EYE.AXEYE.AXASX
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Mark Flynn: Good morning, everyone, and thank you again for joining us today. My name is Mark Flynn from the Investor Relations at Nova Eye Medical Limited. Today's session is an investor briefing, but just a brief reminder, we will include some forward-looking statements. Actual outcomes may differ due to risks and uncertainties, but please refer to the disclaimer in the presentation. Format is straightforward as usual. Tom will first walk through a short presentation. After that, I'll ask a number of questions received from investors. [Operator Instructions] With that, I'll hand over to Managing Director, Tom Spurling.
Thomas Spurling: Thanks, Mark, and thanks, everyone, for joining us today. We've got a good turnout. And for those long-time listeners, long-term listeners, some repeating of the message, but I find that, that will help out -- help get more people understanding our story if you hear it all the once and for those new ones. So thank you. Bear with me. Glaucoma is about the buildup of pressure, a failure of plumbing. Building up of pressure can lead to crushing of the optic nerve and blindness. It's a big market. Next slide, Mark. We describe our market here, 84 million. We're a subset of pharmaceuticals, maybe $4.3 billion of drugs being used eye drops. We participate in what we call the interventional glaucoma segment, which were early surgical engagement to change disease trajectory using devices. This is important so that patients end up with a low quality of life, having to take drops every day and are often don't comply properly. So the disease is not managed easily with drops. A surgical intervention to get people off drops is an important part of our business. There is -- we have a tissue-sparing approach to clearing the blockages associated with glaucoma, which makes us very fast, which has been taken up well by doctors, and we're excited with our revenue growth. We go to the next slide, a little bit more on that cataract link. So cataract is the #1 most performed surgery in the world, not in eyes, in every sort of surgery. There's some data there from the Marketscope report, 32 million procedures annually. Intraocular lenses and equipment drive the ophthalmology industry. Big names like Alcon, J&J Vision, Bausch + Lomb, Zeiss and Rayner provide those intraocular lenses and the equipment to help doctors put them in. And the key statistic is 1 in 5 patients who present with a cataract, that's a calcification of the natural lens in their eye, also have glaucoma. Now those patients are going into surgery to get a new lens, and it is often the doctor who pitches to them, "I see that you're on a couple of drops that you're managing your glaucoma." The patient will say, "Yes, doc, I can't stand those drops. They hurt my eye and I always forget." And so the doctor would say, "Hey, while we got you on the table giving you a new lens so you can see the golf ball and drive better at night, let's do a little tissue-sparing operation with iTrack to clear the blockages and get you off those drops." Very, very simple, and patients are happy with that story and doctors. Next slide. Our procedure, we try to describe here, is about a very small catheter, 2,200 microns, 2 human hairs thick, pushed into the main drainage canal of the eye called the canal of Schlemm that runs broadly around the colored part of your eye. We push that catheter around 360 degrees using our special slider in the bottom left-hand corner. The doctor will push it around gently. It makes its way around that canal with just the right amount of slipperiness, just the right amount of tension and just the right size as well as a light so the doctor can see where the device is. We then remove the catheter. And while doing so, we pump in biocompatible hydraulic fluid, also known as viscoelastic, into that canal, which then flushes the canal and also the creeks and rivers and collector channels off to the side, giving the opportunity for the body to heal itself to reestablish the flow that has been compromised by glaucoma. Next slide. So our competitive position in the market is a broad description. We -- doctors choose iTrack above other devices that can do -- that treat surgically glaucoma because it is -- the term is canaloplasty or we call it angioplasty of the eye. We have an FDA approval to treat glaucoma. It is implant-free and tissue sparing. And other devices either cut tissue or leave a stick behind. So the pitch very much is, "Do you want me to cut you? Do you want me to leave a pipe in your eye? Or would you like me to get -- see if your body can heal itself with some angioplasty in your eye?" And that follows -- that is our story. We currently, in the last 12 months, we've done about 17,000 procedures. It is our current run rate. There is reimbursement for the device from the centers of Medicare and Medicaid, which provide a profitable outcome for everybody, the facility that houses the surgery, the doctor that conducts the surgery and the supplier who provides the device. We calculate we have about 3.9% of the MIGS share and our compound annual growth in the U.S. over the last 6 halves has been 40%, which I'll talk about more because I'm very proud of it. 3.9% -- I don't really care about 3.9% because people say that's a tiny number. You're darn right, it's a tiny number. Imagine if it was 7.6% or 7.8%, 2x 3.9%. Then we would have twice the revenue we have, and all our shareholders, including me, would be very happy. We are -- we have a great position in a small market -- in a large market. So off we go. Next slide. I want to emphasize this, these people find this boring. Some people may find this boring, sorry, but I want to emphasize we have some wonderful infrastructure in our business. That sales team that