UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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April 9, 2019
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Date of report (Date of earliest event reported)
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Surmodics, Inc.
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(Exact Name of Registrant as Specified in its Charter)
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Minnesota
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0-23837
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41-1356149
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(State of Incorporation)
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(Commission File Number)
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(I.R.S. Employer
Identification No.)
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9924 West 74th Street
Eden Prairie, Minnesota
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55344
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(Address of Principal Executive Offices)
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(Zip Code)
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(952) 500-7000
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(Registrant’s Telephone Number, Including Area Code)
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Check the appropriate box below if the Form 8‑K filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions (see General Instruction A.2):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a‑12 under the Exchange Act (17 CFR 240.14a‑12)
☐ Pre‑commencement communications pursuant to Rule 14d‑2(b) under the Exchange Act (17 CFR 240.14d‑2(b))
☐ Pre‑commencement communications pursuant to Rule 13e‑4(c) under the Exchange Act (17 CFR 240.13e‑4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of
this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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☐
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Item 7.01 Regulation FD Disclosure.
Surmodics, Inc. (the “Company”) will make a presentation at the 18th Annual Needham Healthcare Conference on Wednesday, April 10, 2019. A copy of the presentation materials to be used in conjunction with the conference is attached to this report as Exhibit 99.1. A complete copy of the presentation materials will be made available in the investor section of the Company’s website at www.surmodics.com.
The information in this Item 7.01 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities under Section 18, nor shall such information be deemed incorporated by reference into any filings of the Company under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit
Number
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Description
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99.1
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Investor Presentation Materials.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SURMODICS, INC. | |||
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Date: April 9, 2019
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/s/ Bryan K. Phillips | |
| Bryan K. Phillips | |||
| Sr. Vice President, Legal and Human Resources, | |||
| General Counsel and Secretary | |||
EXHIBIT INDEX
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Exhibit
Number
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Description
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Exhibit 99.1
Gary MaharajPresident and CEOTim ArensVice President of Finance and CFOAPRIL 2019 1
Safe Harbor Some of the statements made during this presentation may be considered forward-looking
statements. Statements that are not historical or current facts, including statements about beliefs and expectations regarding our performance in the near- and long-term, including our revenue and earnings expectations for fiscal 2019, and our
SurVeil® drug-coated balloon and other proprietary products, including the timing, impact and success of the TRANSCEND clinical trial, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and
important factors could cause actual results to differ materially from those anticipated, including (1) our ability to successfully develop, obtain regulatory approval for, and commercialize our SurVeil DCB product (including realization of the
full potential benefits of our agreement with Abbott) and other proprietary products; (2) our reliance on third parties (including our customers and licensees) and their failure to successfully develop, obtain regulatory approval for, market
and sell products incorporating our technologies; (3) possible adverse market conditions and possible adverse impacts on our cash flows, and (4) the factors identified under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K
