Mimedx Group, Inc · NASDAQ:MDXG
Mimedx — Proxy Contest (May 2021)
48 slides from Mimedx's proxy contest presentation, May 7, 2021
Slide 1: Advancing Regenerative Medicine Treatment Through Placental Science
ADVANCING REGENERATIVE MEDICINE TREATMENT THROUGH PLACENTAL SCIENCE ISS Meeting Presentation May 7, 2021 1ADVANCING REGENERATIVE MEDICINE TREATMENT THROUGH PLACENTAL SCIENCE ISS Meeting Presentation May 7, 2021 1
Slide 2: Disclaimer & Cautionary Statements
DISCLAIMER & CAUTIONARY STATEMENTS Important Cautionary Statement This presentation includes forward-looking statements. Forward-looking statements are subject to risks and uncertainties, and the Company cautions investors against placing undue reliance on such statements. Actual results may differ
Slide 3: Agenda
AGENDA I. COMPANY OVERVIEW II. EVOLUTION OF MIMEDX UNDER THE NEW MANAGEMENT TEAM & BOARD III. CLEAR STRATEGY FOR VALUE CREATION IV. PERFORMANCE AND SHAREHOLDER RETURNS V. STRONG MANAGEMENT TEAM & BOARD VI. MIMEDX IS ON THE RIGHT PATH 3AGENDA I. COMPANY OVERVIEW II. EVOLUTION OF MIMEDX UNDER THE NEW
Slide 4: Executive Summary
EXECUTIVE SUMMARY n The Board and management team have taken decisive and positive actions to stabilize the Company over the last two years n Total shareholder returns have improved significantly relative to peers n The Company has a clear, long-term strategy for shareholder value creation n The rig
Slide 5: Company Overview
COMPANY OVERVIEW 5COMPANY OVERVIEW 5
Slide 6: Patients Are Why We Are Here
PATIENTS ARE WHY WE ARE HERE A pioneer in utilizing amniotic tissue as a platform WHO WE ARE for regenerative medicine ALVIN We process amniotic tissue using proprietary technology resulting in differentiated treatment RUTH WHAT WE DO options, backed by rigorous science enabling commercial accessibi
Slide 7: Industry Leader in Utilizing Amniotic Tissue as a Platform for Regenerative Medicine
INDUSTRY LEADER IN UTILIZING AMNIOTIC TISSUE AS A PLATFORM FOR REGENERATIVE MEDICINE Pioneer with leading brands and a late-stage pipeline $1.4B 84.2% $246.5M 3 2 1 Market Cap Gross Margin TTM 3/31/21 Net Sales 2,000,000+ ~800 289 4 4 Allografts Distributed Employees 4 Field Sales Personnel Reimburs
Slide 8: Strong and Differentiated Platform Technology to Drive Growth
STRONG AND DIFFERENTIATED PLATFORM TECHNOLOGY TO DRIVE GROWTH MARKET-LEADING • Pioneer and largest US player in amniotic tissue market with strong brand reputation across broad portfolio of products BIOLOGICS PLATFORM • Promising late-stage pipeline in large and growing markets with therapeutic plat
Slide 9: Investments in cGMP Adherence Enhance Competitive Advantages
INVESTMENTS IN CGMP ADHERENCE ENHANCE COMPETITIVE ADVANTAGES Rigorous Compliance to Regulatory Standards throughout Manufacturing Process Provides Product Quality and Consistency Final Release Testing, Shelf-Stable including Purity, Packaged Product Potency and Identity 1 2 3 4 5 Delivery of Donated
Slide 10: Evolution of MIMEDX Under the New Management Team & Board
EVOLUTION OF MIMEDX UNDER THE NEW MANAGEMENT TEAM & BOARD 10EVOLUTION OF MIMEDX UNDER THE NEW MANAGEMENT TEAM & BOARD 10
Slide 11: New Management and Board Stepped In During a Deeply Tumultuous Period
NEW MANAGEMENT AND BOARD STEPPED IN DURING A DEEPLY TUMULTUOUS PERIOD FOR THE COMPANY Legacy Management and Board Created Significant Disruption in the Business 1 n Inappropriate “tone at the top” led to a culture that emphasized short-term business goals over compliance and ethics, purposely took a
Slide 12: New Management and Board Have Addressed Past Challenges, Stabilizing the Company
