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Medistim – a niche market leader within ultrasound technology
March 21st, 2018
DNB SME Conference
Kari E. Krogstad, President and CEO
Disclaimer
The information included in this Presentation contains certain forward-looking statements that address
activities, events or developments that Medistim ASA (“the Company”) expects, projects, believes or
anticipates will or may occur in the future. These statements are based on various assumptions made by
the Company, which are beyond its control and are subject to certain additional risks and uncertainties.
The Company is subject to a large number of risk factors including but not limited to economic and
market conditions in the geographic areas and markets where Medistim is or will be operating, IP risks,
clinical development risks, regulatory risks, fluctuations in currency exchange rates, and changes in
governmental regulations. For a further description of other relevant risk factors we refer to Medistim’s
Annual Report for 2016. As a result of these and other risk factors, actual events and our actual results
may differ materially from those indicated in or implied by such forward-looking statements. The
reservation is also made that inaccuracies or mistakes may occur in this information given above about
current status of the Company or its business. Any reliance on the information above is at the risk of the
reader, and Medistim disclaims any an all liability in this respect.
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21.03.2018 Medistim company presentation
Agenda
1. Medistim today
2. Medical need and technology
3. Market
4. Financial performance
5. Growth strategy
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Medistim company presentation 21.03.2018
1. Medistim today
Medistim – the leader in Ultrasonic Surgical Guidance & Quality Assessment
• Established 1984
• Headquarter in Oslo, Norway
• Global representation
• Market leader in intra-operative TTFM
and ultrasound imaging
• Products made for cardiac, vascular and
transplant surgery
• >2.500 systems on the market
• Epiaortic ultrasound
2007 by ASE, SCA & STS
2011 by ACCF, AHA , AATS, SCA, STS
2015 by ASE & EACVI
• Transit Time Flow Measurements (TTFM)
2010 and 2014 by ESC & EACTS, ACCA,
EACPR, EACVI, EHRA, HFA
2011 NICE
ASE= American Sociaty of Echocardiography, SCA= Society of Cardiovascular Anesthesiology, STS= Society of Thoracic Surgeons, ACCF = American College of Cardiology Foundation, AHA =
Amerian Heart Association, EACVI= European society of vardiovascular imaging, EACTS = European Association of CardioThoracic Surgery, ESC = European Society of Cardiology, ACCA=
Acute Cardiovascular Care Associations, EACPR= European Association for Cardiovascular Prevention & Rehabilitation, EHRA= European Heart Rhythm Association, HFA= Heart Failure
Association NICE = National Institute for Health and Care Excellence
Guidelines
Medistim
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Medistim company presentation 21.03.2018
3rd party products contribution to revenues and profit
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56.3
9.2
EBIT 2017 MNOK 65,5
Medistimproducts
3rd partyproducts
3rd party products represent
24% of revenues and 14% of EBIT
Medistim company presentation 21.03.2018
229.8
71.7
Revenues 2017 MNOK 301,5
Medistimproducts
3rd partyproducts
2. Medical need and technology
How to ensure a coronary bypass graft is patent? – measure blood flow with TTFM
TWO PIEZOELECTRIC TRANSDUCERS
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t1 t2
REFLECTOR
tΔ = t1 – t2 = proportional to blood flow (Q)
Medistim company presentation
ANASTOMOSIS ANASTOMOSIS
21.03.2018
Instant feedback on graft functionality - TTFM data before and after graft revision
Transit Time Flow Measurement
ARTERIAL GRAFT: TTFM of a well functioning LIMA-LAD graft
VEIN GRAFT: TTFM of SVG-CX graft showing low flow, high PI, low DF and noisy curves
After revision (proximal anastomosis corrected): High flow, low PI, normal DF and regular curves
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Medistim company presentation 21.03.2018
To complement TTFM, ultrasonic surgical guidance was added - creating a unique solution
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Planning: 2D scanning of the aorta
Feature to identify soft or calcified plaque that may
preclude clamping, cannulation and the proximal
placement of CABG grafts
Navigation: 2D imaging of conduits and target vessels
Feature to search for intramural coronary arteries
and locate and quantify the degree of a stenosis using PW
Doppler and optimize graft strategy
Verification: Color flow imaging of the anastomosis
Feature to visualize the anastomosis and surgically intervene
to provide optimal flow
Medistim company presentation 21.03.2018
A NEW WORKFLOW – AN EXPANDED VALUE PROPOSITION - A NEW STANDARD OF CARE
Ultrasonic Surgical Guidance & Quality Assessment
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Evaluate ascending aorta prior to any
manipulation
Evaluate morphology of
coronaries & IMA’s
Evaluate morphology of
anastomosis
Assess graft functionality PI<5, DF>50%, Q>15ml/min
Improve surgical outcome, demonstrate quality and increase cost efficiency
