financial summary - asx2015/11/13 · released at europcr (may 2016), following ce mark filing and...

Health Products│Australia│Equity research│November 16, 2015

IMPORTANT DISCLOSURES REGARDING COMPANIES THAT ARE THE SUBJECT OF THIS REPORT AND AN EXPLANATION OF RECOMMENDATIONS CAN BE FOUND AT THE END OF THIS DOCUMENT. MORGANS FINANCIAL LIMITED (ABN 49 010 669 726) AFSL 235410 - A PARTICIPANT OF ASX GROUP

Powered by EFA

Reva Medical

Delivering long-promised bioresorbable stent

RVA looks well positioned to capitalise on its differentiated, proprietary ■bioresorbable polymer technology, which offers multiple commercial opportunities.

While the lead program targeting fully-bioresorbable coronary scaffolds for heart ■disease has had some issues, third generation Fantom looks well positioned in the US$4bn space, with a new commercially savvy CEO beginning to turn the ship.

Emerging Fantom clinical data has shown promising efficacy and safety, with key ■data released mid-2016, followed by CE Mark and EU market entry c1Q17.

We initiate coverage with an ADD rating and A$1.41 blended (SOP/DCF) target ■price.

A novel polymer platform offering several potential revenue streams RVA has developed proprietary bioresorbable polymers with a range of differentiated characteristics (eg, adaptable physical properties, adjustable and predictable degradation/resorption times, unique visibility under X-ray). These polymers appear biocompatible and safe in early-stage testing and may offer broad use for various US$1bn+ medical applications, including the company‟s lead program targeting coronary scaffolds for heart disease, other vascular applications (eg, embolotherapy for the treatment of liver cancer and benign uterine fibroids) and also as a potential local drug delivery vehicle.

New product, new CEO…tough decisions starting to pay off In April 2015, management made the strategic decision to restructure and focus exclusively on third generation bioresorbable Fantom scaffolds, in lieu of continuing development of second generation ReZolve2, and recently brought in a commercially savvy CEO. These changes have been viewed favourably (shares at 5-year highs), with management‟s focus on leveraging Fantom‟s numerous competitive advantages (eg X-ray visibility; single-step inflation; minimal strut thickness; deliverability; simplified manufacturing) to improve its fast-follower positioning and eventual clinical adoption in the US$4+bn global stent market.

Emerging data looks promising…key inflection point approaching Recent interim clinical data have shown high rates of device deliverability, promising imaging performance and a good safety profile, with key 6-month follow-up data to be released at EuroPCR (May 2016), following CE Mark filing and market entry c1Q17.

Cash runway through EU launch, with large med-techs in play We see few capital constrictions through 2016 and would expect increasing interest from investors as well as larger players (eg Boston Scientific, which holds an option to worldwide distribution; and substantial holder Medtronic, which does not have any internal efforts in the space) contingent with clinical demonstration of effectiveness, safety and restoration of vascular integrity and function.

SOURCE: MORGANS, COMPANY REPORTS

ADD Current price: A$0.80

Target price: A$1.41

Previous target: A$

Up/downside: 76.1%

Reuters: RVA.AX

Bloomberg: RVA AU

Market cap: US$217.5m

A$304.7m

Average daily turnover: US$0.04m

A$0.06m

Current shares o/s 33.10m

Free float: 70.0%

Key changes in this note

None.

Price performance 1M 3M 12M

Absolute (%) 7.4 63.3 171.2

Relative (%) 10.3 69.6 178.4

Dr Derek JELLINEK

T (61) 2 9043 7904

E [email protected]

Scott POWER

T (61) 7 3334 4884

E [email protected]

Financial Summary Dec-13A Dec-14A Dec-15F Dec-16F Dec-17F

Revenue (US$m) 0.00 0.00 0.00 0.00 5.15

Operating EBITDA (US$m) -27.05 -20.94 -21.76 -22.53 -19.47

Net Profit (US$m) -27.92 -50.97 -22.90 -23.04 -19.99

Core EPS (US$) -0.84 -0.66 -0.65 -0.58 -0.50

Core EPS Growth 17.3% (22.3%) (1.0%) (10.5%) (13.3%)

FD Core P/E (x) NA NA NA NA NA

DPS (US$) - - - - -

Dividend Yield 0% 0% 0% 0% 0%

EV/EBITDA (x) NA NA NA NA NA

P/FCFE (x) NA 3.00 NA NA NA

Net Gearing (100%) 101% 33% (5%) (7%)

P/BV (x) 0.91 NA NA NA NA

ROE (85%) 772% 69% 50% 39%

% Change In Core EPS Estimates

CIMB/consensus EPS (x) 9.00 10.55 26.48


2

Figure 1: Financial summary

SOURCE: MORGANS RESEARCH, COMPANY

Reva Medical Year end December Closing price (A$) 0.80 1.41Income statement (US$m) 2013A 2014A 2015F 2016F 2017F Valuation metricsDivisional sales 0 0 0 0 5 Preferred methodology Valuation 1.41Total revenue 0 0 0 0 5 DCF valuation inputsEBITDA (27.1) (20.9) (21.8) (22.5) (19.5) Rf 6.25% 10-year rate 6.25%Associate income 0.0 0.0 0.0 0.0 0.0 Rm-Rf 6.00% Margin 1.5%Depreciation (0.8) (0.9) (0.4) (0.4) (0.4) Beta 2.47 Kd 7.75%EBITA (27.9) (21.9) (22.2) (22.9) (19.9) CAPM (Rf+Beta(Rm-Rf)) 21.1% Ke 21.1%Amortisation/impairment (0.1) (0.1) (0.1) (0.1) (0.1) E/EV*Ke+D/EV*Kd(1-t) NPV cash flow (US$m) 530.2EBIT (27.9) (22.0) (22.3) (23.0) (20.0) Equity (E/EV) 60.0% Minority interest (US$m) 0.0EBIT(incl associate profit) (27.9) (22.0) (22.3) (23.0) (20.0) Debt (D/EV) 40.0% Net debt (US$m) -26.8Net interest expense 0.0 0.3 (0.6) (0.0) (0.0) Interest rate 7.8% Investments (US$m) 0.0Pre-tax profit (27.9) (21.7) (22.9) (23.0) (20.0) Tax rate (t) 35.0%Equity market value (US$m) 557.0Income tax expense 0.0 0.0 0.0 0.0 0.0 WACC 14.7% Diluted no. of shares (m) 33.1After-tax profit (27.9) (21.7) (22.9) (23.0) (20.0) DCF Valuation (A$) 1.42Minority interests 0.0 0.0 0.0 0.0 0.0NPAT (normalised) (27.9) (21.7) (22.9) (23.0) (20.0) Multiples 2014A 2015F 2016F 2017FSignificant items 0.0 (29.3) 0.0 0.0 0.0 Enterprise value (US$m) 196.1 190.0 203.7 219.4NPAT (reported) (27.9) (51.0) (22.9) (23.0) (20.0) EV/Sales (x) NA NA NA 42.6

EV/EBITDA (x) (9.4) (8.7) (9.0) (11.3)EV/EBIT (x) (8.9) (8.5) (8.8) (11.0)

Cash flow (US$m) 2013A 2014A 2015F 2016F 2017F PE (normalised) (x) (0.9) (9.7) (9.7) (6.2)EBITDA (27.1) (20.9) (21.8) (22.5) (19.5) PEG (normalised) (x) 0.0 0.1 (15.4) (0.1)Change in working capital 0.7 (0.7) 0.0 (0.1) 0.0 Price/Book (x) -0.72 -5.59 -4.33 -0.49Net interest (pd)/rec 0.0 1.0 1.0 (1.5) (0.0)Taxes paid 0.0 0.0 0.0 0.0 0.0 At target price 2014A 2015F 2016F 2017FOther oper cash items 4.4 2.8 0.0 0.0 0.0 EV/EBITDA (x) (9.4) (8.7) (9.0) (11.3)Cash flow from ops (1) (21.9) (17.9) (20.8) (24.1) (19.5) PE (normalised) (x) 0.0 0.0 0.0 0.0Capex (2) (1.5) (0.5) (0.4) (0.4) (0.4)Disposals/(acquisitions) (1.5) (1.0) 0.0 0.0 0.0 Comparable company data (x) 2015F 2016F 2017FOther investing cash flow 5.2 1.5 0.0 0.0 0.0 ResMed Inc EV/EBITDA 0.9 0.6 0.2Cash flow from invest (3) 2.3 (0.0) (0.4) (0.4) (0.4) Y/E June EV/EBIT 1.1 0.7 0.3Incr/(decr) in equity 0.0 0.2 9.5 11.4 20.0 PE 2.3 2.1 1.9Incr/(decr) in debt 0.0 24.3 (0.9) (1.0) 0.0 PEG 0.4 0.2 0.2Ordinary dividend paid 0.0 0.0 0.0 0.0 0.0 Cochlear EV/EBITDA 21.9 19.1 17.4Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 Y/E June EV/EBIT 25.1 21.5 19.5Other financing cash flow 0.0 0.0 0.0 0.0 0.0 PE 35.0 29.2 26.4Cash flow from fin (5) 0.0 24.6 8.6 10.4 20.0 PEG 1.1 1.5 2.5Forex and disc ops (6) 0.0 0.0 0.0 0.0 0.0Inc/(decr) cash (1+3+5+6) (19.6) 6.6 (12.6) (14.1) 0.1 Per share data 2014A 2015F 2016F 2017FEquity FCF (1+2+4) (23.4) (18.5) (21.2) (24.5) (19.9) No. shares 33.4 391.2 391.2 44.6