for the fiscal year ended September 30, 2018, and updated in our subsequent reports filed with the SEC. These reports are available in the Investors section of our website at www.surmodics.com. 2
Focused on product innovation VISION3 of the Top 10 InnovationsFocused on PAD and designed to be:
safe, clinically effective & improve healthcare economics IMPACT TO PATIENTSGrowing incidence of peripheral artery disease (PAD) IMPACT TO INVESTORSInvesting to build long-term sustainable growth and profitability ROIC INVESTMENT 3
4
DESIRED OUTCOMESGoal of improving clinical outcomes while reducing healthcare costs PATIENTS202 million
patients worldwide living with Peripheral Artery Disease (PAD) 5
Impact to patients Product innovations aimed at making significant improvements in patient outcomes and
quality of life (QOL) PATIENTS DESIRED OUTCOMES Superficial Femoral Artery (SFA)> 500K procedures annuallyPain on ambulation – reduced QOL Reduction in reintervention ratesImproved QOL by reduction in pain and increase in
mobility Below-the-knee disease (BTK)More than 3.5 million patients with critical limb ischemia (CLI) by 202033% amputation; 20% die in 1 year Reduction in reintervention ratesImproved QOL as a result AV access for End Stage Renal Disease
(AV for ESRD) More than 5 million patients with ESRD WWAV access 1% of procedures but 7% of Medicare CostsImpacts QOL for ESRD patients Healthcare economic benefits across the board in all indications above IMPACT TO PATIENTS 6
7 Our whole product solutions strategy is focused on creating innovative, differentiated product
platforms that solve clinically meaningful problems in treating peripheral vascular disease Desired OutcomesImprove Clinical OutcomesReduce Healthcare Costs Initial PlatformsDrug Coated BalloonsSurVeil® DCBAvess™ DCBSundance™
DCBThrombectomyRadial Access
SurVeil® DCB 12-Month Data Uniform drug topcoatPaclitaxel + proprietary excipient2.0 µg/mm² drug
load360°coating coverage 0.035” OTW PTA platform4–7 mm x 40–150 mm Shaft coatingSerene® hydrophilic coating Proprietary PhotoLink® basecoat “The ongoing positive results from this study demonstrate that the SurVeil DCB has the potential
to be a next-generation DCB with improved efficacy of drug transfer. These 12-month data continue to support the functionality and safety of the device.” — Kenneth Rosenfield, MD, Nov. 2018 PREVEIL 12-Month Study Results:First-in-human trial
conducted in the U.S. (13 patients / 3 sites)12 month data results:Acute success measures of safety achieved in 100% of subjects100% freedom from CD-TLR and CD-TVRContinued significant improvement in Rutherford classification, resting ankle
brachial index (ABI), and walking impairment questionnaire (WIQ) including walking distance, walking speed and stair-climbing scores Median paclitaxel plasma concentration peaked immediately post-procedure (Cmax 1.07 ng/mL) and was undetectable
at 30 days (reported in six-month results)Device met secondary performance criteriaKey secondary safety endpoints included freedom from major vascular complications, evidence of paclitaxel toxicity, or thrombolysis in myocardial infarction
(TIMI) VISION 8 CAUTION: SurVeil® Drug-Coated Balloon is an investigational device. Limited by Federal (or United States) law to investigational use.
CURRENT DEBATE ON PACLITAXEL-coated DEVICES TO TREAT PAD 9 RECAP OF RECENTS EVENTS JANUARY 17FDA
CommunicationBenefits outweigh risks 2018 DECEMBER 8 Katsanos Meta-Analysispublished in JAHA SRDX DISCUSSIONS with FDA MARCH 2-3VIVA ForumIn-depth review JUNE (PROBABLE)FDA
PanelMeeting 2019 DEC JAN FEB MAR APR MAY JUN JUL AUG SEP MARCH 15FDA CommunicationPotentially concerning safety signal detected JANUARY 22LINC 2019 MARCH 5CRT 2019DCB Town Hall UPDATED INFORMED CONSENT FORM ENROLLMENT
CONTINUES Pending IRB & EC Approval
December 8: Katsanos meta-analysis Meta-Analysis Limitations:No access to patient-level dataNo plausible
mechanism of action notedQuestions regarding statistical model usedSelection bias due to lack of complete follow upLost to follow up and withdrawals are not accurately or completely accountedPTA group is likely not paclitaxel-naïve for entirety
of analysis (prior disease in contralateral limb and potential post-treatment follow-up with paclitaxel-coated device) 10 Information represents a recap of key points and takeaways captured during the VIVA Leadership Forum meeting, March 1-2,
2019 in Washington DC. https://vascularnews.com/live-updates-vascular-leaders-forum-drug-eluting-devices Katsanos, Konstantinos & Spiliopoulos, Stavros & Kitrou, Panagiotis & Krokidis, Miltiadis & Karnabatidis, Dimitrios.
(2018). Risk of Death Following Application of Paclitaxel‐Coated Balloons and Stents in the Femoropopliteal Artery of the Leg: A Systematic Review and Meta‐Analysis of Randomized Controlled Trials. Journal of the American Heart Association. 7.
10.1161/JAHA.118.011245.
