The U.S. medical device industry continues to grow at a brisk pace, thanks to an aging Baby Boomer population, high unmet medical needs and increased incidence of lifestyle diseases (including cardiovascular diseases, diabetes, hypertension and obesity). The global medical device market is expected to reach $300 billion by 2017 with a CAGR of 6.1% over the next several years (2011-2017). Misonix (MSON) is aggressively pursuing a $3 billion+ piece of the market with their ultrasonic medical devices. Last quarter the company grew revenues 42%, with the highest growth occurring internationally. Misonix’s three core products grew at an impressive 220% (BoneScalpel), 97% (SonicOne), and 21% (SonaStar) year over year respectively. More importantly we expect profitable growth in 2013 and beyond. Listen to CEO Michael McManus as he tells the story.
2. Forward Looking Statements
With
the
excep�on
of
historical
informa�on
contained
in
this
presenta�on,
content
herein
may
contain
"forward
looking
statements"
that
are
made
pursuant
to
the
Safe
Harbor
Provisions
of
the
Private
Securi�es
Li�ga�on
Reform
Act
of
1995.
These
statements
are
based
on
management's
current
expecta�ons
and
are
subject
to
uncertainty
and
changes
in
circumstances.
Investors
are
cau�oned
that
forward-‐looking
statements
involve
risks
and
uncertain�es
that
could
cause
actual
results
to
differ
materially
from
the
statements
made.
These
factors
include
general
economic
condi�ons,
delays
and
risks
associated
with
the
performance
of
contracts,
risks
associated
with
interna�onal
sales
and
currency
fluctua�ons,
uncertain�es
as
a
result
of
research
and
development,
acceptable
results
from
clinical
studies,
including
publica�on
of
results
and
pa�ent/procedure
data
with
varying
levels
of
sta�s�cal
relevancy,
risks
involved
in
introducing
and
marke�ng
new
products,
poten�al
acquisi�ons,
consumer
and
industry
acceptance,
li�ga�on
and/or
court
proceedings,
including
the
�ming
and
monetary
requirements
of
such
ac�vi�es,
the
�ming
of
finding
strategic
partners
and
implemen�ng
such
rela�onships,
regulatory
risks
including
approval
of
pending
and/or
contemplated
510(k)
filings,
the
ability
to
achieve
and
maintain
profitability
in
the
Company's
business
lines,
and
other
factors
discussed
in
the
Company's
Annual
Report
on
Form
10-‐K,
subsequent
Quarterly
Reports
on
Form
10-‐Q
and
Current
Reports
on
Form
8-‐K.
The
Company
disclaims
any
obliga�on
to
update
its
forward-‐looking
rela�onships.
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2
3. Company Overview
Misonix, Inc. (Nasdaq: MSON) develops ultrasonic Revenues
$50
$45.5
surgical devices for use in a wide variety of
procedures $45
$42.4
$39.8
$40
Focused medical device company; divested non-
$35
core businesses in 2008 - 2012
$
millions
$30
Operates in a recurring razor / razorblade model
$25
– 39.2% of revenues recurring – FY 2012
$20
$14.4
$13.4
– 40.0% of revenues recurring – 1st Quarter FY
$15
2013
$10
$15.7
$12.4
Misonix’s products are protected by strong patent
$9.7
$10.7
$5
$8.1
$8.7
$4.6
portfolio
$0
FY
2007
FY
2008
FY
2009
FY
2010
FY
2011
FY
2012
Q1
2013
Total
Medical
Revenue
– Over 40 patents
Total
Other
Revenue
Large worldwide revenue generating installed base;
consistently growing
Products aimed at large and rapidly growing aging
demographic
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3
4. Company Highlights
Substantial Recurring Revenue Component
– 40.0 % of revenues recurring – First Quarter 2013
– 39.2% of revenues recurring – FY 2012
– 48% of revenues recurring – FY 2011
Strong Balance Sheet
– $6.7 million cash (approximately 20% of current market value)
– ZERO long-term debt
Revenue Growth – FY 2013 - First Quarter
– 42% growth –First Quarter 2013 vs. 2012
– BoneScalpel TM – 220% growth - First Quarter 2013 vs. 2012
– SonaStar® – 21% growth - First Quarter 2013 vs. 2012
– SonicOne™ - 97% growth - First Quarter 2013 vs. 2012
Improving Gross Margins
