Urologix, Inc. (
Lazard Capital Markets 8th Annual Healthcare Conference Call
November 16, 2011 9:00 a.m. ET
Stryker Warren, Jr. - Chief Executive Officer
Gregory Fluet - Executive Vice President & Chief Operating Officer
Karen Koski - Lazard Capital Markets
Karen Koski - Lazard Capital Markets
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I think we will get started. My name is Karen Koski and I work in equity research at Lazard Capital Markets. We are very pleased to have Urologix here with us today. Presenting on behalf of Urologix is the company's CEO, Stryker Warren, and we invite you to ask questions at the end of the presentation. Stryker, so it’s over to you.
Stryker Warren, Jr.
Karen, thank you very much. It’s a pleasure to introduce the new Urologix to you today and much of this is driven by the recent announcement, September 6, of the exclusive worldwide license with Medtronic for the Prostiva RF therapy system. This puts Urologix into the leading position in terms of in-office solutions for benign prostate enlargement. And these two technologies are very very key to treating not only the symptomatic phase of the disease, but more importantly the longer-term implications associated with the obstructive component of the disease.
Some of the investments highlights. With the Prostiva transaction this combines the number one and number two technologies in the in-office minimally invasive space for the treatment of BPH. It has also effectively expanded our sales force, introduced additional distribution channels and what is very very important with these two technologies is that they are complementary in nature. I will share more details on that in a moment. They are both clinically proven with good reimbursement.
Something is changing in the market is very obvious to us is that there are more and more questions being asked in the clinical and related communities about the long term cost benefit relationship with oral medication which I think over the last ten years has been glamorized with both direct to consumer advertising, much of what's been in the nutraceutical news which recently has been called into question.
The management team is experienced, more details on that a little bit later in the presentation, but with a real preoccupation to market expansion and development of this integration platform. So deal structure, strategic reaction and its financial impact, it’s a ten year term on the license. $10 million option that are required that can be paid off with a combination of license fee and royalties. For us as a company this dramatically expands our customer base and it positions Urologix to be the single source solution set for the urologist in terms of addressing BPH in the office.
We believe that up to a 100% of the patients represent in the outpatient setting for the general urologist could be treated with one or the other of these two therapies. So giving a growth platform for the company, and we believe that with the combined sales forces there is a great opportunity to be more efficient in territory management as well as penetrating more deeply into the existing book of business through a very focused consultative selling approach.
Diversifies the revenue base for the company, certainly offer us great operating leverage, and while the company has not provided guidance for the Street historically, when we announced the transaction we gave guidance of $18 million to $20 million for partial year of consolidating Prostiva revenue with the legacy Urologix revenue.
What is BPH? For every male in this room it’s not a question of if it’s only a question of when and to what extent and degree. It’s a non-cancerous, progressive, gender specific, age related disease. Left untreated, BPH can lead to some very very serious problems in the lower urinary track to include issues with continence, bladder decompensation and kidney involvement. So when you look at these two technologies on a somewhat high level comparative basis, the legacy Urologix products, CTT, is high energy cooled microwave. Both of these technologies create necrosis, it’s a thermal injury that leads to debulking the gland.
With microwave we include proprietary cooling to protect the urethra as well as to patient comfort. The procedure is done well under an hour in the urologist’s office. And as I mentioned earlier, supported by very significant data on safety, efficacy and durability. The Prostiva RF Therapy is radio frequency also done in the urologist’s office. And it too preserves the urethra in the treatment which is important to the healing process as well as overall patient comfort. Safe, efficacious and durable.
When one looks more closely at the Urologix Cooled ThermoTherapy, this is a treatment catheter that leads to customization of the therapy given the size, choices of the microwave antenna. So one can customize for the patient based upon prosthetic urethra length and then further customize in terms of the treatment algorithm, in terms of power and duration of the treatment, making it a highly customizable clinical intervention for the urologist. 90% freedom from any additional procedure at five years, whether a surgical procedure or another minimally invasive. This kind of durability data sets the company well apart from its competition. Over 67% of the patients at five years, free from any medical therapy.
In terms of the heating pattern, we are targeting the transition zone, or the lateral lobes. It’s a very targeted energy pattern as is shown in this schematic. We are anchoring the catheter with location balloon in the bladder. The microwave antenna sits in the prosthetic urethra. It’s radiative heating with conductive cooling as we are circulating chilled sterile water through the lumens of that catheter. Again, one of the hallmarks of this is very high energy but with preservation of the urethra.