microcapclub invitational: misonix (mson)
DESCRIPTION
The U.S. medical device industry continues to grow at a brisk pace, thanks to an aging Baby Boomer population, high unmet medical needs and increased incidence of lifestyle diseases (including cardiovascular diseases, diabetes, hypertension and obesity). The global medical device market is expected to reach $300 billion by 2017 with a CAGR of 6.1% over the next several years (2011-2017). Misonix (MSON) is aggressively pursuing a $3 billion+ piece of the market with their ultrasonic medical devices. Last quarter the company grew revenues 42%, with the highest growth occurring internationally. Misonix’s three core products grew at an impressive 220% (BoneScalpel), 97% (SonicOne), and 21% (SonaStar) year over year respectively. More importantly we expect profitable growth in 2013 and beyond. Listen to CEO Michael McManus as he tells the story.TRANSCRIPT
R
CORPORATE PRESENTATION January 2013
MISONIX, INC. (NASDAQ: MSON)
ADVANCING ULTRASONIC SURGERY
2 R
Forward Looking Statements
With the excep�on of historical informa�on contained in this presenta�on, content herein may contain "forward looking statements" that are made pursuant to the Safe Harbor Provisions of the Private Securi�es Li�ga�on Reform Act of 1995. These statements are based on management's current expecta�ons and are subject to uncertainty and changes in circumstances. Investors are cau�oned that forward-‐looking statements involve risks and uncertain�es that could cause actual results to differ materially from the statements made. These factors include general economic condi�ons, delays and risks associated with the performance of contracts, risks associated with interna�onal sales and currency fluctua�ons, uncertain�es as a result of research and development, acceptable results from clinical studies, including publica�on of results and pa�ent/procedure data with varying levels of sta�s�cal relevancy, risks involved in introducing and marke�ng new products, poten�al acquisi�ons, consumer and industry acceptance, li�ga�on and/or court proceedings, including the �ming and monetary requirements of such ac�vi�es, the �ming of finding strategic partners and implemen�ng such rela�onships, regulatory risks including approval of pending and/or contemplated 510(k) filings, the ability to achieve and maintain profitability in the Company's business lines, and other factors discussed in the Company's Annual Report on Form 10-‐K, subsequent Quarterly Reports on Form 10-‐Q and Current Reports on Form 8-‐K. The Company disclaims any obliga�on to update its forward-‐looking rela�onships.
3 R
Company Overview
Misonix, Inc. (Nasdaq: MSON) develops ultrasonic surgical devices for use in a wide variety of procedures
Focused medical device company; divested non-core businesses in 2008 - 2012
Operates in a recurring razor / razorblade model – 39.2% of revenues recurring – FY 2012 – 40.0% of revenues recurring – 1st Quarter FY
2013 Misonix’s products are protected by strong patent
portfolio – Over 40 patents
Large worldwide revenue generating installed base; consistently growing
Products aimed at large and rapidly growing aging demographic
Revenues
$8.1 $9.7 $8.7 $10.7 $12.4 $15.7
$4.6 $0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Q1 2013
Total Medical Revenue Total Other Revenue
$42.4 $45.5
$39.8
$13.4 $14.4
$ m
illio
ns
4 R
Company Highlights
Substantial Recurring Revenue Component – 40.0 % of revenues recurring – First Quarter 2013 – 39.2% of revenues recurring – FY 2012 – 48% of revenues recurring – FY 2011
Strong Balance Sheet – $6.7 million cash (approximately 20% of current market value) – ZERO long-term debt
Revenue Growth – FY 2013 - First Quarter – 42% growth –First Quarter 2013 vs. 2012 – BoneScalpel TM – 220% growth - First Quarter 2013 vs. 2012 – SonaStar® – 21% growth - First Quarter 2013 vs. 2012 – SonicOne™ - 97% growth - First Quarter 2013 vs. 2012
Improving Gross Margins – 59.7% GM – First Quarter 2013 – 59.0% GM – FY 2012 – 58.0% GM – FY 2011
5 R
Addressable Market H
ard
Tiss
ue
