investor meeting june 21, 2016 · pdf filewe have absorbed price cuts and maintained share ......

1 | VARIAN PROPRIETARY: INTENDED FOR INVESTORS ONLY 1 | VARIAN PROPRIETARY: INTENDED FOR INVESTORS ONLY

A Review of Our Growth Strategies Investor Meeting – June 21, 2016

2 | VARIAN PROPRIETARY: INTENDED FOR INVESTORS ONLY

Forward-Looking Statements Forward-Looking Statements

Except for historical information, this presentation contains forward-looking statements within the meaning of the Private

Securities Litigation Reform Act of 1995. Statements concerning industry and market outlook, including growth drivers

and future market estimates; the company’s future orders, revenues, backlog, earnings growth and other financial

results; market acceptance of or transition to new products or technology; the ability of the company’s technology and

products to treat cancer; and any statements using the terms “will,” “could,” “believe,” “expect,” “outlook,” or similar

statements are forward-looking statements that involve risks and uncertainties that could cause the company’s actual

results to differ materially from those anticipated. Such risks and uncertainties include global economic conditions;

currency exchange rates and tax rates; the impact of the Affordable Health Care for America Act (including excise taxes

on medical devices) and any further healthcare reforms (including changes to Medicare and Medicaid), and/or changes

in third-party reimbursement levels; demand for and delays in delivery of the company’s products; the company’s ability

to develop, commercialize, and deploy new products; the company’s ability to meet Food and Drug Administration (FDA)

and other regulatory requirements for product clearances or to comply with FDA and other regulatory regulations or

procedures; changes in the regulatory environment, including with respect to FDA requirements; challenges associated

with the successful commercialization of the company’s particle therapy business; challenges to public tender awards

and the loss of such awards or other orders; the effect of adverse publicity; the company’s reliance on sole or limited-

source suppliers; the impact of reduced or limited demand by purchasers of certain X-ray products; the company’s ability

to maintain or increase margins; the impact of competitive products and pricing; the potential loss of key distributors or

key personnel; and the other risks listed from time to time in the company’s filings with the Securities and Exchange

Commission, which by this reference are incorporated herein. The company assumes no obligation to update or revise

the forward-looking statements in this presentation because of new information, future events, or otherwise.

2


Welcome & Opening Remarks Dow Wilson


AGENDA

SPIN OVERVIEW

IMAGING COMPONENTS

INTERMISSION

ONCOLOGY SYSTEMS

LUNCH INTERMISSION

PARTICLE THERAPY

ONCOLOGY FACTORY TOUR

8:00 - 8:30 am

8:30 - 9:30 am

12:15 – 1:00 pm

9:30 - 9:45 am

9:45 - 12:15 pm

1:00 – 1:45 pm

1:45 – 2:30 pm


Varian Plans To Separate Into Two Great Companies

Varian Medical

Systems

New Imaging

Components

Company

Our Recent News


Why? And Why Now?

Imaging / oncology business objectives & growth strategies

are moving in different directions

Global cancer

fighter

Global leader in

imaging

components


Fundamentally Different Businesses

Varian Medical

Equipment, Software & Service

Customers:

1000s of Healthcare Providers

Sales and Service in ~200 Countries

Cancer

Low-Volume Manufacturing

Varian Imaging

Components

Customers:

100s of Imaging Equipment Makers

Sales/Service in ~20 Countries

Medical, Industrial & Security

High-Volume Manufacturing


Spin Benefits…. A Win for Everyone

Businesses

Sharper focus of investments in core markets & growth strategies

Customers

Undivided attention on product development & service

Investors

Better understanding of each company

Employees

Creates new growth opportunities through closer alignment of

goals to business performance

Unlocking potential


Guiding Principles of Spin

Execute and deliver on 2016 financial

commitments

Build two great companies

Achieve profit margin neutrality within two years

Make decisions quickly and efficiently

Operate as one Varian until closing


Transaction Overview & Timeline

Tax-free spin to Varian investors

Varian investors receive dividend of shares

in the new company

Ratio to be determined

Subject to:

Effectiveness of Form 10 filing with the SEC

Favorable opinion on validity of tax-free spin

Final approval by Varian Board

MAY 23 2016

Spin

Announcement

2017 JULY 27

~END OF JULY

Q3 Earnings

Update

Form 10 Target

SEC Filing

OCT 26

Q4 Earnings

Update Target Close for

Spin

~END OF DEC.


Estimated Spin Costs

$35M in one-time transaction advisory

services

$20M of dis-synergies in Varian

Aiming to return to targeted non-GAAP operating

margins in FY19

Spin expected to be neutral to Varian Imaging

segment profitability


We Did It Before; We Can Do It Again

VMS is the product of a successful spin

in 1999 that delivered:

New products & technologies for

customers

New opportunities for employees

Great results for each business and

for investors

VARIAN IMAGING COMPONENTS


Imaging Investment Summary

Global leader I X-Ray imaging components

Broadest product portfolio

Highest volume, lowest cost position

Strong customer relationships

World-class X-Ray engineering talent

Growth opportunity in large markets

Large player in $3B medical X-Ray market

Emerging player in $750M industrial and security inspection market

Positive market trends driving growth

Scale and track record of operational excellence

Seasoned management team

15 | VARIAN PROPRIETARY: INTENDED FOR INVESTORS ONLY V A R I A N I M A G I N G C O M P O N E N T S

Our Vision

To create the most innovative and

cost effective X-ray imaging solutions

for equipment manufacturers

Market segments

Customers

Medical imaging

Industrial imaging

Security & inspection

Equipment manufacturers

Distributors

Systems integrators


Our Mission

To be the world’s leader in imaging

components through the delivery of

high quality products that enable

our customers’ success

HEADQUARTERS

Salt Lake City, UT

FY15 SALES

$611M

PATENTS

200+

EMPLOYEES

1300

OF INNOVATION

70 Years


Worldwide Manufacturing & Presence

Salt Lake City, UT (HQ, R&D, Mfg)