Optimize graft strategy
Reduce risk of strokes
Verify graft functionality…revise when needed
Soft plaque
in aorta
LAD with stenosis
Restricted
anastomosis
Medistim company presentation 21.03.2018
Surgical guidance & quality assessment is needed in Vascular Surgery as well
• Guide carotid endarterectomy
and assess for technical
imperfections
• Assess graft patency in
peripheral bypass and
evaluate anastomosis
• Quantify flow for guidance
during AV access surgery
Immediate feedback to revise on the spot
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Medistim company presentation 21.03.2018
THE PRODUCTS
Ultrasound systems
• Designed for intraoperative TTFM during cardiac, vascular
and transplant surgery
• Fast, accurate and reproducible method for graft patency
verification
• Easy-to-interpret data to assist the surgeon
• Blood flow is measured with sterile probes and a real-time
flow curve is displayed together with Mean Flow in ml/min,
Pulsatility Index [PI] and Diastolic Filling percentage [DF%]
• Combines ultrasound imaging and proven TTFM in a
single system specifically designed for cardiovascular
surgery
• Combines quantitative, functional data [TTFM] with
qualitative, morphological data [intra-operative ultrasound
imaging]
• Imaging technology improves the quality assessment
obtained from TTFM alone
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TTFM & Ultrasound imaging system
PRODUCTS ON THE MARKET:
- MiraQ™
- VeriQ C™
Medistim company presentation
TTFM (transit time flow measurement) system
PRODUCTS ON THE MARKET:
- MiraQ™
- VeriQ™
21.03.2018
THE PRODUCTS
Probes are sold as consumables
• The flow probes gets attached to the
blood vessel and provide fast,
accurate and reproducible
measurements of blood volume flow
intra-operatively
• Compatible with a range of cleaning
and sterilization methods
• The doppler X-plore probe is used on
the surface of the heart/vessel to
search for intramural coronary
arteries or to locate and quantify the
degree of a stenosis
• The X-plore stabilizer makes the
velocity measurement on the beating
heart easier
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• High-frequency probe providing
excellent resolution in the near-field
• Specifically designed for
cardiovascular surgery
• Approved for direct contact with
cardiac tissue without the use of a
sterile sleeve
TTFM probes
Doppler probe
High-frequency ultrasound
imaging probe
Medistim company presentation 21.03.2018
3. Market
Large untapped global CABG market
GLOBAL MARKET SIZE
• > 700,000 CABG procedures annually
o 80% arrested heart (on-pump)
o 20% beating heart (off-pump)
• Medistim owns about 28% of procedures
• Competitors own about 7%
Medistim share of penetrated market is 80%
65% of the market is OPEN
• Market value (TTFM only); NOK 1 Billion
• Market value (Imaging & TTFM); NOK 2 Billion
MARKET TRENDS
• Cardiovascular diseases are on the rise worldwide
o 2013: CVD causes 1/3 of all deaths globally
o Obesity and diabetes risk factors are increasing
• The population size of 60+ years is increasing
• CABG remains the gold standard for multi-vessel disease
o PCI covers >80% of procedures today
o Clinical data document superior results with CABG
(SYNTAX 2013, Bernadetto 2016, NOBLE 2016, EXCEL 2016)
• Developing economies expected to drive CABG growth
o OECD countries perform 47 CABG per 100,000
inhabitants
o China and India perform <5 CABG per 100,000
inhabitants
Medistim company presentation
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21.03.2018
CABG
Huge variation in technology adoption
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JAPAN (127M people) • 20.000 procedures • >80% market share
GERMANY(82M people) • 54.000 procedures • >60% market share
USA (314M people) • 220.000 procedures • 19% market share
UK (62M people) • 20.000 procedures • 5% market share
CHINA (1.3B people) • 50.000 procedures • 40% market share
BRAZIL (194M people) • 60.000 procedures • <1% % market share
INDIA (1.3B people) • 50 - 150.000 procedures • <1 % market share
RUSSIA (143M people) • 30.000 procedures • 7 % market share
Medistim company presentation 21.03.2018
Vascular market potential
• Global vascular market is
> 600 000 procedures annually
• > 1 Billion NOK of market
opportunity for Medistim
Applications
Size of key markets # of procedures
(USA, Germany, Nordic)
Clinical needs
CEA surgery
>135 000
Reduce risk of death and stroke Improve cost-effectiveness
Peripheral bypass surgery
>200 000
Improve long-term graft patency Improve quality of life
AV access surgery
>200 000
Secure maturation of shunt/fistula Reduce risk of cardiac failure & hand ischemia
Liver transplant Surgery
20 000 (globally)
Increase success rate for a costly procedure
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Medistim company presentation 21.03.2018
Medistim’s value proposition
• Immediate feedback: revise on the spot
• Reduce risk and protect the patient
• Become a better surgeon
• Improve health economy by reducing costly re-interventions
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“The MiraQ system is associated with an estimated cost saving of £141 per patient compared with clinical assessment alone, when it is used routinely for assessing coronary artery bypass grafts during surgery.”
