Staar Surgical Nasdaq

8/3/2019 Staar Surgical Nasdaq

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STAAR SurgicalSTAAR Surgical(Nasdaq: STAA)(Nasdaq: STAA)

David Bailey, President & CEODavid Bailey, President & CEO

Deborah Andrews, CFODeborah Andrews, CFO

May 2007May 2007


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FORWARDFORWARD--LOOKING STATEMENTSLOOKING STATEMENTS

AAll statements in this presentation that are not statements of historical fact arell statements in this presentation that are not statements of historical fact are

forwardforward--looking statements, including any projections of earnings, revenue, cash or otherlooking statements, including any projections of earnings, revenue, cash or otherfinancial items, any statements of the plans, strategies, and objectives of management forfinancial items, any statements of the plans, strategies, and objectives of management forfuture operations, any statements regarding expectations for success of the ICL or otherfuture operations, any statements regarding expectations for success of the ICL or otherproducts in U.S. or international markets, any statements concerning proposed new productsproducts in U.S. or international markets, any statements concerning proposed new productsand government approval of new products, services or developments, any statementsand government approval of new products, services or developments, any statementsregarding future economic conditions or performance, statements of belief and anyregarding future economic conditions or performance, statements of belief and anystatements of assumptions underlying any of the foregoing. These statements are based onstatements of assumptions underlying any of the foregoing. These statements are based onexpectations and assumptions as of the date of this presentation and are subject toexpectations and assumptions as of the date of this presentation and are subject to

numerous risks and uncertainties, which could cause actual results to differ materially fromnumerous risks and uncertainties, which could cause actual results to differ materially fromthose described in the forwardthose described in the forward--looking statements.looking statements.

The risks and uncertainties include our limited capital resources and limited access toThe risks and uncertainties include our limited capital resources and limited access tofinancing, our ability to overcome negative publicity resulting from warning letters and otherfinancing, our ability to overcome negative publicity resulting from warning letters and othercorrespondence from the FDA Office of Compliance, the willingness of surgeons andcorrespondence from the FDA Office of Compliance, the willingness of surgeons andpatients to adopt a new product and procedure, and our ability to successfully launch andpatients to adopt a new product and procedure, and our ability to successfully launch andmarket the ICL in the U.S. while overcoming the foregoing challenges, our ability tomarket the ICL in the U.S. while overcoming the foregoing challenges, our ability to

implement our cost savings strategies and realize our expected savings, our ability to reverseimplement our cost savings strategies and realize our expected savings, our ability to reversethe decline in domestic sales of intraocular lenses, our ability to maintain or enhance ourthe decline in domestic sales of intraocular lenses, our ability to maintain or enhance ourexisting product sales and gross profit margin and reduce compliance expenditures, the rapidexisting product sales and gross profit margin and reduce compliance expenditures, the rapidpace of technological change in the ophthalmic industry, our ability to compete with muchpace of technological change in the ophthalmic industry, our ability to compete with muchlarger ophthalmic companies, general domestic and international economic conditions, andlarger ophthalmic companies, general domestic and international economic conditions, andother factors beyond our control, including those discussed under the headingother factors beyond our control, including those discussed under the headingRiskRiskFactorsFactors in our Current Report on Form 8in our Current Report on Form 8--K filed with the SEC on April 26, 2007 and ourK filed with the SEC on April 26, 2007 and ourAnnual Report on Form 10K for fiscal year 2006. STAARassumes no obligation to updateAnnual Report on Form 10K for fiscal year 2006. STAARassumes no obligation to update

these forwardthese forward--looking statements to reflect future events or actual outcomes and does notlooking statements to reflect future events or actual outcomes and does notintend to do so.intend to do so.


