Staar Surgical Company · NASDAQ:STAA
Staar Surgical — Sidoti Eighteenth Annual Emerging Growth Conference (March 2014)
32 slides from Staar Surgical's conference presentation, Mar 17, 2014
Slide 1: Visian ICL, Fastest Growing Refractive Technology in the World
1 Visian ICL, Fastest Growing Refractive Technology in the World Sidoti Eighteenth Annual Emerging Growth Conference March 17, 2014 NASDAQ: STAA
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 stateme nts about any of the following: any projections of earnings, revenue, sales, profit margins, cash, effective tax rate or any other financial
Slide 3: Generating Strong Current and Future Growth
• Two Large Market Opportunities • Sustainable Competitive Advantages • Rapid Cadence of New Products • Increasing IP Position with New Technologies • Strong Balance Sheet Getting Stronger • 2014 Operating Leverage Enhances Profitability 3 Generating Strong Current and Future Growth
Slide 4: Strategic Focus on Vision
Strategic Focus on Vision 4 Cataract IOL Refractive ICL 61.1% 2013 Revenue 55% in 2012 33.4% 2013 Revenue 40.7% 2012 Only Intraocular Lenses Placed within the Eye
Slide 5: How to Look at Our Growth
• Continued ICL Market Penetrations – Double Digit Revenue Growth – 85 % Gross Margin – New Products (CentraFLOW, Preloaded, and V6) • Targeted IOL Profitable Growth – Single Digit R evenue Growth – 60 %+ Gross Margin Target – New Products (nanoFLEX Toric and KS - SP) • Project Comet Benefits begin
Slide 6: STAAR's Value Driver: The Visian ICL
STAAR’s Value Driver • $3B Addressable Market • Currently about 2% Market Share & Growing • $44.1M Revenue in 2013 – >$80M End Customer Sales Annualized • Sales Growth Rate 26% in 2013 – 85% Gross Margin – New Product Launches (CentraFLOW & Preloaded) • 10% Share in Focused Markets Yields $300M of E
Slide 7: Visian ICL and TICL
• Implantable Collamer® Lens Better Known as the “Implantable Contact Lens” or ICL • Made f rom a Proprietary Material Called Collamer • Corrects Myopia (Nearsightedness/Inability to See Far) • Toric ICL (TICL TM ) Version Corrects Both Myopia and Astigmatism (Blurred Vision D ue to Inability to Foc
Slide 8: Competitive Landscape
Competitive Landscape Lens Based Segment Changing • STAAR Is the Market Leader – >65% Unit & Dollar Market Share – Only Posterior Lens Approach • Other Players (Anterior Lens) – Abbott - AMO (Not Competitive) – Novartis - Alcon ( Removed from Key Markets ) – Ophtec (Sell on Price) • The Big Guys Are
Slide 9: Advantages of Visian ICL Over LASIK
9 ICL • Small Micro Incision • Adds Lens into the Eye • Permanent but Removable • No Induced Dry Eye • Future Options Preserved LASIK • Incision over 1 Inch - Long • Burns Material Away • Cannot Be Reversed • Potential Dry Eye • May Reduce Future Options Advantages of Visian ICL Over LASIK 8 - 12% N
Slide 10: Why LASIK Under Pressure?