March 15: FDA Communication to Health Care Providers FDA conducted a preliminary pooled analysis of
long-term follow-up data (up to 5 years) of the pivotal premarket RCTs for paclitaxel-coated products and has identified a potentially concerning signal of increased long-term mortality (analysis is ongoing)Acknowledged that the data should be
interpreted with caution Large variability in risk estimate due to limited long-term dataUncertainty surrounding data that was not intended to be pooledThe specific cause and mechanism of increased mortality is not knownFDA will convene an
Advisory Committee meeting to sort this out https://www.fda.gov/MedicalDevices/Safety/LetterstoHealthCareProviders/ucm633614.htm This Advisory Committee may not convene for several months 11
FDA Recommendations to US Health Care Providers (March 15 Letter) Continue diligent monitoring of
patientsEvaluate and inform of potential risksConsider there may be an increased rate of long-term mortality with paclitaxel-coated devices when recommending treatment or consenting patientsDiscuss the risks and benefits of all available PAD
treatment options with patientsFor most patients, alternative treatment options should generally be used until additional analysis of the safety signal has been performedFor some patients at particularly high risk for restenosis, clinicians may
determine the benefits may outweigh the risksEnsure patients receive optimal medical therapy and guidance for healthy lifestyle 12
WHAT IS A “SIGNAL” From the FDA: A Signal represents new information which:May arise from one or several
sourcesMay suggest a new potentially causal association between a marketed medical device and an event or set of related eventsMay justify or require further evaluation and/or action by the AgencyImportant to note, the “Signal” that has been
identified:Exists when clinical trial data from multiple devices and device types are pooledHas not been observed in individual devicesHas not been observed in large CMS data sets Does not necessarily implicate PaclitaxelThere are competing
hypotheses of what may be causing it Correlation ≠ CausalityThe future discussion will center on this issue and what is causality 13
FDA's communication with surmodics FDA RECOMMENDATION FOR TRANSCEND:Follow the device recommendations
outlined in March 15 letterUpdate patient informed consent form (ICF)Have ongoing independent Data Safety Monitoring Board (DSMB) reviewTake measures to increase follow-up of patients SURMODICS IMPLEMENTATION:Communicated FDA recommendations
to InvestigatorsInitiated process to update ICF at worldwide sitesOngoing Clinical Events Committee (CEC) and DSMB reviews already in placeImplementing measures to increase follow-up of patients already treated under the TRANSCEND
trial Multiple conversations with the Agency to seek clarification: We continue to assess the impact of the FDA communication on the TRANSCEND clinical trial and our expectations related to the timing of completion of patient enrollment 14
TRANSCEND: SURVEIL® DCB PIVOTAL TRIAL PRINCIPAL INVESTIGATORSWilliam (Bill) Gray, MD, FACC,
FSCAIClinical Advisor — Main Line Health, Inc., Wynnewood, PAKenneth Rosenfield, MD Chair Advisory Board — Interventional Cardiology, Mass. General HospitalMarianne Brodmann MD, PhD Clinical Advisor— Interventional Cardiology, Division of
Angiology Medical University, Graz Received IDE approval from the U.S. FDA to begin pivotal trial for SurVeil DCB STUDY DESIGNSummaryRandomized control pivotal trial evaluates SurVeil drug-coated balloon for treatment of peripheral artery
disease in the upper leg compared to the Medtronic IN.PACT® Admiral® drug-coated balloon. Number of Subjects and SitesUp to 446 subjectsUp to 60 sites in U.S. and 18 outside U.S.Study Duration60 months post procedure PRIMARY
ENDPOINTSEffectivenessPrimary patency, defined as a composite of freedom from clinically-driven target lesion revascularization (TLR) and binary restenosis (restenosis defined as duplex ultrasound [DUS] peak systolic velocity ratio [PSVR] ≥2.4
or >50% stenosis as assessed by independent angiographic and DUS core labs) through 12 months post-index procedure.SafetyComposite of freedom from device- and procedure-related death through 30 days post-index procedure and freedom from
major target limb amputation (above the ankle) and clinically-driven target vessel revascularization (TVR) through 12 months post-index procedure. VISION TRANSCEND ENROLLMENT PROGRESS*Currently anticipate study enrollment completion by
September 2019CE MARK PROGRESS*Currently anticipate obtaining CE mark by December 2019 10/20/17 15 * We continue to assess the impact of the FDA communication on SurVeil DCB milestones
Strategic Agreement with Abbott Demonstrates value of whole-product solutions strategyLeverages
Surmodics’ leadership in drug-delivery technologies, design, development capabilities, and manufacturing capacityCombines with Abbott’s deep experience in vascular care products and worldwide strength in the market 16 CAUTION: SurVeil®