Palo Alto, CA (R&D)

Las Vegas, NV (R&D, Mfg)

Downers Grove, IL (R&D, Mfg)

Rochester & Liverpool, NY (R&D)

Charleston, SC (Service Center)

Dinxperlo NL (R&D and Mfg)

Willich DE (Service Center)

Bremen DE (R&D)

Sursee CH (R&D)

Beijing CHN (Service Center)

Wuxi CHN (Service Center)

Calamba City PHL (Manufacturing)

North America

Europe

Asia

Producing 24% of medical tubes & flat panels globally


Product Platforms and Integration Strategy

X-Ray Sources

Medical X-Ray tubes

Industrial X-Ray Tubes

Linear Accelerators

X-Ray Accessories

High-voltage connectors

Collimators

AECs

X-Ray Detectors

Radiographic detectors

Dynamic flat panel detectors

Industrial detectors

Software & Services

Image processing & diagnostic

workstations

3D visualization

Image analysis


History of Strong Growth but Perfect Storm in FY15

VIC revenue history Factors impacting 2015 revenue

$611

$660

(60)

(40) (20)

$71

2014 2015

Exchange

rates Oil

prices Customer

insourcing

Volume

gain,

acquisition

Revenues in millions. These revenues do not include inter-segment revenues.

05 06 07 08 09 10 11 12 13 14 15


Business Normalizing

FX impact diminishing

We have absorbed price cuts and maintained share

Panel business recovering

Unit volume healthy, improved mix

Absorbed customer loss

Oil prices rising

Security market re-engaging

Toshiba/Canon headed for normalization

Strong engineering/innovation partnership continuing


Long-Term Estimated Market Growth

~ 4% CAGR

$3B $3.3B

$950M

2016 2020

$750M Industrial

& Security

Medical

X-Ray imaging components market

$3.75B Addressable

market

Subject to various risks and assumptions relating to forward looking statements.


Our Strengths

Industry-leading technology

and innovation

Manufacturing scale and

cost structure

Broadest imaging

component portfolio

Top 10 customers # Years of relationship

Toshiba Medical Systems 40

Hitachi Medical Corporation 40

Shimadzu Corporation 40

GE Medical Systems 40

Philips Medical 40

Hologic 25

L3 17

Ziehm 15

Smiths Detection 15

Medtronic 13

Long-term deep

customer relationships


A Leader in Two Growing Global Markets Medical X-Ray Imaging

Medical Flat Panels

(all modalities)

Medical Tubes

(all modalities)

33%

29%

26%

12%

Varian

Thales

All other competitors

OEMs

21%

7%

8% 64%

Varian

Toshiba

All othercompetitors

Varian estimates: All other competitors include PerkinElmer,

Toshiba, Vieworks, iRay, Hamamatsu, Fuji, Canon,Rayence,

iRay Detection Tech, Analogic, Dalsa, Dexela, CareRay, Samsung

Varian estimates: All other competitors include

Dunlee, IAE, Wandong, Kailong


A Leader in Two Growing Global Markets Industrial & Security

Industrial and Security Inspection

Tubes & Flat Panels Industrial and Security Inspection

Linear Accelerators

15%

11%

23%

51%

Comet

Varian


Film and CR

33%

29%

38% Nuctech

Varian



GE, PerkinElmer, Thales, Toshiba, Siemens, iRay, Panalytical


Foton, HITEC, Siemens, Accuray, RIAMB, PMB, ETM


Broadest Imaging

Components Portfolio Competitor Portfolios

Inspection

Varian Imaging

Components

Linear

Accelerators

High Energy

Detectors

X-Ray

Detectors

Software and

Workstations

Connectors

and Other

Components

X-Ray

Tubes


Enabling Fast, Cost-Efficient Equipment Development

Product breadth and development expertise positions us as the partner of choice.

Medical Imaging (82% of sales)

X-Ray tubes

Flat panel detectors

AECs, collimators

HV cables, interconnects

Imaging software and workstations

Collimator

Bucky

system

Generator Automatic

Exposure

Control (AEC)

Console

Interconnect X-Ray tube

Flat panel

detector


Enabling Customers to Develop Products Faster

Product breadth and development expertise positions us as the partner of choice.