EPS (normalised) (cps) (65.5) (64.8) (58.0) (50.3)Balance sheet (US$m) 2013A 2014A 2015F 2016F 2017F EPS (dil. normalised) (cps) (65.3) (5.9) (5.9) (9.2)Cash & deposits 20.7 26.8 14.2 0.1 0.2 Dividend per share (cps) 0.0 0.0 0.0 0.0Trade debtors 0.0 0.0 0.0 0.0 0.0 Franking (%) 0% 0% 0% n.a.Inventory 0.0 0.0 0.0 0.1 0.1 Dividend payout ratio (%) 0.0% 0.0% 0.0% 0.0%Investments 0.0 0.0 1.0 5.1 6.1 Dividend yield (%) 0.0% 0.0% 0.0% 0.0%Goodwill 0.0 0.0 0.0 0.0 0.0Other intangible assets 0.0 0.0 0.0 0.0 0.0 Growth ratios 2014A 2015F 2016F 2017FFixed assets 3.6 2.9 2.9 2.8 2.8 Sales growth - - - -Other assets 0.5 0.5 0.5 0.5 0.5 Operating cost growth -22.6% 3.9% 3.5% 9.3%Total assets 24.8 30.2 18.6 8.6 9.7 EBITDA growth -22.6% 3.9% 3.5% -13.6%Short-term borrowings 0.0 0.0 0.2 0.4 0.0 EBITA growth -21.5% 1.3% 3.5% -13.3%Trade payables 1.4 0.7 0.7 0.7 0.7 EBIT growth -21.4% 1.3% 3.4% -13.3%Long-term borrowings 0.0 0.0 0.7 0.1 0.1 Reported NPAT growth 82.5% -55.1% 0.6% -13.3%Provisions 0.0 0.0 0.0 0.0 0.0 Normalised NPAT growth -22.3% 5.5% 0.6% -13.3%Other liabilities 2.6 56.0 56.9 58.9 60.4 Reported EPS growth 81.7% -96.2% 0.6% 55.7%Total liabilities 4.0 56.6 58.4 60.1 61.2 Normalised EPS growth -22.6% -91.0% 0.6% 55.7%Preference shares 0.0 0.0 0.0 0.0 0.0Hybrid equity 0.0 0.0 0.0 0.0 0.0 Operating performance 2014A 2015F 2016F 2017FShare capital 222.3 226.1 235.6 247.0 267.0 Asset turnover 0.0% 0.0% 0.0% 0.0%Other reserves 0.0 0.0 0.0 0.0 0.0 EBITDA margin NA NA NA -377.7%FCTR 0.0 0.0 0.0 0.0 0.0 EBIT margin NA NA NA -387.4%Unrealised gains/losses 0.0 0.0 0.0 0.0 0.0 Net profit margin NA NA NA -387.8%Retained earnings (201.5) (252.5) (275.4) (298.5) (318.5) Return on net assets 83.0% 55.8% 44.7% 38.8%Other equity 0.0 0.0 0.0 0.0 0.0 Net debt (US$m) -26.8 -13.3 0.3 -0.1Total equity 20.8 (26.4) (39.8) (51.5) (51.5) Net debt/equity 101.4% 33.5% -0.7% 0.2%Minority interest 0.0 0.0 0.0 0.0 0.0 Net interest/EBIT cover (x) 83.2 -34.6 -1067.4 -992.1Total shareholders' equity 20.8 (26.4) (39.8) (51.5) (51.5) ROIC -2632.6% 1279.0% 1480.5% -3809.3%Total liabilities & SE 24.8 30.2 18.6 8.6 9.7

Internal liquidity 2014A 2015F 2016F 2017FCurrent ratio (x) 9.5 4.8 0.2 0.2Receivables turnover (x) NA NA NA NAPayables turnover (x) 26.4 32.2 33.4 34.6

Assumptions 2014A 2015F 2016F 2017FUSD/USD 0.836 0.730 0.740 0.740

Target price (A$)

DCF, EV/EBITDA, PE


3

A revolutionary technology

Investment thesis

Initiating coverage with an ADD rating

We believe REVA Medical has all the makings of a commercially viable medical device company: leverageable proprietary, bioresorbable polymer platform technology; large market opportunities; corporate appeal (with Boston Scientific holding an option to worldwide distribution rights, and investment by Medtronic); a competent management team and board; and adequate cash reserves to advance the product pipeline to key inflection points.

While noting these solid fundamentals, slippage of timelines on various iterations of its lead product candidate, scale-up issues around device uniformity and the recent reorganisation and streamlining of operations to focus exclusively on Fantom, a third-generation bioresorbable scaffold family in lieu of a more clinical advanced second-generation product ReZolve2, has caused investor angst and has seen the share price fall below A$0.15 last year, a far cry from its 2010 debut at A$1.10.

However, it appears that the kinks have been worked out in the lead coronary stent program, with emerging clinical data looking promising and competitive, and a new CEO taking the helm to drive the commercial strategy. As such, investors have become increasingly more confident in the company‟s future prospects.

We too see the possibility of a “third time lucky” story playing out, believing its differentiated, proprietary bioresorbable polymer technology can create long-term value if ongoing clinical studies can demonstrate that Fantom is able to compete with the metallic stents in terms of safety and efficacy, while restoring vascular integrity and function.

We initiate coverage of REVA Medical with an ADD rating and A$1.41 target price.

Investment highlights

Proprietary technology platform with broad optionality

RVA has been working with lead scientists at Rutgers University in the US for nearly 10 years developing bioresorbable polymers with a range of differentiated material characteristics, including adaptable strength and structural integrity, adjustable and predictable degradation/resorption times, and unique visibility under X-ray. Encouragingly, these polymers generally appear biocompatible and safe, offering broad use for various US$1bn+ medical applications (eg, coronary scaffolds for heart disease, other vascular applications, embolotherapy for the treatment of liver cancer and benign uterine fibroids) as well as a potential local drug delivery vehicle. We believe the potential for multiple avenues for growth, novel product iterations and scarcity value help to de-risk the company‟s profile and reinforce our favourable view.

Strong intellectual property portfolio

RVA has a broad portfolio of proprietary technologies protected by more than 290 issued patents as well as pending applications, which the company owns directly or has licensed, with the latest expiry beyond 2030. To our knowledge, the company has not received communication from third parties concerning the patentability, validity or enforceability of its patents or patent applications, and has not been subject to re-examination, interference or other legal challenges. RVA uses in-house patent counsel and also employs external patent attorneys to assist in managing the intellectual property portfolio.


4

A large market with unmet medical need

Coronary heart disease (CHD) is the leading cause of morbidity and mortality in the developed world and represents a multi-billion dollar market. In the US, nearly 25m people have CHD, with CHD attributable to one death every minute and accounting for 20% of all deaths. Atherosclerosis, or the hardening of the arteries, is the main underlying cause of CHD, attributable to more than 70% of all cardiovascular disease-related deaths. As the blood vessels that nourish the heart with oxygen, blood and nutrients become blocked or narrowed due to fatty deposit (ie, plaques) build-up, blood flow to the heart is restricted, potentially causing irreparable damage.

CHD treatments continue to evolve

Over the past 50 years, CHD treatment has evolved from invasive open heart surgery (first revolution), to less invasive percutaneous coronary intervention (PCI; second revolution), to the opening of narrowed heart vessels using the placement of bare metal (third revolution) and now mostly drug-eluting stents (DES; fourth revolution) in an attempt to overcome the body‟s inflammatory response and limit restenosis (ie narrowing of the blood vessel). However, DES placement carries the risk of blood clots and limits natural artery movement and healing. As such, bioresorbable drug-eluting scaffolds (fifth revolution) is focused on not only allowing the stent to prop open the artery and release its treatment, but also to effectively disappear before clots and stroke risk become an issue.

US$4bn+ stent market

We believe the US$4bn+ global stent market remains dynamic, with three key competitors (Boston Scientific, Abbott Laboratories, and Medtronic) competing for market share. Since 2009, the market has declined by around 7% annually through 2014, given lower average selling prices (driven by competition and other pricing pressures) and declining procedural volumes. We estimate price stability and modest volume growth going forward (2-3%). However, we believe new products such as bioresorbable scaffolds could drive category reinvigoration, assuming a strong conversion rate over time. Abbott‟s 2012 launch of its bioresorbable Absorb stent is not a good example, as it carried a relatively high price premium to DES (75-100%), which limited its uptake and caused a strategic price re-alignment to improve substitution and increase utilisation. It will be interesting to see if likely US approval early next year, kick-starts growth or if physicians and insurers take a more cautious stance. We believe moving from early adopters to the early majority is a big step that may require further evidence that fully bioresorbable stents do in fact restore complete vascular motion, lower healthcare costs and improve patient outcomes above those seen with DES. Importantly, we believe RVA is well placed for a fast-follower advantage if this occurs.

Good safety/utility versus metal stents in preclinical testing

RVA has undertaken significant laboratory and preclinical testing looking at various parameters (eg, strength, embrittlement, fatigue tests, biocompatibility, toxicity tests, drug release, and deployment/degradation), with more than 1,000 stents tested across various animal models showing the technology is safe and effective. Notably, long-term preclinical studies looking at comparability to commercial metal stents have shown the benefits of bioresorbable scaffolds, with arteries achieving late lumen gain (months to years) and restoration of arterial compliance compared with metallic stents, with which lumen growth remains permanently smaller.

Clinical data from prior product iterations lowers Fantom risk

RVA conducted the RESTORE Trial (Pilot Study of the ReZolve Sirolimus-Eluting Bioresorbable Coronary Scaffold) with ReZolve (a first-generation scaffold) in 22 patients (implanted December 2011 – July 2012) at multiple centres in Brazil and Europe. Data reported from 12-month follow-up showed a late loss (ie loss of vessel lumen post procedure, a key determinate of effectiveness) of 0.29mm in 14 event-free patients and an 18% MACE rate (ie


5

Major Adverse Cardiac Event; 3 retreated lesions; 1 death), with solid procedural success (85% delivery/deployment; 100% artery blockage of <20%). The RESTORE II CE Mark study using second-generation ReZove2 showed no MACE rates and strong procedural success (94% delivery/deployment; 100% artery blockage of <20%) in 65 patients who competed a 30-day follow-up.

