Download - Investor Presentation - ConforMIS
Investor Presentation
September 2020
2
Forward-Looking Statements
This presentation contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this presentation, including statements regarding our strategy, future operations, projected financial position, future revenues, projected costs, projected profits, projected margins, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “grow,” “improve,” and “trend”, and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. The forward-looking statements contained in this presentation reflect our current views with respect to future events, and apply only as of the date of this presentation. We assume no obligation to update any forward-looking statements.
Our business is subject to substantial risks and uncertainties, including those referenced in certain of our filings with theSEC under the heading “Risk Factors.” You are encouraged to read our filings with the SEC, available at www.sec.gov, including our Annual Report or Form 10-K for the year ended December 31, 2019 filed with the SEC on March 3, 2020, as well as our Quarterly Reports on Form 10-Q. You should give careful consideration to these risks and uncertainties.
© 2020 Conformis, Inc. Slide
3© 2020 Conformis, Inc.
• Founded: 2004
• Headquartered: Billerica, MA
• Ticker: CFMS
• Global employees: ~275
• International: Products sold
in 18 countries
• Milestone: Sold >110,000
personalized knees
Conformis Today
Key Statistics
Expanding Portfolio of Knee & Hip Implants
Comprehensive Dossier of Clinical and Health
Economic Benefits
Recognized Leader in Patient-Specific
Instrumentation and Personalized Implants
Proprietary Technology Platform with Broad
Patent Portfolio
Slide
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A Paradigm Shift in OrthopedicsA personalized solution for patients that delivers demonstrated value to physicians and payors
CT Scan• Surgeon orders and sends a standard diagnostic CT scan to Conformis
Restore the native anatomy using 3D modeling• Convert the imaging data into a 3D model
Create the patient-specific implant and instruments• Single-use, patient-specific instruments include guides and instruments
necessary to fit our customized implants to the patient
Develop patient-specific pre-surgical plan• iView allows the surgeon to visualize preoperative planning, including
measurements, orientations and anatomic variants
Just-in-time delivery to the customer• Deliver implant, iJigs and iView within 6 weeks
Digitally driven manufacturing• Produce custom implant and patient-specific instruments
Patient-Specific Solution
Delivered Just-in-Time in a
Convenient Kit
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5
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© 2020 Conformis, Inc. Slide
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iFit Design
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iFit Image-to-Implant Platform Technology
iFit JIT Delivery
Clinical Benefits
Economic Benefits
Intra-Op Benefits
iFit 3D Additive Printing
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Expand hip product adoption to further accelerate sale
© 2020 Conformis, Inc.
Launching a New Investment Thesis
• We have experienced adoption challenges• Lead times and lack of intraoperative flexibility have
limited new surgeon adoption and compressed margins
• We compete in a large and profitable market that is undergoing a transformation• Procedural shift to outpatient / ambulatory surgery
centers (ASCs) creates significant opportunity
• We are the clear leader in personalized hip & knee implants with a capital-efficient delivery model• We are an innovator of the single-use kit, sterile
delivery model of implants and patient-specific instrumentation (PSI)
Present Situation Our Plan
Slide
Develop and launch a new ‘ASC’ knee to expand our product offering and aggressively target the ASC and hospital outpatient facilities
Generate value from PSI expertise & intellectual property portfolio
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ASC Opportunity is Compelling
© 2020 Conformis, Inc. Slide
U.S. Joint Replacement Procedures in ASC settings
This shift in elective knee procedures to ASC provides significant growth opportunity
Notable Drivers
0%
10%
20%
30%
40%
50%
60%
2016 2018 2020 2022 2024 2026
Procedure Shift to ASC2
Partial and Total Knee Procedures in 2024:
~370,0001
1) Company estimates based on projected shift in elective joint procedures.
2) According to Sg2, a Vizient company.
