Endologix Management Presents At JPMorgan Global Healthcare Conference (Transcript)

Endologix, Inc. ( ELGX)

JPMorgan Global Healthcare Conference (Transcript)

January 11, 2012 12:30 PM ET

Executives

John McDermott – President and CEO

Analysts

Kim Gailun – J.P. Morgan

Presentation

Kim Gailun

Good morning. I’m Kim Gailun with the J.P. Morgan med tech team. And presenting next, we have Endologix. So, without any further ado, it’s my pleasure to introduce CEO, John McDermott.

John McDermott

Thanks, Kim. Good morning. Okay. So, Endologix, medical device manufacturer, located in Irvine, California. Here is our Safe Harbor disclosures. Just briefly, to kind of kick us off at a high level, we are competing in a large and growing market. I’ll walk you through all of the dynamics of that and how we plan to accelerate that growth. The company has grown very nicely over the last several years with significant number of continued growth drivers, which I’ll also touch on through the course of the presentation, as well as you can see we’ve had strong growth and expect to continue that over the next several years.

This is what we do. We treat abdominal aortic aneurysms. The picture over on the right shows the traditional or historical approach, which is open repair. And what’s evolved over the last several years is more of an endovascular approach or what we call EVAR, which is a catheter-based therapy, whereby devices inserted through a small incision in the patient’s groin and a device is guided up to in place and deployed, which basically relines the aorta from the inside out, therefore shunting the blood off of the fragile aneurysm and preventing a rupture, which is a fail.

In the United States now, little over 60% of the AAAs are repaired with endovascular therapy and another 40% are still treated surgically. The reason for that I’ll touch on as I go through the presentation is really primarily related to the wide range of different types of anatomies that we still see in the devices that are currently available are not suitable to treat all those different anatomies.

This is the current EVAR market. This is for devices that are used below the renal arteries. And the location within the aorta will become important as we talk about how we’re going to expand the market moving forward in our product portfolio. But if you just took last year’s total global sales of these devices used below the renal arteries, it’s about $1 billion. And you can see the segments, 60% of that is in the US, and you can see those relative market percentages. So, 85,000 procedures on a worldwide basis, and you can see the average selling prices are relatively high. We tend to have one of our clinical specialists or salespeople in the OR for every case. So this is a very high-touch, high-clinical type of sales.

This is the competitive landscape. All of the devices over the right, which we call proximal fixation or really the first generation or traditional types of devices, they look very similar to a surgically implanted graft. And in fact, that’s how the development evolved. They were surgically implanted graft, to which they sowed stents and they have put these devices inside catheters and they were delivered through the legs, as I mentioned.

Our device over on the left is fundamentally different. You can see that it sits. It actually sits on the patient’s native bifurcation. And that’s how it gets its fixation. With all of the other devices, they are deployed up near the renal arteries, and when they come out, there is anchors, hooks and barbs that attach and try to adhere to the vessel valve for their fixation. That’s how they are put into place.

Unlike all of those devices, ours is actually positioned to sit right on the patient’s native bifurcation. So we get our stability. We don’t hang from the artery like the other devices. We actually sit on that patient’s natural bifurcation. The advantage to that is we can’t lose our purchase. There’s nowhere for the device to go. So we’ve got very good long-term clinical data.

The other advantage to that is we preserve that bifurcation. So if you put in any of the other competitive devices, once that device is in, you can no longer go back through that graft if you ever wanted to do a future peripheral intervention, which is common. About a third of aneurysm patients also have peripheral arterial disease, and the preferred approach to treat somebody with PAD has come in from one side of the groin and cross over to treat the lesion on the other side.

Once you have one of the competitive devices in place, you can no longer do that. So it’s the only device that preserves the ability to go back over the bifurcation for future interventions. And that has become more and more important as you get a larger installed base of these Endografts and these patients are living longer and they are coming back now with PAD and it becomes a problem for the doctors to treat them with the exception of our device. So we kind of grew up being the other guy.

The analogy we use in the company is we’re – you need more than one type of screwdriver in your toolbox. You’ve got a Phillips-head and a fly head, and we are the Phillips. And we grew up treating some more challenging anatomies than the other companies. But over the last few years, as we’ve worked our way into physicians’ practices, they’ve realized they can use us for the common cases as well as the challenging cases, and that has contributed to our growth, as well as we’ve worked hard to broaden the range of sizes that the device can now treat and made it easier to use.

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