Security & Industrial Imaging (18% of sales)

X-Ray tubes

Flat panel detectors

Linear accelerators

Specialized software

Services

X-Ray tube

Flat panel

detector

High voltage

connector


Growing Software Expertise

Diagnostic workstations

3D visualization

Image analysis and CAD

Measurements Image processing

Modality acquisition workstation

Industrial NDT

Acquisition

$34M software business - 7% CAGR


Global Medical Imaging

Trends are Positive

X-Ray

Imaging

Other

Imaging

Modalities

~ $3B ~ $3.3B

~ $3B

~ $3.5B

~ $6B

~$6.8B

2016 2020

Market Drivers

Aging population

Safety

Emerging markets

Innovation in image quality,

cost, speed

Reducing X-Ray dose

Push for affordability

Two Major Areas for Growth

Analog to digital conversion:

• ~500K analog units to be upgraded

• $7-8B Components spend

• Reimbursement cut for Film/CR in the US starting 2018

China’s focus on healthcare:

• 25K+ CTs needed over next 10 Years

• $1B+ Components spend

Source: VIC analysis of industry and companies, OEM discussions, and VIC estimates



Medical OEMs Outsourcing

Market fragmenting; scale

matters

Component cost reduction

imperative

Emerging market OEMs lack

component technologies

Mature OEMs have high product

development costs

Drivers of Increased Outsourcing:

Good enough technology

Component commoditization

Conversion to digital

Market Factors/Trends

Cost containment/reduction

Increasing product life

Regulatory hurdles

Regionalized decision making


Industrial Imaging Applications Growing Rapidly

Market Drivers

New safety and quality

standards

Inline manufacturing

inspections

Disruptive technologies

(eg. 3D printing)

Source: VIC analysis of industry and companies, OEM discussions, and

VIC estimates 2025

$3-5B+

Film to digital detectors

Inspection of castings, complex machined parts

NDT for 3D printed products

Airport/ship cargo scanning

Vehicles scanning at borders

Package scanning

Packaged food safety scanning

Material and surface treatment

Market Growth Areas

~$750M

~6% CAGR

2016 Subject to various risks and assumptions relating to forward looking statements.


VIC Strategy

Grow Targeted Segments

Drive Operational Excellence

Sell More to Current Customers

Continuous Innovation


By End of 2020 We Aspire to:

Thrive as a standalone business by growing ~5% per year

Expand operating margin from 17% 20%



Imaging Investment Summary

Global leader I X-Ray imaging components

Broadest product portfolio

Highest-volume, lowest-cost position

Strong customer relationships

World-class X-Ray engineering talent

Growth opportunity in large markets

Large player in $3B medical X-Ray market

Emerging player in $750M industrial and security inspection market

Positive market trends driving growth

Scale and track record of operational excellence

Seasoned management team


INTERMISSION

Varian Investor Meeting / Webcast

9:30 – 9:45 AM PT


KOLLEEN T. KENNEDY

JUNE 21, 2016

ONCOLOGY SYSTEMS

OVERVIEW


ONCOLOGY AGENDA

ONCOLOGY OVERVIEW

GOVERNMENT AFFAIRS

OVERVIEW OF MARKETS

PRODUCT PORTFOLIO

CLINICAL PROGRESS

SERVICE

SUMMARY


DRIVING FOR MID-SINGLE-DIGIT GROWTH

• Expanding globally

• Getting return on innovation

• Building software & services

• Driving profitable growth


EMPLOYEES

~5,000

TOTAL ORDERS

$2.7B

SOFTWARE INSTALLS

3,700 6 EDUCATION CENTERS

VARIAN ONCOLOGY SYSTEMS

7,400 MEDICAL LINEAR ACCELERATORS

RECURRING SERVICES

$1B


GLOBAL CANCER BURDEN RISING

The global cancer burden nearly doubles by 2030;

expected to grow to 24.6 million new cancer cases

with 13.5 million deaths.*

24.6 million people

next 15 years

*Lancet Commission Report, 2015


new cancer cases per year by 2030

56% of cancers diagnosed in high income countries

WORLDWIDE CANCER BURDEN

$2T global economic burden in 2010

10% of patients have access to RT in low income countries

50-60% of patients with cancer need RT

20,000+ Linacs needed by 2035, with greatest need in low and mid-income countries

Expanding global access to radiotherapy

Lancet Oncology Vol 16 Sept. 2015


CLOSING THE GAP: NEEDED BY 2035

• 20,000+ linacs

• Expanded software,

service infrastructure

• Need 150,000 trained

health practitioners

• Greatest need in

lower- and middle-

income countries

(LMIC) Automation, Simplification, Productivity

Old graphic

Over 75

Between 41 and 75

Between 31 and 40

Between 21 and 30

Between 1 and 20

No Machines

Radiotherapy Machines

per Million People Over 64

Years


LANCET 2015 RECOMMENDATIONS

By 2020 80% of

countries should

have cancer plans

that include

radiotherapy.

POPULATION BASED

CANCER CONTROL

PLANS

25% increase in

RT capacity from

2015 to 2025.

EXPANSION OF

ACCESS TO

RADIOTHERAPY

$46B of investment

by 2025 to establish

radiotherapy

infrastructure and

training in LMIC.

SUSTAINABLE

FINANCING TO

EXPAND ACCESS TO

RADIOTHERAPY

80% of LMIC to

include RT services

as part of universal

health coverage by

2020.