we -- well, for want of a better word, own, our employees are out there. They are doing so with market excitement generated with KOL support, product messaging and brand awareness that you've got to spend money on. And we do that over the top of what you would say, well, that's all pretty boring, all those green jigsaws down the bottom, but that is the foundation. That's a very strong foundation for our business. We've got good reimbursement. We've got good clinical data, and we've got a great product that's safe and efficacious. That's been used many times, 180,000 times. And we also have the capacity to deliver more from our FDA-approved factory in Fremont. Next slide. So this is a derivative. Today, we're talking most that we released our cash flow statement. So we have these great data. Record sales in December quarter; growth driven mainly over the U.S.; 6 consecutive halves of growth. Our long-term last 12 months sales up 24%, 3x higher than the industry-specified growth rate. And the underlying after working capital adjustment, our cash flow from operations in the quarter at 31 December. Some might argue are you still burning $1 million. It's a big difference between burning $1 million on marketing or product development or sales reps trying to go out there versus investing in accounts receivable, which is what we did. Next slide. Once again, we've seen this before, these continuing strong demand in the United States, 180,000 surgery cases globally, good growth on our PCP both in the quarter and the half. Next slide. I very much look at last 12 months revenue. All the time, quarters are all well and good, they are a good period, but it's always that growth over time. 27% growth in the United States, 24% across everything else, impacted by China being up and down. But the -- and I can report that our January sales continue that momentum in the United States. We've only just got them in this morning. But that momentum that we report on that sheet right there under the category of growth U.S.A. is continuing into the next month. Next one, Mark. Once again, I like this that just shows the sequence of growth 6x, and we're on our way to our seventh growth period so far based on January. 40% compounded annual growth rate, which is really, really good. Surgeons, we are getting new surgeons, and we're expanding utilization for existing surgeons. It's a combination of both. Over the years, say, is it better to look after the surgeons you've got or to get new ones? There's no 2 ways about it. You have to do both, and you've got to focus your reps accordingly. Next slide. Last time I delivered this a couple of weeks ago with our sales update. I said that it's a key driver of our bottom line operating results sales per rep of nearly $2 million in that last quarter. That, I happen to know, is industry-leading. And you can see that over the years, we try and keep it very high. People often say, how long does it take for one rep to get to $1.4 million and what's the payback on that rep and blah, blah, blah. The answer is it's a whole continuum of a team of 9, 10, 11, 12 reps, and we are trying to grow everything at the same time because if you try and do anything else, the bottom line falls apart. So we carefully grow and trying to maintain the high revenue per rep for the whole pool of reps. Next slide. Here we have a continuation of our growth. We have put the underlying with our working capital there. We certainly did have good trading in November and December. Our cash, as we stated, increased in the month of December. We are not commenting on what happened in the month of January because literally, I don't know it because it's still the 31st of January in America. And -- but we made a significant investment in working capital across that period. So our promises to our shareholders that we will see improving operating performance and improving operating cash flow is being delivered. People talk about -- will ask me what does it take for institutional investors to be aware. The answer, I think, is predictability. Now we've gone out there to give guidance, a little company giving guidance in the vibrant market is hard. But -- we're making promises and we're delivering on those promises. Next slide. It's a little bit -- we made a release earlier about the real-world clinical evidence in our registry. Clinical data is, I said, boring. Well, some may say boring, but it is fundamental to having a good efficacious device, making sure that we are delivering data to -- or we have a flow of data to our doctors to show to them that it works. Doctors are very conservative. They want to see peer-reviewed data and so do payers. And this library, I call the library, the registry is a source, a flow of data, prospective data that improves our ability to engage with regulatory agencies, whether it's the FDA or not, and the insurers and helps us sell to catheters to doctors. We make a pretty heavy investment in clinical data and -- but it's fundamental. We are expecting the first peer-reviewed paper out of this registry to be delivered this week. So we are hoping we can make an announcement about that very soon, which would be exciting -- which will be exciting. So recapping everything I've said about the stuff we're proud of: That revenue per rep is driving our bottom line; underlying improvement in cash flow and we remain on track to achieve; our guidance, still a broad range. Yes, it is still a broad range. But that's how we see it; and continuing cash flow improvement. Thank you.
Mark Flynn: Thanks, Tom. A couple of questions coming through. I'll go straight to the live ones that have come through. From a shareholder. Tom, thanks for the presentation as always. But has the price of the iTrack gone up over the last few years because it feels like it's been at USD 1,000 for many years?