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Investment ConsiderationsInvestment Considerations

Large and growing addressable marketLarge and growing addressable market Cataract andCataract andRefractiveRefractive

Proprietary Collamer technologyProprietary Collamer technology

Leadership in phakic implants; Visian ICLLeadership in phakic implants; Visian ICL Opportunity to rebuild Share in the Cataract marketOpportunity to rebuild Share in the Cataract market

CMS ruling a positiveCMS ruling a positive

New product launchesNew product launches

Strong International growthStrong International growth

Turnaround and growth strategy underwayTurnaround and growth strategy underway


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Company BackgroundCompany Background

Founded in 1982Founded in 1982

(STAAR= Surgical Technology And Applied Research)(STAAR= Surgical Technology And Applied Research)

Original core technology was foldable IOLs, whichOriginal core technology was foldable IOLs, whichare now the gold standard in ophthalmologyare now the gold standard in ophthalmology

1990s: Development of major new technologies:1990s: Development of major new technologies:

Collamer material and ICLCollamer material and ICL

2000s: New management, ICL/TICL2000s: New management, ICL/TICL

commercialization, Preloaded introductioncommercialization, Preloaded introduction


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Two Main Businesses:Two Main Businesses:

Ref

ract

ive

an

d Cat

aract

Ref

ract

ive

an

d Cat

aract

20062006 20052005 20042004Refractive RevenueRefractive Revenue

% ofRevenue% ofRevenue

% Change YoY% Change YoY

$12.7$12.7

22.3%22.3%

136.1%136.1%

$5.4$5.4

10.4%10.4%

31.5%31.5%

$4.1$4.1

7.8%7.8%

37.6%37.6%

Cataract RevenueCataract Revenue% ofRevenue% ofRevenue

% Change YoY% Change YoY

$44.3$44.3

77.7%77.7%

(4.7%)(4.7%)

$46.5$46.5

89.6%89.6%

(3.5%)(3.5%)

$48.2$48.2

92.2%92.2%

.3%.3%

Total RevenueTotal Revenue% Change YoY% Change YoY

$57.0$57.0

9.8%9.8%

$51.9$51.9

(.8%)(.8%)

$52.3$52.3

2.5%2.5%


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Addressable MarketsAddressable Markets

Refractive Error (Myopia, Astigmatism,Refractive Error (Myopia, Astigmatism,

Hyperopia). ElectiveHyperopia). Elective

Cataracts: Opacification of the lens of the eye.Cataracts: Opacification of the lens of the eye.

Age related.R

eimbursedAge related.R

eimbursed


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VisianICLVisianICL


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Phakic Lens SitesPhakic Lens Sites


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History ofRefractive SurgeryHistory ofRefractive Surgery

Refractive Keratotomy (RK) becomes widespread inRefractive Keratotomy (RK) becomes widespread in1980s, then declines1980s, then declines

First laser procedure, Photo Refractive KeratectomyFirst laser procedure, Photo Refractive Keratectomy(PRK) becomes widespread in mid(PRK) becomes widespread in mid--1990s, then declines1990s, then declines

Second laser procedure, Laser InSecond laser procedure, Laser In--Situ KeratomileusisSitu Keratomileusis(LASIK) becomes widespread in late 1990s.(LASIK) becomes widespread in late 1990s.

20002000 -- Heavy Investments in LASIK marketing andHeavy Investments in LASIK marketing andtechnologytechnology growth stagnates, Low penetration ratesgrowth stagnates, Low penetration rates

20002000 -- Phakic Implants, Multifocal/AccommodatingPhakic Implants, Multifocal/Accommodatingimplants, Toric Implantsimplants, Toric Implants

Refractive Surgery is going insidetheeyeRefractive Surgery is going insidetheeye


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Vision Correction MarketVision Correction Market

Up to 1.5 billion myopes worldwide; geographicUp to 1.5 billion myopes worldwide; geographicvariances in key matrices e.g. mean myopiavariances in key matrices e.g. mean myopia

3.0 million LASIK procedures/year WW3.0 million LASIK procedures/year WW

1.4 million US1.4 million US

0.8 million China0.8 million China

0.8 million ROW0.8 million ROW

R

ecent cannibalization in the US to PR

KR

ecent cannibalization in the US to PR

K 10 to10 to15%. Driven by large law suits over some cornea15%. Driven by large law suits over some cornea--based proceduresbased procedures


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ICL MarketICL Market Limits ofLASIKLimits ofLASIK

Target atTarget at --7.5D and above7.5D and above -- adjusted population in theadjusted population in theUS of six million eyes per year. (same inUS of six million eyes per year. (same in --6 to6 to --7 group)7 group)