ALIGN RADIOTHERAPY

ACCESS WITH

UNIVERSAL HEALTH

COVERAGE


VARIAN MARKET DEVELOPMENT

• Expanding global team

• Partnering to build access to cancer care

– Governments

– Financiers

– Clinicians

– Patient advocacy groups

• Promoting awareness

– Lancet Oncology Commission

– Non-governmental organizations


VARIAN MARKET DEVELOPMENT

Emerging markets: Training is key

in market development programs

Skills training enables safe radiation

therapy implementation


NUMBER 1 CANCER INCIDENCE PER 100K

Sources: American Cancer Society, Globocan data

CANCER IN WOMEN

Breast Uteri Lung Liver

CANCER IN MEN

Prostate Stomach Lung Liver


VitalBeam™

High throughput and Scalable System

VARIAN’S ONCOLOGY ECOSYSTEM


VARIAN ONCOLOGY SOLUTIONS

7,400 global accelerators

2.8M patients treated annually

100k+ software users

A majority of the

top 50 US

cancer centers use Varian hardware, software, and/or services

~7%: percentage of revenue spent on R&D

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwi1trqs9NbKAhUMzmMKHS3PBXMQjRwIBw&url=http://www.medfusion.com/blog/medfusion-is-named-best-in-klas/&psig=AFQjCNEttESo42jtxGLN5XqHsLn1ut_dhA&ust=1454427912843110


INNOVATION CREATES UPGRADE OPPORTUNITY

Upgrade

PerfectPerfect™ Couch

RapidArc®

MLC / PV

TrueBeam™ Apps

OBI

SRS Package

$400M 5-Year Opportunity


ACCELERATING SOFTWARE GROWTH

New Offerings

RapidPlan™

InSightive™ Analytics

Velocity™

Qumulate™ QA

SRS Planning

$300M 5-Year Opportunity


SUMMARY OVERVIEW

• Varian is the global radiotherapy leader

• Long-term demand for radiotherapy is

increasing

• Healthcare megatrends drive our

strategy for continued leadership and

market expansion

• Organizational structure evolution

driving customer satisfaction and

business growth


GOVERNMENT AFFAIRS &

ONCOLOGY REIMBURSEMENT

Andrew Whitman, VP Government Affairs


• Legislative & Regulatory Matters

– US Congress & Federal Administration

– EMEIA, APAC, AMS institutions & governments

– Reimbursement & regulatory issues

Addressing Issues that Impact Radiotherapy Globally

Build awareness of value of radiotherapy to support access, health systems & growth

VARIAN GOVERNMENT AFFAIRS

• Public Affairs Advocacy

– Promote value of radiotherapy

– Reimbursement & value assessment


2017 GENERAL REIMBURSEMENT EXPECTATIONS

• Freestanding Centers

– Freezes IMRT and 3D rates until 2019

– S.2425 - Patient Access and Medicare

Protection Act

• Hospital Outpatient Department

– Historically, seen slight increase

– Do not expect any major changes for

2017


MACRA: BIG OPPORTUNITY FOR VARIAN

Weighted

Performance

Categories

Quality Measures

50%

Cost 10%

Clinical Practice

Improvement Activities

15%

Advancing Care

Information 25%

More software tools needed to qualify for reimbursement

Merit Based Incentive Payment

System

Advanced Alternative Payment

Models


ONCOLOGY MARKET

OVERVIEW

Chris Toth, President, Americas


GEOGRAPHIC OPERATING MODEL

AMERICAS

Chris Toth

APAC

Kevin O’Reilly

EMEIA

Jean-Luc

Devleeschauwer


0

200

400

600

800

1,000

1,200

1,400

1,600

2010 2030

Other BRIC NA EU Developed

People 60 Years and Older in Millions

Source: U.S. Census Bureau

DEMOGRAPHICS DRIVE DEMAND

BRIC

+97%

TOTAL

+82%


VARIAN MARKET SHARE GROWTH

Varian cost per patient driving

share through:

• Integrated solutions

• High throughput

Pricing stability

Socket expansion (SW & Services)

fostering growth through industry

leading installed base

Constant currency TTM revenue share based upon publicly reported financials

TTM Revenues

Varian

Elekta

Accuray

Other


North America • US consolidation

• Healthcare reform (ACA, MACRA)