Market Segment Surgical Specialties
Competition Market size Worldwide
BoneScalpel™ Spine
Orthopedics Neuro
High-speed Burr $ 300 M *
Small bone Maxillofacial Reconstructive ENT Hand, Foot & Ankle
Micro saw $ 300 M *
Total $ 600 M *
* Millennium Research Group 2010 ** Misonix Estimates
Soft
Tiss
ue
Market Segment Surgical Specialties
Competition Market size worldwide
SonicOne® Surgical Debridement Plastic Reconstructive General Vascular
Waterjet Scalpel, Curette
$ 300 M **
Ambulatory Debridement
Podiatric General Vascular
Ultrasonic Debridement Scalpel, Curette
$ 100 M **
Total $ 400 M **
Soft
Tiss
ue Market
Segment Surgical Specialties
Competition Market size worldwide
SonaStar® Tumor Resection
Neurosurgical General
Ultrasonic Aspirators Waterjet
$ 100 M **
Total $ 100 M **
6 R
Sales & Distribution
Domestic – Hybrid Sales Organization
2 Direct Neuro/Spinel Sales Territories
28 Contract Neuro/Spinel Sales Agencies with over 100 salespeople
9 Contract Wound Sales Agencies with over 40 salespeople
Supported by Misonix Sales directors (2) and regional Business Development Managers (10)
International – Specialty Distributor Organization
45 Specialty Distributors with over 200 salespeople
Supported by Misonix Sales Directors (2) and Application Specialists (3)
Private Label –
Aesculap is non-exclusive in the U.S. only for spine and cranial applications of BoneScalpel
R
Product Overviews
8 R
BoneScalpel™: Overview
Ultrasonic Bone Cutting System Precision cuts with minimal loss of bone Spares soft tissue structures like delicate nerves* Improved patient safety* Relatively bloodless field – US’s hemostatic affect* Encourages new surgical techniques* Faster overall procedure time*
Addressable Market $300 million current worldwide market for spine. $300 million maxillofacial, reconstructive and other
small bone procedures
Hospital Price Points (ASP = Average Sales Price) $35,000 ASP per capital system sale with $400 ASP for
consumables per use $500 ASP for consumables with consignment
placement and minimum monthly purchases
Competition Medtronic, Anspach, Stryker, Aesculap, Synthes,
Stryker, MicroAire – Power Drills & Saws
$0.0 $0.2
$1.1
$3.3
$2.5
$4.8
$2.1
-‐$0.5
$0.5
$1.5
$2.5
$3.5
$4.5
$5.5
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Q1 2013
BoneScalpel TM Revenues
* Clinical Study completed at CHC Hospital, Liege, Belgium ** 2009 data from Hospital Discharge Survey & H-CUPnet
$ m
illio
ns
9 R
Drive Unit Placement: BoneScalpel™
13 19 18
29
18
33 30
43
57
0
10
20
30
40
50
60
Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12
# of Units Sold/Placed
498 670 860
4,789 4,374 4,114
6,810 7,188
8,777
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12
# of Consumable Sold
Management Initiatives
Target teaching hospitals to ensure future users, including the use of ‘hands on’ workshops, cadaver labs and other clinical education programs
Expand global network of clinical thought leaders
Expand export network of specialty distributors
Expand quantity and improve quality of domestic sales agents and direct representatives
Utilize personal referrals from present users worldwide
Expand number of using surgeons in each hospital
Penetrate spine and maxillofacial markets by expanding into additional surgical procedures
Fiscal 2012
Fiscal 2012
10 R
SonicOne®: Overview
Tissue Selective Wound Debridement for diabetic foot ulcers, venous ulcers, pressure ulcers, burns, trauma wounds and infected bone
Ultrasound effectively debrides and cleanses soft tissue, eschar, infected bone
Ultrasound has been shown to shorten healing times1
Reduces number of debridements required1
Ultrasound is effective in disrupting, inactivating and removing bacterial organisms2
Addressable Market $400 million worldwide
Hospital Price Points (ASP = Average Sales Price) $35,000 ASP per capital system sale with $400 ASP for
consumables per use, or, $1,995 per month rental, minimum 1 year + consumables
$500 ASP for consumables with consignment placement & minimum monthly purchases
Competition