– 59.7% GM – First Quarter 2013
– 59.0% GM – FY 2012
– 58.0% GM – FY 2011
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4
5. Addressable Market
Market Segment Surgical Competition Market size
Specialties Worldwide
Hard Tissue
BoneScalpel™ Spine Orthopedics High-speed Burr $ 300 M *
Neuro
Small bone Maxillofacial Micro saw $ 300 M *
Reconstructive
ENT
Hand, Foot & Ankle
Total $ 600 M *
Market Segment Surgical Competition Market size
Specialties worldwide
Soft Tissue
SonicOne® Surgical Debridement Plastic Waterjet $ 300 M **
Reconstructive Scalpel, Curette
General
Vascular
Ambulatory Podiatric Ultrasonic $ 100 M **
Debridement General Debridement
Vascular Scalpel, Curette
Total $ 400 M **
Market Surgical Competition Market size
Soft Tissue
Segment Specialties worldwide
SonaStar® Tumor Neurosurgical Ultrasonic $ 100 M **
Resection General Aspirators
Waterjet
Total $ 100 M **
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* Millennium Research Group 2010 5
** Misonix Estimates
6. Sales & Distribution
Domestic – Hybrid Sales Organization
2 Direct Neuro/Spinel Sales Territories
28 Contract Neuro/Spinel Sales Agencies with over 100 salespeople
9 Contract Wound Sales Agencies with over 40 salespeople
Supported by Misonix Sales directors (2) and regional Business
Development Managers (10)
International – Specialty Distributor Organization
45 Specialty Distributors with over 200 salespeople
Supported by Misonix Sales Directors (2) and Application
Specialists (3)
Private Label –
Aesculap is non-exclusive in the U.S. only for spine and cranial
applications of BoneScalpel
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6
8. BoneScalpel™: Overview
BoneScalpel
TM
Revenues
Ultrasonic Bone Cutting System
$5.5
Precision cuts with minimal loss of bone
$4.8
$4.5
Spares soft tissue structures like delicate nerves*
Improved patient safety*
Relatively bloodless field – US’s hemostatic affect* $3.5
$3.3
$
millions
Encourages new surgical techniques*
$2.5
$2.5
Faster overall procedure time* $2.1
$1.5
$1.1
Addressable Market
$0.5
$300 million current worldwide market for spine. $0.2
$0.0
FY
2007
FY
2008
FY
2009
FY
2010
FY
2011
FY
2012
Q1
2013
$300 million maxillofacial, reconstructive and other
small bone procedures -‐$0.5
Hospital Price Points (ASP = Average Sales Price)
$35,000 ASP per capital system sale with $400 ASP for
consumables per use
$500 ASP for consumables with consignment
placement and minimum monthly purchases
Competition
Medtronic, Anspach, Stryker, Aesculap, Synthes,
Stryker, MicroAire – Power Drills & Saws
* Clinical Study completed at CHC Hospital, Liege, Belgium
R
** 2009 data from Hospital Discharge Survey & H-CUPnet
8
9. Drive Unit Placement: BoneScalpel™
# of Units Sold/Placed Management Initiatives
60
57
50
Target teaching hospitals to ensure future users,
43
including the use of ‘hands on’ workshops, cadaver
40
33 labs and other clinical education programs
30
29 30
20
Fiscal
2012
19 18 18
13 Expand global network of clinical thought leaders
10
0
Expand export network of specialty distributors
Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12
Expand quantity and improve quality of domestic
# of Consumable Sold sales agents and direct representatives
10,000
9,000
8,777
8,000
7,188
7,000
6,810 Utilize personal referrals from present users
6,000
worldwide
5,000
4,789
4,374 4,114
4,000
3,000
Expand number of using surgeons in each hospital
Fiscal
2012
2,000
1,000
498 670 860
0
Penetrate spine and maxillofacial markets by
Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12
expanding into additional surgical procedures
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9
10. SonicOne®: Overview
SonicOne®Revenues
Tissue Selective Wound Debridement for diabetic foot
$1.4
ulcers, venous ulcers, pressure ulcers, burns, trauma
$1.3
wounds and infected bone
Ultrasound effectively debrides and cleanses soft $1.2
$1.1
tissue, eschar, infected bone
$1.0
Ultrasound has been shown to shorten healing times1