Targeted penetration rate of this market is 10% overTargeted penetration rate of this market is 10% over

timetime 600,000 procedures600,000 procedures

In International equate to 100 million eyes per yearIn International equate to 100 million eyes per year

Support for superiority of phakic implantsSupport for superiority of phakic implants

CorneaCornea, Dec. 2006, Dec. 2006 ICL safer & more effective than LASIKICL safer & more effective than LASIKforfor --4D to4D to --7.88D7.88D

ASCRS PresentationASCRS PresentationApr. 2007Apr. 2007 Phakic IOLs procedure ofPhakic IOLs procedure ofchoice to correct myopia atchoice to correct myopia at --6.5D+, Dr. Neatrour6.5D+, Dr. Neatrour


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Change inProduct Mix andChange inProduct Mix and

Effe

ct

on

G

ross

Margin

Effe

ct

on

G

ross

Margin

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006* Q1 2007

41.00%

42.00%

43.00%

44.00%

45.00%

46.00%

47.00%

48.00%

49.00%

50.00%

Refractive Revenue Cataract Revenue Gross Margin

*exclusive of obsolecence charge of 5.3%


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CountryCountry Penetration% ofLASIKPenetration% ofLASIK

BeneluxBenelux 5.0%5.0%

SwitzerlandSwitzerland 3.8%3.8%

Korea

Korea 3.2%3.2%

SpainSpain 2.9%2.9%

ScandinaviaScandinavia 2.8%2.8%

South AmericaSouth America 0.6%0.6%

GermanyGermany 0.5%0.5%

Middle EastMiddle East 0.5%0.5%

UKUK 0.2%0.2%

ItalyItaly 0.2%0.2%

FranceFrance 0.2%0.2%

IndiaIndia 0.1%0.1%

International ICL Penetration of LASIKInternational ICL Penetration of LASIK

MarketMarket


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Visian AdvantagesVisian Advantages

Architecture and Anatomy of the Cornea is completelyArchitecture and Anatomy of the Cornea is completelyunchanged with the ICL.unchanged with the ICL.

Correct the Vision NOT the eyeCorrect the Vision NOT the eye

Ease of use for the SurgeonEase of use for the Surgeon existing skill setexisting skill set

Patient friendlyPatient friendly topical anesthesia, small incision, quicktopical anesthesia, small incision, quickrehabilitation, wow for patient.rehabilitation, wow for patient.

Exceptional clinical outcomesExceptional clinical outcomes Navy driving study, ASCRSNavy driving study, ASCRSApril 2007April 2007

Additive Vs SubtractiveAdditive Vs Subtractive RemovableRemovable Manageable complication profileManageable complication profile -- With a LASIK complicationWith a LASIK complication

an effective solution is not always easily availablean effective solution is not always easily available


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Sales & Marketing StrategySales & Marketing Strategy

ThreeThree--pronged strategypronged strategy

Training/CertificationTraining/Certification

Focused on the surgeon and patient outcomesFocused on the surgeon and patient outcomes

Practice IntegrationPractice Integration

Establishing a cutEstablishing a cut--off for patient selectionoff for patient selection

Integrating the cutIntegrating the cut--off in the whole networkoff in the whole network Practice BuildingPractice Building

Marketing the procedure to drive volumeMarketing the procedure to drive volume


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Advantagesfor the SurgeonAdvantagesfor the Surgeon

ICL integration will build overall refractive volumesICL integration will build overall refractive volumes Exceeds patient expectationsExceeds patient expectations

Profitable procedureProfitable procedure Few reFew re--treatstreats

Happy patients = free marketing = positive referralsHappy patients = free marketing = positive referrals

Mitigated riskMitigated risk

ICL diversifies the practiceICL diversifies the practice LASIK technology is generic procedureLASIK technology is generic procedure

Future growth driven by new technologies ex LASIKFuture growth driven by new technologies ex LASIK


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PRKPRKNot APractice BuilderNot APractice Builder