National Inst for Health and Care Excellence (NICE), 2011/2018
Medistim company presentation 21.03.2018
4. Financial performance
Financial highlights
• 301.5 mill NOK in revenues (2017)
• Strong revenue and profit growth
• EBIT margin of 21.7 %
• Strong cash flow
• No net long term liabilities
• Equity ratio of 73.1%
• MCAP 1.5 Bill NOK
(84 NOK/share 14.03.18)
• Dividend paid since IPO in 2004
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Medistim company presentation 21.03.2018
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Revenue CAGR=10.9%
(2011 - 2017)
Op. profit (EBIT) CAGR=18.3 %
(2011 - 2017)
kNOK
kNOK
Profit and loss 2017
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30,000
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Q214
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Profit & loss 2017 2016
All numbers in NOK 1000
Sales 301 461 268 061
Cost of goods sold 72 782 64 957
Salary and sosial expenses 98 281 89 719
Other operating expenses 51 705 45 304
Total operating expenses 222 768 199 980
Op. res. before depr. and write-offs (EBITDA) 78 693 68 081
EBITDA % 26,1 % 25,4 %
Depreciation 13 223 11 726
Write offs - -
Operating result (EBIT) 65 470 56 355
EBIT % 21,7 % 21,0 %
Financial income 8 838 7 506
Financial expenses 7 696 10 334
Net finance 1 142 (2 828)
Pre tax profit 66 612 53 527
Tax 19 038 14 429
Result 47 574 39 098
Medistim company presentation 21.03.2018
Sales per Quarter (kNOK)
EBIT per Quarter (kNOK)
5. Growth strategy
Medistim growth strategy
Emerging, high-growth economies (e.g. BRIC)
Developing Medistim markets (e.g. USA, UK, Fra)
Strong Medistim markets (CABG) (e.g. Jp, Nordic, Germany) >50% CABG share
CABG surgery (2 BNOK)
Vascular surgery (>1 BNOK)
Other open heart surgery (1 BNOK)
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1. Convert the routine Flow market to a Flow-and-
Imaging market by establishing Surgical Guidance and
Quality Assessment as the new standard of care through
o Early adopter & KOL support
o REQUEST study
o Ease conversion from flow to imaging with MiraQ
2. Achieve routine use of both Flow and Imaging by fighting
ignorance, indifference and ease-of-use objections through
o Clinical marketing & Educational programs
o Product innovation for ease of use
o Getting closer to the customers
3. Offer an entry-level solution to reach emerging, price-
sensitive, high-growth markets
4. Build and strengthen position in vascular surgery
o Dedicated system (MiraQ Vascular) & probes
o Establish position with societies and KOLs
3
4 1
2
GEOGRAPHIES
APPLICATION
AREAS
Medistim company presentation 21.03.2018
EXECUTING THE STRATEGY - GETTING CLOSER TO THE CUSTOMERS
Medistim establishes direct sales operation in Spain
• Highly penetrated market with large opportunity to convert
old flow systems to top model MiraQ with imaging
• Low penetration in the vascular market provides further
expansion opportunity
• Subsidiary setup prepared during the first quarter 2017
• Two sales representatives hired, one in Madrid and one in
Valencia to cover the market with support from Oslo
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MARKET DATA:
o Number of CABG procedures: 7 000
o Numer of vascular procedures: 8 000
o Medistims market penetration in flow market: 80%
o Medistims market penetration in imaging market: <5%
o Medistims market penetration in vascular market: <5%
Medistim company presentation 21.03.2018
EXECUTING THE STRATEGY - CLINICAL MARKETING AND EDUCATION
What is the study protocol?