Drug-Coated Balloon is an investigational device. Limited by Federal (or United States) law to investigational use. February 27, 2018 – Abbott and Surmodics Announce Agreement for Next-Generation Drug-Coated Balloon Development and
Commercialization
Terms of Agreement CAUTION: SurVeil® Drug-Coated Balloon is an investigational device. Limited by
Federal (or United States) law to investigational use. 17 Exclusive worldwide commercialization rights for SurVeil® drug-coated balloon (DCB) for superficial femoral artery (SFA)$25 million upfront payment$67 million for milestones associated
with product developmentAll milestones are pre-commercializationOptions to negotiate agreements for Sundance™ below-the-knee (BTK) and Avess™ arteriovenous (AV) fistula drug-coated balloon products (currently in pre-clinical development)Revenue
realized from product sales to AbbottShare of profits resulting from Abbott sales
DCB platform extension Surmodics .014” PTA platform2 – 4 mm diameter20 – 220 mm lengths Uniform
sirolimus drug coatingSirolimus + Proprietary Excipient360° uniform coating coverage Avess™ AV Fistula DCB* VISION Surmodics .035” PTA platform4 – 12 mm diameter40 – 80 mm lengths Uniform paclitaxel drug coatingPacliltaxel + Proprietary
Excipient360° uniform coating coverage Sundance™ Below-The-Knee DCB Treated initial patient in FIH study Q1 FY 2019Initiate and anticipate completing FIH in FY 2019 Hydrophilic shaft coatingSurmodics PRISTYNE™ hydrophilic coating In
preclinical evaluationInitiate FIH process in FY 2019 18 CAUTION: Sundance™ and Avess™ Drug-Coated Balloons are investigational devices. Limited by Federal (or United States) law to investigational use. *FDA evaluating paclitaxel-coated
devices for use in AV fistula
JANUARY 510 (K) Clearance for Telemark™ Coronary / Peripheral Support Catheter We Are Making
Progress On Our Whole-Product Solutions Strategy 19 Drug-Coated Balloons (DCB) 510 (K) / CE Mark 2017 2018 SEPTEMBER Global Clearance of .014” Low-Profile PTA Balloon Catheter APRIL FDA Clearance for .018” Low-Profile PTA Balloon
Dilation Catheter IDE Approval to Initiate Pivotal Trial for SurVeil® DCB JULY FEBRUARY Abbott & Surmodics Announce Agreement for SurVeil® DCB First Patient Enrolled in TRANSCEND Clinical Trial for SurVeil® DCB OCTOBER Q1 Q2 Q3 Q4
Q1 Q2 Q3 Q4 Q1 May Surmodics Announces Acquisition of Embolitech Thrombectomy Technology & IP Initial patient treated in First-in-Human Study for Avess™ AV Access DCB DECEMBER
Thrombectomy Platform Technology Acquired innovative thrombectomy platform technology and IP from
EmbolitechGame-changing technology designed for removal of organized thrombi and emboli, in an approximately $400M growing global marketSimple stand-alone intervention, eliminates need for capital equipment and may reduce the need for
thrombolytics and complex proceduresDevelopment is on schedule with successful early pre-clinical results and positive hands-on physician feedback 20 Mesh trumpet designed to entrain clot and compress fluid during removal Two
self-expanding cages designed to break up clot and capture within mesh trumpet
Radial Access Platform Technology Radial artery access offers many benefits relative to femoral artery
access including reduced bleeding complications, early ambulation, reduced length of stay and costsRadial access is widely adopted in coronary procedures where devices have been developed to accommodate the needSurmodics Xtreme™ braided
technology offers the ability to treat peripheral procedures, including below-the-knee applicationsInitial radial-based products in development include:Access Devices from Radial Artery to Legs:.018 & .035 Peripheral Radial Guide
SheathTherapeutic Devices to Treat Lesions:.014 Radial BTK PTA Balloon Catheter .014 Radial BTK PTA Balloon Catheter .018 & .035 Braided Peripheral Radial Guide Sheath 21
Product Milestones* *We continue to assess the impact of the FDA communication on certain product
milestonesCAUTION: SurVeil®, Avess™ and Sundance™ Drug-Coated Balloons are investigational devices. Limited by Federal (or United States) law to investigational use. IMPACT TO INVESTORS CY 2019 GOALS FY 2019 – FY 2021 GOALS Enroll the
TRANSCEND trial as fast as reasonable: complete enrollment by Q4 FY19Attain CE marking for SurVeil® by December 2019Initiate and complete first-in-human trial for AV DCB and initiate first-in-human trial for BTK DCB Submit for 510(k) regulatory
clearance on three to four devices Complete design freeze for initial thrombectomy device by end of fiscal 2019Secure commercialization agreements for approved devices Secure PMA of SurVeil® DCBComplete pivotal trial of Avess™ AV DCBInitiate
pivotal trial for Sundance™ BTK DCBObtain regulatory clearance on the initial device for vascular thrombosis and on at least seven other new-to-the-world vascular devices in areas of unmet clinical needs 22
