1 Investor PresentationPresented by Rick Van Kirk, CEO
2 Investment HighlightsPro-dex is a high-growth innovative technology company with finished device contract manufacturing multiple High value product pipeline Strong long term relationships with dominant and strategic orthopedic OEMs High value intellectual property Increasing margins and considerable operating leverage Stable core cash cow Management team that can execute on new initiatives Transformation of the Pro-dex legacy business model Bringing innovations to market vs. the innovations disproportionately benefiting our customers alone Significant credibility with large manufacturing partners Establishment of opportunity funnel with surgeon and independent distributor advisory relationships Entry into disposable and single use markets Pre-eminence as OEM supplier of orthopedic robotic end effectors
3 Pro-dex Past to PresentFYE: 06/2016 MRQ: 2017 Q3 Next Rpt: 09/14/17 Revenue Q1 Q2 Q3 Q4 FY FY2014 2.6 2.4 3.2 10.8 FY2015 2.8 3.9 4.1 13.4 FY2016 5.2 5.3 19.8 FY2017 5.4 4.6 6.6 5.3* 21.9* FY2018 5.5* 5.0* 5.6* 5.8* EPS 0.06 -0.1 -0.12 0.01 -0.14 -0.04 -0.05 -0.02 0.02 -0.09 -0.03 0.09 0.05 0.2 0.07 0.78 0.22 .04* 0.95* .07* .06* 0.24* PDEX Share Price Revenue * Analyst Estimates Key Figures (2017 Q3) Shares Outstanding Avg Daily Volume (3 mos): Employees Cash Book Value Mkt Cap 81 4.0m Float : 2.3m 10K $4.0m Debt : $0.1 m $12.9m $22.7m Q1-Q3
4 High Value Customer Relationships:Pro-dex Core Business Arthroscopic Shavers Sagittal saw mechanisms Craniomaxillofacial Drivers Multifunction Handpieces Robotic End Effectors Engineering Services “The interface between surgeons and patients.” Pro-dex has deployed smart drivers in CMF with 3 major companies that account for over 60% of the CMF market. The field of surgical robotics is rapidly growing and Pro-dex has manufacturing relationships with key players High Value Customer Relationships: “Pro-dex is a leader in powered solutions for the operating room with over 40,000 handpieces shipped to the largest orthopedic distributors in the world.”
5 Surical Power: Addressable Market $1.2-1.7bnPro-dex has greater than 60% market share in CMF, the smallest market in the orthopedic space Opportunity to take share with differentiated solutions in strategic markets (see TorqueDrive) CMF $ 29.2 bn Global Orthopedic Devices Market Revenue, 2012 Thoracic Shoulder Elbow Spine Hip Source: KOL Opinions, Company Annual Reports, Expert Interview, Investing Publications, TMR Analysis Knee Pro-dex bringing solutions to market vs. reliance on customers to fund developments First Pro-dex owned driver solution launch expected calendar Q1 ‘18 Extremities
6 TORQUEDRIVE The software algorithm can be integrated across a family of products from small bone and CMF (MatrixPro) to large bone and trauma Our algorithms do not affect the operation of non drill/drive ancillary operations; for example sagittal saws, burrs, etc. Screws mapped and optimized to the hardware making piggybacking difficult High product differentiation and a significant driver of sales conversions
7 Variable density doesn’t matterTechnology Overview Pro-dex utilizes algorithmic methods to characterize certain unchanging features of a torque curve. For example: A screw seating has universal features regardless of the screw type or the substrate density (osteoporotic or healthy) Variable Density Has Limited Affect on Screw Characterization Variable density doesn’t matter Differing bone densities represent a vertical shift (y-axis) of the torque curves. The torque characteristics of the screw path remain the same. Osteoporosis | 10 PCF Density By characterizing the torque curves themselves and not the absolute torque levels the behavior of variable density bones is captured. Normal | 50 PCF Density