$
millions
$0.8
Reduces number of debridements required1 $0.7 $0.7
Ultrasound is effective in disrupting, inactivating and $0.6
$0.5
removing bacterial organisms2
$0.4
$0.3
$0.2
Addressable Market $0.2
$0.0
$400 million worldwide
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Q1 2013
Hospital Price Points (ASP = Average Sales Price)
$35,000 ASP per capital system sale with $400 ASP for
consumables per use, or, $1,995 per month rental,
minimum 1 year + consumables
$500 ASP for consumables with consignment
placement & minimum monthly purchases
Competition
Soering, Arobella, Smith & Nephew 1Clinical
Study completed at Calvary Hospital, Bronx, NY
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2 Study conducted by Brook Army Medical Center, San Antonio, TX
10
11. Drive Unit Placement: SonicOne®
# of Units Sold/Placed Management Initiatives
12
11
10
10 10
Establish market leadership in Ultrasonic Wound
Debridement by penetrating the inpatient surgical
8
7 7 market segment
6
6
5 Large, full service hospitals
4
4
Fiscal 2012 Burn hospitals
2
2
Long term acute care (LTAC) hospitals
0
Government hospitals
Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12
Leverage full range of customer acquisition models
# of Consumable Sold Capital purchase, rentals, and fee per use
3,500
3,000
2,922 2,836
2,798
2,672
2,500
2,417 2,450
Strengthen clinical proof and its communication
2,000
1,710 Leverage global network of key opinion leaders
and the referral base they can provide
1,500
1,400 1,341
1,000
Fiscal 2012
500
Target diabetic foot ulcers; 11 million per year
worldwide
0
Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12
Leverage sales of synergistic products to own the
R wound healing treatment protocol
11
12. SonaStar®: Overview
SonaStar®Revenues
Tissue Selective Tumor Removal
Fragmentation, emulsification and aspiration $7.0
of targeted tumors or tissue
$6.0
$5.9
Precise bone sculpting for anatomical access
$5.0
Neuro and General Surgeries $4.1
$4.0
$
millions
$3.5
Addressable Market $3.0
$2.3 $2.4
$2.1
$120 million worldwide, including: $2.0
$1.6
5,000 brain tumor surgeries per year
$1.0
7,000 liver resection surgeries per year
$0.0
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Q1 2013
Hospital Price Points (ASP = Average Sales Price)
$85,000 ASP per capital system sale with $500 ASP for
consumables per use, or, $4,500 per month rental,
minimum 3 months + consumables
Competition
Integra Life Sciences, Stryker, Soering
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12
13. Drive Unit Placement: SonaStar®
35
# of Units Sold Management Initiatives
30
30
Expand network of export specialty distributors
25
21
20
18 18
16
15
14 Expand quantity and improve quality of
10
9 8 9 Fiscal
2012
domestic sales agents and direct
5
representatives
0
Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar 12 Jun12 Sep12
Emphasize high margin consumables business
# of Consumables Sold
4,500
4,182
Target teaching hospitals to ensure future users
4,000
3,869
3,646
3,500
3,340 3,381
3,219
3,000
2,500
2,190 Tap into large liver surgery market for aspirators
2,000
1,500
1,290 Fiscal
2012
1,000
877
Leverage full range of customer acquisition
500
models
0
Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12
capital purchase, leasing, rentals, and fee
per use
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13
14. Additional Products
Addi�onal
Medical
Products
AutoSonix Revenues
Ultrasonic shears for laparoscopic cutting & $6.0
$5.6 $5.7
$5.0
coagulation $4.7
$4.5 $4.5
Licensed to Covidien, exclusively, worldwide
$4.0
$3.7
$
millions
Manufactured pursuant to Misonix patents
$3.0
Market size is approaching $ 1.0 billion worldwide,
$2.0
Covidien’s market share is approximately 5%
$1.0
LySonix
$0.4
Ultrasound-assisted liposuction
$0.0
Distributed by J&J exclusively in the U.S.A., non- FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Q1 2013
exclusive elsewhere