PIPELINE PRODUCTSSurVeil® DCBSundance™ Below-the-knee DCBAvess™ AV DCBMultiple 510(k)’s Financial
Performance Targets>10% revenue growth (achieved fiscal 2018)>30% EBITDA margin by 2021 23 The agreement with Abbott has a meaningful positive impact on our commitment to deliver the returns described above within the targeted time
frame given the potential for pre-commercialization revenue within the next 5 yearsIn addition, successful US and OUS commercialization of the Surveil DCB contributes in a meaningful way to the long-term consistency of revenue and EBITDA growth
at the targeted levelsWe continue to assess the impact of the FDA communication and any effect on our fiscal 2019 financial and long-term guidance Achieving SurVeil® DCB milestone successes (positive clinical results and regulatory approvals)
enables the business to reach the financial performance targets
MANAGEMENT TEAM Gary R. MaharajPresident and Chief Executive Officer (2010) Timothy J. ArensVice
President of Finance and Chief Financial Officer (2007) Joseph J. Stich Vice President and General Manager of In Vitro Diagnostics (2010) Thomas GreaneyChief Operating Officer of Medical Devices (2015) Gregg S. SuttonVice President of
Research and Development (2016) Bryan K. PhillipsSenior Vice President of Legal and Human Resources, General Counsel and Secretary (2005) 24 Teryl L.W. Sides Senior Vice President and Chief Marketing Officer (2018)
Clinical & scientific ADVISORS Ken Rosenfield, MD Chair Advisory Board — Interventional
CardiologyMassachusetts General Hospital Gary Ansel, MD, FACC Clinical Advisor — Interventional CardiologyOhio Health Research Marianne Brodmann MD, PhD Clinical Advisor— Interventional CardiologyDivision of Angiology Medical University
Graz Michael Jaff, DO Clinical Advisor — Vascular MedicineNewton Wellesley Hospital Mike Dake, MDClinical Advisor — Interventional RadiologyStanford Health Care Renu Virmani, MD, FACCClinical Research Advisor — Cardiovascular
PathologistCVPath Peter Schneider, MDClinical Advisor — Vascular SurgeryUniversity California San Francisco 25
Surmodicsbusiness segments For the three months ended December 31,
2018 BUSINESSSEGMENTREVENUE IVDBUSINESS22% MEDICAL DEVICES78% 26
Surmodics CORE BUSINESS vascular access sheath coronary guidewire peripheral clad guidewire coronary
stent delivery catheter coronary balloon dilatation catheter peripheral balloon dilatation catheter diagnostic guide catheter vascular access and support catheter MEDICAL DEVICE COATINGS IN VITRO DIAGNOSTICS Leveraging science and
expertise to offer world-class coatings and drug delivery Providing critical components for in vitro diagnostic tests and microarrays Creating sustainable margins for long-term growth and profitabilityTechnologyDesign capabilityAgility of a
start-upOperational excellenceManufacturingProcess Engineering 27
FINANCIAL PERFORMANCE 28 *We continue to assess the impact of the FDA communication on our fiscal 2019
financial and long-term guidance
FINANCIALS BY SEGMENT MISSION: To improve the treatment and detection of diseaseStrong balance sheet and
attractive cash flows to fund growth strategy$45.9 million of cash/investments as of December 31, 2018Operating cash flow of $34.1 million and adjusted EBITDA of $7.3 million in fiscal 2018 MEDICAL DEVICES78%
BUSINESSSEGMENTREVENUE‡ IVDBUSINESS22% MEDICAL DEVICE Growth 2% 16% 12% IN VITRO DIAGNOSTICS Growth 5% 14% 9% 29 ‡For the three months ended December 31, 2018
2019 Guidance(1) 2019 Financial Guidance Long Term Objectives Total Revenue: $94 million to $97
million (includes $14-$15 million of SurVeil DCB revenue)(2) GAAP Loss per Share(3): $(0.22) to $(0.02)Non-GAAP Earnings per Share(3): $0.02 to $0.22 Continue consistent double digit top line revenue growth and generate EBITDA margins at or
above 30% by 2021 30 Reflects guidance issued by the Company as of January 30, 2019. The Company is assessing the impact of the March 15, 2019 FDA communication on our fiscal 2019 financial and long-term guidance and, as a result, nothing
herein should be interpreted as reaffirming its earlier guidance.Our fiscal 2019 SurVeil DCB revenue is driven by the recognition of (a) a portion of the $25 million up front license fee received following the execution of the distribution
agreement in late February 2018 and (b) a portion of a $10 million milestone payment which may be received upon the successful completion of enrollment in the TRANSCEND clinical study.GAAP loss per share is the estimated fiscal 2019 diluted
loss per share as determined by U.S. generally accepted accounting principles. Non-GAAP (loss) earnings per share adjusts GAAP loss per share for estimated fiscal 2019 contingent consideration adjustment, acquired intangible amortization, and
foreign exchange gain on contingent consideration of $0.08, $0.17 and $(0.01) per share, respectively.
INVESTOR RELATIONSFor additional inquiries, please contact:Tim Arens • 952-500-7056 31