• Care coordination

• High RT utilization

Latin America • Low access to care driving demand

• Economic, political headwinds

• Brazil MOH tender proceeding

AMERICAS – TALE OF TWO MARKETS Trends Driving Varian Growth Opportunities


US MARKET OUTLOOK

Market Mix

2015 to 2017 2017 to 2020 2020 and beyond

VOLUME-BASED ONCOLOGY DELIVERY

VOLUME TO VALUE TRANSITION INCREASES

VALUE-BASED ONCOLOGY DELIVERY

SRS/SBRT Driven HW

replacement cycle (>1500 10+

year old systems)*

HW & Software growth

supporting MACRA, ACA and

increased efficiencies

3100+ VAR Accelerators in U.S. will

yield a long-term sustainable HW +

Services business to complement

SW growth

*Estimated Varian + Siemens + Elekta + Accuray installed base


EMEIA – GROWTH IN EMERGING MARKETS AFRICA

EUROPE WEST

EUROPE EAST

DACHS

INDIA SUBCONTINENT

• Market leader & fastest-growing RT company TTM

• Pricing stable in premium segment

• Service contract capture rate strengthening

• SW commercial channel investment yielding growth

• Emerging market growth opportunities

• Africa long-term promise


APAC – HIGH GROWTH EMERGING MARKETS

China • Market leader

• Strong growth in China – 12% orders growth YTD

• >4,000 new linacs needed

• Emerging rural (Tier 2) demand

Southeast Asia • Population growth

• Government cancer program focus

• Access to Care programs create

opportunity in frontier markets

CHINA

South

Korea

Japan

Taiwan

Philippines Vietnam

Cambodia

Laos

Malaysia

INDONESIA

Myanmar

Thailand

AUSTRALIA


APAC – MATURE MARKET OPPORTUNITIES

Australia • Public sector market with strong replacement cycle

• Private market stimulating new IB growth

• Excellent customer relationships

• Strong service business

Japan • Slow replacement-oriented market

• Strong service business

• ~25% RT utilization

• Reimbursement policies constrain IMRT growth

• Opportunity to expand market, benefit patients

CHINA South

Korea

Japan

Taiwan

Philippines Vietnam Cambodia

Laos

Malaysia

INDONESIA

Myanmar

Thailand

AUSTRALIA


ONCOLOGY PRODUCT

STRATEGY

Corey Zankowski, VP Products & Solutions


ONCOLOGY MEGATRENDS

MINIMALLY INVASIVE

RADIOSURGERY

ROBOTIC SURGERY

EMERGING ECONOMIES

EDUCATION GAPS

POOR INFRASTRUCTURE

RISING COSTS OF CARE

EVIDENCE-BASED MEDICINE

VALUE-BASED HEALTHCARE

BIG DATA

PERSONALIZED MEDICINE

DIGITAL FRONTIER

Global Communities

Inspire Confidence

Onco-Informatics

Simpler Solutions

Accessible Technology

Cloud Computing

Cost-effective Solutions

Patient Safety

Coordinated Care Teams

Compact 3D Dose


PORTFOLIO SOLUTIONS STRATEGY

COST-EFFECTIVE

HIGH-QUALITY

GLOBALLY

ACCESSIBLE

SIMPLIFIED &

AUTOMATED


Knowledge-

Guided

Oncology

Intelligent

Treatment

Delivery

Advanced

Data

Analytics

69 | VARIAN PROPRIETARY: INTENDED FOR INVESTORS ONLY 69 | FOR VARIAN INVESTOR MEETING – JUNE 21, 2016


PRODUCT INNOVATION

Clinac® 4:

First fully rotational

RT linac

Clinac® 18:

High energy medical

linac with gridded

electron gun

Dynamic Wedge

For shaping an

X-Ray beam

Smartbeam™

IMRT Higher dose

delivery with

greater protection

for healthy tissue

Eclipse™ Treatment

Planning software with

inverse treatment

planning for IMRT Millennium™ MLC

The standard in

conformance

ARIA® Oncology

Information

System

1961 1972 1987 1998 2002 2005


PRODUCT INNOVATION

2005 2007 2010 2012 2015

IGRT enabled by

the On-Board

Imager®

RapidArc®

Radiotherapy

TrueBeam™

Integrated imaging

and delivery

Calypso®

Real-time

tracking

technology

Edge®

RadioSurgery

RapidPlan™

Knowledge-based

planning software

VitalBeam™

Affordable

Advanced

Radiotherapy

HD-RT*

Automated 4π SRS

intracranial

treatments

2017+ 2013 2014

*HD-RT is a Works in Progress – Not Available for Sale


HIGH-DEFINITION RT/SRS/SBRT

SIMPLE

HIGH-QUALITY

EFFICIENT


HIGH DEFINITION RT/SRS/SBRT

IMRT

LUNG PATIENT 1

VMAT HD SBRT

64 Gy

15 Gy

Courtesy of Ke Sheng, UCLA

LUNG PATIENT 2

Works in Progress – Not Available for Sale


HIGH DEFINITION RADIOSURGERY

Coplanar RapidArc SRS

High Definition SRS

Brain Stem Brain Stem

50% Rx Dose 50% Rx Dose



PROGRESS MADE SO FAR & WHAT’S NEXT The Conformality Continuum

HEALTHY TISSUE SPARED

3D CONFORMAL IMRT IGRT SBRT HDRT

TODAY TOMORROW


VARIAN HD SRS DEVELOPMENT GOAL: SPARE MORE HEALTHY TISSUE

Varian HD SRS = blue

CyberKnife = pink

Varian HD SRS = blue

GammaKnife = pink


Simultaneous treatment of multiple brain metastasis


Multi-modal

Knowledge-guided contouring

Real-time quality control


MULTI-MODAL IMAGING


Improve CBCT so that therapists can align the tumor every day.

Iterative CBCT

AcurosTM scatter correction

High resolution


ADVANCED IMAGE ANALYTICS


Improve CBCT so that therapists can align the tumor every day.

Even when it is moving.

Iterative CBCT

AcurosTM scatter correction

High resolution

Dynamic


ADVANCED IMAGE ANALYTICS



RAPIDPLAN™ KNOWLEDGE-GUIDED PLANNING

Increase plan quality Beginner

Improve consistency Experienced

Increase efficiency Busy

Standardize Networked

Quality. Consistency. Efficiency.


