Staar Surgical Company · NASDAQ:STAA
Staar Surgical — BMO Tenth Annual Healthcare Conference 2010
33 slides from Staar Surgical's conference presentation, Aug 5, 2010
Slide 1: STAAR Surgical at BMO Tenth Annual Healthcare Conference
TAABY SURGICAL (NASDAQ: STAA) Cataract IOLs Refractive ICLs August BMO Tenth Annual Healthcare Conference August 5, 2010
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS All statements in this presentation that are not statements of historical fact are forward-looking statements, including any projections of earnings, revenue, profit margin, cash or other financial items, any statements of the plans, strategies, and objectives of managemen
Slide 3: STAAR Investment Considerations
STAAR Investment Considerations = I'wo Large Market Opportunities = Two Differentiated Product Lines = Strong Barriers to Enter = Strong Balance Sheet = Generating Growth and Expected Profitability in 2010
Slide 4: STAAR Surgical
STAAR Surgical (NASDAQ: ST'AA) urgical | echnology And Applied Research Leaders of Innovative Ophthalmic Devices = Foldable Intraocular Lens (IOL) = Collamer® Material = Toric IOL = IOL Delivery Systems (Preloaded, small incisions) = Implantable Collamer Lens (ICL™) STAAR’s business is
Slide 5: Intraocular Lens (IOL)
Intraocular Lens (IOL) Lens Placed within the Eye Aphakic IOL Phakic IOL Cataract Refractive
Slide 6: Surgical Refractive Correction Market
Surgical Refractive Correction Market Up to 1.5 billion nearsighted people worldwide 5 Million Refractive procedures WW by 2014 7.7 % CAGR LASIK challenged by economy and technology’s limitations Source: The Global Refractive Surgery Market by Market Scope November 2009
Slide 7: Refractive ICL Competitive Landscape
Refractive ICL Competitive Landscape Other players: = Ophtec (Anterior Phakic IOL) = Ina few countries they may have a 20% share = AMO has marketed as distributor with little success = Alcon-Novartis (Anterior Phakic IOL) = CE Mark Approval in August 2008 = Very little success in Europe = Seem to be
Slide 8: Visian ICL
sf Visian® ICL Implantable Collamer Lens better known as “the ” Made from a allowing placement between the iris and natural lens from 3 diopters to 15 diopters for patients ages of 21 to 45 in U.S. while the hyperopic version (HICL) corrects hyperopia (farsightedness). Available OUS
Slide 9: Refractive Procedures
Refractive Procedures Laser Based Lens (ICL) Based Visian ICL
Slide 10: ICL vs. LASIK
ICL vs. LASIK Adds a lens into the eye Permanent but Provides UV protection No dry eye 99% satisfied after five years with ICL Cannot be reversed No UV protection Potential dry eye High percent of enhancements
Slide 11: Superior Data for Young Adults in the Military with Low Myopia
Superior Data for Young Adults in the Military with Low Myopia “Weapons Grade Vision” 20/10 or better 9% 4% 20 ee 20 or better 100% 70-80% —= opic error 7.1 *Eyes with pre-op cylinder of 1D or less.
Slide 12: Visian ICL Growth Dynamics
VISIAN ICL GROWTH DYNAMICS = Approval in Japan of the Visian ICL in February = Submission of the Visian TICL filed = Actively responding to questions from PMDA on submission = Myopic error demographics makes the opportunity equal to U.S. u Submission in U.S. of the Visian Toric ICL = Currently marke
Slide 13: Toric ICL Clinical Data
Toric ICL Clinical Data 71% of eyes post-op Uncorrected Visual Acuity was the same or better than the Best Corrected Visual Acuity pre-op
Slide 14: New ICL CE Mark Approval
New ICL CE Mark Approval May 2010 Adds -0.5 D to -2.75 D for low myopes Adds +0.5D to +2.75 D for low hyperopes Visian Toric ICL range expanded = Upto 6 D treatments for the entire range
Slide 15: Visian ICL Grows Despite Economy
Visian ICL Grows Despite Economy ‘Top Ten Refractive Markets 09 Pr s 09 ICL Growth 786,000 Flat 724,000 +37% 427,000 (17%) 141,000 +1% 128,000 +79% 119,000 +21% 111,000 +87% 110,000 (1%) 110,000 (ip) 75,000 +82% 2,731,000 °10% ICL market penetration equals $200M at 85% to 90% GM +* Estimate as Marke
Slide 16: Worldwide Cataract Market
Worldwide Cataract Market “Large and Growing” = $3.1 billion Worldwide Cataract IOL market in 2014 = 8.2% CAGR a U.S. Market is $1.1 billion in 2014 = 8.7% CAGR = Driven by innovation / improved outcomes / aging population Source: The Global IOL Market by Market Scope June 2009
Slide 17: Cataract IOL Competitive Landscape
Cataract IOL Competitive Landscape 15 million global units in 2009 growing by 3.8% per year to 2014 The Big Three Global IOL share leaders = Alcon (Novartis) 54% = AMO (Abbott) 16% = B&L (Private) 10% Other players: Hoya, Kowa, Lenstec, Rayner, and Zeiss Source: The Global IOL Market by Market Scope