8 Small Bone: CMF, Thoracic, ExtremitiesModular quick-swap capabilities for attachments Patent filed on thoracic non-invasive attachment for anterior rib fixation with posterior approach Early adopters have taken significant share Pro-dex serves > 60% of the market (3 major customers) Positive surgeon feedback Adaptive torque limiting for rapid-driving screws and perfect seating of screws Screw stripping prevention Drill and Drive Mode Capabilities Rechargeable battery options High Precision discrete digital torque limiting Excellent ergonomics, balance and weight Adaptive torque limiting works with an assortment of attachments and offset geometries Key Capabilities: Extremely high accuracy locking screws and plates within manufacturer recommended specifications
9 Spine Prevention of cortical breach via tissue differentiationFiled several patents on the execution of torque limiting in this application Should have a prototype ready to demonstrate that if cortical contact occurs the device terminates driving action. Advancing and perfectly tightening set screws including rod reduction High Precision discrete digital torque limiting Speed and torque optimized driver Prevention of cortical breach via tissue differentiation Well placed screw path Misplaced screw path Cortical Bone Cancellous Bone Cortical Bone Cancellous Bone The screw path for a well placed screw is very clearly defined; after penetration of the lateral cortical layer ( mm) the entirety of the remaining travel is cancellous bone. After penetration of the lateral cortical layer and penetration into the cancellous bone near the pedicle channel a second impact of cortical bone (medial or lateral) occurs. In discussions for Virtual Reality application specific integration
10 Trauma, Large Bone, ReconstructivePrevention of cortical breach via tissue differentiation Adaptive Torque limiting does not affect application of non- driving applications Rapid driving and seating of screws regardless of screw type or patient bone quality Promising R&D with plunge prevention Screw seating torques significantly higher than Tissue Removal Torques Non Driving application torques (Burr, Saw, Sagital Saw) orders of magnitude below seating torques Extremely high accuracy locking screws and plates within manufacturer recommended tightening specification High Precision discrete digital torque limiting Drill and Drive Modes
11 Monogram Monogram Technology highly disruptive to existing robotic solutions Surgical Robotics (Mako, Bluebelt, Rosa) Cloud Based Surgical Navigation (Brainlab, Materialize, Surgical Theater) Patient Specific Additive Manufacturing (Conformis, 3D Systems) Exit multiples have ranged between 10-20x sales Transformative for the Pro-dex business model Entry to high growth 3D printed medical implant market Entry to high growth 3D printing of metals market Entry into device consumables (attachments, cutting tools, etc.) market Entry into orthopedic robotics market Pre-eminence as OEM supplier of orthopedic robotic end effectors
12 High Potential Future Product PortfolioAcetabular Cup Revision Tool Arthroscopic System with Proprietary Blade Design Adjustable Torque Wrench ATLAS Pro-driver Spinal Drill/Driver First Pro-dex branded product release in several years; expected release calendar Q4 ‘17 Materially downsized design vs. competition First Pro-dex branded driver release in several years; expected release calendar Q1 ‘18 Adaptive torque limiting, modular attachments Provisional patent application on some application specific attachments Negotiating potential JV Differentiated IP & synergistic with power portfolio Negotiating potential JV for high value differentiated blade IP Promising R&D developments and several provisional patents filed Possible 3D VR third party application specific integration
13 Management Team Rick Van Kirk, MBA, President & CEO 35 years experience Unisys, Dynacast International, Comarco Wireless Technologies Alisha Charlton, CFO 26 years experience Comarco, CKE Restaurants, KPMG Rosie Hokanson, HR Manager X years experience XYZ Companies Angel Domingo, Director QARA 20 years experience Spectrum, Chemicon, Watson Rick Boyd, Director of Manufacturing 18 years experience Pro-dex Ben Sexson, CFA, Director of Business Development 11 years experience Pro-dex, MUFG, First Wilshire
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