RAPIDPLAN™ KNOWLEDGE-GUIDED PLANNING

Prostate Plan

Spine SBRT Plan

Manual RapidPlan™

Time 60-90 min 15-20 min

Manual RapidPlan™

Time 114±86 min 21±13 min

Equivalent

or better 40% 90%

Better 10% 60%

Manual RapidPlan

Courtesy, Royal Surrey County Hospital NHS Foundation, Guilford, UK (Data source on file)

Foy J, et al. An analysis of knowledge based planning for stereotactic body radiation therapy of the spine. Poster presentation at:

American Association of Physicists in Medicine 57th Annual Meeting & Exhibition; July 12-16, 2015; Anaheim, CA. University of Michigan

http://www.aapm.org/meetings/2015AM/PRAbs.asp?mid=99&aid=29386

http://www.aapm.org/meetings/2015AM/PRAbs.asp?mid=99&aid=29386


LEADER IN ONCOLOGY SOFTWARE

• > 3700 software sites globally

• Eclipse Treatment Planning

• ARIA Oncology Information System

• Velocity Oncology Imaging

• Integrated clinical process

• Security-hardened

• Optimized workflow

• Patient care pathways

• ARRA HiTECH compliant

• Full-scale cloud-based services

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwic3seJiN3KAhUH8GMKHVjhACQQjRwIBw&url=http://www.klasresearch.com/&psig=AFQjCNGXlAg_djdw097Wfj_cJEyALXEhYQ&ust=1454639360249108


VELOCITY

• Transforms images into knowledge

• Multi-vendor and multi-modality

• Treatment analytics

• Designed for collaboration

• Sales doubled from FY14 to FY15


INSIGHTIVE: ONCOLOGY DATA ANALYTICS Analytics to support evidence-based decision making


MAKING ONCOLOGY CARE SIMPLER AND SMARTER

Efficiency & Costs

Quality of Care

Patient Outcomes

Make

decisions

confidently

Engage

patients

Meaningfully

Deliver team

based care

efficiently

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiJru7V1a3MAhUmv4MKHf2ZAiEQjRwIBw&url=http://events.r20.constantcontact.com/register/event?llr=5zkx8zdab&oeidk=a07e8b6uqief569e63a&bvm=bv.120551593,d.amc&psig=AFQjCNGOncoF7fFhmBnfTNKKq0Vg5iWXVw&ust=1461806963270730


PROGRESS IN RADIATION

ONCOLOGY

Dr. Patrick Kupelian, VP Clinical Affairs


DISEASES TREATED WITH RT

Curable Cancers

with RT ALONE:

• Prostate

• Head & Neck

• Lung

• Cervical

• Skin

Curable Cancers with RT as part of treatment

(adjuvant):

• Breast

• Brain Tumors

• Testicular

• Adv. Lung

• Rectal

• Sarcomas

Metastatic disease: Bone / Brain / Other…

• Adv. Cervical

• Endometrial

• Pediatric

• Adv. Head & Neck

• Bladder


CLINICAL UPDATE - THEMES

• Improving delivery of radiation:

– Smaller targets/ Larger doses / Better aiming

– Decrease treatment duration

• Predictive biomarkers: Predicting tumor / Normal tissue sensitivity

• Combination of RT with drugs:

– Radio-immunotherapy / Radio-immunomodulation

• Value of radiation therapy: Cost effectiveness

• Novel indications for RT:

– Expanding RT indications for metastatic disease

– Non-oncologic radiation medicine

HD Radiosurgery


Precision Radiotherapy

15 metastases successfully

treated with Radiosurgery


BRAIN METASTASES

• Brain Metastases

• Multiple brain metastases treated

synchronously with radiosurgery1

• Replacing whole brain radiotherapy

• Better combination with drugs (particularly immunotherapy)2

• Technical delivery increasingly done with linac-based platforms,

allowing more efficient delivery and better quality plans3-5

1. Survival of Patients With Multiple Intracranial Metastases Treated With Stereotactic Radiosurgery: Does the Number of Tumors Matter? Knoll et al. Am J Clin Oncol. 2016

2. Timing and type of immune checkpoint therapy affect the early radiographic response of melanoma brain metastases to stereotactic radiosurgery. Qian et al. Cancer. 2016

3. Plan Quality and Treatment Efficiency for Radiosurgery to Multiple Brain Metastases: Non-Coplanar RapidArc vs. Gamma Knife. Liu et al. Front Oncol. 2016

4. Volumetric Radiosurgery for 1 to 10 Brain Metastases: A Multicenter, Single-Arm, Phase 2 Study. Nichol et al. IJROBP. 2016

5. Normal Brain Sparing With Increasing Number of Beams and Isocenters in Volumetric-Modulated Arc Beam Radiosurgery of Multiple Brain Metastases. Hossain et al. Technol Cancer Res Treat. 2015


ROLE OF MULTI-MODALITY IMAGING IN RT

• Increasing role of integrating images in RT planning

– CT for all cases

– PET for lung, head & neck cancers

– MRI for in CNS, GYN, prostate cancers

• Gradual move to MRI simulation from CT simulation

• Imaging in treatment room requires higher-quality images

– Unclear whether MRI, PET have roles in treatment room

– Unclear if in-room functional imaging is clinically practical or needed


LINAC-BASED SRS ACCELERATING

0

10

20

30

40

50

60

70

80

90

100

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Pro

po

rtio

n R

eceiv

ing

S

ele

cte

d S

RS

Mo

dality

Diagnosis Year

LINAC + NOSSRSGK SRS 44.4% 50.0% 50.0% 40.7% 42.3% 41.9% 37.6% 33.4% 32.0%

55.6% 50.0% 50.0% 59.3% 57.7% 58.1% 62.4% 66.6% 68.0%

# EXCLUDING 2012 AS OUTLIER Park et al. J Neurosurg. 2016 Apr;124(4):1018-24.

National

Cancer

Data Base


PRECISION SBRT

• Larger VA study planned:

