Business Update. May Duncan Ross CEO Peter Manley CFO

Transcription

1 Business Update May 2014 Duncan Ross CEO Peter Manley CFO 1

2 Investment Summary ASX Code: ACG Ordinary Shares on Issue:157.4m Market $0.12: $18.9m Options on Issue: 20.2m (price range $ $0.165) 2014 share price range: $ $0.17 Average daily share volume (2014): 0.6m Cash 31 Dec: $4.1m $0.250 $0.200 $0.150 ACG share performance vs. Small Ordinaries index $0.100 Substantial Holders % $0.050 ACG.ASX XSO.ASX CB Co Pty Ltd (Curran family) 14.2 $0.000 Directors & staff 14.7 Top

3 The SphygmoCor Product What does SphygmoCor do? Addresses the key cardiovascular risks: Heart failure, Heart attack, Stroke Provides key heart function parameters of cardiovascular function and risk : Blood pressure at the heart Load on the heart Coronary artery pressure Timing of the heart pumping cycle, and Measures of arterial stiffening Reference standard aortic pulse wave velocity Such central data is only otherwise available via an invasive catheter into the ascending aorta of the heart 3

4 The SphygmoCor Product How does it work? SphygmoCor Central Pressures Records the blood pressure pulse waveform at the arm, noninvasively Using this recording, it derives the blood pressure pulse waveform at the heart From this pressure pulse waveform at the heart, SphygmoCor then calculates: central aortic blood pressures certain key heart function parameters Compares these patient parameters against population normals to assess CV status Pulse Wave Velocity Considered gold standard measure of arterial stiffness Based on the pulse transit time from carotid to femoral artery SphygmoCor is the reference device, most widely used and published 4

5 The SphygmoCor Product Why are central pressures important? A traditional blood pressure device provides limited clinical information other than the systolic and diastolic pressure experienced by a patient in their arm. Brachial Identical Systole Brachial measures are a poor surrogate for central (aortic) pressures, which are always lower but the magnitude of the difference differs significantly between individuals, resulting in misdiagnosis and over/under treatment regimens Clinical evidence is now well established that central pressure is a stronger predictor of future cardiovascular events than traditional brachial (cuff) pressures and drug effects are many times different centrally. Majority of the clinical evidence generated is the direct result of clinical studies undertaken using AtCor s SphygmoCor device. Clinical evidence encompasses both major longitudinal studies and randomised controlled trials which to date encapsulates over 22,000 patients. Competitor devices lack the depth and breadth of AtCor s evidence Central Large difference centrally Important implications for how hypertension is both diagnosed and managed clinically SphygmoCor detects cardiovascular diseases earlier and substantially improves patient management 5

6 The SphygmoCor Product Where does it fit in clinical practice? Tools to Assess a Patient s Cardiovascular Status Severity of Patient Condition ROUTINE MILD MODERATE SEVERE Non-Invasive Invasive Traditional Devices / Tests Cuff BP ECG Stress ECG Ambulatory BPM (24-Hr) SphygmoCor Echocardio - graphy Doppler ultrasound Cardiac Catheterisation & Angiography Relatively inexpensive. Performed in doctor s offices Relatively expensive. Performed in specialist clinics and hospitals 6

7 Recent Company Highlights Pulse Wave Velocity meta-analysis from 16 studies finds improved cardiovascular risk prediction SphygmoCor XCEL approved for sale in China and Canada Randomized controlled trial improved outcomes from SphygmoCor guided therapy in heart failure patients 1 Cardiac output patent granted in USA SphygmoCor XCEL launched at major medical meeting in China Growing evidence over 25 new studies in past 90 days utilising SphygmoCor Approaching 800 in total US $23.5m in total sales opportunities under management (Pharma, Clinical, Research) Angy China Medical, AtCor s Chinese distributor, host visitors at their stand at the recent China International Medical Equipment Fair in Shenzen (17-20 April, 2014). 1 A Randomized Pilot Study of Aortic Waveform Guided Therapy in Chronic Heart Failure, Barry A. Bourlag, Thomas P. Olson et al, J Am Heart Assoc 2014;3:e