Promising, albeit early-stage, clinical data seen with Fantom

Currently, RVA is conducting two Fantom clinical studies: Fantom I, a pilot study in 7 patients; and Fantom II, a 220 patient study for CE Mark. While acknowledging small patient numbers, recent data reported for Fantom I looks encouraging, showing a 100% success rate with delivery/deployment, acute procedural (ie residual stenosis <50% with no in-hospital MACE) and clinical (ie acute procedure success without MACE through 30 days), a clean safety profile, and a last lumen loss (LLL) of 0.21mm at 4 months. Interim data from Fantom II was just as encouraging, demonstrating robust procedural outcomes (delivery, 96.2%, acute procedural, 99.0%, and clinical procedural, 98%), and only 1 MACE event (ie post-procedure MI at 30 day follow-up), but no events in-hospital or reported at 90 days follow-up.

Corporate interest and Boston Scientific distribution option

RVA is arguably one of the key players developing next-generation polymer technologies targeting multiple indications. While acknowledging the highly competitive coronary stent market, we note the only large pharma to commercialise a bioresorbable product is Abbott Laboratories, and strategic investments have been made in RVA by both Medtronic and Boston Scientific (BS sold its US$25m stake to Saints following the US$27bn Guidant acquisition in January 2006). Moreover, RVA retains an option agreement with BS for worldwide distribution rights to sell products at a favourable transfer price (50% royalty).

Top-calibre management/board

We believe the management team and board possess a wide breadth of experience across the medical device, technology and broader healthcare industries, with domestic and international experience in capital markets along with financial and commercial expertise. Notably, we believe the recent appointment of Ms Regina Groves as CEO (effective 21 September 2015) should enrich the executive team‟s competencies as it continues with clinical trials and prepares for commercial product launch. Ms Groves comes with 30 years‟ experience in the medical device field and successfully built the atrial fibrillation business at Medtronic.

Pipeline

Figure 2: RVA Pipeline

SOURCES: MORGANS, COMPANY REPORTS

Product Description Indication

Market

opportunity Development stage Comment

Fantom Third generation bioresorbable

stent made from a single piece

of proprietary desaminotyrosine

polycarbonate polymer

Coronary artery disease (CAD) US$1bn+ Phase II- Fantom I pilot study

in 7 pts

Phase III- Fantom II study in

220 pts

Fantom I-data at TCT Oct '15 showed 0 MACE, 4

mo LLL 0.21mm

Fantom II- Interim results at TCT Oct '15- 96-99%

procedural outcomes, MACE 1 post-procedure MI

at 30 day follow-up; 0 events in-hospial or at 90

day follow-up

NA Polymer technology Liver cancer;uterine fibroids;

drug delivery

US$500m+ Preclinical Outlicensing opportunities


6

Catalysts

Figure 3: Key inflection points


Valuation

We utilise an equally blended risk-adjusted sum-of-the-parts (SOP) and DCF analysis to capture fair value. Using the first approach, peak sales estimates are risk-mitigated based on our assumptions of the probability of commercial success and years to launch, and discounted based on an appropriate cost of capital. We assume Fantom peak sales of US$1,000m and US$500m in US and ex-US geographies, respectively, with a 70% probability of success. In addition, we include US$250m in potential sales for other indications applicable to the platform technology, with a 10% probability of success. Applying a 4x sales multiple, we derive a combined value of US$9.51 with US$0.50 net cash per share, and a net value of US$10.01 or CDI of A$1.43 (USD/AUD 0.70).

Figure 4: SOP valuation


Our DCF analysis ascribes fair value of US$9.84 per share (WACC of 15%, long-term growth rate of 2%) with a CDI derived per share value of A$1.41 (USD/AUD 0.70).

Figure 5: DCF valuation


Taken together, we arrive at a fair per share value per CDI of A$1.41.

Product Indication Event Timing Significance

Fantom

Coronary artery

disease Cohort B enrollment completion 1H16++

" "

6 mo data from cohort A (n=110) released at

EuroPCR May-16+++

" " CE mark application 3Q16 +++

" " EU launch YE16/1Q17 +++

" " Partnership/licensing 2016 +++

NA Polymer technology Partnership/licensing 2016+ +++

SOTP Disct Rt Yrs. to Mkt % Success

Peak

Sales

(USD Mln)

Yrs. to

peak sales

Sales

multiple

Value

(US$M)

Fantom (ex-US) 15% 1.5 70% 500 5 4 $1,900.00

NPV US$4.12

Fantom (US) 15% 4 70% 1000 8 4 $3,700.00

NPV US$5.27

Other platform indications 15% 6 10% 250 10 4 $875.00

NPV US$0.13

Net Margin 35%

Mln Shrs OS 56.2

Total US$9.51

Cash/Shr (est) US$0.50

Net value US$10.01

USD/AUD 0.70

Fair value (CDI 10:1) A$1.43

Target Price A$1.43

DCF Disct Rt

Long term

growth rate

NPV

(US$m)

Terminal

value

(US$m)

Firm value

(US$m)

Per share

value

Fantom 15% 2% 101 452 553 US$9.84

USD/AUD 0.70

Fair value (CDI 10:1) A$1.41

Target Price A$1.41


7

Figure 6: Blended valuation


Financials and Morgans estimates

Revenues: As a development-stage company, RVA does not generate any revenue. We forecast 2017 EU commercial launch of Fantom, with sales of A$5m ramping to more than A$200m by 2021. While the US strategy remains uncertain, we believe strong Fantom adoption is predicated on tapping into this market. As such, we have forecast US sales of US$20m from 2019, with more than US$200m generated over the following three years.

Manufacturing: Product development and manufacturing activities are based in a 37,000 square foot, medical device standard certified (ISO 13485-2003) facility located in San Diego, California. The facility operates under a lease that expires in January 2018 and includes product assembly, chemistry and engineering laboratories as well as clean rooms and quality assurance suites. The company has begun implementing methods and processes for scale-up, including work on the product‟s size offerings, and manufacturing preparedness in 2016 as it approaches commercialisation. While RVA single-sources some processes (eg, polymer manufacture from SurModics; catheter supply from Bavaria Medizin Technologies GMBH; and lasing process, cutting stent pieces from the polymer, from Resonetics), it has not entered into any material agreements with any third parties regarding the manufacturing process.

We believe the facility has the capacity to produce the quantities of Fantom needed for current clinical trials and initial commercial sales. We estimate gross margins should comfortably fall within the 75-80% range, given a low cost of goods (US$200-350) and only modest royalties payable on sales to licensees Rutgers University and Integra LifeSciences. However, we see upside to our margin estimates as we expect manufacturing to move towards more automated processes to increase and improve capacity and yields.

Operating expenditures: In FY14, opex (less amortisation) was US$20.9m (-22.6% yoy), with R&D of US$14.3m (-25.5%) and G&A of US$6.6m (-15.6%). In the 9 months to September 2015, opex was US$16.7m (flat yoy), with R&D of US$11.7m (+8.8/%) and G&A of US$5.0m (-13.2% yoy). We estimate opex growth at a CAGR of 5% through 2018, with SG&A annual growth of 12% and R&D growth essentially flat.

Net income: In FY14, RVA reported an adjusted net loss after tax of US$21.7m (-22% yoy; excludes US$29.3m associated with issuance of convertible notes and warrants). We forecast profitability of US$2.6m in 2018 ramping up to more than US$100m over the next three years.

Low tax rate due to NOLs: We estimate RVA will have an accumulated deficit of around US$275m exiting FY15, with an estimated additional US$45m through 2017. As such, we believe the company has considerable net operating losses (NOLs) to act as credit against tax expenses when it reaches profitability (we estimate 2018).

Balance sheet good through 2016: The company completed a US$25m senior unsecured convertible note and 8.75m option financing in September 2014 through Goldman Sachs and Senrigan Capital. Key terms are as follows:

Convertible notes - 5 year term; US$100k face value; 7.54% interest per annum, payable upon redemption.

Maturity - 60 months from issue.

Optional redemption - option at 26 months, at maturity and upon change of control or default.

Metric Weight Valuation (A$ per share)

Blended Valuation (A$

per share)

DCF 50% 1.41 0.70

SOP 50% 1.43 0.72

Blended Equity Valuation 100% 1.42

Target price 1.42


8

Optional conversation - noteholders are allowed to convert some or all notes into common stock at any time at an initial conversion price of A$0.25 per CDI; the conversion price is subject to adjustments.

Automatic conversion - If Fantom is granted CE Mark approval and the market price of CDIs is greater than A$0.60 for 20 consecutive trading days.

We estimate the maximum number of CDIs that may be issued on conversion of all convertible notes and options at 230.4m (23m shares), based on the initial conversion price and AUD/USD of 0.70.

RVA had cUS$12.3m in cash/interest bearing investments and no debt exiting 3Q15. The company received US$9.506m in cash from issuance of 4.375m shares upon exercise of warrants associated with the convertible issuance. An additional 4.375m warrants remain outstanding and, if exercised, would give the company an additional US$11.4m in capital.

Given a 3Q15 cash utilisation of US$4.5m, we estimate the company has c1.3 years of cash reserves at current levels. However, given ongoing clinical development (we assume a US trial would be funded by a partner) and required ramp-up of commercialisation activities through next year, we have incorporated an equity raising of US$20m in 2017, which should provide adequate capital to see the company through to profitability.

Risks

Developmental risk: Success of the polymer technology and lead product candidate Fantom is reliant upon showing a favourable risk/benefit profile in clinical studies. If products fail to demonstrate the required clinical specifications or cause adverse or unexpected events, the technology may be questioned and require further modifications.