Why LASIK Under Pressure? Good Procedure for Some, Not All • Limitations of LASIK – Contraindications Exclude Approximately 8% to 12%: • Dry Eye • Thin Cornea • Large Pupils • Cornea Disease • High Level of Myopia and/or Astigmatism • When LASIK Patients Reach Cataract Age – “Patients who’ve had LAS
Slide 11: Visian ICL with CentraFLOW
Visian ICL with CentraFLOW™ • CentraFLOW™ Technology Assists the Natural Aqueous Flow within the Eye Utilizing the KS - AquaPORT™ • Eliminates a Procedure and Visit - (LASIK - like) • Same Day ICL Surgery now Possible • Economics Better for t he Surgeon • >50,000 Implants Indicate Predictable IOP an
Slide 12: 2013 ICL Procedure Growth in Key Markets
2012 Market Shares: Korea 12%, ME 8%, Spain & India 4% China, U.S., & Japan ≈1% 2013 ICL Growth 2013 Procedure Growth in Key Markets (Gaining Share Globally) +12% +41% +19% +12% +16% +34% +43% +4% +25% +54% +38% +16% 22% Global ICL Procedure Growth EMEA +29% APAC +19% NA +19%
Slide 13: Visian ICL Dollar Growth in Key Markets
Visian ICL Dollars Increase in 11 of 12 Key Markets 2013 ICL Growth 2013 Dollar Growth in Key Markets +15% +40% +15% +59% +18% - 4% +34% +40% +33% +54% +50% +17% 26% Global ICL Dollar Growth EMEA +41% APAC +20% NA +16%
Slide 14: Market Introduction of the Preloaded ICL
Market Introduction of the Preloaded ICL Rapid Cadence of New Products (H1 2014) 14 • Preloaded ICL with Enhanced Optics – Saves Procedure Time – Learning Curve Shortened – More Consistent Delivery • New IP around Product • Enhanced Optic Design to Increase U seful O ptical Z one to Benefit P atient
Slide 15: V6a ICL: Next in Line
V6 ICL Next in Line (V6a ICL) Rapid Cadence of New Products • Differentiates ICL for Myopic P atients N earing Age 40 Who Will Need Near & Intermediate Adds • Goal To Add Near - Vision Enhancement Capability – Treats the Early Onset and Progression of Presbyopia – Adds ≈2.0 Diopters of Near While Pr
Slide 16: V6b ICL: Next in Line
V6 ICL Next in Line (V6b ICL) Rapid Cadence of New Products • Targets New Market : Presbyopic Patients A ge 40 and Above – Solution to the Need for Permanent N ear & Intermediate V ision E nhancement – 100% of Population over Approximately A ge 50 Affected (Estimated 1.8 Billion Are Challenged with
Slide 17: Regulatory Submissions
Expanded Market Opportunities Regulatory Submissions • FDA Toric ICL Submission – Ophthalmic Device Panel Meeting Favorable Vote March 14 • CentraFLOW Submissions – Japan Submission - Approval on March 3 – Recent Approvals in Korea, India and Argentina – China Submission - Approval B elieved on Trac
Slide 18: TICL Opportunity in U.S.
Expanded Market Opportunities TICL Opportunity in U.S. • National Health and Nutrition Examination Survey (NHANES; 1999 - 2004) – Myopia Prevalence 33.1% ( - 1.0D or higher) – Astigmatism Prevalence 36.2% (cylinder of 1.0D or higher) • Market Scope >100k Refractive Procedures >1.0D Astigmatism • In
Slide 19: TICL Opportunity in U.S.: UCVA vs Pre-Op BSCVA
Expanded Market Opportunities TICL Opportunity in U.S. 3.6 40.9 82.4 93.8 98.4 100.0 20.7 53.9 81.9 90.7 93.3 95.3 0 10 20 30 40 50 60 70 80 90 100 20/12.5 20/16 20/20 20/25 20/32 20/40 Pre-Op BSCVA UCVA at 12 Mo or better or better or better or better or better or better Cumulative Percentage of Ey
Slide 20: Consumer Education and Awareness
Consumer Education and Awareness • Patient Leads G enerated from ‘Doc Finder’ Increasing – 68% Contacted by Surgeon’s Practice (Working to Improve Follow Up) – From Those Contacts: 62% Received ICL, 10% Received LASIK • New Websites for China, Japan and Middle East • Key Social Media Data for Q4 201
Slide 21: The ICL Technology Era Beginning?