• Medicare / Medicaid reimbursement change
• Bundled “Episode of Care”
• Physician ownership: capital-efficient requirements
• Increased pressure on healthcare spending
• COVID-19 protocol accelerates trend
• Lack of “installed base” for larger players
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Common Challenges for Joint Replacement in the ASCHospitals and other medical facilities face similar challenges
Common Challenges
Limited Processing Capability
• 5–10 bulky instrumentation
• Potential source of costly infections
• Substantial manpower costs
© 2020 Conformis, Inc.
Limited Efficiency
• All instrument trays require timely setup, break down, and sterilization
• Potential source of costly infections
Slide
Conformis Solution
• Single-use kit, delivered before surgery
• Set of disposable patient-specific guides
• One reusable tray
Limited Space
• Tray management
• Inventory storage
• Supply costs
99© 2020 Conformis, Inc. Slide
Future
New ASC KneeTarget U.S. Launch 2H, 2021
ASC Solution• Broader anatomical coverage than competitive
implants1
• Implant size matched to patient’s knee scan
• Approx. 3-week lead time
• Full range of standardized poly thickness options
• Product costs allows greater pricing flexibility
• Select patient-specific instrumentation
• Pre-packaged in a single-use, sterile kit with an
iView pre-surgical plan
Present
iTotal: Patient Specific iTotal: Patient Specific
Personalized Solution• Approx. 6-week lead time
• 3 patient-specific poly inserts
• Premium priced solution
• Custom made for each patient
• Patient-specific instrumentation
• Pre-packaged in a single-use, sterile kit with
an iView pre-surgical plan
Personalized Solution• Approx. 6-week lead time
• 3 patient-specific poly inserts
• Premium priced solution
• Custom made for each patient
• Patient-specific instrumentation
• Pre-packaged in a single-use, sterile kit with
an iView pre-surgical plan
Expand Our Portfolio with New ASC KneeNew product offering aimed at driving greater surgeon adoption
1) Company sponsored study.
1010© 2020 Conformis, Inc. Slide
• New Knee with Poly Options• Pre-select implant size to best fit patient’s knee anatomy • Includes iView Pre-Surgical Plan • Full range of polyethylene inserts for each surgery • Leverage iTotal platform1 with clinical outcome data• Broader anatomical coverage v. competitive Off-the-Shelf (OTS) knees2
• Shorter Lead Times• Pre-packaged solution to be delivered within approx. 3 weeks
• Greater Pricing Flexibility• Ability to competitively price the product given new target product
costs
• Aggressively Target the ASC Opportunity • Leverage unique delivery model to aggressively target the hospital
outpatient and ASC spaces
Anticipated Benefits:
Same Efficient Solution with Better
Pricing and Flexibility
1) Clinical studies on iTotal Total Knee Arthroplasty system.2). Company sponsor study.
New ASC Knee Offers Attractive Benefits Target product profile intended to directly address customer feedback
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Product Gross Margin ImprovementSelect standardization enables lower cost of goods
Patient-Specific Knee
2019
45%-50%
2022 - 2024
70%+
ASC KneeValidated Targeted Production Savings Planned changes between platforms to reduce COGS
Significant cost savings opportunities with new ASC knee offering:
• Eliminate implant design labor cost
• Lower femur casting costs
• Less machining time
• Improved material costs
• Standardize production quantities
• Less scrap
© 2020 Conformis, Inc. Slide
1212© 2020 Conformis, Inc. Slide
Conformis Uniquely Positioned to Win in the ASC
Conformis Advantage: Right Product at the Right Price
Capital-Light Delivery Model• Just-in-time delivery addresses sterilization / lack of inventory space