– VA Valor study

– Randomization SBRT vs surgery

• Early stage lung cancer

– PI: Drew Moghanaki

• Planned to start in 2017

SBRT vs. Lobectomy for Operable Stage I Lung Cancer

Pooled analysis of 3 small trials:

RT patients live longer

Chang et al. Lancet Oncol. 2015;16(6):630-7


ASCO 2016: EXCITING NEW CLINICAL EVIDENCE

• RT for metastatic disease historically limited to palliation

• Multi-institutional randomized study

– Randomized local therapy (RT) versus no local therapy in patients

treated with standard of care therapy

– Study closed early due to efficacy difference:

Patients who received local therapy lived longer by 10 months

INCREASING ROLE OF RT IN PATIENTS WITH

METASTATIC DISEASE, NOT LIMITED TO PALLIATIVE RT

Gomez et al. Clin Oncol 34, 2016 (abstr 9004)


RADIOSURGERY + IMMUNOTHERAPY

64 y/o man with metastatic lung cancer,

progressing on chemotherapy

The Abscopal Effect RT + Ipilimumab

Golden E B et al. Cancer Immunol Res 2013;1:365-372


• Metastatic Melanoma

• Combination RT+ Immune

drug

• Medically effective if given

together

• 30% long-term survivors

EXCITING RESULTS WITH SRS + IMMUNOTHERAPY


• Cardiac arrhythmias

• Emphysema

• Post-thoracic surgery

neuropathy

• Plantar fasciitis

• Depression

• Arthritis

Research Opportunities

NEW FRONTIERS IN RADIATION MEDICINE

These are off-label uses that are currently being investigated.


COST EFFECTIVENESS

• Radiation therapy, particularly

radiosurgery, is a cost-effective treatment

compared to surgery, chemotherapy or

biologics

• Comparisons are not possible in all

clinical contexts

• Increasing numbers of published studies

demonstrate the cost-effectiveness (and

value) of radiation therapy

References on file


CONCLUSIONS

• Radiation therapy indications increasing

• Precision of modern radiotherapy

techniques enables expansion of

radiosurgery treatments

• Combination of RT with drugs (particularly

immunotherapy) actively being

investigated*

• Radiation therapy a cost-effective cancer

treatment for many clinical entities

*These are off-label uses that are currently being investigated.


ONCOLOGY SYSTEMS

SERVICES

Patrick Joda, SVP Global Operations


Site Solutions

Installation

Hardware Support

Software Support

Remote Services

Help Desk

Training

Logistics

Consulting

Services

Global Customer

Support Services

237 Countries

ONCOLOGY SERVICES


REVENUE GROWTH

Growth Drivers

• New installed base growth

• TrueBeam conversions

• Software support agreements

• Managed and professional

services

5-Year Service Revenue Growth

2012 2013 2014 2015 2016

38% of

VOS

Revenue

42% of

VOS

Revenue

*Subject to various risks and assumptions relating to forward looking statements.


ONCOLOGY SYSTEMS

SUMMARY


OPERATIONAL EXCELLENCE >> PROFITABLE GROWTH

• Cost-reduction initiatives

• Supply chain productivity

• Installation & warranty

• Cost of quality leverage

• Remote software

deployments

• Remote accelerator

servicing


SUSTAINABILITY FOCUS

• Global 100 Sustainability Award

• Corporate Knights Global 100

• >4,600 companies analyzed

against global peers

• Varian is top-ranked healthcare

equipment company

• 2015 Varian Sustainability Report

available on varian.com


ONCOLOGY INVESTMENT SUMMARY

• Rising global cancer burden

• Need to expand, modernize RT infrastructure

• Demand for cost-effective solutions

• Winning product portfolio

• Strong innovation pipeline

• Largest installed base

• Service momentum

• Operational excellence

Long-Term Growth Drivers


LUNCH / INTERMISSION

Varian Investor Meeting / Webcast

12:15 – 1:00 PM


Moataz Karmalawy

JUNE 21, 2016


PARTICLE THERAPY INVESTMENT SUMMARY

Leadership position in expanding Global PT market

Leading Varian RT technology

End-to-end integrated systems solutions

Leveraging Varian’s global service infrastructure

Growing body of clinical evidence, indications

Building $400M annual business

On track for profitability in FY2018


GLOBAL PROTON MARKET

0

50

100

150

200

250

300

350

400

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Number

Cumulative Number of PT Treatment Rooms Operational

Proton Therapy World Market Report (Edition 2015), MEDraysintell.