NEW MANAGEMENT AND BOARD HAVE ADDRESSED PAST CHALLENGES CREATED BY PRIOR MANAGEMENT, STABILIZING THE COMPANY AND POSITIONING IT FOR GROWTH S U S T A I N S T A B I L I Z E G R O W Anticipating Regulatory Approval in Japan in Mid-2021 $150 Million Transformative Financing Awarded Amniotic Tissue Suppl
Slide 13: Turnaround Under the New Management Team and Board Have Positioned the Company for Growth
POSITIONING IT FOR GROWTH TURNAROUND UNDER THE NEW MANAGEMENT TEAM AND BOARD HAVE POSITIONED THE COMPANY FOR GROWTH AND DRIVEN STOCK PRICE PERFORMANCE Stock Price Performance Since Appointment of New CEO - Timothy 1• Refreshed > 90% of management team and R. Wright (05/09/2019) fully reconstituted b
Slide 14: Turnaround Positioned the Company for Growth
POSITIONING IT FOR GROWTH TURNAROUND UNDER THE NEW MANAGEMENT TEAM AND BOARD HAVE POSITIONED THE COMPANY FOR GROWTH 1 2 3 Refreshed > 90% of Management Stabilized Business and Accelerating Increased Our Liquidity Team and Fully Reconstituted Board Late-Stage Pipeline ✓ Highly credible and experience
Slide 15: Turnaround Positioned the Company for Growth (continued)
TURNAROUND UNDER THE NEW MANAGEMENT TEAM AND BOARD HAVE POSITIONED THE COMPANY FOR GROWTH 4 5 6 Settled with SEC, Avoided DOJ Improved Control Environment, Completely Rebuilt Corporate Prosecution and Largely Resolved Completed Financial Restatement, and Governance and Ethics / Compliance Material L
Slide 16: Capital Raise Provided Ability to Stabilize the Business
CAPITAL RAISE PROVIDED ABILITY TO STABILIZE THE BUSINESS, PRIORITIZE INVESTMENTS AND POSITION THE COMPANY FOR GROWTH As a result of these actions, the Company was able to avoid a “going concern” limitation in its audit during a challenging and truly unprecedented time Situation Overview Before Capit
Slide 17: Our Commitment to Patient Care Drives Everything We Do
OUR COMMITMENT TO PATIENT CARE DRIVES EVERYTHING WE DO Core Values are the framework of our identity and culture. I believe culture is the most integral part of building a successful, sustainable company.” Timothy R. Wright, MIMEDX CEO Character Customer Orientation Innovation As leaders, we do the
Slide 18: Employee Survey Results Underscore Positive Influence of New Management
18 EMPLOYEE SURVEY RESULTS UNDERSCORE POSITIVE INFLUENCE OF NEW MANAGEMENT New Management Dimension 2018 2019 2020 Senior Senior leadership is open and honest in communication 12% 61% 72% Leadership Diversity & We have a work environment that is accepting of different 29% 76% 82% Inclusion ways of t
Slide 19: Clear Strategy for Value Creation
CLEAR STRATEGY FOR VALUE CREATION 19CLEAR STRATEGY FOR VALUE CREATION 19
Slide 20: Industry Leader in Utilizing Amniotic Tissue as a Platform for Regenerative Medicine
INDUSTRY LEADER IN UTILIZING AMNIOTIC TISSUE AS A PLATFORM FOR REGENERATIVE MEDICINE Base Business puri +n. Advanced Wound Care Distinct drivers of significant shareholder value with current and future growth potential eo MIMEDX
Slide 21: Clear Strategy for Value Creation
CLEAR STRATEGY FOR VALUE CREATION Industry leading base business with high gross margins provides foundation for long-term, stable growth, fueling late-stage pipeline • Targeting 10%+ growth in base advanced wound care business • Japan approval anticipated mid-2021; providing foundation for further
Slide 22: Investing Heavily in Promising Late-Stage Pipeline
INVESTING HEAVILY IN PROMISING LATE- STAGE PIPELINE WITH SIGNIFICANT GROWTH OPPORTUNITIES ▪ Announced last patients last visits in three late-stage trials ▪ Top-line data readouts anticipated late-summer 2021 ▪ Intend to initiate Phase 3 study Knee Osteoarthritis in Q3 2021 ▪ Submitted IND for Chron