The ICL Technology Era Beginning? 21 • RK: Started in 1978, Peaked in 1994 • PRK: Started in 1984, Peaked in 2006 • LASIK: Started in 1989, has LASIK Peaked?? – Big Guys Heavily Invested – LASIK Procedures Losing Share in Major Markets • Visian ICL: – >400,000 ICLs Implanted World W ide – Gaining Sh
Slide 22: Cataract IOL: Large & Growing Market
• 21.9M IOLs Implanted in 2013 ( 26.1M 2018) • The Big Three Hold ≈70% Market Share – Novartis (Alcon), Abbott (AMO), Valeant (B&L) • STAAR Strategy – Focused on Only the Higher Margin Premium IOLs – Focused Only in Markets that Generate a Fair Profit Large & Growing Market Tough Competitive Landsca
Slide 23: New IOL Products
• 2013 Sales $24.2M, 5 % Growth in CC – (7%) USD YoY , >50% sales in Japan • Acceptance of the KS - IOLs Has Increased • Supply of KS - IOLs from 3 rd Party H as L imited O ur Growth – Approximately $400k in backorders from European customers at End of 2013 – Forced to reduce commercialization effor
Slide 24: Revenue Results
Revenue Results 2012 - 13 Revenue in CC +$3.2M or 5% Increase FY 2013 IOL Growth 2013 IOL Revenue USD - 1% / +24% - 8% +23% - 55% - 7% / +5%
Slide 25: 2013 Key Financial Results
2013 Key Financial Results 25 2013 2012 Change Revenue $72,215 $63,783 +$8,432/+13% Gross Profit $50,309 $44,291 +$6,018/+14% Gross Profit Margin 69.7% 69.4% +30bps Operating Expenses $49,609 $45,511 +$4,098/+9% Income Before Taxes $ 1,114 $ (519) +$1,633 Income Taxes $ 716 $ 1,244 $ (528) Net Incom
Slide 26: 2013 Non-GAAP Measures
2013 Key Financial Results 2013 FY Non - GAAP Measures ($000"s) 26 Measure 2013 2012 GAAP Net Income (loss) $ 398 $ (1,763) Mfg. Consolidation Expenses $ 2,242 $ 2,636 Spain Distribution Transition Cost $ 442 $ 1,151 Foreign Currency Impact $ (39) $ (111) Adjustment of Warrant Value $ (27) $ (335) S
Slide 27: STAAR Balance Sheet
STAAR Balance Sheet Strong and Improving • Profitable and Generating Cash – $23M in c ash as of end of 2013 – Invested $5.7M in Project Comet and Fixed Assets during 2013 – $3.4M Cash Generated from Operations • Working L ine of C redit in Japan at 1.4% Interest Rate • $122M in NOLs (Worth $ 1.00/sh
Slide 28: Manufacturing Consolidation: Project Comet
• Consolidate Four Manufacturing Operations (Japan , U.S., Switzerland) to One E xisting U.S. Facility in Monrovia • 3 + Years to Complete at a Cost of $6.2M – Spent $5.9M in 2011/2012/2013 – To Spend <$500k in 2014 • Complete Manufacturing Consolidation by June 2014 – Japan Moved in 2012, Switzerla
Slide 29: Post Comet Operating Model Potential
29 Metric 2014 Analyst Ests * If $90M If $100M Revenue $ 80.2 $90.0 $100.0 Gross Margin % 73.1% 78.5% 80% Gross Margin $ $ 58.6 $ 70.6 $ 80.0 Operating Exps. $ 50.9 $ 48.5 $ 50.0 Operating Inc. $ $ 8.5 $ 22.1 $ 30.0 Operating Inc. % 10.6% 25% 30% Net Income $ $ 6.9 $ 20.0 $ 27.0 Net Income % 8.6% 22
Slide 30: Strong 2013, Solid Foundation for 2014
Strong 2013 Solid Foundation for 2014 • Revenue Growth of 15% / 22% in CC Q4 • Revenue Growth of 13% / 19% in CC FY – Visian ICL Growth of 26% – IOL Growth of 5% in Constant Currency (USD 7% Decline) • Gross Margin 69.7%, 72.3 % GM Without Negative Impacts – Negative Impact from Yen Valuation and Lo
Slide 31: Upcoming STAAR Catalysts
• Expanded ICL with CentraFLOW approvals to Key Markets – Korea, India and Argentina H2 13 – Japan approval March 3rd & China H1 14 • Commercialization of Preloaded ICL H1 14 in Europe • Successful FDA Panel Meeting in U.S. for TICL on March 14 • P&L Contribution from Consolidation Benefits H2 14 •
Slide 32: Visian ICL, Fastest Growing Refractive Technology in the World
32 Visian ICL, Fastest Growing Refractive Technology in the World Sidoti Eighteenth Annual Emerging Growth Conference March 17, 2014 NASDAQ: STAA
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