8 Financial Performance 1H2014 Profit & Loss (A$ 000) 1H2014 1H2013 Revenue from sales of goods & services 2,674 5,429 Gross Profit 2,192 4,777 Other income/revenue Sales & marketing expenses (1,898) (1,577) Other expenses (1,808) (1,841) Depreciation & amortisation (47) (73) EBIT (965) 2,267 Other income & expenses 6 1 Income tax benefit/(expense) - - Net profit/(loss) (959) 2,268 Sales lower pharma contract delays v pcp Strong gross margins at 82% Expenses contained - 1% increase in constant currency vs. pcp Cash flow positive for 3 consecutive half years Cash Flow (A$ 000) Cash flows from operating activities 1H2014 1H2013 Receipts from customers 4,393 4,249 Payment to suppliers and employees (4,339) (4,132) Other income (grants, R&D tax etc) Cash flows from investing activities 464 1,099 Payments for P,P&E (25) (60) Cash Flows from financing activities Net proceeds from issue of shares & option exercise (25) (60) 734 (14) 734 (14) Net increase (decrease) in cash 1,173 1,024 Cash at beginning of period 2,874 1,117 Effect of FX rate changes 55 (3) Cash at end of period 4,102 2,138

9 Geographic split of revenue Sales by Region Highlights A$m Pharma Americas EMEA Apac 1H2013 1H2014 Pharma 1H2014 impacted by the deferral/delay of new contract signings and a record 1H2013 Americas Clinical growth 77% Large US Government order 1H2013 not repeated 1H2014 EMEA EMEA up 5% assisted by currency Average sell price maintained APac A/Pac up 13% on the pcp Driven by strong domestic sales 9

10 Multiples and Context Company Ticker Market Cap (A$m)* Cash (A$m) EV ($m) 1H2014 Sales (A$m) EV/Sales (x) Market Cap/Sales (x) Ellex Medical Lasers ELX EPS (cents) Uscom UCM (0.90) LBT Innovations LBT (0.87) Azure Healthcare AZV Impedimed IPD (0.02) Nanosonics NAN (1.33) Somnomed SOM (0.37) AtCor Medical ACG (0.63) AVERAGE * Mkt cap as at Apr 28 th 2014, sales & cash as at Dec 31 st 2013 Attractively Priced v ASX Comps 10

11 Four Distinct Market Segments..Annual global market potential US$500m Clinical Specialist Cardiologists, Hypertension, Nephrologists (kidneys), Endocrinologists (diabetes) Academic-based specialists Only 2% of potential market converted Clinical - Primary Care GP s, internists, executive health, wellness centres, etc. Future market opportunity (0% converted) Clinical - specialist $100m Clinical - primary care $268m Pharma trials $110m Pharmaceutical trials Cumulative 5 year sales $23m or approx. 5% of potential market converted Research $22m Research - Academia Universities & Hosp. Affiliated 15% of potential market converted Current served market US$232m * Early Days - Big Runway Ahead * i.e. all sectors except Clinical primary care 11

12 Research Market US$22m annual opportunity Market Drivers Provides key parameters for predicting CV disease Leading edge technology Breadth of features Well validated Global research interest in CV disease prevention AtCor Value Proposition Universally accepted gold standard Measures central aortic BP, pulse wave velocity and heart rate variability all in the same device More than 700 peer reviewed journals articles Strong relationships with research group and associations 15% of market converted SphygmoCor used in more than 75% of sites 12

13 Pharmaceutical Trials Market US$110m annual opportunity Market Drivers Ability to better understand & differentiate drugs Meet new regulatory mandates for cardiac safety Superior product & service offering AtCor Value Proposition Exceptional service through secured proprietary data management 100% client retention rate SphygmoCor systems & new product offering through joint development with SunTech Medical 30 pharma trials completed or in progress since % of market converted almost 100% SphygmoCor used in these studies US$15.5m in opportunities under management with 10 global companies 13

14 Clinical Practice-Specialists Market US$100m annual opportunity Market Drivers Improved patient outcomes Easy to use technology Rapid data generation & interpretation Cost effective for doctor & patient Reimbursed by health plans Strong clinical evidence of utility AtCor Value Proposition SphygmoCor XCEL designed specifically for clinical market Cuff based; familiar and intuitive to doctors Category 3 CPT code in place in USA (0311T) Current reimbursement from payers - $40-$100/test (CPT1 filing 2H CY2014) Medical association support (RPA, ASH, National Medical Assoc., etc) Only 2% of specialist market converted Over 80% US & AUS share is SphygmoCor dominant position off a low base 14

15 New Market Opportunities China Large market with growing middle class >36% of population aged 45 or older have hypertension SphygmoCor XCEL approval Jan 2014 Distributor Angy (China) Medical Ltd Cardiology-focused division 20 sales managers & 135 sub-distributors Sales offices in Beijing, Shanghai, Guangzhou, Chengdu, and Changsha South Korea 50 million population 30% men and 17% women with hypertension Strong awareness of central blood pressure (cbp) SphygmoCor in use in 13 key public hospitals SphygmoCor XCEL approval Aug 2013 Distributor DK Medical Solutions Co. Ltd Dedicated cardiology team - Product mgr and 5 sales execs National coverage offices in Seoul, Teaju & Pusan 15