Concerns about LASIK have led to resurgenceConcerns about LASIK have led to resurgence

of PRKof PRK

According to Market Scope, PR

K representedAccording to Market Scope, PR

K represented13% of laser13% of laser--based refractive procedures in 2006,based refractive procedures in 2006,up from 8% in 2005up from 8% in 2005

PRK resurgence driven by fear of ectasia andPRK resurgence driven by fear of ectasia and

the perception that PRK is safer than LASIKthe perception that PRK is safer than LASIKThe perception of safety has been stronglyThe perception of safety has been strongly

challenged if not repudiatedchallenged if not repudiated


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PRKPRKNot APractice BuilderNot APractice Builder

PRK is very poor in early results and in patientPRK is very poor in early results and in patientsatisfactionsatisfaction

The Slade contraThe Slade contra--lateral study at 2006 ESCRS indicatedlateral study at 2006 ESCRS indicated

significantly higher pain and lower visual acuitysignificantly higher pain and lower visual acuity

PRK patients will not yield positive referralsPRK patients will not yield positive referrals

If surgeons are uncomfortable with corneaIf surgeons are uncomfortable with cornea--basedbasedprocedures, they should not do LASIK or PRKprocedures, they should not do LASIK or PRK

Therefore, the Visian ICL is the answer for the 1% toTherefore, the Visian ICL is the answer for the 1% to

15% of US volume that is now PRK (140k to 200k eyes)15% of US volume that is now PRK (140k to 200k eyes)


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Worldwide Cataract MarketWorldwide Cataract Market

Large

an

dG

rowin

g

Large

an

dG

rowin

g

Worldwide IOL market, estimated 13.8MWorldwide IOL market, estimated 13.8Mprocedures ($1.28 billion) performed in 05procedures ($1.28 billion) performed in 05

Market growing to $2.42 billion by 2010 (17.1MMarket growing to $2.42 billion by 2010 (17.1Mprocedures), representing a CAGRof 13.5% byprocedures), representing a CAGRof 13.5% by20102010

Driven by innovation / improved outcomesDriven by innovation / improved outcomes


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US Cataract MarketUS Cataract Market

Large

an

dG

rowin

g

Large

an

dG

rowin

g

Largest IOL market, estimated 2.9M proceduresLargest IOL market, estimated 2.9M procedures($428 million) performed in 05($428 million) performed in 05

Market growing to $1.034 billion by 2010 (3.2MMarket growing to $1.034 billion by 2010 (3.2Mprocedures), representing a CAGRof 19% byprocedures), representing a CAGRof 19% by20102010

Medicare reimbursement is DECREASINGMedicare reimbursement is DECREASING doctors and looking to upsell the patientdoctors and looking to upsell the patient

Presbyopic IOLs (accommodating and multifocal)Presbyopic IOLs (accommodating and multifocal)and RLE will grow but slower than recentlyand RLE will grow but slower than recentlyprojectedprojected

Toric IOLs will lead the upsell following CMSToric IOLs will lead the upsell following CMS


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New Cataract

P

roduct

Int

roduct

ions

STAARToric IOL qualifies for dual aspectSTAARToric IOL qualifies for dual aspectreimbursement under new CMS rulingreimbursement under new CMS ruling

Collamer Aspheric IOLCollamer Aspheric IOL launched at ASCRS,launched at ASCRS,

April 2007April 2007

Silicone Aspheric IOLSilicone Aspheric IOL Q307 IntroductionQ307 Introduction

Preloaded Silicone Aspheric InjectorPreloaded Silicone Aspheric Injector 1H20081H2008


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PlayersPlayers -- NowNow

MaterialMaterialSiliconeSilicone AcrylicAcrylic OtherOther

PlatePlate Bausch & LombBausch & LombSTAARSTAAR

STAARSTAAR

ThreeThree--PiecePiece AMOAMOBausch & LombBausch & Lomb

STAARSTAAR

AlconAlcon STAARSTAAR

OneOne--PiecePiece AlconAlconAMOAMO

AsphericAspheric AMOAMOBausch & LombBausch & Lomb

STAAR *STAAR *

AlconAlcon

AMOAMO

STAAR *STAAR *

BlueBlue--BlockingBlocking AlconAlcon

ToricToric STAARSTAAR AlconAlcon

AccommodatingAccommodating EyeonicsEyeonics

MultifocalMultifocal AlconAlconAMOAMO

* Enhancements


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Current US CataractCurrent US Cataract