• Perform ultrasound imaging of the aorta, conduit arteries
in situ, compromised coronary arteries and completed
grafts (anastomosis)
• Perform TTFM on completed grafts
• The procedures will be done with Medistim’s devices
(VeriQ C™ and MiraQ™)
• Record all changes to the surgical procedure and the
number of revisions done to the grafts based on the flow
and imaging data
• Capture major adverse cardiac and cerebrovascular
events (MACCE)
Why are these data interesting to the surgical
community?
• The hypothesis motivating the REQUEST registry study
is that employing a new and unique combination of
functional flow measurement and morphological
ultrasound imaging data may enable surgeons to
o make better informed decisions during
coronary surgery
o improve surgical quality and outcomes
o contribute to improved healthcare efficiency
from this surgical procedure
• The study is the first of its kind to investigate the value
of implementing both TTFM and intraoperative
ultrasound imaging as a concerted effort to provide
surgical guidance and graft quality assessment
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Medistim company presentation 21.03.2018
1) Ultrasound
assessment of aorta
prior to manipulation
2) Ultrasound assessment of
conduit arteries in situ
and 3) diseased coronaries
4) TTFM graft assessment
(Flow, PI, DF, BF)
LAD with stenosis
5) Ultrasound
assessment
of anastomosis Restricted
anastomosis
Soft plaque
in aorta
EXECUTING THE STRATEGY - CLINICAL MARKETING AND EDUCATION
Surgical protocol
Medistim company presentation
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21.03.2018
• Prospective registry study from 7 sites in 6 countries
• Preliminary findings from 776 patients enrolled from February 2015 to July 2017
• 285 changes in the surgical procedure in 203 of 776 patients
• 26% of patients had at least 1 surgical change
EXECUTING THE STRATEGY - CLINICAL MARKETING AND EDUCATION
Preliminary findings presented at ICC, New York, August 19th
Medistim company presentation
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21.03.2018
EXECUTING THE STRATEGY – PRODUCT INNOVATION FOR EASE OF USE
MiraQ launch in Europe 2014, in USA 2016, in China 2017
• A platform built for the future
• Application specific versions for cardiac and
vascular surgery
• Focus on ease of use
• Field upgradable to Imaging
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Medistim company presentation 21.03.2018
EXECUTING THE STRATEGY – BUILDING POSITION IN VASCULAR SURGERY
Working with the societies and KOLs
New Carotid Endarterectomy study
• Goal:
Compare ultrasound imaging as
intraoperative morphological control
compared to angiography
• Principal investigator:
Prof Eckstein, Tech Univ of Munich
• Preliminary results from 100 patients
presented at the Munich Vascular
Meeting 7-9 December
• Ultrasound imaging indicated
superiority to angiograpy with respect
to:
o Detecting more serious
defects
o More frequently leading to
revisions
Collaborating with vascular societies
• ESVS (Europe)
o Main program speaker
o Workshop
• EVC Maastricht (NL)
o Workshop
• Veith symposium (USA)
o Main program speakers
• SVS (USA)
o Networking
Medistim company presentation
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Building the business
• 2017
o MNOK 33,6 sales revenues
o 17% of own product sales
o Germany largest market
o USA highest growth
• Building the organization
o Business area leadership
o Vascular Clin App
21.03.2018
EXECUTING THE STRATEGY – OFFERING AN ENTRY-LEVEL PRODUCT
First year experience with SonoQ™
• SonoQ was introduced during the International Coronary
Congress in India (ICC) in November 2016
• Medistim premium products are well accepted, but price
has been an issue
• Large market with 150.000 coronary surgeries performed
per year and high growth
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Medistim company presentation
7 systems 100 probes sold so far
21.03.2018
APPENDIX
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1984
Medi-stim AS
founded
Launch of 1st
generation flowmeter
CardioMed™
Arne Grip starts