Slide 23: Plantar Fasciitis Top-Line Results Anticipated Late-Summer 2021
PLANTAR FASCIITIS TOP-LINE RESULTS ANTICIPATED LATE-SUMMER 2021 Study Informs Safety and Efficacy and Creates Foundation for Other Future Indications Market Overview Phase 2B study completed 2M+ 200K+ Phase 3 study enrollment completed U.S. patients treated for Candidates for advanced • 277 patients
Slide 24: Knee Osteoarthritis Program Progressing Towards Phase 3 Initiation
KNEE OSTEOARTHRITIS PROGRAM PROGRESSING TOWARDS PHASE 3 INITIATION Top-line results anticipated late-summer 2021 Phase 2B study ongoing • Enrollment completed September 2020 Market Overview - 447 patients enrolled - Drop-out rates lower than expected (3% actual vs. 10% planned) 17.5M+ 8.8M • Last Pa
Slide 25: Achilles Tendonitis Program
ACHILLES TENDONITIS PROGRAM Phase 3 Double-Blinded, Randomized Controlled Trial • 158 patients enrolled across 11 sites • Outcomes Measures include: • Change in Visual Analog Scale at 90 days, Incidence of Adverse Events at 365 days, Foot Function Index (FFI-R) at 90 days Enrollment completed in Sep
Slide 26: The BLA Process Is Lengthy and Requires Careful Planning with the FDA
THE BLA PROCESS IS LENGTHY AND REQUIRES CAREFUL PLANNING AND COORDINATION WITH THE FDA MIMEDX has assembled the right Board and Management Team with the relevant clinical, scientific and regulatory expertise required to navigate the BLA pathway Industry – FDA Interactions During Development Clinical
Slide 27: Base Business Has Stabilized and Is Now Positioned for Growth
BASE BUSINESS HAS STABILIZED AND IS NOW POSITIONED FOR GROWTH 2 Net Sales ($M) Section 361 vs. Section 351 Sales Breakdown (2.9%) 2020 1Q21 $76 $69 $64 $62 $60 $54 14% 13% 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 1 Adjusted Net Sales ($M) 87% 86% +4.2% $68 $68 $63 $60 $57 $52 Section 361 Sales Section 351 Sale
Slide 28: Cash Generated from Base Business Fuels Pipeline
CASH GENERATED FROM BASE BUSINESS FUELS PIPELINE Quarterly Net Loss ($M) R&D Spend 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 Anticipate three-fold increase in 2021 with ~75% ($5) ($8) ($9) ($8) focused on late-stage pipeline ($17) ($19) 1 Inventory Levels ($M) Adjusted EBITDA as % of Adjusted Net Sales $11.6 $1
Slide 29: Performance and Shareholder Returns
PERFORMANCE AND SHAREHOLDER RETURNS 29PERFORMANCE AND SHAREHOLDER RETURNS 29
Slide 30: MIMEDX's TSR Metrics Have Improved Significantly
MIMEDX’S TSR METRICS HAVE IMPROVED SIGNIFICANTLY n New MIMEDX management team and Board have delivered meaningful shareholder returns n MIMEDX has significantly outperformed its peer group by almost 250% over the past two years Total Shareholder Return (1) (1) TSR Prior To 2-Year Benchmark 2-Year TS
Slide 31: Third-Party Validation for the Company's Trajectory, Strategy and Leadership
THIRD-PARTY VALIDATION FOR THE COMPANY’S TRAJECTORY, STRATEGY AND LEADERSHIP Leaving turmoil behind, MIMEDX is back in the game… Starting in 2018, MIMEDX meticulously stabilized its operations by (1) replacing 90% of its senior leadership; (2) establishing an Ethics and Compliance Committee; and (3)
Slide 32: Strong Management Team & Board
STRONG MANAGEMENT TEAM & BOARD 32STRONG MANAGEMENT TEAM & BOARD 32
Slide 33: Highly Accomplished Management Team Restoring Reputation for the Future
HIGHLY ACCOMPLISHED MANAGEMENT TEAM RESTORING REPUTATION FOR THE FUTURE CEO Timothy R. Wright personally recruited 7 of the 9 highly-respected senior executives, building a team focused on long-term strategic management TIMOTHY R. WRIGHT PETER M. CARLSON WILLIAM F. HULSE ROHIT KASHYAP, PhD ROBERT B.
