Obagi Medical Products — IPO Roadshow (October 2007)
35 slides from Obagi Medical Products's IPO roadshow presentation, Oct 1, 2007
Slide 1: Obagi Medical Products, Inc. Follow-On Offering October 2007
Obagi Medical Products, Inc. Follow-On Offering October 2007
Slide 2: Offering Summary
Offering Summary Shares Offered Current Stock Price Selling Stockholders Use of Proceeds Expected Pricing Bookrunners Co-Manager 6.3 million (5.5 million secondary, 0.8 million primary) $19.75 (as of September 27, 2007) Stonington Partners, Obagi Family Trust Repayment of Term Loan From Merrill Lync
Slide 3: Safe Harbor
Safe Harbor Our presentation today will include forward-looking statements relating to the company’s financial results, business prospects and the development of potential human therapeutic products that involve a number of risks and uncertainties. Actual events and performance may differ materially
Slide 4: Business Overview, Steve Carlson, President & CEO
Business Overview, Steve Carlson, President & CEO
Slide 5: Obagi Investment Highlights
Obagi Investment Highlights Leading brand in the physician-dispensed skin care market Proprietary “Penetrating Therapeutics” technology Large & growing $36.2 billion global skin care market (62%+ facial care) Significant growth opportunities Use with: Botox®, fillers, Laser therapy, scar cosmesis (b
Slide 6: 2007 Performance and Guidance
$102-$106 $49.1 $26.1 $23.0 Sales +265% $3.9 +39% (US +45%) Q2 07 +167% $6.9 +37% 1H 07 +96% $2.9 +34% Q1 07 $17.0-$17.6 Net Income +31%-36% YOY Growth YOY Growth +177%-188% 2007E Guidance 2007 Performance ($ in millions) +34% Revenue Growth +39% Revenue Growth $18.7 $26.1 $17.2 $23.0 15% 6% 13% 9%
Slide 7: Continued Execution Since IPO
Continued Execution Since IPO New Product Launches February 2007 ELASTIderm Eye Gel February/July 2007 CLENZIderm M.D. Acne Therapeutic System for both normal-to-oily and normal-to-dry skin August 2007 Condition & Enhance Systems for both Surgical and Non-Surgical Procedures On-going studies to demo
Slide 8: Penetrating Therapeutics Process
“Penetrating Therapeutics” Process Standard Topical Agents Obagi Penetrating Therapeutics Stratum cornea Epidermis Dermis Stratum cornea Epidermis Dermis Obagi’s proprietary processes and systems enhance skin penetration and increase active agent efficacy
Slide 9: Core Obagi Systems
Core Obagi Systems 1988 2004 2005 Nu-Derm System® Prescription-based hydroquinone 4% + Tretinoin Clinically proven six-product skin health system for fine lines, wrinkles, hyper-pigmentation, melasma, photo-damage, and acne CRx System™ Patented system Photolumines™ “glowing” skin Enhanced collagen p
Slide 10: Obagi Nu-Derm Results
Obagi Nu-Derm Results Before After Before After Photos showing the patients before and after the use of Obagi Nu-Derm System.
