Endologix's CEO Presents At The 2012 Bank Of America Merrill Lynch Health Care Conference (Transcript)

Endologix Inc (ELGX)

2012 Bank of America Merrill Lynch Health Care Conference

May 16, 2012 6:00 PM EST

Executives

John D. McDermott – President & CEO

Presentation

Moderator

Endologix. I’m pleased to introduce to you John McDermott, President and CEO. We’ll have a brief presentation and we’ll go to Q&A thereafter. Thanks.

John D. McDermott

Okay, thank you. Good afternoon everybody. Those are Safe Harbor Statements. So this is going to be quick. I am going to give you a very accelerated version of the company. I can talk all afternoon about it, but I’ll give you a quick overview and then we’ll open it up for Q&A as he mentioned.

Just briefly, the company is well positioned for ultimately a leadership position in a large and growing market. A lot of growth drivers, very deep new product portfolio as well as a strong core business. We’ve been expanding our sale force in the United States and now we are embarking on an effort to go direct in Europe, as well as we’ve been putting up some pretty good numbers along the way as you can see here. Good gross margins and good anticipated continued growth.

So this is what we do. We repair Aneurisms and we do that through catheter-based therapy. Years and years ago if you had an Abdominal Aortic Aneurism, there was really one way to fix it and that was through an open incision from above the bottom of your Sternum, down below your belly button, what we call Open Surgical Repair.

The picture over on the right, they sew in a synthetic graft to by pass that disease area, and you can see over on the left that aneurisms below the renal arteries and a catheter inserted in through the patients right groin and a stent graft, or an endoluminal graft deployed, which was designed to realign the aorta from the inside out in a less invasive type of approach.

Today that approach, or what we call EVAR is used in about 65% of the aneurisms treatments that are performed in the United States. 35% are still treated with Open Surgical Repair. The primary reason there are still 35% open repair disease aneurisms come in a lot of different shapes and sizes and the currently available technology just can’t treat that wide range of anatomy and I’ll touch on that as I go through the presentation.

Here’s the primary competitors in this market. And you can see I have got this into two categories. One, the guys on the right, which includes WL Gore, Medtronic and Cook. Both Gore and Cook as you probably know are private companies and you know Medtronic.

All three of those devices really evolved out of the original surgical graft technology. They took those surgical grafts; they sewed them on stents and put them down into delivery catheters and inserted them through the groin. Our device, which was the last to market or fourth to the US market is fundamentally different and you can tell by looking at it, it’s something different. And what it is, is all of these other devices are delivered through the vessel and they are deployed in the anchor into the Aortic wall right around the renal arteries. Notice hooks and barbs that are catch and the device hangs. What you don’t want to do is have that fixation loss, okay.

So these devices are all top down. They get this over here if you look at the right, this Cook device. That goes in first and then they add the limps from the bottom. So their fixation comes from these attachments, these hooks and barbs. Our device, the Endologix device over on the left actually is designed to sit on the patient’s bifurcation. So we inserted it in the groin but we pulled the device down and actually fit it right on the bifurcation where the aorta splits off and goes down the leg.

So we get our fixation and our stability from the patient’s own anatomy. And it’s really the only device that returns the aorta back to its native configuration. So unlike the other devices that are top down, we are bottoms up. The benefit is that we can’t have any migration. There’s nowhere for that device to go. It sticks and so we don’t have the same kind of movement as the other devices.

And the other thing that’s unique is that by sitting on the bifurcation, we preserve that bifurcation, which is important for our peripheral arterial procedures. So if you ever had a peripheral stent or a peripheral angioplasty. The way they perform those procedure is they’ll enter the patient from one groin, they’ll go up and over and they’ll treat from the other side. It’s called the crossover intervention. Once you put in any one of the competitive devices, you no longer can do that. You can’t take the catheter up and over that. And even if you could you wouldn’t want to pull down on that device and run the risk that you are going to pull the device down out of the aneurism.

So our device is very unique and it’s got excellent clinical data and it’s been really responsible for driving the growth that you can see here in this chart. So the midpoint of our guidance this year is $104 million. We’ve grown very nicely over the last few years and the core business is doing well. But probably what is most exciting about the company as of late is the pipeline.

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