Medistim a niche market leader within ultrasound technology · Medistim – the leader in Ultrasonic Surgical Guidance & Quality Assessment • Established 1984 • Headquarter in

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

5


3rd party products contribution to revenues and profit

6

56.3

9.2

EBIT 2017 MNOK 65,5

Medistimproducts

3rd partyproducts

3rd party products represent

24% of revenues and 14% of EBIT


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

8

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

9


To complement TTFM, ultrasonic surgical guidance was added - creating a unique solution

10

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


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


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

12


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

13

TTFM & Ultrasound imaging system

PRODUCTS ON THE MARKET:

- MiraQ™

- VeriQ C™


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


http://www.medistim.com/en/our-products/Transit-Time-Flow-Measurement-Probes/Flow-probes1/Vascular-TTFM-Probes/

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


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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


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’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

19

“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


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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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

Q414

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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


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)

24

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


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%


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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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


Surgical protocol


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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


Preliminary findings presented at ICC, New York, August 19th


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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

29


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


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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

31


7 systems 100 probes sold so far

21.03.2018

APPENDIX

33

1984

Medi-stim AS

founded

Launch of 1st

generation flowmeter

CardioMed™

Arne Grip starts

development of

the first flowmeter

1991 1994

Launch of 2nd


Butterfly™

1997 2003 2009 2010

Launch of 3rd


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™


20 largest shareholders (per 19. mars 2018)

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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

35

Balance sheet 31.12.2017 31.12.2016


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

36

Balance sheet 31.12.2017 31.12.2016


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


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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

Documents

Medistim a niche market leader within ultrasound technology · Medistim – the leader in Ultrasonic Surgical Guidance & Quality Assessment • Established 1984 • Headquarter in