ME New Haven-Milford, CT Macon, GA Dallas-Fort Worth-Arlington, TX Fort Wayne, IN 0% 5% 10% 15% 20% 25% 30% 35% 31

32 DTC - Empowering the Patient to Drive Adoption 1. Track My Implant Patient Engagement 2. Live-Patient Education Department Prescribed patient opt-in at office Six points of engagement featuring each stage of manufacturing process Keeps patient engaged with surgeons office and drives surgeon pre-op protocol No cost for enrollment 3. Patient Ambassador Program 4. Viral Marketing Provide personal customer experience for each qualified inquiry Educate on ConforMIS vs off-the-shelf Provide surgeon names from locator Provide second opinion resource Builds customer intelligence and market research Creates quality surgical leads Real ConforMIS Patients Ambassadors are the center of our new real patients ad campaign Speak to other patients considering ConforMIS Consumer Facing Brand - easy to remember Encourage patient participation Establishes emotional connection to brand Encourages Social media sharing New website Cornerstone of our consumer facing brand Conversation Starter Fun and Relatable Fills pipeline for future ambassadors and media stories 32

33 Co-Marketing - Empowering the Patient to Drive Adoption 1. Regional News Media - Traditional 2. Regional Microsites Google paid search; drives new patients into office 3. Regional Patient Seminars 4. Regional Advertising 33

34 Ambulatory Surgery Center (Outpatient) Opportunity Outpatient procedures expected to grow in near term Driven by economics, surgeon reimbursement, advanced technologies Reimbursement - Medicare considering, private allowing selectively ConforMIS Value Proposition Single-use, pre-sterilized kit No implant inventory (limited space) Only one reusable instrument tray (limited sterilization capacity) Simplified procedure, setup and turnover Fewer adverse events, transfusions and release to post-acute care More patients released within 24 hours ConforMIS Investing to Win in ASC Outpatient program developed based on surgeon education Hiring dedicated ASC sales position to sell value proposition Differentiation messaging versus Off the Shelf 34

35 ConforMIS IP & Financials 35

36 Broad IP Portfolio ~450 patents and pending patent applications owned or exclusively licensed IP covers all joints and spine Patient-Specific Instruments (PSI) Core patents expected to expire Customized Orthopedic Implants Core patents expected to expire Wright Medical and MicroPort License agreements executed April 2015 Use of patient-specific instruments; not customized implants Wright lump-sum payment MicroPort lump-sum payment plus ongoing royalties High single digit to low double digit on PSI & associated implant sales Smith & Nephew Lawsuit filed February 2016 Alleges that Smith & Nephew s Visionaire patientspecific instrumentation and associated implants infringes multiple CFMS patents 36

37 Millions Product Revenue Growth Product Revenue Key Drivers $90.0 $80.0 $70.0 $60.0 $50.0 $40.0 $30.0 $20.0 $10.0 $0.0 Annual YTD 26% 30% 39% 40% $78.9 $62.8 $48.2 2% $34.6 $24.6 $20.0 $ YTD'16 YTD'17 Represents YoY Growth Leverage clinical and economic benefits Sales force expansion Targeted regional commercial strategy Growth of itotal CR, iuni, iduo Full launch of itotal PS 2017 Guidance Total revenue $80M to $84M Product revenue $79M to $83M / CC growth 1-6% Underlying CC growth 10-15% adjusted for recall delayed surgeries and change in Germany partial knee reimbursement Royalty revenue $0.8M Gross Margin 36% to 38% 37

38 Millions Product Gross Margin Growth Product Gross Profit / Margin Key Drivers 30 Annual 33% YTD Reduce material cost Progressive vertical integration 25 3D printing, CNC machining % 28% Vendor pricing - Increase volume Reduce labor cost Design time reduction with progressive % 17% 32% 32% software releases Leverage lower labor cost OUS Overhead absorption - Increase volume YTD'16 YTD'17 Represents product gross margin % 38

39 Summary

40 Long Range Goals 2017 Guidance Long Range Goals Product Revenue $79M - $83M Consistent Revenue Growth Underlying Growth 10% - 15% CC Expansion of Gross Margin Gross Margin 36% - 38% Path to Profitability Improved Commercial Execution Focused Operations Platform Expansion 40

41 Compelling Investment Thesis ~ $15B joint replacement market Proprietary platform technology for customized joint replacement implants Superior clinical outcomes Economic benefits Broad IP portfolio Highly scalable business model 41

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43 Thank you