Commercial risk: Fantom is RVA‟s lead developmental product, with success dependent upon market acceptance. While we have based our estimates and forecasts on the targeted patient populations and various market penetration rates, we remind investors that uptake for this novel device is difficult to estimate at such an early stage in its life cycle, with changes to our key metrics potentially having a material impact on our projections.

Regulatory risk: RVA has yet to achieve approval for any products. Government regulators are the ultimate gatekeepers, with varying options in different jurisdictions and the potential to delay market entrance, if granted at all.

Financial risk: We estimate the company has limited resources to reach profitability, requiring additional funds and potentially diluting existing shareholders.

Company description

REVA Medical, founded in 1998 and floated on the ASX in December 2010 (US$84.3m IPO; 77.3m CDIs [7.73m shares] at A$1.10) is a US-headquartered (San Diego, California), clinical-stage medical device company. It is focused on the development and commercialisation of its proprietary bioresorbable radiopaque polymer technology, which offers potential coronary artery disease treatment, other vascular applications (eg, embolotherapy for the treatment of liver cancer and benign uterine fibroids), and a vehicle for local drug delivery.

Lead product candidate Fantom is a third-generation drug-eluting bioresorbable coronary scaffold (aka stent) that combines both proprietary stent design and polymers that are metabolised and cleared from the body over time, allowing natural expansion and contraction of the coronary artery, potentially translating into improved long-term health outcomes. Fantom is currently being tested in a clinical study (Fantom II) in up to 220 patients, with 6-month data expected in mid-2016 for CE Mark registration.

The company has material agreements in place with the following: Boston Scientific, in relation to a distribution option that is set at a favourable 50%


9

royalty rate; Rutgers University, in relation to polymer material licenses that require milestone-related payment and sales royalties; and Integra LifeSciences, in relation to polymer material licenses that require royalty payments.

Prior to its 2010 IPO, development efforts were funded by US$69m in equity and US$29m in debt, obtained via a variety of sources (eg, angel investors, venture capitalists and hedge funds), including investments from Boston Scientific and Medtronic. As at 30 June 2014, the company had US$20.5m in cash and an accumulated deficit of US$253m.

Figure 7: Key event timeline


Unique bioresorbable polymer platform

We believe bioresorbable materials are underpinning innovation in medical devices, allowing for new and developing medical applications, more complete and preferred therapies, with the potential to translate into improved health outcomes. Bioresorbable materials have been used in cardiovascular devices (primarily as delivery vehicles for drug coatings) and in orthopaedics for years, with Poly-L-lactic acid (PLLA) most commonly used (ie, in resorbable sutures, soft tissue implants, orthopaedic implants and dialysis media) and metabolised over 12-18 months into carbon dioxide and water. Other materials include: polyglycolic acid (PGA), the copolymer of PLA and PGA (PLGA); the DL–isotope form of PLA (PDLLA); and polycaprolactone (PCL). In addition, metallic-based materials containing magnesium, iron or zinc are also in development. We believe there are numerous unique complexities and requirements for bioresorbable implantable devices and controlled drug delivery, including:

Polymer/alloy strength (avoid recoil with stents);

Rate of degradation/corrosion;

Biocompatibility;

Lack of toxicity; and

Optimal mechanical properties and drug release profiles (with stents, dependent on rate of degradation, coating agents and manufacturing process).

We believe RVA is well aware of these key aspects and has been working collaboratively with lead scientists at distinguished Rutgers University for nearly 10 years developing proprietary bioresorbable polymers with a range of differentiated material characteristics (eg, adaptable physical properties, various strength and structural integrities, adjustable and predictable degradation/resorption times, and unique visibility under X-ray). Encouragingly,

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

De

c-10

Ma

r-11

Jun

-11

Sep

-11

De

c-11

Ma

r-12

Jun

-12

Sep

-12

De

c-12

Ma

r-13

Jun

-13

Sep

-13

De

c-13

Ma

r-14

Jun

-14

Sep

-14

De

c-14

Ma

r-15

Jun

-15

Sep

-15

IPO raises A$85m

at A$1.10

Positiiv e initial results f rom

Fantom at TCT

New CEO

appointed

Completes enrollment in

Fantom II

US$25m f inancing f rom Goldman

Sachs and

Senrigan

Focus mov es f rom ReZolv e2 to new

Fantom scaf f old

First clinical results

f rom ReZolv e2

12 month data f rom Restore trial

Completes trial enrollment of

Restore

Start ReZolv e2 CE Mark trial using

ReZolv e2

Elliott Mgnt and Medtronic purchase

US$24m at A$0.50

Receiv es EU approv al to commence Restore

clinical study of first

generation ReZolv e

scaf f old


10

these polymers appear biocompatible and safe in early-stage testing. We believe they offer broad use for various medical applications, including the company‟s lead program targeting coronary scaffolds for heart disease, other vascular applications (eg, embolotherapy for the treatment of liver cancer and benign uterine fibroids, where microspheres could allow for retreatment options, would be visible to aid in targeting and outcome assessment, and could offer greater flexibility in particle penetration and drug payload based on various degradation degradation/resorption rates) and also as a potential local drug delivery vehicle.

Competitive space, but differentiated product

What is Fantom?

Fantom is a third-generation drug-eluting bioresorbable coronary scaffold made from a single piece of proprietary desamiontyrosine polycarbonate polymer, which degrades into water, carbon dioxide and ethanol and requires no special handling (ie, not temperature sensitive; no refrigeration).

Figure 8: Fantom- Sirolimus-eluting bioresorbable tyrosine polycarbonate


This leaves desamiontyrosine, which is absorbed and excreted from the body over a period of c48 months. The polymer is iodinated, making it radiopaque, unlike the majority of other bioresorbable materials in development, aiding its placement and traceability. In addition, Fantom‟s unique thin-strut design confers both flexibility and strength, with single-step inflation and good expansion range, while minimising stent recoil.

We believe these features differentiate RVA‟s offering from others, both in development or currently commercialised. We highlight in the following table the competitive landscape in bioresorbable materials (polymeric and metallic-based compared to a commercialised metal drug eluting sent), noting key features, and expand upon Fantom‟s distinguishing attributes in the proceeding paragraphs.


11

Figure 9: Competitive landscape


Manufacturer Product Design Material Visible Drug

Total

thickness,

um

Cross

profile

mm

% Stent-to-

artery

coverage

Duration

radial

support

Absorption time

(months) Comment

Polymeric-based

Reva Medical Fantom Deformable Desaminotyrosine

polycarbonate

Yes Sirolimus 125 1.3 48 CE Mark trial underway; data at EuroPCR in May '16; launch est

by YE16; 4mo LLL 0.21 (n=7) in Fantom I trial

Abbott Absorb Deformable Poly‐L‐lactic acid (PLLA)

oriented; semicrystalline

Marker only Everolimus 157 1.4 25 3 mo 24 First approved bioresorbable scaffold; CE Marked 2011; available

in 30+ countries; US Absorb III trial met endpt showing non-

inferiority to Xience on TLF at 1 yr (7.8% vs 6.1%, p <0.007);

China trial met non-inferiority endpt, LLL at 12 mo, 0.19mm vs

Xience 0.13mm; Japan trial met non-inferiority TLF endpoint 4.2%

vs Xience 3.8%, p<0.0001

Elixir DESolve Deformable PLLA-based blend; up to

30% crystallinity

Marker only Novolimus 150 1.5 CE Mark approved May '13; 6mo data FIM study showed LLL of

0.37mm in 15pts, with one TLR and MI; 36 mo MACE 8.2%, no

stent thrombosis, no AMI;

Amaranth Medical Fortitude Deformable High Mw PLLA/PLGA;

semicrystalline

Marker only Sirolimus 150-200 12 Ongoing Mend-II and Renascent ICE mark studies; 9mo follow-up

to conclude mid-2016

" ? Deformable High Mw PLLA/PLGA;

semicrystalline

Marker only Sirolimus 120 12 Plans to start the Renascent II study in Italy, Colombia, and

South America

Arterial Remodeling

Technologies

ART 18Z Deformable PLDL, custom ration of L-to

D-isomers; amorphous

No No 170 18 May '15 received CE mark; Terumo Corp acquired the technology

Huann Biotechnology Xinsorb BRS Deformable PLLA, PCL, PLGA Marker only Sirolimus 160 Preclinical evaluation

Kabushikikaisha Igaki-Tamai Deformable PLLA Marker only No 170 24-36 CE mark for peripheral use

OrbusNeich Medical On-ABS Deformable PLLA, PDLLA, PCL Marker only Sirolimus 150 Preclinical evaluation

Xenogenics IDEAL biostent Deformable Polylactide anhydride mixed

with a polymer of salicylic

acid with a sebacic acid

linker

Yes Sirolimus 200 2 65 3 Gen I-WHISPER trial was implanted in 40pts, showed significant

restenosis; Gen II- Preclinical evaluation

Metallic-based

Biotronik DREAMS 2 Deformable

Metal-magnesium alloy;

PLLA coating Marker only Sirolimus 150 9

Oct ‟13 started BIOSOLVE II study for CE Mark in 120 pts; 6mo

LL 0.27± 0.37mm; target lesion failure 3.3%, MI 0.8%;

vasomotion seen at 6mos; concern- degradation of the

magnesium alloy limits longer term strength and may cause

inflammation

Abbott Xience V Deformable Metal-cobalt chromium Yes Everolimus 96.2 1.09 10.7 Permanent Permanent A market-leading DES

Metal drug-eluting stent (DES)


12

Deformable, single-step inflation: All commercial metal stents use deforming technology, whereby the stent is crimped-down onto the catheter-mounted balloon and is expanded with the balloon. When polymers are stretched, they can lose strength and become prone to breakage. Fantom appears to maintain its radial strength under single-step balloon catheter expansion similar to traditional metal stents (but unlike other bioresorbable stents) helping to minimise the procedure time for the physician and the patient.