Manufactured pursuant to Misonix patents
Market size is 1.6 million liposuction procedures
worldwide, dominated by U.S., China and Brazil
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14
15. Strategic Direction
1. Drive unit placements of BoneScalpel,
SonicOne and SonaStar via capital sales,
rentals, and “no cap” placements that feature
high margin consumables and minimum
purchase requirements
2. Focus on high margin consumables for all
product platforms
3. Enhance efficiencies through more effective
sales and marketing efforts
4. Leverage the benefit of growing worldwide
distribution
5. Continue to add distribution agreements for
other high margin products synergistic to our
base businesses in wound care, neurosurgery
and spine surgery
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15
20. Enhance Efficiencies: Operating Expense
Management Initiatives
Focus on surgical market segments, which
Operating Expense feature high margin consumables and
$3.50
satisfactory reimbursement
Develop and introduce additional disposable
$3.00
$2.9 $2.9
line extensions that address new surgical
$2.7 $2.7
$2.5
$2.6 $2.6 applications
$2.50
$2.4 $2.4
Endeavor to consistently control and/or reduce
manufacturing costs, thus improving margins
$2.00
$
millions
Patent technology whenever possible
$1.50
Fiscal 2012
Management
Ac�ons
Reduced headcount
$1.00
Increased effectiveness via
multi-tasking
$0.50
Lowered operating costs by reducing
$0.00
size of facility and number of
Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 personnel
Streamline operations for efficient
R production and support functions
20
22. Selected Balance Sheet
• Cash
and
investments:
$6.7M
Misonix
(Nasdaq:
MSON)
• $0.95
per
share
Stock
Price:
$4.53*
• Net
Working
Capital:
$12.0M
• $1.71
per
share
Market
Cap.:
$31.7
M*
• Total
Shareholder
Equity:
$15.7M
• $2.24
per
share
• ZERO
Long-‐term
debt
• Shares
Outstanding:
7.0M
*as
of
November
5,
2012
• Total
NOLs:
$7.5
Million
• Expire
2026–
2031
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22
23. Key Takeaways
Implemen�ng
high
margin
consumables-‐based
recurring
revenue
business
model
60%+
Gross
Margins
a�ainable
Strong
leverage
built
into
opera�ng
model
Products
are
fully
developed
and
marketable
Focus
on
opera�ng
expenses
and
efficiencies
R&D
and
S&M
investments
posi�on
company
for
improved
opera�onal
and
financial
results
Strong
patent
por�olio
Strong
balance
sheet
Solid
cash
posi�on
ZERO
long-‐term
debt
20%
of
market
cap
is
cash
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23
24. Management Team
Michael A. McManus, Jr. CEO since late 1998.
Former President and CEO of New York Bancorp, Inc. before which he held
President, CEO
senior positions with Jamcor Pharmaceutical, Pfizer and Revlon.
Prior Assistant to President Ronald Reagan.
Richard Zaremba With company since early 1999.
Former VP and CFO of Comverse Information Systems, a manufacturer of
Senior VP, CFO
digital voice recording systems.
Treasurer, Secretary
Prior VP and CFO Miltrope Group, Inc.
Michael C. Ryan Joined in 2007.
Former Senior VP and General Manager for Nomos Radiation Oncology.
Senior VP, Sales & Mkt’g.
Prior Executive VP Business Development for Inter V, Inc. -- a medical device
company marketing specialty products for interventional radiology and
cardiology.
Dan Voic Approximately 15 years of senior scientific experience at Misonix.
Expertise and training in all phases of ultrasound technology.
VP, R&D and Engineering
Ronald Manna Present position since 2002.
Former VP of R&D and Engineering, VP of Operations and Director of
VP, Regulatory Affairs and
Engineering of the Company.
Quality
Frank Napoli Joined in 2004.
Former VP of Manufacturing for Spellman High Voltage Electronics Corp.
VP, Operations
Prior Director of Manufacturing for Telephonics Corporation.
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24
25. R
Thank You
CORPORATE PRESENTATION
January 2013
ADVANCING ULTRASONIC SURGERY