Soering, Arobella, Smith & Nephew 1Clinical Study completed at Calvary Hospital, Bronx, NY 2 Study conducted by Brook Army Medical Center, San Antonio, TX
$0.2 $0.3
$0.7 $0.7
$1.1
$1.3
$0.5
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Q1 2013
SonicOne®Revenues
$ m
illio
ns
11 R
Drive Unit Placement: SonicOne®
10
5 6
4
7 7
2
10 11
0
2
4
6
8
10
12
Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12
# of Units Sold/Placed
1,400
2,922
1,710
1,341
2,417 2,672
2,450 2,798 2,836
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12
Fiscal 2012
# of Consumable Sold
Management Initiatives
Establish market leadership in Ultrasonic Wound Debridement by penetrating the inpatient surgical market segment
Large, full service hospitals
Burn hospitals
Long term acute care (LTAC) hospitals
Government hospitals
Leverage full range of customer acquisition models
Capital purchase, rentals, and fee per use
Strengthen clinical proof and its communication
Leverage global network of key opinion leaders and the referral base they can provide
Target diabetic foot ulcers; 11 million per year worldwide
Leverage sales of synergistic products to own the wound healing treatment protocol
Fiscal 2012
12 R
SonaStar®: Overview
Tissue Selective Tumor Removal
Fragmentation, emulsification and aspiration of targeted tumors or tissue
Precise bone sculpting for anatomical access
Neuro and General Surgeries
Addressable Market
$120 million worldwide, including:
5,000 brain tumor surgeries per year
7,000 liver resection surgeries per year
Hospital Price Points (ASP = Average Sales Price)
$85,000 ASP per capital system sale with $500 ASP for consumables per use, or, $4,500 per month rental, minimum 3 months + consumables
Competition Integra Life Sciences, Stryker, Soering
$2.3
$3.5
$2.4 $2.1
$4.1
$5.9
$1.6
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Q1 2013
SonaStar®Revenues
$ m
illio
ns
13 R
Drive Unit Placement: SonaStar®
9 8 9
14
18 18 16
30
21
0
5
10
15
20
25
30
35
Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar 12 Jun12 Sep12
# of Units Sold
1,290 877
2,190
3,869
3,219 3,340
4,182
3,381 3,646
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12
# of Consumables Sold
Management Initiatives
Expand network of export specialty distributors
Expand quantity and improve quality of domestic sales agents and direct representatives
Emphasize high margin consumables business
Target teaching hospitals to ensure future users
Tap into large liver surgery market for aspirators
Leverage full range of customer acquisition models
capital purchase, leasing, rentals, and fee per use
Fiscal 2012
Fiscal 2012
14 R
Additional Products
AutoSonix
Ultrasonic shears for laparoscopic cutting &
coagulation
Licensed to Covidien, exclusively, worldwide
Manufactured pursuant to Misonix patents
Market size is approaching $ 1.0 billion worldwide,
Covidien’s market share is approximately 5%
LySonix
Ultrasound-assisted liposuction
Distributed by J&J exclusively in the U.S.A., non-
exclusive elsewhere
Manufactured pursuant to Misonix patents
Market size is 1.6 million liposuction procedures
worldwide, dominated by U.S., China and Brazil
$5.6 $5.7
$4.5 $4.5 $4.7
$3.7
$0.4
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Q1 2013
Addi�onal Medical Products Revenues
$ m
illio
ns
15 R
Strategic Direction
1. Drive unit placements of BoneScalpel, SonicOne and SonaStar via capital sales, rentals, and “no cap” placements that feature high margin consumables and minimum purchase requirements
2. Focus on high margin consumables for all product platforms
3. Enhance efficiencies through more effective sales and marketing efforts
4. Leverage the benefit of growing worldwide distribution
5. Continue to add distribution agreements for other high margin products synergistic to our base businesses in wound care, neurosurgery and spine surgery
R
Financials
17 R
Total Revenues*
$2.7 $2.8 $3.1
$3.8
$3.2
$3.6 $3.6
$5.3
$4.6
Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 $0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
Quarterly Revenues
*As a pure play medical device company
$12.4
$15.7
$4.6