Small strut thickness: A large amount of data shows that stent characteristics, such as stent design, composition, and strut thickness may have a significant impact on the outcome of patients undergoing coronary stenting. In particular, strut thickness has been found to play an important role in the development of in-stent restenosis, with thinner struts believed to help prevent this occurrence. Fantom has one of the smallest strut thicknesses (125µm) in the bioresorbable space.

Minimal crossing profile to improve deliverability: A primary concern of stent development is the need to increase flexibility to facilitate safe delivery. Fantom has one of the lowest crossing profiles in the space (c1.3mm), aiding deliverability either through the femoral artery in the groin or through the radial artery of the wrist (this type of delivery is becoming more common as it decreases surgery complications and hospital stays).

Radiopaque for standard x-ray imaging: Iodination of the polymer allows the device to be visible under X-ray (ie, radiopaque), which aids traceability and stent placement. The majority of other bioresorbable polymer scaffolds are invisible and require permanently-attached radiopaque markers to enable their limited visibility.

Figure 10: Absorb (1); Fantom (2); and drug-eluting metal stent (3)


Minimal recoil: Unlike metal stents, where the strength of the material prevents excessive recoil of the expanded device, polymer stents do not possess this strength and can break, recoil to a smaller diameter or collapse. Fantom‟s design appears to offer radial strength to overcome these issues, with early clinical data from Fantom I showing acute recoil of 4.82%.

Large expansion range minimises over extension: Existing technologies for metal and polymer stents generally require physicians to accurately assess the correct size of the coronary artery based on angiography. Fantom allows for a broad expansion range (3mm device, expandable to 4.87mm) to accommodate different artery diameters and conform to vessel shape without fracture.

1 2 3


13

Figure 11: Fantom- 3mm nominal device expanded to 4mm


Drug-eluting to prevent restenosis: Fantom is coated with Sirolimus, an anti-restenotic drug (ie, prevents re-narrowing of the artery) that is used in other drug-eluting metal stents, is available commercially from a number of different sources, and is FDA-approved. A dose of 80µg is coated onto the outside surface using a polymer solution containing the drug; the coating is the same as the base polymer. Laboratory and animal tests have shown controlled release of the majority of the drug over 30 days, with most of the drug released from the polymer within 90 days.

Controlled re-absorption rate: Radial support is maintained for 4-6 months, which clinical reports have indicated is the critical healing period post stent placement. The majority of the stent‟s weight (>80%; see chart below) is lost by one year with full absorption in around four years.

Figure 12: Fantom- >80% is degraded within 1 year


Promising preclinical and early clincal data

Safe and effective in preclinical models

RVA has undertaken significant laboratory and preclinical testing, looking at various parameters including strength, embrittlement, fatigue tests, biocompatibility, toxicity tests, drug release, and deployment/degradation. More than 1,000 stents have been tested across various animal models showing the technology is safe and effective. Notably, long-term preclinical studies looking at comparability to commercial metal stents have shown the benefits of bioresorbable scaffolds (see following graph), with arteries achieving late lumen gain (months to years) and restoration of arterial compliance, compared with metallic stents where the lumen growth remains permanently smaller than reference.


14

Figure 13: Animal testing of lumen size over time


Several product iterations build upon experience and lower risk

While Fantom scaffolds are the company‟s fourth product iteration in as many years (prior include bioresorbable stent, ReZolve, and ReZolve2), we believe the current offering has a much better chance of success as it is underpinned by numerous competitive advantages to improve its positioning and clinical adoption than prior commercial candidates, including:

uni-body construction based on proprietary desaminotyrosine polycarbonate polymer to improve radial strength;

minimal strut thickness (up to 50% vs ReZolve2) to improve healing response;

minimal crossing profile (>10x smaller vs ReZolve2) to improve deliverability;

lower COGS (20% of ReZolve2) with a proven deformable design.

To date, the company has embarked on five clinical investigations (RESORB, RESTORE, RESTORE II, Fantom I and Fantom II) to determine the risk/benefit profile of its bioresorbable coronary scaffold technology. We highlight the key trial parameters and findings in the following table and detail specifics to each investigation in the subsequent sections.

Title:

Source:

Please fill in the values above to have them entered in your report

0

2

4

6

8

10

12

3 mo 6 mo 12mo 18mo 55mo

RVA polymer Bare metal

mm2


15

Figure 14: Clinical investigations


RESORB study - Three-year imaging data showed treated arteries remained open and stable with a non-drug eluting device. However, the study showed a high restenosis rate secondary to mechanical failures, which management determined was due to device embrittlement. The polymer and design was subsequently revised and bench testing improved to better predict clinical outcomes.

Restore pilot study - Used the ReZolve stent which had improved strength and a coating of sirolimus versus the prior iteration. ReZolve was evaluated in the December 2011-initiated 22-patient RESTORE (ReZolve Sirolimus-Eluting Bioresorbable Coronary Scaffold) pilot study at multiple centres in Brazil and Europe, with patients followed for five years. 12-month results were presented at the Transcatheter Cardiovascular Therapeutics 2013 (TCT) meeting in October 2013 showed positive mean late loss (ie the change in the lumen area between the time of treatment when blood flow was restored and the time of follow-up) in the majority of patients (ie 0.29mm in those who remained event free after treatment), but less than ideal in others (ie 0.69mm in patients who had undergone retreatment for in-stent restenosis, or re-narrowing of the artery at the implant site). Historically, permanent drug-eluting stents have exhibited late loss between 0.20 mm to 0.40 mm, which tends to correspond with positive long-term outcomes.

In addition to a high rate of retreatment, as ReZolve was sheathed on a 7 Fr. catheter, its cross profile is quite large (1.9mm) and RESTORE inclusion criteria confined lesion length to 12mm, slowing trial recruitment and prompting RVA to redesign the scaffold.

Product Location Design Phase N Observation period Primary endpoints Comment

Bioresorbable

coronary stent

Brazil and

Germany

Non-

randomised,

single arm

Phase I/II, RESORB

(REVA Endovascular

Study of a Bioresorbable

Coronary Stent)

25 30 day with multiple

follow-ups

Safety at 30 days;

imaging at follow-up

30 day: 2pts had heart attack, one

needed to be retreated; higher

retreatment rate between 4-6mos due

to device embrittlement; 3 yr imaging

data in pt subset showed arteries

remained open and stable

ReZolve Brazil,

Austria,

Poland,

Germany

Non-

randomised,

single arm

Phase II pilot study,

RESTORE (ReZolve

Sirolimus-Eluting

Bioresorbable Coronary

Scaffold)

26

(22

implanted)

1, 6, 12 months and

annually for up to 5 yrs

Freedom from ischemic-

driven target lesion

revascularization (TLR)

at 6 mos

Quantitiative

measurements at 12

mos (QCA/IVUS)

Started Dec'11; 12mo results at TCT

OCT '13, mean late loss of 0.29mm in

those who remained event free after

treatment, but 0.69mm in patients who

had undergone retreatment : 2 pts

experiencing target lesion

revascularisation (TLR) and one death

ReZolve2 Up to 30

sites in

Australia,

Brazil,

Europe

(Germany,

Poland,

Slovenia)

and New

Zealand

Non-

randomised,

single arm

Phase III CE Mark study,

RESTORE II

125 6, 9, 12 months and

annually

Late loss (reduction of

internal artery diameter)

at 9mos; major adverse

coronary events (MACE

; death, ischemia, heart

attack) at 9 and 12mos

Initiated March '13; program was

deemphasised with introduction of the

Fantom scaffold in March „14

Fantom 2 centres

(Brazil,

Poland)

Non-

randomised,

single arm

Phase I/II pilot trial;

FANTOM I

7 4 mo clinical &

imaging (angiographic;

OCT; IVUS); 6 mo

clinical; follow-up

through 5 yrs

Procedural outcomes

(delivery success;

acute; clinical); MACE;

angiographic, IVUS

Oct'15 results at TCT, 100% success

seen with delivery/deployment, acute

procedural (residual stenosis <50%

with no in-hospital MACE) and clinical

(acute procedure success without

MACE through 30 days); 0 MACE; 4

mo LLL 0.21mm

Fantom 30 clinical sitesNon-

randomised,

two cohorts

Phase III FANTOM II trial;

cohort A- 110pts for CE

Mark; cohort B- 110pt for

additional data to support

product use; 2.5-3.5mm

vessels, lesion length

<20mm

220 6 mo clinical (MACE),

angiographic (LLL);

follow-up through 5

yrs; COT and IVUS

sub-studies at 24 mo

in cohort A, 48 mo in

cohort B

Procedural outcomes

(delivery success;

acute; clinical); MACE;

angiographic, IVUS

Cohort A enrollment complete Sept '15;

Interim results at TCT Oct '15-

procedural outcomes: delivery (96.2%),

acute procedural (99.0%), clinical

procedural (98%); MACE: 1 post-

procedure MI at 30 day follow-up; 0

events in-hospial or at 90 day follow-up


16

Restore II CE Mark study - Uses the ReZolve2 scaffold, which maintains all the benefits of ReZolve (ie, fully radiopaque, large expansion range, traditional direct balloon inflation), but is designed with more favourable attributes (ie, lower profile (1.5mm vs 1.88mm with ReZolve), ability to utilise a 6 Fr. catheter, no sheath, and improved tyrosine polycarbonate polymer which provides a 30% increase in radial strength, allowing it to treat lesions ≤14mm).

ReZolve2 was tested in the March 2013-initiated, 125-patient RESTORE II study. Data released in October 2013 on the first 65 patients treated who had completed 30-day follow-up showed no major adverse coronary events (MACE), with no incidences of ischemic target revasulatarisation (TLR), heart attack or stent thrombosis.

Fantom I pilot study - In March 2014, management introduced the Fantom scaffold family, a significant product advance over ReZolve2 as previously outlined above. Fantom I is designed as a small (7 patients) pilot study, assessing acute procedural outcomes, safety and clinical/imaging (ie angiographic; optical coherence tomography- OCT; intravascular ultrasound- IVUS) at four and six months, with follow-up through five years.