Pre-Packaged Procedural Kit with iView • Total knee replacement-in-a-box improves efficiencies
Partnership with Stryker® Validates Approach
Attractive Target Price • Lower COGS allows aggressive targeting of the ASC segment
Conformis is the IDEAL
SOLUTION for ASC
Customers
iView
Re-usable Instrumentation
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Clinically Demonstrated Benefits
Safety & Efficacy
OUTCOME Publications & Conference Proceedings
Higher Patient Satisfaction
• Reimann, et al. – Journal of Orthopaedics. 2019• Schroeder, et al. – Orthopaedic Proceedings of Bone & Joint Surgery. 2019• Katthagen, et al. – ICJR World Arthroplasty Conference. 2015• Ogura, et al. – Knee Surgery, Sports Traumatology, Arthroscopy. 2018
Better Alignment
• Schroeder et al. – The Journal of Knee Surgery. 2018• Ivie, et al. – The Journal of Arthroplasty. 2014• Levengood, et al. – The Journal of Knee Surgery. 2017• Arbab, et al. – The Knee. 2018
Better Health Economic Outcomes
• O’Connor, et al. – American Health & Drug Benefits. 2019• Buch, et al. – Reconstructive Review. 2019• Culler, et al. – Arthroplasty Today. 2017• Namin, et al. – Value in Health. 2019
Better Range of Motion • Zeller, et al. – British Association for Surgery of the Knee. 2017• Buch, et al. – Reconstructive Review. 2019
Better Functional Results
• Zeller, et al. – ICJR Pan Pacific. 2016• Zeller, et al. – The Journal of Arthroplasty. 2017• Wang, et al. – International Orthopaedics. 2018• Reimann, et al. – Journal of Orthopaedics. 2019
Better Fit
• Koeck, et al. – The Knee. 2011• Carpenter, et al. – The Journal of Arthroplasty. 2014• Demange, et al. – International Orthopaedics. 2015• Schroeder, Lennart, and Gregory Martin (May 25, 2018)• Meier, et al. – Clinical Orthopedics and Related Research. 2019• Meier, et al. – Knee Surgery, Sports Traumatology, Arthroscopy. 2019
Demonstrated in:
50+ Clinical Studies
30+Peer-Reviewed Publications
© 2020 Conformis, Inc. 13Slide
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Conformis Re-Defining Patient Satisfaction
Conformis patients are more satisfied with their knee replacements and more likely to recommend a Conformis knee to a friend
© 2020 Conformis, Inc. 14Slide
Improve Patient Reported Satisfaction & Overall Quality Measures Grow Referral Base
p=0.007 p=0.003p=0.003
Conformis Patients 77% vs Non-Conformis Patients 36%
2.1x
Patients who respond as ‘Extremely Likely’
recommend Conformis 2.1x more than OTS
p<0.0001
1515© 2020 Conformis, Inc.
1) 2019 Orthoworld. The Orthopedic Industry Annual Report. 2) U.N. data, 2019.3) Conformis Hip Systems were implanted in a limited commercial launch in July 2018.
Full commercial launch
of the Conformis Hip System commenced in November 20193
2019
Similar to knee, life expectancy
continues to increase, global population is gaining weight, and individuals desire to live a more
active lifestyle2
$8B global hip
market is projected to grow in the low single digits1
New Hip Platform Drives Additional GrowthRecent hip introduction doubles addressable market opportunity
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1616© 2020 Conformis, Inc. Slide
Conformis Addresses Total Hip Replacement (THR) Challenges
Challenges: Notable Drawbacks with THR
• THR Traditionally is an UNGUIDED Operation• Heavily dependent on training, skill, and experience of
the surgeon
• 2D-Templating Can Be Inaccurate • Neck angles and offsets can be dramatically affected by
rotation on x-ray
• Standard Hips Offer Limited Neck Angles, Offsets• Capital-intensive delivery model, implant &
instrumentation
• Leg length / offset issues after THR
• Patient Dissatisfaction1 and Revision Rates2
Solution: Apply Conformis Philosophy
1) Jones, et al., and Anakwe et al.2) Labek, et al.
