Staar Surgical Company · NASDAQ:STAA
Staar Surgical — Investor Presentation (May 2014)
32 slides from Staar Surgical's investor presentation, May 7, 2014
Slide 1: Visian ICL, Fastest Growing Refractive Technology in the World
1 Visian ICL, Fastest Growing Refractive Technology in the World NASDAQ: STAA May 7, 2014
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 While Investing for Future • 2014/15 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% Q1 14 Revenue 61% in 2013 33% Q1 14 Revenue 33% 2013 Only Intraocular Lenses Placed within the Eye
Slide 5: How to Look at Our Expected Top Line & Bottom Line 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 - IOLs) • Project Comet Benefits begi
Slide 6: STAAR's Value Driver: The Visian ICL
STAAR’s Value Driver • >$ 3B Addressable Market and Growing – 5.8% Annual Growth expected 2014 - 2019 – 3.4M Procedures in 2014 Growing to 4.3M in 2019 • Currently about 2.7% Market Share & Growing • $44.1M Revenue in 2013/$12.2M in Q1 – >$80M End Customer Sales Annualized • Sales Growth Rate 26% in
Slide 7: Visian ICL and TICL Premium Product
• 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 A
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 Superior
Slide 10: Why LASIK Under Pressure?
Why LASIK Under Pressure? Good Procedure for Some, Not All. 8 - 12% Not Candidates for LASIK • Limitations of LASIK – Contraindications: • 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 L
Slide 11: Visian ICL with CentraFLOW with KS-AquaPORT
Visian ICL with CentraFLOW ™ with KS - AquaPORT™ • 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 • Nearly 60,000 Implants In
Slide 12: 2013 Targeted ICL Markets
2013 Targeted ICL Markets 12 Market 2013 Total Ref. Proc.* 2013 Ref. Proc. ∆ 2013 ICL Proc. ∆ ICL Share Ref. Proc. 2013 ICL Gain China 875,000 +5% +41% 1.6% x U.S. 602,000 (3%) +19% 1.2% x Latin Am*** 226,380 (0.4%) +43% 1.7% x India*** 156,430 +5% +12% 4.5% x S. Korea*** 139,280 +0.7% +12% 12.4% x
Slide 13: Visian ICL Procedures Gaining Traction Globally
Q1 14 Q1 13 Visian ICL Procedures Gaining Traction Globally Visian ICL Procedure Growth in Target Markets 2013 & Q1 Growth (Continue to Gain Share Globally) +21% +23% + 5 % + 7 % - 20% +74 % +29% - 10% +39% +12% - 11% +25% 22% Global ICL Procedure Growth in 2013/14% in Q1 EMEA + 29% 2013/+24% Q1 APA
Slide 14: Premium for ICL Enhancements Driving Higher Revenue
Q1 14 Q1 13 Premium for ICL Enhancements Driving Higher Revenue Visian ICL Revenue Growth in Target Markets 2013 & Q1 Growth in USD +26% +29% +25 % - 16% + 10% - 12% +14 % +46% + 34% + 58% - 6% + 11% 26% Global ICL Dollar Growth in 2013/+15% Q1 EMEA +41% 2013/+27% Q1 APAC +20% 2013/+17% Q1 NA +16% 2
Slide 15: Market Introduction of the Preloaded ICL
Market Introduction of the Preloaded ICL Rapid Cadence of New Products (H1 2014) 15 • 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 16: V6 ICL Next in Line (V6a ICL)
V6 ICL Next in Line (V6a ICL) Rapid Cadence of New Products (H1 2015) • 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 Nea
Slide 17: V6 ICL Next in Line (V6b ICL)
V6 ICL Next in Line (V6b ICL) Rapid Cadence of New Products (H1 2016) • 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 Challe
Slide 18: New Regulatory Submissions/Approvals
Expanded Market Opportunities New Regulatory Submissions/Approvals • FDA Toric ICL Submission – Ophthalmic Device Panel Meeting Favorable Vote March 14 • CentraFLOW Submissions – Japan Approval on March 3 – Recent Approvals in Korea, India and Argentina – China Submission - May 15 th Experts Panel M
Slide 19: TICL Opportunity in U.S.
Expanded Market Opportunities TICL Opportunity in U.S. • National Health and Nutrition 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 Markets Wher
Slide 20: TICL Opportunity in U.S.