Thomas Spurling: The price of the iTrack has not. It has been very consistent. And I use $1,000 because it's easy for people to calculate. It works with the reimbursement. You should consider reimbursement as the reimbursement hasn't changed. Our price hasn't -- our unit price has not fallen. And if reimbursement was to go up, that would give us a chance to increase our price. So it is very much about managing our cost of goods sold, which is improving with volume.
Mark Flynn: Thanks, Tom. Lots of questions around the revenue per rep as per the sales rep. So whilst positive, obviously, to see that increase in the revenue per rep. So just some context around the chart around the headcount again, considering the sales team expansion would appear to be the principal driver of revenue growth?
Thomas Spurling: Sales rep expansion in the United States does ultimately improve revenue. There's no doubt about it. We have regions in the United States that we feel are underpenetrated. And as we fill those regions, we will increase sales. We do this, as I've said a number of times, at a rate to ensure that our revenue per rep does not dramatically fall. Because we have such a reliance on the United States, if we spend too much on reps too quickly to try and grow too fast, we will ruin our bottom line. We -- as I've said a number of times, we are here to improve the bottom line and achieve growth. That balance involves a lot of above 20% growth seems to be what people want. But we are not exploiting the opportunity at the rate we could exploit in terms of sales if we chose to invest in reps harder and faster.
Mark Flynn: What does that full U.S. coverage look like over time?
Thomas Spurling: I think the best guidance on full U.S. coverage is that market share number I gave. 3.5%, 3.9% isn't very much. So I think -- imagine if it was, as I said, 7.8%, twice that. That means twice the revenue we had, which we're going to be happy with. So I don't have an answer to that beyond the fact that we are showing growth. We are tracking -- we continue to track up, and that shareholders should be learning to trust us that we can deliver on what we're saying we're going to deliver.
Mark Flynn: On the cash flow, so the cash flow trend, obviously, we reported an improvement in operating cash flow in December and also the December cash flow was positive. Can you sort of comment on how we think of cash flow from here? And should investors assume that this repeats every month?
Thomas Spurling: Well, there's -- working capital movements are hard to predict. We report quarterly on cash flow for a reason because it's a more substantial period. And individual months can't -- are harder to -- well, we're not going to report on individual months, what I'm going to say. I did give guidance just then on how our January sales are tracking. And I didn't mention that we had a continuation of growth despite some of you may have seen a big storm on the East Coast in the United States, which immobilized some of our reps and stopped people getting to surgery. So that makes January even quite exciting. But I haven't got the information on January yet, and we won't be reporting on individual month cash flows. What we want shareholders to say is this company is saying stuff and delivering. So if they say it, I can trust it. Therefore, off we go. That's what I'd like to achieve, but that's for investors and shareholders to make up their own mind.
Mark Flynn: Speaking of the weather in the U.S., would the company benefit from a U.S.-based CEO?
Thomas Spurling: Well, execution is about people, not geography. Our U.S. sales team is led from a person in the United States. He happens to be -- he is an expert. We have our sales outside the U.S. leadership with -- Kate Hunt is here. I think we have a nice balance at the moment. And yes, that's the answer to the question. It's about people, not geography.
Mark Flynn: Perfect. U.S. investor interest, what are you and me doing to attract U.S. investors?
Thomas Spurling: Well, we often receive calls from U.S. funds, and we talk to them. And the -- it can be -- a lot of them talk about how well we're doing compared with the American competitors. But a lot of them struggle to invest on the Australian Stock Exchange, simple as that. They just struggle. They don't understand time zones. So we are working to improve our operating cash flow, improve our top line. With that, we are hoping, planning, hoping, what other words, for a share price improvement that will give us a market value that reduces the risk, a sub-$50 million company people would worry about, reduce the risk, improve liquidity, with that comes share price appreciation. But we are focusing on delivering on our promises.
Mark Flynn: Okay. And time for one more. So market valuation, obviously, a straightforward question, but does management believe the stock is mispriced?
Thomas Spurling: I think you'll find that every Managing Director and CEO of every Australian company thinks their stock is undervalued. So our job is to convince and continue to do the work that we promised to do.
Mark Flynn: And that's all the questions for today. Tom, if you've got anything to sign off, and then we can finish the webinar.
Thomas Spurling: I just really appreciate everybody tuning in and listening. Thanks very much for listening. Thanks, Mark.
Mark Flynn: Thank you, everyone. And if any follow-up questions, Tom and I, e-mail, our numbers on the screen. Anything you need from that, please come through to us, and we're happy to help where possible. Thanks very much for joining us.