• Conformis Hip Systems uses 3D imaging technology to provide PRE-SURGICAL navigation of the patient’s specific implant for restoration of patient anatomy
Total Hip Replacement-in-a-Box
• Patient-specific instrumentation improves efficiencies
• iView surgical planning tool helps guide surgical procedure
• Hip system offers a range of femoral neck options
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Developing a Multi-Line Hip PortfolioCapital efficient delivery model remains central to the product offering
© 2020 Conformis, Inc.
Customer Preference Guides Level of Customization
Slide
Proprietary iView provides a personalized
surgical roadmap
Personalized guides and bone models streamline the surgical procedure
iView Pre-Surgical Plan Patient-Specific Instrumentation Product Portfolio
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Anticipated New Product CadenceRobust pipeline drives growth
2020
LMR = Limited Market Release; FMR = Full Market Release
© 2020 Conformis, Inc.
Hip• Total Hip Product
• Hip Line Additions
• Cordera Standard Hip Stem
• Hip Fit Analysis Software
• 2nd Hip Stem Design
ConformisTotal Hip System (FMR) Cordera
Standard Stem
Hip Line Additions
Knee• Identity CR
• Identity PS
• Constrained Poly Options CS/PS
• Identity Cementless System
• New ASC Knee
Identity iTotal(FMR)
Hip Fit Analysis
Software/ Cordera Match
Constrained Poly
IdentityCementless
(LMR)
Identity Cementless
(FMR)
New ASC Knee (LMR)
1st half 2nd half 1st half 2nd half 1st half 2nd half
2021 2022
Slide
New ASC Knee(FMR)
New ASC Knee:
Cementless(LMR)
2nd Stem(LMR)
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Strategic Partnership: StrykerCollaboration adds another profitable growth driver
© 2020 Conformis, Inc. 19
Leveraging the strengths of the respective organizations to further expand personalized care into low-cost, site-of-care settings / ASC
Conformis will develop, manufacturer, and supply patient-specific instrumentation for use in connection with Stryker’s knee implant offerings, including the market-leading Triathlon Total Knee System
Slide
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1) Stryker is a registered trademark of Stryker Corporation.
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Stryker: Private Label OpportunitySignificant revenue and profit potential
© 2020 Conformis, Inc. 20
Stryker is a leader in
the U.S. primary
knee reconstruction
market
$30M• $14 million upfront • up to $16 million in
milestone payments• Long-term supply
agreement
Collaboration:Capitalizing on Partner’s Strengths
Revenue from private
label products offers
potential to drive 10%–
20% of Conformis’ overall
revenue by 2024
Leadership Position:U.S. Primary Knees1
ASC Opportunity:Trend in Knee Procedures2,3
Revenue Potential:Drive Incremental Growth
10%–20%
Partnership validates
Conformis’ expertise in
design, development,
and manufacturing
excellence of PSI
Slide
~30% Share ~240,000 Units
Projected shift in knee
procedures to ASC
offers significant
opportunity
1) 2019 Orthoworld. - the Orthopedic Industry Annual Report and management estimates prior to the emergence of COVID19. 2) Management estimates based on projected shift in elective procedures.3) According to Sg2, a Vizient company.
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We Plan to Create Significant Shareholder Value2024 Financial Targets
© 2020 Conformis, Inc.
RevenueCommitted to double digit
revenue growth
Gross MarginDeliver improved
gross margins
$160M - $190M
ProfitGenerate meaningful
operating income
$15M - $30M60%+
• New product introductions• International market expansion
into India, China, and Japan • Supply of private label products
• Growing contribution of higher margin knee and hip products
• Introduction of profitable private label products
• Scale business, leverage operating expense
• Improved cash flow • Accelerates time to breakeven
Slide
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Anticipated hip product adoption further accelerates revenue growth
© 2020 Conformis, Inc.
Private label products drive additional profitable growth
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Conformis
New knee targets ASC procedure growth and drives gross margin expansion
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Slide
New Growth Drivers Create a Compelling Investment Thesis
Thank You!