Alphatec Spine. March 2018

Transcription

1 Alphatec Spine March 2018

2 Forward Looking Statements and Guidance This communication contains forward-looking statements within the meaning of the federal securities laws. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as expect, anticipate, intend, plan, believe, seek, see, will, would, target, similar expressions, and variations or negatives of these words, but the absence of such a terms does not mean that a statement is not a forward-looking statement. These and other forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forwardlooking statements. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Forward-looking statements include the references to the Company s strategy in significantly repositioning the Alphatec brand and turning the Company into a growth organization. The important factors that could cause actual operating results to differ significantly from those expressed or implied by such forwardlooking statements include, but are not limited to: the uncertainties regarding the Company s ability to recognize the expected synergies and other benefits of the SafeOp acquisition; the difficulties in the integration of SafeOp post-closing; the diversion of management time to address transactionrelated issues; the uncertainties related to litigation involving the acquisition of SafeOp or the 2018 private placement or limitations or restrictions imposed by regulatory authorities; the uncertainties related to unanticipated integration costs or undisclosed liabilities assumed; the uncertainties related to the acceptance of the SafeOp acquisition and its products by third parties; the uncertainty of success in developing new products or products currently in the Company s pipeline; the uncertainties in the Company s ability to execute upon its strategic operating plan; the uncertainties regarding the ability to successfully license or acquire new products, and the commercial success of such products; failure to achieve acceptance of the Company s products by the surgeon community, including Battalion and Arsenal Deformity; failure to obtain FDA or other regulatory clearance or approval for new products, or unexpected or prolonged delays in the process; continuation of favorable fourth party reimbursement for procedures performed using the Company s products; unanticipated expenses or liabilities or other adverse events affecting cash flow or the Company s ability to successfully control its costs or achieve profitability; uncertainty of additional funding; the Company s ability to compete with other competing products and with emerging new technologies; product liability exposure; an unsuccessful outcome in any litigation in which the Company is a defendant; patent infringement claims; claims related to the Company s intellectual property and the Company s ability to meet its financial obligations under its credit agreements and the Orthotec settlement agreement. A further list and description of these and other factors, risks and uncertainties can be found in the Company s most recent annual report, and any subsequent quarterly and current reports, filed with the Securities and Exchange Commission. Alphatec disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law. MARCH

3 Our Mission is Our Passion We improve lives by providing innovative spine surgery solutions through our relentless pursuit of superior outcomes MARCH

4 Building a Culture With a Vision We do the right thing We are unified and supportive We make it personal Core Values We are honest and transparent We deliver results The Most Respected, Fastest Growing U.S. Spine Company MARCH

5 $7B U.S. Spine Market Needs the New ATEC ATEC: TOP 10 PUBLIC SPINE HARDWARE COMPANY 75% 6 Large Companies Low single-digit growth; strong operating margins; price competition GPO s/hospital system strength; drivers of vendor reduction Reliant on status quo; currency related products Focused on asset returns; not addressing market requirements Others 25% ATEC and all others Non-dedicated salesforces ATEC is increasing dedicated distribution and has strong hospital access Distributor consolidation Innovation needed because spine surgery still unpredictable Existential requirement for ATEC MARCH

6 Our History - Solid Beginnings 2006 IPO FOUNDED SPINE FOCUS INTERNATIONAL EXPANSION Founded as contract manufacturer of orthopedic device and transitioned to spine Focused on spine implants HPC acquired Alphatec Manufacturing Rebranded as Alphatec Spine Headquarters relocated to Carlsbad Broadened portfolio to expand revenues 2010 acquired Scient X MARCH

7 MARCH Followed by Poor Decisions and Challenges THE DECLINE Orthotec Litigation and Settlement Investments never commercialized: Aging Spine, GLIF Lack of spine experience drove bad decisions: Price ceiling, eliminated biologics, commoditized portfolio, POD s Threat of bankruptcy forced sale of international business Revenue decline

8 Today - Turnaround and Transformation Raised $26M Raised $50M 2018 Acquired SafeOp 2018 Present REBUILD Future PROCEDURAL EXPANSION Rebuilding leadership Creating innovative culture Strengthening distribution channel Perpetuating hospital access Launched new solutions Improved expense profile Expanding IP (20+ new patents in 2017) Engaging renowned surgeon thought leaders Acquired SafeOp Surgical technology to differentiate solutions and accelerate business SafeOp as platform for improved clinical outcomes Product innovation: Evolving from Implant Manufacturer to Spine Solutions Architect Opportunity to enhance shareholder value with continued execution MARCH

9 MARCH Previous Leadership Executive CEO CFO COO Gen Counsel SVP, HR SVP, Sales VP Marketing VP Finance VP Regulatory VP Operations VP Program Mgt VP Development 21 Additional Non-Executive Senior Managers Exited Board of Directors Member Member Member Member Member Member Member Member Member