Slide 34: Our Board Members Bring Diverse Skillsets Critical for MIMEDX's Turnaround
OUR BOARD MEMBERS BRING DIVERSE SKILLSETS THAT HAVE BEEN CRITICAL FOR MIMEDX’S TURNAROUND Each specific member of the Board was deliberately selected to Sustain, Stabilize, and Grow the Company S U S T A I N S T A B I L I Z E G R O W n With the Company stabilized, MIMEDX can focus on n Deeply tumult
Slide 35: Our Board Is Comprised of Leaders with Key Skillsets
OUR BOARD IS COMPRISED OF LEADERS WITH THE KEY SKILLSETS NECESSARY TO CONTINUE LEADING MIMEDX THROUGH THIS NEXT STAGE OF GROWTH Current Board Skills Matrix Senior Med Tech / Life Research and Leadership Clinical Drug Operational Financial M&A Sciences Risk Regulatory (Public Diversity Development Ex
Slide 36: Current CEO and Chair Have Driven Value, Stabilization and Growth
CURRENT CEO AND CHAIR HAVE DRIVEN VALUE, STABILIZATION AND GROWTH Under Timothy R. Wright as CEO and Dr. M. Kathleen Behrens as Chair of MIMEDX, 1 the Company has had an absolute TSR of +233% and +103%, respectively Timothy R. Wright M. Kathleen Behrens, PhD Chief Executive Officer Chair of the Boar
Slide 37: Our Current Directors Bring Key Expertise to the MIMEDX Boardroom
OUR CURRENT DIRECTORS BRING KEY EXPERTISE TO THE MIMEDX BOARDROOM Dr. Phyllis I. Gardner brings an independent voice through her background in academia, medicine, and Boardrooms. K. Todd Newton brings a history of turnaround management and auditing to the Board Phyllis I. Gardner, MD K. Todd Newton
Slide 38: Dr. Gardner Brings an Independent Voice to the Board
DR. GARDNER BRINGS AN INDEPENDENT VOICE TO THE BOARD ▪ Dr. Gardner is a world-renowned, well-respected clinical pharmacologist and healthcare executive with over 35 years of life sciences experience who has served on over 18 public and private boards ▪ Gardner brings a highly-sought, long track reco
Slide 39: Improvements by Management and Board Have Positioned MIMEDX for the Future
IMPROVEMENTS BY MANAGEMENT AND BOARD HAVE POSITIONED MIMEDX FOR THE FUTURE MIMEDX has adopted approximately 70 corporate governance reforms Selected Key Governance Enhancements Fully Reconstituted the Board Resolved SEC and Several DOJ inquiries 90% Refreshed Management Amendments to Bylaws to Limit
Slide 40: MIMEDX Is Committed to Responsible Conduct
MIMEDX IS COMMITTED TO RESPONSIBLE CONDUCT ESG: Commitment to Corporate Social Responsibility W E H A V E A N O P P O R T U N I T Y A N D R E S P O N S I B I L I T Y T O M A K E A D I F F E R E N C E F O R T H E S E PAT I E N T S . A N D I N D O I N G S O , G R O W A S U C C E S S F U L A N D M E A
Slide 41: Compensation Is Aligned with Performance Metrics That Drive Shareholder Value
41 5/7/2021 COMPENSATION IS ALIGNED WITH PERFORMANCE METRICS THAT DRIVE SHAREHOLDER VALUE Say-on-Pay received more than 90% support at the 2020 Annual Meeting Management Incentive 2020 Financial Performance Compensation Overview Plan (MIP) Threshold Results Achieved Components ($M) ($M) Revenue û $2
Slide 42: EW Healthcare Brings Experience and Expertise to the Board
EW HEALTHCARE BRINGS EXPERIENCE AND EXPERTISE TO THE BOARD § EW Healthcare Partners are highly skilled investor with a track record of value creation in healthcare ‒ Over a 36 year history, EW has invested in over 150 companies ‒ Their investment team has 500+ years of combined healthcare industry e
Slide 43: MIMEDX Is on the Right Path
MIMEDX IS ON THE RIGHT PATH 43MIMEDX IS ON THE RIGHT PATH 43
Slide 44: MIMEDX's Foundation Is in Place
MIMEDX’S FOUNDATION IS IN PLACE 1 Refreshed Management Team and Fully Reconstituted Board 2 Stabilized Business and Accelerating Late-Stage Pipeline 3 Increased Our Liquidity 4 Resolved Material Litigation and Investigations Completed Financial Restatement, Improved Controls and Relisted 5 on NASDAQ
Slide 45: The Right Board, Leadership and Strategy Is in Place
THE RIGHT BOARD, LEADERSHIP AND STRATEGY IS IN PLACE MIMEDX is a new company, with a fully reconstituted Board and Senior Leadership team, transformed in the last 2 years The Board and management team have completely rebuilt and stabilized the Company, positioning MIMEDX for long-term, sustainable g
Slide 46: Appendix
APPENDIX 46APPENDIX 46
Slide 47: Non-GAAP Metrics Reconciliation
NON-GAAP METRICS RECONCILIATION ($ millions) 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 Net Sales – Reported $ 76.4 $ 61.7 $ 53.6 $ 64.3 $ 68.5 $ 60.0 1 Less: Revenue Transition Impact 8.2 4.5 1.7 1.0 0.5 0.3 Adjusted Net Sales $ 68.2 $ 57.2 $ 51.9 $ 63.3 $ 68.0 $ 59.7 $ 63.7 $ 51.7 $ 45.4 $ 54.0 $ 57.7 $ 50.3 G
Slide 48: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION ($ millions) 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 Net Loss (7.5) (4.8) (8.5) (19.4) (16.6) (8.4) Depreciation & Amortization 1.8 1.8 1.7 1.8 1.6 1.5 Interest Expense 2.4 2.4 2.6 1.5 1.5 1.5 Loss on Extinguishment of Debt 0.0 0.0 0.0 8.2 0.0 0.0 0.3 (11.3) 0.0 0.0 (1.0) 0.1 In