Slide 11: Newly-Introduced Line Extensions
Newly-Introduced Line Extensions 2007 Obagi Condition & Enhance System for Use with Surgical Procedures For use before and after cosmetic laser procedures Obagi Condition & Enhance for Use with Non-Surgical Procedures For use after Botox®, soft tissue filler injections and other non-surgical treatme
Slide 12: Botox + Obagi Condition & Enhance: Increases Patient Satisfaction
Botox® + Obagi Condition & Enhance: Increases Patient Satisfaction Before use of Condition & Enhance for non-surgical procedure (Botox® Cosmetic) After use of Condition & Enhance for non-surgical procedure (Botox® Cosmetic)
Slide 13: Obagi Condition and Enhance Clinical Studies
Obagi Condition and Enhance 2007 Clinical studies Market size (procedures) Scar cosmesis (Basal cell carcinoma excisions) 3+ Million Patient enrollment complete Lasers 1+ Million Ablative (ASPS) Q1 patient enrollment Syneron Q3 patient enrollment IPL Q3 patient enrollment Botox® Q3 patient enrollmen
Slide 14: New Dermatology & Aesthetic Platforms
New Dermatology & Aesthetic Platforms CLENZIderm M.D.™ Acne Treatments Liquefies Benzoyl Peroxide on contact, resulting in greater follicular penetration and rapid lesion reduction 2007 ELASTIderm™ Eye Cream and Eye Gel Helps the skin’s natural ability to produce elastin to decrease wrinkles and inc
Slide 15: New Dermatology Platform: CLENZIderm M.D.
Uses a combination of salicylic acid and a new, prescription strength, proprietary, solubilized form of Benzoyl Peroxide (BPO) Soluble, molecular size BPO (0.0001 mm) Works on all three causes of acne: excess oil bacteria clogged pores More rapid lesion reduction than BPO/Clindamycin combination dru
Slide 16: Generic vs. Solubilized BPO Gel Study
Generic vs. Solubilized BPO Gel Study* After 30 minutes with generic BPO gel (magnification 300x) After 30 minutes with novel solubilized BPO gel (magnification 300x) *American Academy of Dermatology 2007 Poster: A Comparison of patterns of deposition of Two BPO Formulations on the skin and on the f
Slide 17: CLENZIderm vs. BPO/Clindamycin Lesion Reduction Study
CLENZIderm vs. BPO/Clindamycin Lesion Reduction Study* * American Academy of Dermatology 2007 - A comparison of a novel Benzoyl Peroxide System with a combination Benzoyl Peroxide and Clindamycin product: A 2- week split face study of effectiveness and tolerability. D. Wilson, MD, K. Meadows, MD, J.
Slide 18: CLENZIderm M.D. Before and After
CLENZIderm M.D. 4 weeks Baseline Before After Photos showing a patient before and after the use of CLENZIderm M.D.
Slide 19: New Aesthetic Platform: ELASTIderm
New Aesthetic Platform: ELASTIderm Proprietary Bi-mineral complex Enhances skin elasticity through stimulation of new elastin Increases collagen production First application: Around the eye Other areas of the body in development 9 week clinical study Increase in elasticity 46% after 9 weeks of use R
Slide 20: ELASTIderm Clinical Results: Skin Elasticity
ELASTIderm Clinical Results: Skin Elasticity A statistically significant increase in elasticity (Cutometer – snap test) . Mean ± Standard Error Statistical Analysis was performed using a single-sample t-test. Essex Clinical Testing, Dr. John Erianne, S001 Aug – Oct 2006. N=33 2 4 6 8 9 0 20 40 60 *
Slide 21: ELASTIderm: Effects on Visible Wrinkles Around the Eye
ELASTIderm: Effects on Visible Wrinkles Around the Eye 6 weeks Baseline Female Age 58
Slide 22: Product Development Target Markets
Product Development Target Markets ($ in millions) Source: Kalorama, February 2006. Current Market Size (Worldwide Rx sales) Potential Addressable Market (Additional topical Rx categories) Fungal Infection $3,044 Psoriasis $868 Dermatitis/Seborrhea $991 Hair Loss/Removal $562 Total: $5,465 Total: $2