Figure 15: Fantom I design


We believe interim results recently presented at TCT (October 2015) are promising showing:

Strong procedural outcomes:

delivery success (successful delivery and deployment of the device) -100%;

acute success (delivery success with residual stenosis <50% with no immediate (in-hospital) MACE - 100%; and

clinical success (acute success without the occurrence of MACE through 30 days) -100%.

Safety is not an issue:

No MACE events recorded (albeit, non-adjudicated) - in-hospital, at 30-day follow-up, at 4 months angiographic follow-up, or at 6-month follow-up.

Minimal stenosis and acute recoil at four months:

acute recoil- 4.82%;

median late lumen loss- 0.21mm (but large range -0.06, 0.88); and


17

Diameter stenosis (%)- baseline, 67.31 ± 9.82; post procedure 2.84 ± 7.11; 4 months 7.55 ± 11.92.

Promising imaging at four months:

IVUS results showed a similar mean lumen area post procedure and at four months (6.15 ± 0.68 vs 5.60± 0.67).

Fantom II CE Mark study - The investigation commenced March 2015 and is designed as a 220 patient pivotal trial (split into two equal cohorts, A and B) that will measure procedural outcomes, angiographic quantification and safety endpoints at 6 months, with sub-studies assessing additional imaging at 24 or 48 months. Cohort A is fully enrolled (September 2015), with key 6-month data to be released at EuroPCR in May 2016.

Figure 16: Fantom II design


Interim data presented at TCT (October 2015) are encouraging, demonstrating:

Robust procedural outcomes

Delivery, 96.2%; acute procedural, 99.0%; and clinical procedural, 98%.

Good safety profile

1 MACE event in 72 patients (ie post-procedure heart attack at 30-day follow-up), but no events seen in-hospital (in 105 patients) or reported at 90 days follow-up (in 21 patients).

CVD- a blockbuster market

An epidemic

According to the World Health Organization, cardiovascular disease (CVD) is the number-one cause of death globally. In the US, CVD claims the lives of more than 2,500 people every day and is directly attributable to more fatalities than the next seven causes of death combined. The American Heart Association (AHA) estimates over 100m Americans live with some form of CVD, with more than a 25% increase estimated over the next 20 years. The direct costs of CVD are estimated to be more than US$275bn. Moreover, the prevalence and financial burden associated with CVD is predicted to increase as the US population ages. Currently, an estimated 40m Americans are over the age of 65, the age group associated with nearly 40% of all CVDs. In addition, the current epidemic in obesity and Type 2 diabetes is fuelling the growth of cardiovascular-related diseases (eg, hyperlipidemia, hypertension and atherosclerotic vascular disease).


18

Figure 17: CVD prevalence in the US (m) Figure 18: Direct medical costs of CVD in the US (US$bn)

SOURCES: MORGANS, COMPANY REPORTS SOURCES: MORGANS, COMPANY REPORTS

Coronary heart disease–A growing concern

Coronary heart disease (CHD) is the most common form of CVD, and is the leading cause of morbidity and mortality in the developed world. In the US, nearly 25m people have CHD, comprised of over 13m myocardial infraction (MI; heart attack) sufferers and nearly 12m citizens afflicted with angina pectoris (chest pain). In the US, CHD is attributable to one death every minute and accounts for 20% of all deaths. Atherosclerosis, or hardening of the arteries, is the main underlying cause of CHD, attributable to more than 70% of all CVD-related deaths. As the blood vessels that nourish the heart with oxygen, blood and nutrients become blocked or narrowed due to fatty deposit (ie, plaques) build up, blood flow to the heart is restricted, potentially causing irreparable damage. Over time, the disease worsens, but is virtually unnoticed until signs of chest pain (ie, angina), shortness of breath, heart palpitations, or other symptoms manifest. In severe cases, CHD can cause MI or sudden coronary death.

Figure 19: CHD prevalence in the US (m) Figure 20: CHD medical costs in the US (US$bn)


CHD treatment evolution

Over the past 50 years, CHD treatment has evolved from invasive open heart surgery (first revolution), to less invasive percutaneous coronary intervention (PCI; second revolution), to the opening of narrowed heart vessels using the placement of bare metal (third revolution) and now mostly drug-eluting stents (DES; fourth revolution) in an attempt to overcome the body‟s inflammatory response and limit restenosis. However, DES placement carries the risk of blood clots and limits natural artery movement and healing. As such,

Title:

Source:


35%

36%

37%

38%

39%

40%

41%

0

20

40

60

80

100

120

140

160

2010 2015 2020 2025 2030

US prevalence % of population

Title:

Source:


0

100

200

300

400

500

600

700

800

900

2010 2015 2020 2025 2030

CVD direct costs

Title:

Source:


7.0%

7.5%

8.0%

8.5%

9.0%

9.5%

0

5

10

15

20

25

30

35

40

2010 2015 2020 2025 2030

US prevalence % of population

Title:

Source:


0

20

40

60

80

100

120

2010 2015 2020 2025 2030

CVD direct costs


19

bioresorbable drug-eluting scaffolds (fifth revolution) is focused on not only allowing the stent to prop open the artery and release its treatment, but also to effectively disappear before clots and stroke risk become an issue. We highlight the market evolution below:

Coronary Artery Bypass Grafting (open heart surgery) – 1960s CABG is a highly invasive procedure that creates a detour around a blocked coronary artery with a new blood vessel, or graft, usually taken from another part of the patient‟s body.

Percutaneous coronary intervention (balloon angioplasty) – 1970s PCI is a minimally invasive procedure, during which a catheter is pushed along the inside of an artery to reach blockages in or near the heart. The catheter is balloon tipped and inflated where the artery is obstructed in order to compress the plaque and widen the artery. The treatment has a high rate of restenosis (re-narrowing of the artery; ~40% within 6 months) along with risk of vessel closure leading to severe complications (eg, heart attacks, CABG or death).

Figure 21: Coronary Artery Bypass Grafting (CABG) Figure 22: Percutaneous Coronary Intervention (PCI)


Bare metal stents – 1990s BMS are tiny, metal mesh tubes delivered via a balloon catheter, expanding with the balloon, implanted into an artery to help prop it open and facilitate blood flow to and from the heart. The scaffolds are permanent and can result in relatively high rates of restenosis (~30%) due to the inflammatory metal effects. They can also result in long-term complications and cause earlier disease progression than that seen with PCI (six years vs 10+ years).

Drug-eluting stents – 2002 DES attempt to overcome the inflammatory response and restenosis seen with BMS through various coatings, from cytotoxic (paclitaxel) to immunosuppressant (eg, sirolimus, zotarolimus, and everolimus) drugs. While clinical evidence has shown the use of DES has resulted in a <10% decline in restenosis rates, the medical literature indicates that a stent's functional purpose is fully served in less than six months, with the permanent nature of DES restricting the natural movement of the artery and increasing the risk of blood clot formation (ie, late stent thrombosis).

Bioresorbable drug-eluting vascular scaffolds – 2012 The aforementioned concerns with DES have prompted extensive research into improving stent safety, various new types of coronary stents in development including DES with biocompatible polymers, DES with biodegradable polymers, polymer-free DES, and completely bioresorbable scaffolds. The latter are temporary implantable devices that work like common DES, restoring blood flow to a clogged vessel and administering drug, however they are resorbed by the body over time, leaving behind a treated vessel free to move, flex, pulsate and dilate.

While we believe these stents have the potential to revolutionise the market, data needs to show amelioration of late stent thrombosis or provide other advantages not available with current DES on the market (eg, complete vascular restoration and motion) for strong adoption by the medical community.


20

Figure 23: Bare metal stent (BMS) Figure 24: Bioresorbable drug-eluting vascular scaffold


Absorbable stents

Absorb leads the charge

A growing body of data from Absorb, the first commercialised (2012) fully bioresorbable stent from Abbott Laboratories, which is available in more than 100 countries (ex-US) and has been used to treat more than 125k people, is providing further clinical evidence that a fully dissolving stent functions like a permanent DES by opening up blocked heart vessels and restoring blood flow.

Notably, results from the 2k patient Absorb III trial were recently presented at TCT (October 2015) showing Absorb to be comparable to Xience, the best-in-class DES, on the measure of target lesion failure (TLF) at one year (ie composite endpoint of cardiac death and heart attack attributable to the target vessel and repeat procedures within the treated lesion caused by ischaemia (lack of oxygen in the treated vessel)). No statistically significant differences were seen between the devices (7.8% vs 6.1%; non-inferiority p<0.007), demonstrating that both are comparable in treating people with CAD. While one-year rates of in-stent thrombosis were higher numerically higher in the Absorb treated group vs Xience (1.5% vs 0.7%), this difference was not statistically significant (p=0.13). We believe these results should support FDA approval expected in early 2016.

Abbott also presented positive one year data at TCT from a prospective, randomised trial comparing Absorb to Xience in 480 people at 24 sites throughout China. The trial met is non-inferiority primary endpoint of late loss (0.19 ± 0.38 mm vs 0.13 ±0.38 mm; p=0.01).

Absorbable stent sales remain in ‘early-adopter’ phase

Despite the accumulating evidence showing Absorb is similar to DES, ex-US sales have been sluggish, with 2014 sales coming in at US$142m. Boston Scientific‟s Synergy stent, which is not totally absorbable but has an absorbable polymer and was granted CE Mark in 2012, had 2014 sales of US$82m. When taken together, both devices comprise just 3% of coated stent sales in EU, according to Millennium Research Group.


21

Figure 25: Absorbable stents share of EU coated stents

SOURCES: MORGANS, MILLENNIUM RESEARCH GROUP, BLOOMBERG

Will US approval drive sales?