CAGR

15%


VARIAN GAINING SHARE OF THE PROTON MARKET

14%

29%

5% 2% 5% 5%

40%

Hitachi IBA Mevion Misubishi

Pronova Sumitomo Varian

Share of # Rooms Ordered 2012 - 2015

8%

36%

9%

47%

Hitachi IBA Pronova Varian

2012 - 2015 2015


ESTIMATED SERVICE REVENUE RAMP UP OPPORTUNITY

0

20

40

60

80

100

120

2016 2017 2018 2019 2020 2021

Estimated Service Revenue Opportunity

$M


VARIAN PARTICLE THERAPY BACKLOG – 34 ROOMS

KFMC-KING FAHD MEDICAL CENTER 3 Rotational and 1 Fixed Beam & 1Eye Tx

UNIVERSITY OF MARYLAND 4 Gantries and 1 Fixed Beam Room

PTC ST PETERSBURG, RUSSIA 2 Gantries

UK PROTON THERAPY CENTER UCLH London – 3 Gantries

CINCINNATI CHILDREN’S HOSPITAL 3 Gantries

PAUL SCHERRER INSTITUTE (PSI) 1 Gantry Room

NATIONAL TAIWAN UNIVERSITY

WAN UNIVERSITY

2 Gantries 1 Fixed Beam Room

AARHUS PTC - DENMARK 2 Gantries

UK Proton Therapy Center The Christie Hospital, Manchester

3 Gantries

HOLLAND PTC 2 Gantries 1 Fixed Beam

NEW YORK PTC

3 Gantries 1 Fixed Beam Room

Five additional contracts for 12 rooms not yet booked as orders


OUR KEY GROWTH INITIATIVES

Expand addressable market by making protons more affordable

Develop lower-cost systems

Drive down manufacturing, service costs

Shortening install times

Extend market & technology leadership

Leverage, integrate Varian RT technology

Implement adaptive treatment planning, delivery

Build service business

Bring current projects on line

Improve service margin

Offer project consulting, development


PROTON THERAPY

Varian Range of Particle Therapy Product Offerings

ProBeam

Compact

• 4,500 square feet

• Optimized for

compactness

• Fully IMPT capable

• Advanced image

guidance

ProBeam

3-Gantry + 1 FB

• Horizontal fixed beam

room for GI and H&N

• KFMC-King Fahd

Medical Center

ProBeam

2-Gantry

• Matched treatment

rooms optional

• St Petersburg, Russia

ProBeam

4-Gantry + 1 FB

• Horizontal fixed beam

room for eye and H&N

• Rinecker PT Center

• University of Maryland

*Estimates based on standardized BTE model calculations


Plan – Treat – Adapt

Varian’s best-in-class oncology product

suite applied to protons:

Eclipse™ treatment planning

ARIA® OIS

Velocity

Cone Beam CT imaging

Full solution integration

Fully Integrated Workflow

VARIAN PROBEAM ADVANTAGE


120+ ACTIVE CLINICAL STUDIES

19

15

11

7 7

7

7

7

7

5 2 2 4

%

Proton Therapy World Market Report (Edition 2014), MEDraysintell.

Brain and spinal

Prostate

Lung

Pancreas Sarcoma

Breast

Chondrosarcoma

and chordomas

Liver

Head & Neck

Eye

Gastrointestinal tract

Lymphoma Miscellaneous

Clinicalstudies.gov


A PROMISING CLINICAL OUTLOOK

Breast

Bush DA, Do S, Lum S, et al. Partial breast radiation therapy with proton beam: 5-year results with cosmetic outcomes. Int J Radiation Oncol Biol Phys. 2014;90(3):501-505.

Head & Neck

Frank SJ, Cox JD, Gillin M, et al. Multifield optimization intensity modulated proton therapy for head and neck tumors: a translation to practice. Int J Radiat Oncol Biol Phys.2014;89(4)846–853.

Lung

Berman AT, St. James S, Rengan R. Proton beam therapy for non-small cell lung cancer: current clinical evidence and future directions. Cancers. 2015;7:1178-1190.doi:10.3390/cancers7030831


Accepted

standard

Reduced side

effects

Improved local

control

Reduced

secondary cancer

• Eye

• Pediatric

• Base of skull

• Brain

• Intracranial

• H&N

• Urologic

• Lung

• Breast

• Gynecological

• Breast

• Lymphoma

• Testis

• Intracranial

• H&N

• Urologic

• Lung

• Sarcoma

0.6% of RT patients

12.1% of RT patients

3.0% of RT patients

2.0% of RT patients

CLINICAL RATIONALE FOR PROTON TREATMENTS

National Health Ministry Models in the UK, Denmark and The Netherlands recommend proton

treatment for ~18% of patients.

Today only 1 percent of these patients get proton therapy.

Varian is now equipping centers in each of these nations.


WHY WE’RE WINNING

Varian’s best-in-class oncology products

fully integrated into protons allow us to be:

Adaptive

Expanding Indications

Adaptive Therapy

Accurate

IMPT, CBCT and Motion Management

Affordable

Single Room Solutions

Financing Packages


PARTICLE THERAPY INVESTMENT SUMMARY

Leadership position in expanding Global PT market

Leading Varian RT technology

End-to-end integrated systems solutions

Leveraging Varian’s global service infrastructure

Growing body of clinical evidence, indications

Building $400M annual business

On track for profitability in FY2018


Closing Remarks Dow Wilson


Inorganic Growth Priorities

Precision medicine

Next-gen radiation therapy

Multi-modality therapy

Immuno-oncology

Radiation medicine

Cancer-care coordination

New served

markets:

$3-4B potential

Image guidance

Therapy planning

Automated delivery

Radiation expertise

Global channel

Onco-informatics


Until Close We Remain

One Varian

Our continued focus:

Execution on FY16 objectives

Taking care of our customers

Hitting our growth targets


Our Growth Strategies are the Same

Go Global

Build Software & Services

Innovate

Commercialize Protons

Operational Excellence

Increase Revenues

Strengthen Profitability


Investment Summary

(NYSE: VAR)

Two great businesses

Radiation Oncology & Particle Therapy

Imaging Components

Market and technology leaders

Attractive addressable growth markets

Favorable demographic/economic/technical

trends

Promising product portfolios and pipelines

Healthy balance sheets & positive cash flows

investor meeting june 21, 2016 · pdf filewe have absorbed price cuts and maintained share ......

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