Slide 23: Industry Growth Drivers
Industry Growth Drivers Aging population New procedures: less invasive, more effective Increased focus on combination therapy Growing demand for physician-dispensed products Physicians’ economic alternative to healthcare reform pressures
Slide 24: Growth Opportunities in the U.S. Physician-Dispensed Channel
Growth Opportunities in the U.S. Physician-Dispensed Channel *Sources: Dendrite Interactive Marketing, “U.S. Distribution of Physicians,” U.S. Department of Labor, “May 2004 National Occupational Employment and Wage Estimates,” (Other Physician Population includes General practice, Family Practice,
Slide 25: Differentiated Sales Strategy
Differentiated Sales Strategy Dynamic Sales Force 84 field sales positions Adding 5 – 6 reps per quarter, in response to growing demand New specialty derm reps being added to increase practice penetration Partner with physicians to build dispensing business Core market penetration Drive new patients
Slide 26: International Opportunities
International Opportunities International sales growth drivers Introduction of ELASTIderm and CLENZIderm in 2H 2007 and early 2008 Broaden geographic penetration: South Korea Vietnam Brazil Expansion opportunities: China Europe South America International Revenue Mix (as of June 30, 2007) Japan 11%
Slide 27: Company Highlights
Company Highlights Strong momentum in top and bottom line growth 6 new products launched since July 2006 Robust pipeline of new products and applications Leveraging existing infrastructure: Return on Sales*: Q2 2006 18%, Q2 2007 29% Significant opportunity for continued account penetration among bot
Slide 28: Launch of Condition & Enhance Systems
Launch of Condition & Enhance Systems* *Striped portion represents estimated Condition & Enhance initial stocking. Quarterly Growth ($ in millions) 2004 2005 2006 2007 ** Unaudited preliminary figure. $13.3 $14.3 $13.3 $15.4 $15.0 $16.0 $14.7 $19.3 $17.2 $18.7 $19.1 $23.0 $23.0 $26.1 $26.2** Q1 Q2 Q
Slide 29: Financial Overview, Stephen Garcia, CFO
Financial Overview, Stephen Garcia, CFO
Slide 30: Company Financial Highlights
Company Financial Highlights ($ in millions except EPS) 21% $11.3 $5.9 $0.14 $2.6 $7.4 83.9% +16% $35.9 1H 2006 $11.3 $2.8 Cash $17.7 $13.0 Operating Income 2006 1H 2007* 26% $8.0 $0.31 $6.9 82.7% +37% $49.1 82.7% Gross Margin % 23% Return on Sales** $12.9 Operating Cash Flow $0.34 EPS (Diluted) $6.
Slide 31: Strong Revenue Growth
Strong Revenue Growth ($ in millions) +37% YOY +20% +15% +14% +31%-36% $49.1 $35.9 $78.0 $64.9 $49.3 $56.3 $102.0-$106.0 2003 2004 2005 2006 2007E 1H 06 1H 07
Slide 32: Improving Net Income
Improving Net Income ($ in millions) +167% YOY +35% +15% +152% $6.9 $3.9 $2.9 $1.0 $2.5 $2.6 Q3 06 Q4 06 Q1 07 Q2 07 1H 06 1H 07
Slide 33: Income Statement
Income Statement (in thousands except share and per share amounts) Three Months Ended June 30, Six Months Ended June 30, 2007 2006 2007 2006 Net sales 26,067 $ 18,722 $ 49,113 $ 35,926 $ Cost of sales 4,560 3,017 8,521 5,789 21,507 15,705 40,592 30,137 Selling, general and administrative expenses 12
Slide 34: Balance Sheet Highlights
Balance Sheet Highlights ($ in thousands) As of June 30, 2007 $61,677 53 $51,434 22,083 $8,055 Pro forma as adjusted $61,677 9,163 $61,677 31,193 $17,727 Pro forma $46,746 Total liabilities and stockholders’ equity 9,163 Long-term debt less current portion $46,746 Total assets Working capital $2,796
Slide 35: Obagi Investment Highlights
Obagi Investment Highlights Leading brand in the physician-dispensed skin care market Proprietary “Penetrating Therapeutics” technology 2007 revenue guidance $102 MM - $106 MM (31%-36% YOY growth) 2007 EPS guidance $0.76 - $0.79 per share* Significant growth opportunities Use with: Botox®, fillers,