Given the slow sales ramp for bioabsorbables outside the US, it will be interesting to see if likely US approval next year for Absorb and the recent FDA approval of Synergy (October 2015), kick-starts growth or if physicians and insurers take a more cautious stance. We believe moving from early adopters to the early majority is a big step that may require further evidence that fully bioresorbable stents do in fact restore complete vascular motion, lower healthcare costs and improve patient outcomes above those seen with DES.

Coronary stent market needs reinvigoration

Absorb leads the charge

The US$4.2bn global stent market (90% DES,10% BMS; 38% US, 62% ROW) is undergoing a rapid and significant technological change, with lower average selling prices (driven by competition and other pricing pressures) and declining procedural volumes resulting in sales declining by around 7% annually since 2009. While we estimate pricing stability and modest volume growth going forward (2-3%), we believe a growth acceleration will require new products such as bioresorbable scaffolds for category reinvigoration, assuming a strong conversion rate over time and sustained premium pricing. However, we note Abbott‟s 2012 launch of Absorb saw a relatively high price premium to DES (75-100%) limit uptake and caused a strategic price re-alignment, with tighter pricing band across the products to allowing for easier substitution and improve utilisation.

Figure 26: Global stent market (US$bn) Figure 27: Market split between BMS and DES (2014)


Title:

Source:


0

1

2

3

4

5

6

7

2006 2007 2008 2009 2010 2011 2012 2013 2014

Title:

Source:

Please fill in the values above to have them entered in your reportBMS, 10%

DES, 90%


22

Market dominated by three players

The global coronary stent market is well established, highly concentrated, and dominated by three major players: Boston Scientific, Abbott Laboratories, and Medtronic. While the former two are actively involved in the bioresorbable space, Medtronic has not made any concerted efforts outside of strategic investments in a few companies including RVA. Johnson & Johnson (JNJ) exited the market in 2011 and recently sold its interventional vascular technology leading Cordis franchise to Cardinal Health for cUS$2bn. It will be interesting to see if Cardinal is looking to revitalise the division.

Figure 28: Global stent market share (2014)


Management and board

We believe the management team and board have a wide breadth of experience across the medical device, technology and broader healthcare industries, with domestic and international experience in capital markets, along with financial and commercial expertise. Notably, we believe the recent appointment of Ms Regina Groves as CEO should enrich the executive teams‟ competencies as it continues with clinical trials and prepares for commercial product launch.

Regina Groves (CEO)

Regina Groves joined the company as CEO in September 2015. Her background encompasses more than 30 years‟ experience in medical devices, executive leadership, and financial management. Prior to joining RVA, Ms. Groves served as Vice President and General Manager of AF Solutions, Cardiac Rhythm and Heart Failure division of Medtronic, a leading global medical technology company. Previously she held positions at Medtronic of Vice President of Quality and Regulatory for the Cardiac Rhythm Disease Management (“CRDM”) business and Vice President and General Manager for Patient Management CRDM. Her experience also includes positions with McKinsey & Company, Inc., several health care companies, including direct providers, and involvement with start-up companies. Ms. Groves received her MBA from Harvard Graduate School of Business Administration and her BS in Pharmacy from the University of Florida. She currently serves on the board of three private companies.

Robert Schultz PhD (President and COO)

Robert Schultz, Ph.D. has served as President and COO since 2003. Dr. Schultz has more than 30 years of experience in pharmaceutical, medical device and combination products. Prior to joining RVA, Dr. Schultz held positions of Vice President of Research and Development and Vice President of Technology Strategy and Licensing for Dura Pharmaceuticals, a specialty respiratory pharmaceutical and pulmonary drug-delivery company, and

Title:

Source:


Abbott, 42.0%

Boston Scientific, 25.0%

Medtronic , 28%

other , 5.0%


23

Research Specialist for 3M Pharmaceuticals, a diversified international technology company. Dr. Schultz obtained a Ph.D. in Pharmaceutics and a BS degree in Pharmacy from the University of Minnesota.

Katrina Thompson (CFO and Corporate Secretary)

Katrina Thompson has served as Chief Financial Officer and Corporate Secretary since 2003. Ms Thompson experience encompasses over 30 years in accounting, finance, and corporate administration. Prior to joining RVA, Ms. Thompson held senior positions in the telecom, real estate development, commercial nursery and high tech industries, with time also spent with Price Waterhouse, a provider of tax, audit and advisory services. Ms. Thompson received her BS in Business Administration from San Diego State University.

Jeffrey Anderson (Vice President of Clinical and Regulatory Affairs)

Jeffrey Anderson has served as Vice President of Clinical and Regulatory Affairs since February 2011, a position he previously held at RVA from 2004 to 2008. Mr. Anderson has over 20 years of experience in the medical device industry, including positions of Vice President of Clinical & Regulatory Affairs and Vice President of Research & Development for Neomend. Additionally, Mr. Anderson has held senior positions at Abbott Vascular, Jomed, CRS Clinical Research, and Medtronic. Mr. Anderson received his BS in Physics from California State University Fullerton.

Donald Brandom PhD (Senior Vice President of Product Development)

Donald Brandom, Ph.D. has served as Senior Vice President of Product Development since December 2013, Vice President of Product Development since December 2010, and Vice President of Biomaterial Product Development since January 2008. Dr Brandom has directed all biomaterial development activities since 2003 and the scaffold development program since 2010. In his over 25 years of industry experience, Dr Brandom has held technical, senior, and executive management product development positions in the aerospace, microelectronics, and medical device industries. Dr Brandom earned his Ph.D. in Materials Engineering Science at Virginia Tech and has a B.S. in Chemistry from the University of California, Davis.

Joan Zeltinger PhD (Vice President of Scientific Affairs)

Joan Zeltinger, Ph.D. has served as Vice President of Scientific Affairs since June 2004 and has directed biological and preclinical activities since 2000. Dr. Zeltinger has 20 years of industry research and business experience that includes numerous publications and patents. Dr. Zeltinger previously directed Advanced Tissue Sciences' bioresorbable coronary graft and tissue engineered heart valve programs and chaired ASTM standard development for combination medical products. Dr. Zeltinger received a PhD in Biology from the University of South Carolina with post-doctoral work conducted at the University of Washington, School of Medicine, and has a BS in Biology from the University of North Dakota.


24

Board

Robert Stockman (Chairman and CEO)

Robert Stockman, the Company's co-founder, has served as its Chairman of the Board and director since 1999 and its Chief Executive Officer from August 2010 to September 18, 2015. He serves as a director of HeartWare Limited/HeartWare International, Inc., a NASDAQ-listed medical device company, since December 2006. Mr. Stockman also serves as a board member for MuseAmi, Inc., a privately held advanced music software company that he co-founded. He previously served on the board of ZELTIQ Aesthetics, Inc., a medical technology company listed on NASDAQ, from July 2010 until April 2012. Since 1999, Mr. Stockman has been the President and Chief Executive Officer of Group Outcome LLC, a U.S.-based merchant banking firm that deploys its capital and that of its financial partners in private equity and venture capital investments in medical technology companies. Mr. Stockman also co-founded Centrimed, Inc., an internet-based software company, that was acquired by the Global Healthcare Exchange, LLC, and led the buyouts of Ioptex, an intraocular lens manufacturer, and two Johnson & Johnson divestitures, “A” Company Orthodontics, Inc. and Critikon Company, LLC, each of which was subsequently acquired. Prior to establishing Group Outcome LLC, Mr. Stockman spent 18 years with Johnston Associates, Inc. and Narragansett Capital Corporation, where he focused on venture capital investments and merger advisory work in health care. Mr. Stockman holds a Bachelor’s Degree from Harvard College and an MBA from The Tuck School at Dartmouth College, where he serves on Tuck’s Board of Overseers.

Ross Breckenridge, MA BM BCh FRCP Ph (Director)

Dr. Breckenridge was appointed as a director in January 2015. Dr. Breckenridge is a senior clinical lecturer and Programme Director for the Masters Programme in Clinical and Experimental Medicine at University College London since 2006, a Fellow of the Royal College of Physicians (London) since 2013, and a Consultant Physician at University College London Hospital since 2006. His research focuses on the heart‟s response to low levels of oxygen, with an overall aim to identify novel therapeutic targets for cardiac disease. Dr. Breckenridge has provided consultation services to investors in the biotech and healthcare sector since 1998. He is an academic board member of Empower India, and the Cornelia de Lange Society of Great Britain. He obtained his medical degree from Oxford University, followed by his PhD in Developmental Biology at the University of Cambridge and completed his training in Clinical Pharmacology at University College London.

Brian Dovey (Director)

Mr. Dovey has served as a director since June 2001. Since 1988, Mr. Dovey has been a partner of Domain Associates, LLC, a private venture capital management firm focused on life sciences, where he has led innovative investments and has established and directed new initiatives such as the collaboration between Domain and RUSNANO. Since joining Domain, he has served on the board of directors of over 35 private and public companies and has been Chairman of five. He currently sits on the board of three public companies: REVA, Otonomy, and Orexigen Therapeutics. Prior to joining Domain, Mr. Dovey spent six years at Rorer Group, Inc. (now part of Sanofi-Aventis), a pharmaceutical and medical device company listed on the NYSE. As president of Rorer from 1986 to 1988, he was the primary architect of the company‟s strategic shift to pharmaceuticals. Previous to that, he was President of Survival Technology, Inc., a start-up medical products company. He also held management positions with Howmedica, Inc., Howmet Corporation, and New York Telephone. Mr. Dovey has served as both President and Chairman of the National Venture Capital Association. He is former Chair and currently serves on the Board of Trustees of the Wistar Institute, a non-profit preclinical biomedical research company. Mr. Dovey serves on the board of directors and is also Chairman at the Center for Venture Education (Kauffman Fellows Program) and on the La Jolla Playhouse Board of Trustees. He was also a former board member of the industry association


25

representing the medical device industry, as well as the association representing consumer pharmaceuticals. He is a trustee emeritus of Germantown Academy and is a former trustee of the University of Pennsylvania School of Nursing and the Burnham Institute for Medical Research. Mr. Dovey received his B.A. in mathematics from Colgate University and his MBA from the Harvard Business School.