Opportunity to build shareOpportunity to build share currently >4%currently >4%

Four players; ACL, AMO, B+L, STAARFour players; ACL, AMO, B+L, STAAR

Revamping the offeringRevamping the offering 2007 early 082007 early 08 Strengthening sales effortStrengthening sales effort

direct RMRsdirect RMRs

direct sales people to supplement agentsdirect sales people to supplement agents Heavy commission bias to new productsHeavy commission bias to new products


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Q107 Financial RecapQ107 Financial Recap

11% year11% year--overover--year sales growth to $14.9 millionyear sales growth to $14.9 million

Refractive product sales up 47.5%Refractive product sales up 47.5%

Cataract product sales up 2.4%Cataract product sales up 2.4%

Gross Profit Margin of 48.9% and growingGross Profit Margin of 48.9% and growing

Effective expense managementEffective expense management

12% improvement in cash usage12% improvement in cash usage

Buffered cash position to fund growth strategyBuffered cash position to fund growth strategy Cash as of March 30, 2007Cash as of March 30, 2007 -- $9.2 million$9.2 million

$16.9 million raised May 1$16.9 million raised May 1


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Strong International FranchiseStrong International Franchise

Products for sale in more than 40 countriesProducts for sale in more than 40 countries

Direct sales in the US, Germany, AustraliaDirect sales in the US, Germany, Australia

Distributor sales inR

OWDistributor sales inR

OW German subsidiary stabilized and growingGerman subsidiary stabilized and growing

Intl. Refractive CAGRof 35% since 2004Intl. Refractive CAGRof 35% since 2004

ICL adoption rate continues to growICL adoption rate continues to grow New product approvals pendingNew product approvals pending


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Revenue Change Year over YearRevenue Change Year over Year

-$2,000

-$1,500

-$1,000

-$500

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

Q1 06 Q2 06 Q3 06 Q4 06 Q1 07

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

Cataract Refractive Percent

In

Thousands


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2005 Sales and GrossProfit2005 Sales and GrossProfit

Refractive Revenue as

Percent of Total

Refractive Gross Profit

as Percent of Total


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2006 Sales and GrossProfit2006 Sales and GrossProfit

Refractive Revenue as

Percent of Total

Refractive Gross Profit

as Percent of Total


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LongLong--TermOperating ModelTermOperating Model

Sales - cataract 60% $ 60,000,000

Sales - refractive 40% $ 40,000,000

Total sales* 100% $100,000,000*

COS - cataract 40% $ 24,000,000COS - refractive 15% $ 6,000,000Total COS 30% $ 30,000,000

GP cataract 60% $ 36,000,000

GP - refractive 85% $ 34,000,000GP - total 70% $ 70,000,000

G&A 9% $ 9,000,000M&S 28% $ 28,000,000R&D 8% $ 8,000,000Total SG&A & R&D 45% $ 45,000,000

Operating Income 25% $ 25,000,000Other 1% $ 500,000

Income before taxes 26% $ 25,500,000Income taxes** 1% $ 1,300,000Net income 24% $ 24,200,000

* $100,000,000 is a hypothetical number for demonstration purposes only and is not meant to indicateactual sales or projected sales in any period.

**Assumes no U.S. income taxes paid until NOLs absorbed at approximately $80 million earnings.


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Investment ConsiderationsInvestment Considerations

Large and growing addressable marketLarge and growing addressable market Cataract andCataract andRefractiveRefractive

Proprietary Collamer technologyProprietary Collamer technology

Leadership in phakic implants; Visian ICLLeadership in phakic implants; Visian ICL Opportunity to rebuild Share in the Cataract marketOpportunity to rebuild Share in the Cataract market

CMS ruling a positiveCMS ruling a positive

New product launchesNew product launches

Strong International growthStrong International growth Turnaround and growth strategy underwayTurnaround and growth strategy underway

Documents

Staar Surgical Nasdaq