10 The New, Transformational Leadership 200+ YEARS COMBINED SPINE EXPERIENCE Pat Miles Chairman & CEO Terry Rich President, COO Director Jeff Black EVP, CFO Brian Snider EVP, Strategic Mkt & Product Dev Craig Hunsaker EVP, People & Culture, GC Luiz Pimenta, MD CMO Kelli Howell EVP, Clinical Strategies Jon Allen EVP, Commercial Operations Mike Dendinger VP, Operations Scott Lish VP, Development Richard O Brien, MD CMO, SafeOp Robert Snow Chief Marketing Officer, Safe Op Jim Gharib Technical Lead, SafeOp MARCH

11 The New, Transformational Leadership BOARD OF DIRECTORS Quentin Blackford Jeff Rydin Dave Mowry Ward Woods James Tullis Jason Hochberg Evan Bakst Don Williams Tim Berkowitz Ian Molson HEALTHPOINT CAPITAL HEALTHPOINT CAPITAL MARCH

12 Our Path to Increased Market Share From Implant Manufacturer to a SPINE SOLUTIONS ARCHITECT Proceduralization Design complete solutions that address unmet clinical needs and improve clinical outcomes by seamlessly integrating the parts (ATEC products and technologies) to treat specific pathologies Speed to Market Build on proven team expertise in expedited product development Maintain a nimble, innovative prowess by constantly obsoleting our own technology Momentum from SafeOp Surgical, Inc. acquisition MARCH

13 ATEC Disrupts Spine Market with Acquisition of SafeOp Surgical MARCH

14 Neuromonitoring in Spine Surgery NEUROMONITORING (DEF): The use of electrophysiological tools in surgery to avoid nerve injury Electromyography (EMG) is widely used for directional location of nerves to help surgeons avoid the nerves intra-operatively But, there has been no automated technology that predictably provides objective information about the health of the nerves during retraction, or that alerts surgeons when nerves are at risk of injury UNTIL SAFEOP! MARCH

15 SafeOp: Objective, Simple, Focused Monitoring for Nerve Avoidance & Nerve Health Unprecedented technology that creates a signal to noise ratio enabling effective nerve health monitoring with SSEP (Somatosensory Evoked Responses) to reduce the risk of nerve injury Automated alerting algorithm enables pre-injury interventions Sweep thresholding algorithm enables nerve avoidance monitoring - (lateral approach surgery, pedicle screw testing, etc.) Simplicity and ease of use allows non-expert users to monitor nerve health Anesthesia resistant waveforms allow standard anesthesia Small footprint with wireless connectivity Innovation protected by 2 issued and 9 patents pending MARCH

16 SafeOp Differentiation Can Address Current Deficiencies in Spine Surgery Lack of reliable whole surgery neuromonitoring solution has prompted alternative surgical approaches, which can present additional vascular risks Neural Plexus Only initial 5% of a lateral surgery procedure is reliably monitored to avoid nerves Remaining 95% is monitored by poorly predictive, technically demanding techniques >60% of lateral surgery patients have residual thigh pain due to surgical retraction injury Aorta Vena Cava In current practice, human SSEP interpretation makes the process subjective, and prone to error

17 SafeOp s Better Information Removes the Guesswork From Nerve Health Monitoring Nerve Avoidance Monitoring - Remains important due to inability to directly visualize neural anatomy within psoas muscle surgeon needs to know real-time directional location Nerve Health Monitoring Solves a 15-year problem that has resulted in high retraction nerve complication rates SafeOp s differentiated, automated technology is applicable to every procedure in spine, opening the door for ATEC to untapped markets MARCH

18 ATEC + SafeOp: Platform for Product Expansion and Integration SSEP Nerve Health (Lateral, Cervical) EMG, SSEP Nerve Location & Health Outcomes Data, Alignment Modular/ Procedural Optimal Construct Analysis, Patient Specific Anterior Column Alignment Advanced Navigation Patient Specific Porosity/ Stiffness Lateral Monitoring Osseos crew Next Gen Open MIS/ Reduction Porous Portfolio Lateral Expansion Cervical Optimal Construct/ indication ASC

19 2018 Financial Outlook ~$95M FY 18 TOTAL REVENUE 2H growth in U.S. commercial revenue INVESTMENT IN PRODUCT DEVELOPMENT SafeOp technology integration Portfolio expansion INVESTMENT IN COMMERCIAL RAMP Dedicated distribution Geographic sales expansion Instrument sets support revenue expansion MARCH

20 Why Invest in the New ATEC? Creating Innovative Solutions That Improve Patient Outcomes Advance from implant manufacturer to Spine Solutions Architect SafeOp acquisition provides differentiated technology Diligently innovating and purposely obsoleting our own technology Driving Predictable Financial Performance Established portfolio generated $100M+ revenue in 2017 Top-line predictability and growth through dedicated sales channel Cash runway to execute plan Making Culture Our Competitive Advantage Spine-experienced, personally-invested leadership team Building a culture to become the most respected, fastest growing U.S. spine company through a relentless pursuit of superior outcomes MARCH

21 Thank You