Expanded Market Opportunities TICL Opportunity in U.S. • Average Patient in TICL Study Trial was - 9.37D of myopia and 1.95D of astigmatism 20
Slide 21: 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 21 Social Media Marketing Results Hitting a Tipping Point Jul '12 Aug Sep Oct Nov
Slide 22: Consumer Education and Awareness: Push and Pull Marketing
Consumer Education and Awareness Effective at Push, Looking to Expand Pull Push Marketing • We do pretty well at STAAR today. • Promoting to surgeons through sales reps and marketing tools. • Clinical training and articles on the technology. • Enhance the technology and introduce with a marketing st
Slide 23: Cataract IOL: Large & Growing Market, Tough Competitive Landscape
• 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 24: New IOL Products: Growth Despite Supply and Currency Headwinds
• 2013 Sales $24.2M, 5 % Growth in CC • Q1 Sales $6.6M, 4% Growth/12% Growth in CC – IOL Unit Increase of 16% • Acceptance of the KS - IOLs Driven Demand Beyond Supply • Supply of KS - IOLs from 3 rd Party H as L imited O ur Growth Potential – $500k in backorders from European customers at End of Q1
Slide 25: 2014 IOL Growth
Japan U.S. EMEA China Total Q1 14 Q1 13 Unit Increase of 22% in Japan & 59% in Europe Q1 After 16% Unit Growth During 2013 in Both Markets 2014 IOL Growth Q1 IOL Revenue Growth USD +2% / +15% - 6% +64% - 46 % +4% / +12%
Slide 26: Q1 Key Financial Results
Q1 Key Financial Results 26 Q1 2014 Q1 2013 Change Revenue $20,178 $18,001 +$2,177/+12% Gross Profit $13,884 $12,654 +$1,230/+10% Gross Profit Margin 68.8%* 70.3% (150bps) Operating Expenses $15,226** $11,570 +$3,656/+32% Income Before Taxes $(1,140) $ 785 $(1,925) Income Taxes $ 219 $ 314 $ ( 95) N
Slide 27: Q1 Key Financial Results: 2014 Non-GAAP Measures
Q1 Key Financial Results 2014 Non - GAAP Measures ($000’s) 27 Measure Q1 2014 Q1 2013 GAAP Net Income (loss) $ (1,359) $ 471 Mfg. Consolidation Expenses $ 168 $ 901 Spain Distribution Transition Cost -- $ 442 Foreign Currency Impact $ (66) $ 341 Adjustment of Warrant Value -- $ ( 27 ) Stock - based
Slide 28: STAAR Balance Sheet
STAAR Balance Sheet Strong while Making Investments for Future • Profitable and Generating Cash – $21M in c ash as of end of Q1 – Invested $5.7M in Project Comet and Fixed Assets during 2013 – Invested $1.1M to Increase ICL Inventories in Q1 – Investing to Expand U.S. Sales Team in Anticipation of T
Slide 29: Manufacturing Consolidation Project Comet
• Consolidate Four Manufacturing Operations (Japan , U.S., Switzerland) to One E xisting U.S. Facility in Monrovia – Japan Moved in 2012, Switzerland by June 2014 • 3 + Years to Complete at a Cost of $ 6.4M – Spent $5.9M in 2011/2012/2013 – To Spend <$500k in 2014 • Complete Manufacturing Consolidat
Slide 30: Post Comet Operating Model Potential
30 Metric 2014 Analyst Ests * If $90M If $100M Revenue $ 80.9 $ 90 $ 100 Gross Margin % 72.3% 78.5% 80% Gross Margin $ $ 58.5 $ 70.6 $ 80.0 Operating Exps. $ 53.4 $ 48.5 $ 50.0 Operating Inc. $ $ 5.1 $ 22.1 $ 30.0 Operating Inc. % 6.3% 25% 30% Net Income $ $ 3.8 $ 20.0 $ 27.0 Net Income % 4.7% 22% 2
Slide 31: Upcoming STAAR Catalysts
• Expanded ICL with CentraFLOW approvals to Key Markets – Korea, India and Argentina H2 13 – Japan approval March 3rd & China May 15 th Experts Panel Meeting • Soft Marketing Launch of Preloaded ICL H1 14 in Europe • Successful FDA Panel Meeting in U.S. for TICL on March 14 • P&L Contribution from C
Slide 32: Visian ICL, Fastest Growing Refractive Technology in the World
32 Visian ICL, Fastest Growing Refractive Technology in the World NASDAQ: STAA May 7, 2014