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
FY 2011 FY 2012 Q1 2013
$ m
illio
ns
Revenues
$ m
illio
ns
Fiscal 2012
18 R
Gross Margins*
54.7%
63.4%
55.1%
56.2%
54.8%
63.9%
58.7%
57.7%
59.7%
Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 50%
52%
54%
56%
58%
60%
62%
64%
66%
Quarterly Gross Margins
*As a pure play medical device company
57.3% 58.8% 59.7%
0%
10%
20%
30%
40%
50%
60%
70%
FY 2011 FY 2012 Q1 2013
Gross Margins
Fiscal 2012
19 R
R&D vs. S&M
$0.46 $0.42 $0.41 $0.42 $0.39
$0.30 $0.33 $0.35
$0.40
$1.0
$1.1 $1.1
$1.3
$1.2 $1.2 $1.2
$1.4
$1.5
Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 $0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
R&D S&M
Fiscal 2012
R&D vs. Sales and Marke�ng
$ m
illio
ns
20 R
Enhance Efficiencies: Operating Expense
$2.4 $2.4 $2.5
$2.7 $2.7 $2.6 $2.6
$2.9 $2.9
Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 $0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
Fiscal 2012
Operating Expense
Management Initiatives Focus on surgical market segments, which
feature high margin consumables and satisfactory reimbursement
Develop and introduce additional disposable line extensions that address new surgical applications
Endeavor to consistently control and/or reduce manufacturing costs, thus improving margins
Patent technology whenever possible Management Ac�ons
Reduced headcount Increased effectiveness via
multi-tasking
Lowered operating costs by reducing size of facility and number of personnel
Streamline operations for efficient production and support functions
$ m
illio
ns
21 R
EPS (from continuing operations)*
($0.12)
($0.08)
($0.06)
($0.09)
($0.12)
$0.03
($0.03)
$0.03
$0.01
Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 ($0.16)
($0.11)
($0.06)
($0.01)
$0.04
$0.09
$0.14
Fiscal 2012
Quarterly EPS
*As a pure play medical device company
($0.30)
($0.09)
$0.01
($0.35)
($0.25)
($0.15)
($0.05)
$0.05
$0.15
$0.25
$0.35
FY 2011 FY 2012 Q1 2013
EPS
22 R
Selected Balance Sheet
• Cash and investments: $6.7M • $0.95 per share
• Net Working Capital: $12.0M • $1.71 per share
• Total Shareholder Equity: $15.7M • $2.24 per share
• ZERO Long-‐term debt
• Shares Outstanding: 7.0M
• Total NOLs: $7.5 Million • Expire 2026– 2031
Misonix (Nasdaq: MSON)
Stock Price: $4.53*
Market Cap.: $31.7 M*
*as of November 5, 2012
23 R
Key Takeaways
Implemen�ng high margin consumables-‐based recurring revenue business model
60%+ Gross Margins a�ainable
Strong leverage built into opera�ng model Products are fully developed and marketable Focus on opera�ng expenses and efficiencies R&D and S&M investments posi�on company
for improved opera�onal and financial results
Strong patent por�olio
Strong balance sheet Solid cash posi�on ZERO long-‐term debt 20% of market cap is cash
24 R
Management Team
Michael A. McManus, Jr. CEO since late 1998. Former President and CEO of New York Bancorp, Inc. before which he held senior positions with Jamcor Pharmaceutical, Pfizer and Revlon. Prior Assistant to President Ronald Reagan.
President, CEO
Richard Zaremba With company since early 1999. Former VP and CFO of Comverse Information Systems, a manufacturer of digital voice recording systems. Prior VP and CFO Miltrope Group, Inc.
Senior VP, CFO Treasurer, Secretary
Michael C. Ryan Joined in 2007. Former Senior VP and General Manager for Nomos Radiation Oncology. Prior Executive VP Business Development for Inter V, Inc. -- a medical device company marketing specialty products for interventional radiology and cardiology.
Senior VP, Sales & Mkt’g.
Dan Voic Approximately 15 years of senior scientific experience at Misonix. Expertise and training in all phases of ultrasound technology. VP, R&D and Engineering
Ronald Manna Present position since 2002. Former VP of R&D and Engineering, VP of Operations and Director of Engineering of the Company. VP, Regulatory Affairs and
Quality
Frank Napoli Joined in 2004. Former VP of Manufacturing for Spellman High Voltage Electronics Corp. Prior Director of Manufacturing for Telephonics Corporation. VP, Operations
R
CORPORATE PRESENTATION January 2013
Thank You
ADVANCING ULTRASONIC SURGERY