16 New Independent Studies Momentum Building Over 25 new studies involving SphygmoCor have reported in the last 90 days Broad range of research into areas including kidney transplant, sleep apnea, preeclampsia, congenital heart repair, arthritis, etc. Subjects studied > 2,500 Highlights the continued interest in SphygmoCor as a vital tool in the detection and management of cardiovascular disease, globally Critical in building clinician awareness and brand recognition prior to more widespread reimbursement following CPT 1 coding in the US Supports Clinical Adoption 16

17 Key Areas of Focus Clinical Specialist Sales Pharmaceutical Sales Strategic Alliances & Business Development Build on early success globally, focus on US and APac markets Support and complement RPA initiative to file for US category 1 CPT CY 2014 Harvest deals while replacing US$15.5m sales funnel Continued diversification increasing range of global companies & therapeutic areas Launch new product with SunTech Medical within next 90 days Complete current study with global device company in cardiac pacemaker optimisation Continue work in cerebral vascular & cognitive function applications Complete study in cardiac output - intensive care application 17

18 Reimbursement Current CPT3 code in place (0311T) Effective 1 Jan 2013 Criteria Status Notes US FDA Cleared Since 2002 Renal Physicians Association (RPA) advancing application to convert to CPT1 Procedure or service is performed by many physicians or other qualified health care professionals across the United States. 190 clinical practices >300 physicians; On track to file in 2H CY2014 If successful will take effect 1 Jan 2016 American Medical Association (AMA) criteria in place for CPT1 conversion The procedure or service is performed with frequency consistent with the intended clinical use The procedure or service is consistent with current medical practice Procedure volume requirements established by US Renal Physicians Association (Code sponsor) on track Specialists managing complex and resistant cases of hypertension Continue to pursue local coverage decisions with Medicare providers and private health plans The clinical efficacy of the procedure or service is documented in literature that meets the requirements set forth in the CPT code change application. Meets criteria including highly valued randomized control BP Guide study A CPT1 code gives physicians an easier path to being paid for tests, therefore motivated to invest in a technology 18

19 Clinical data Critical for driving/supporting physician uptake Critical Clinical publications in last 12 months BP Guide use of central pressure to manage hypertension patients, improves patient care and reduces costs (286 subjects p < 0.05). Optimum blood pressure control with fewer drugs and side affects Critical win for patients and payers Aortic pulse wave velocity (PWV) improves cardiovascular event prediction: an individual participant meta-analysis of prospective observational data from (17,635 subjects- p < 0.001) Found that aortic stiffness, as measured by PWV, predicts future CV events and mortality Joint Heart Failure study with the Mayo Clinic and Uni Arizona. Aim is to demonstrate improved heart function and reduced care costs (50 subjects p < 0.05). Found more effective use of drug therapies with no increased risk to patients Key clinical publications expected in next 12 months Central vs. brachial pressure in CV risk assessment; Meta-Analysis. >22,000 patients Reinforces clinical utility of central pressures from major studies over past 10 years Anticipated by regulators evaluating more widespread adoption in drug safety 19

20 Leverage Technology and IP-Partnering SphygmoCor is a platform technology Hypertension mgmt & related disorders Primary markets for AtCor Includes kidney disease and diabetes Mayo heart failure study reported & meta analysis to report this year Pacemaker optimisation Pilot study underway with major in FY2014 Underserved market Already reimbursed Cerebral vascular & intensive care Working with Macquarie University on IP Parallel investigation with European device company Alliances Allows product & market development without losing focus on primary markets New product on target for launch within 90 days 20

21 Milestones The next 12 months Improved performance in pharma Large sales funnel Diversification with new clients Reimbursement RPA to file in 2H CY2014 CPT 1 coding decision FY2015 Clinical studies & evidence Central Pressures meta analysis to be completed and published Launch new products and market segment presence Joint development with SunTech product launch Sales into new market segments Advance new business & IP development Complete pilot studies in cardiac rhythm management, plan steps to market launch Complete cerebral vascular feasibility studies with European partner 21

22 Summary Well Managed Business- significant upside Strong operating leverage-profitable at sales of $9.0m and above (current fx) Adequate Cash to Meet Objectives Core Focus - Clinical Specialist & Pharma Markets Key Alliance Partners for Core Markets & OEM True Platform Technology US$500m Annual Market Opportunity - Massive Runway CPT 1 Success would be Major Rerating Event 22

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