Slide 18: STAAR Cataract IOLs
STAAR Cataract IOLs Preloaded Proprietary IOLs Acrylic *Silicone Collamer Afinity Aspheric Collamer nanoFLEX ‘Three Piece (NIIOL) _ Aspheric (NTIOL) ¢ Silicone Toric Plate _ Silicone Aspheric Three (Premium Channel) Piece (NTIOL)
Slide 19: Unique Collamer Material
Unique Collamer Material Proprietary hydrophilic material produces 40% water content produces: = Less internal reflectance (reduces glare and halo) compared to all other materials = Induces fewer higher order aberrations Free from glistenings
Slide 20: Cataract IOL Types
Cataract IOL Types U.S. Market Landscape Standard Channel Premium Channel Standard IOLs are Premium IOLs are reimbursed reimbursed by CMS at by CMS as standard $150 to $200 (NTIOL) Current aspheric ASP is about $130 Toric, Multifocal, Accommodating IOLs Expected to grow 20% GAGR to 600,000 procedure
Slide 21: Global Premium IOL Channel
Global Premium IOL Channel 380k procedures grow to 3.8M in 2020 Provides good near, intermediate and distance vision results Surgeons charge as much as $3,000 or $4,000 per eye Source: The Global Market for Presbyopia-Correcting Surgery by Market Scope March 2010
Slide 22: CAST: Collamer Accommodating Study Team
CAST “Collamer Accommodating Study Team” Clinical observations: Inherent property of the material?? = Eight leading ophthalmic surgeons ‘Team given same reading tools to measure near and intermediate vision
Slide 23: CAST Results
CAST Results All cataract patients see very good at distant. Usually need some reading glasses Usually need glasses for laptop :
Slide 24: Next Steps For CAST
Next Steps For CAST CAST II CAST Ii Clinical protocol using the Clinical protocol with current nanoFLEX IOL Bi-lateral 125 patients with 9 to 12 month follow to $1,200/lens
Slide 25: What's the Value for Potential Accommodating Technology?
What’s the Value for Potential Accommodating ‘Technology? = Sales at about $35M in 2007 = Sales in 2009 about $70M = Not yet FDA approved Market Scope Global PCIOL Market Estimates Source: The Global Market for Presbyopia-Correcting Surgery by Market Scope March 2010
Slide 26: 2010 Second Quarter
2010 Second Quarter Comparison to Q2 2009 Revenue $13,639 $13,158 = +4%/+7% Gross Profit Dollars $ 8,679 $ 7,971 +9% Gross Profit % 63.6% 60.6% +300bps Adj. Operating Expenses $8,778* $8,988 (2%) Operating Loss ($99) ($1,017) +83% Adj. Net income, Con’t Ops ($661)** ($1,369) +52% *Excludes $700k non
Slide 27: First Half 2010
First Half 2010 Comparison to First Half 2009 Q2 2010 Q2 2009) Revenue $27,417 $25,316 Gross Profit Dollars $17,508 $15,626 Gross Profit Margin 63.9% 61.7% Adj. Operating Expenses $17,531* $18,506 Operating Loss ($23) ($2,880) Adj. net income, Con’t Ops ($1,297)** ($3,598) *** *Excludes $700k non-ca
Slide 28: Continuing Financial Improvements
Continuing Financial Improvements Gross Margin and Operating Expense Ratios
Slide 29: 2010 Key Metric Report Card
2010 Key Metric Report Card Double Digit Revenue growth in ICL and IOL Gross Margin mid 60% Progress toward profitability Cash from operations J Improve balance sheet
Slide 30: STAAR Balance Sheet
STAAR Balance Sheet = Paid $6.8 Million to retire 1.7 million shares of preferred stock ($4 per share) = Paid $4 Million for litigation settlement = Paid $5.3 Million to retire Broadwood note early = Only a working line of credit in Japan 34.9 million shares of common stock outstanding
Slide 31: The STAAR Transition
The STAAR Transition 2007 to 2010 Culture to vs. “raise more cash” = Operating Expense Ratio from 75% to 61% = 2009 generated cash from operations (7 years) = QI 2010 generated operating income (10 years) Product Rationalization 1. = NTIOL status in U.S. and CAST = New ICL lines CE approved for Sept
Slide 32: STAAR Near Term Catalysts
STAAR Near Term Catalysts FDA Approval and launch of Visian ‘Toric ICL Increased cash flow from operations Profitability IOL profitable growth in targeted markets Visian ICL growth in Japan (Feb approval) European launch of new Visian ICL models Japan PMDA Approval of Visian ‘Toric ICL CAST II clini
Slide 33: GAAP Reconciliation Tables
STAAR Surgical Company GAAP Reconciliation Tables (in 000's) Unaudited Three Months Ended July 2, July 3, 2010 2009 $ Change % Change Adjusted cash used in operating activities Net cash provided by (used in) operating activities - as reported $ (3,698 ) $ $ (3,984 ) -1393.0 % Legal settlement paymen
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