Scott Huennekens (Director)

Mr. Huennekens was appointed as a director on March 25, 2015. From April 2002 to February 2015, Mr. Huennekens served as President and Chief Executive Officer of Volcano Corporation, a manufacturer of intravascular imaging equipment for coronary and peripheral applications. Prior to 2002, he served as President and Chief Executive Officer of Digirad Corporation, a diagnostic imaging solutions provider, and also held senior positions at Baxter International, Inc. in the Edwards Cardiovascular Division and the Novacor division. Mr. Huennekens currently serves on the boards of EndoChoice, Sonendo, Scripps Translational Science Institute, and the Medical Device Manufacturers Association (“MDMA”). He received his B.S. in Business Administration from the University of Southern California and an MBA from Harvard Business School.

Anne Keating (Director)

Ms. Keating has served as a director since October 2010. Ms. Keating is currently a director of a number of ASX-listed companies in a range of different industries, including GI Dynamics, Inc., a U.S.-based medical device company, and Goodman Group Limited, a global property development and management company. Ms. Keating is Chairman of Houlihan Lokey Australia, investment bank. Ms. Keating is also a Director for the Garvan Institute of Medical Research and an Inaugural Governor for the Cerebral Palsy Foundation. From 1993 to 2001, Ms. Keating held the position of General Manager, Australia for United Airlines. She was also a Delegate to the Australian/American Leadership Dialogue for 14 years. Ms. Keating previously served on the board of ClearviewWealth Ltd., a fully diversified life insurance and wealth management company listed on the ASX, from December 2010 until December 2012, was an inaugural board member of the Victor Chang Cardiac Research Institute for ten years and also previously served on the board of NRMA/Insurance/IAG Ltd. for nine years. She has also held former directorships with Spencer Street Station Redevelopment Holdings Limited, Easy FM China Pty Ltd, Radio 2CH Pty Ltd, and Workcover Authority of New South Wales.

Gordon Nye (Director)

Mr. Nye has served as a director since 1999. He is currently Chief Executive Officer of R2 Dermatology, a development stage medical device company. He served as Chief Executive Officer of ZELTIQ Aesthetics, Inc., a medical device company, from September 2009 to April 2012. From August 2003 to July 2009, Mr. Nye served as general partner of Prism Venture Partners, a venture capital firm, where he was a member of the life sciences investment team. Prior to that time, he served as RVA‟s Chief Executive Officer from 2001 to 2003 and President and Chief Executive Officer of two former Johnson & Johnson divisions (“A” Company Orthodontics, Inc. and Critikon Company, LLC) after they were acquired in management buyouts. He has also held a variety of marketing, sales, and general management roles for L.A. Gear, Inc., Olin Ski Company, Inc., Reebok, Ltd., and The Gillette Company. Mr. Nye received his MBA from the Amos Tuck School of Business at Dartmouth College where he also received his undergraduate degree.

Robert Thomas (Director)

Mr. Thomas has served as a director since July 2010. He has also served as a director and non-executive Chairman of the Board of HeartWare Limited/HeartWare International, Inc., a NASDAQ-listed medical device company, since November 2004. He is currently a director of a number of Australian public companies, including Virgin Australia Limited and Biotron


26

Limited; he is Chairman of Starpharma Limited. Between October 2004 and September 2008, Mr. Thomas was a consultant to Citigroup Corporate and Investment Bank. Between March 2003 and September 2004, he was Chairman of Global Corporate and Investment Bank, Citigroup Global Markets, Australia and New Zealand. Prior to that time, Mr. Thomas was Chief Executive Officer of Citigroup‟s Corporate and Investment Bank (formerly known as Salomon Smith Barney), Australia and New Zealand from October 1999 until February 2003. Mr. Thomas is Chairman of Aus Bio Limited, a director of O‟Connell Street Associates and Grahger Capital Securities. He also is a member of the advisory board of Inteq Limited. Mr. Thomas holds a Bachelor of Economics from Monash University, Australia. He is a member of the Stockbrokers Association of Australia and is a Master Stockbroker. Mr. Thomas is also a Fellow of the Financial Services Institute of Australia and the Australian Institute of Company Directors. He is on the board of the NSW State Library Foundation and serves on NSW State Library‟s Audit and Risk Committee.


27

Queensland New South Wales Victoria Western Australia

Brisbane +61 7 3334 4888 Sydney +61 2 9043 7900 Melbourne +61 3 9947 4111 West Perth +61 8 6160 8700

Stockbroking, Corporate Advice, Wealth Management Stockbroking, Corporate Advice, Wealth Management Stockbroking, Corporate Advice, Wealth Management Stockbroking, Corporate Advice, Wealth Management

Brisbane: Edward St +61 7 3121 5677 Armidale +61 2 6770 3300 Brighton +61 3 9519 3555 Perth +61 8 6462 1999

Brisbane: Tynan Partners

+61 7 3152 0600 Ballina +61 2 6686 4144 Camberwell +61 3 9813 2945

South Australia

Bundaberg +61 7 4153 1050 Balmain +61 2 8755 3333 Carlton +61 3 9066 3200 Adelaide +61 8 8464 5000

Cairns +61 7 4222 0555 Bowral +61 2 4851 5515 Farrer House +61 3 8644 5488 Norwood +61 8 8461 2800

Caloundra +61 7 5491 5422 Chatswood +61 2 8116 1700 Geelong +61 3 5222 5128

Emerald +61 7 4988 2777 Coffs Harbour +61 2 6651 5700 Richmond +61 3 9916 4000

Gladstone +61 7 4972 8000 Gosford +61 2 4325 0884 South Yarra +61 3 8762 1400

Gold Coast +61 7 5581 5777 Hurstville +61 2 9570 5755 Southbank +61 3 9037 9444

Ipswich/Springfield +61 7 3202 3995 Merimbula +61 2 6495 2869 Traralgon +61 3 5176 6055

Kedron +61 7 3350 9000 Neutral Bay +61 2 8969 7500 Warrnambool +61 3 5559 1500

Mackay +61 7 4957 3033 Newcastle +61 2 4926 4044

Milton +61 7 3114 8600 Newport +61 2 9998 4200 Australian Capital Territory

Mt Gravatt +61 7 3245 5466 Orange +61 2 6361 9166 Canberra +61 2 6232 4999

Noosa +61 7 5449 9511 Port Macquarie +61 2 6583 1735

Redcliffe +61 7 3897 3999 Scone +61 2 6544 3144 Northern Territory

Rockhampton +61 7 4922 5855 Sydney: Level 7 Currency House

+61 2 8216 5111 Darwin +61 8 8981 9555

Spring Hill +61 7 3833 9333 Sydney: Level 9 +61 2 8215 5000 Tasmania

Sunshine Coast +61 7 5479 2757 Sydney: Hunter St +61 2 9125 1788 Hobart +61 3 6236 9000

Toowoomba +61 7 4639 1277 +61 2 9615 4500

Townsville +61 7 4725 5787 Sydney: Reynolds Equities

+61 2 9373 4452

Yeppoon +61 7 4939 3021 Wollongong +61 2 4227 3022

Disclaimer The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual‟s relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so. Those acting upon such information without advice do so entirely at their own risk.

This report was prepared as private communication to clients of Morgans and is not intended for public circulation, publication or for use by any third party. The contents of this report may not be reproduced in whole or in part without the prior written consent of Morgans. While this report is based on information from sources which Morgans believes are reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect Morgans judgement at this date and are subject to change. Morgans is under no obligation to provide revised assessments in the event of changed circumstances. This report does not constitute an offer or invitation to purchase any securities and should not be relied upon in connection with any contract or commitment whatsoever

Disclosure of interest Morgans may from time to time hold an interest in any security referred to in this report and may, as principal or agent, sel l such interests. Morgans may previously have acted as manager or co-manager of a public offering of any such securities. Morgans affiliates may provide or have provided banking services or corporate finance to the companies referred to in the report. The knowledge of affiliates concerning such services may not be reflected in this report. Morgans advises that it may earn brokerage, commissions, fees or other benefits and advantages, direct or indirect, in connection with the making of a recommendation or a dealing by a client in these securities. Some or all of Morgans Authorised Representatives may be remunerated wholly or partly by way of commission.

Regulatory disclosures

This report was prepared solely by Morgans Financial Limited. ASX did not prepare any part of the report and has not contribu ted in any way to its content. The role of ASX in relation to the preparation of the research reports is limited to funding their preparation, by Morgans Financial Limited, in accordance with the ASX Equity Research Scheme. ASX does not provide financial product advice. The views expressed in this research report may not

necessarily reflect the views of ASX. To the maximum extent permitted by law, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by ASX as to the adequacy, accuracy, completeness or reasonableness of the res earch reports.

Recommendation structure For a full explanation of the recommendation structure, refer to our website at https://www.morgans.com.au/research_disclaimer

Research team For analyst qualifications and experience, refer to our website at https://www.morgans.com.au/research-and-markets/our-research-team

Stocks under coverage For a full list of stocks under coverage, refer to our website at http://www.morgans.com.au/research -and-markets/company-analysis/ASX100-Companies-under-coverage and http://www.morgans.com.au/research-and-markets/company-analysis/EX-100-Companies-under-coverage

Stock selection process For an overview on the stock selection process, refer to our website at http://www.morgans.com.au/research -and-markets/company-analysis

www.morgans.com.au

If you no longer wish to receive Morgans publications please contact your local Morgans branch or write to GPO Box 202 Brisbane QLD 4001 and include your account details.

30.09.15


28

financial summary - asx2015/11/13 · released at europcr (may 2016), following ce mark filing and...

Documents