development of
the first flowmeter
1991 1994
Launch of 2nd
generation flowmeter
Butterfly™
1997 2003 2009 2010
Launch of 3rd
generation flowmeter
VeriQ™
Launch of new paradigm
Flowmetry & Imaging
VeriQ C™
1999
510(k) clearance
from US FDA
Medtronic
distributor in the USA
2001 2007
Direct sales operations
in the USA
Listed on
Oslo Stock Exchange
2004
Acquiring
Kir-Op AS
2006
EU Guideline
endorsement
UK NICE
endorsement
2011
3rd party distribution in Norway
2014 →
Medistim history
Launch of
MiraQ™
Medistim company presentation 21.03.2018
20 largest shareholders (per 19. mars 2018)
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Medistim company presentation 21.03.2018
Shareholder Number of shares Shares in % Citizenship
INTERTRADE SHIPPING 4 003 500 21,83 NOR
SALVESEN & THAMS INV 1 862 500 10,16 NOR
JPMorgan Chase Bank, NORDEA TREATY ACCOUN 1 375 246 7,50 GBR
FOLLUM CAPITAL AS 1 000 000 5,45 NOR
Skandinaviska Enskil A/C CLIENTS ACCOUNT 962 939 5,25 DNK
PROTECTOR FORSIKRING Aksjer 784 155 4,28 NOR
Citibank Europe plc S/A SEB SA UCITS 706 412 3,85 LUX
BUANES ASBJØRN JOHN 494 936 2,70 NOR
GRANDEUR PEAK INTERN BROWN BROTHERS HARRI 420 559 2,29 USA
HOLBERG NORGE VERDIPAPIRFONDET V/HOLBERG FONDSFORVA 398 656 2,17 NOR
DYVI INVEST AS 346 154 1,89 NOR
RBC Investor service S/A LUX SCV-EXEMPT-U 334 397 1,82 LUX
JPMorgan Chase Bank, JPMCB RE HB SWED FUN 285 375 1,56 SWE
Danske Bank A/S 3993 NORDIC SETTLEME 282 546 1,54 DNK
Danske Invest Norge 250 000 1,36 NOR
BNP Paribas Securiti BPSS MLN/PENSION FUN 228 408 1,25 ITA
REGENTS OF THE UNIVE The Bank of New York 228 373 1,25 USA
Skandinaviska Enskil SEB AB, UCITS V - Sw 218 201 1,19 SWE
NN PARAPLUFONDS 1 N. BNY MELLON SA/NV 208 489 1,14 NLD
Bank Julius Bär & Co 200 000 1,09 CHE
Total 14 590 846 79,57
Balance sheet - Assets
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Balance sheet 31.12.2017 31.12.2016
All numbers in NOK 1000
Assets
Intangible assets 45 090 51 698
Fixed assets 25 744 18 404
Total intangible and fixed assets 70 834 70 102
Inventory 62 722 59 297
Customers receivables 57 307 48 328
Other receivables 5 825 7 651
Cash 54 411 31 065
Total current assets 180 265 146 341
Total assets 251 099 216 443
15.02.2018 Medistim ASA Q4 2017
• Working capital is still high, related to:
• MiraQ product line introduction while maintaining the VeriQ/VeriQC products with last-time-buy of components
• Securing safety level of critical components
• Increased customer receivables due to record sales for the quarter
-
50,000
100,000
150,000
200,000
250,000
300,000
Q4 16 Q1 17 Q2 17 Q3 17 Q4 17
Intangible assets Fixed assets Inventory
Accounts receivable Other assets Cash
Balance sheet - Equity and liability
15.02.2018 Medistim ASA Q4 2017
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Balance sheet 31.12.2017 31.12.2016
All numbers in NOK 1000
Share capital 4 585 4 585
Premium fund 44 172 44 172
Other equity 134 226 117 947
Total equity 182 983 166 704
Total long term debt 10 500 2 552
Total short term debt 57 616 47 188
Total equity and liability 251 099 216 444
• 15.4 MNOK in interest bearing debt
-
50,000
100,000
150,000
200,000
250,000
Q3 16 Q4 16 Q1 17 Q2 17 Q3 17
Share capital Premium fund Other equity
Long term debt Short term debt
Alternative business models
CAPITAL SALES MODEL
• System is sold as capital equipment
o Flow: € 45.000
o Flow and imaging: € 90.000
• Flow probes are sold as consumables
o € 1.800 – 2.000
o Reusable 50x
• Imaging probe is sold as consumable
o € 10.000
o Reusable 100x
PAY PER PROCEDURE MODEL
(USA only)
• System and probes are placed at the
hospital ‘free of charge’
o Ownership with Medistim
• Customer pays per procedure and
buys smart cards that activate the
system for one operation
o Flow procedure: $250
o Flow & imaging procedure:
$470
Medistim company presentation
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LEASE MODEL
• System is leased out over a period of
time
o Ownership with Medistim
• Flow probes are sold as consumables
o € 1.800 – 2.000
o Reusable 50x
• Imaging probe is sold as consumable
o € 10.000
o Reusable 100x
21.03.2018
