Foxhollow Technologies, Inc. (Other)
September 19 2007 - 11:45AM
Edgar (US Regulatory)
Filed by ev3 Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 under the
Securities Exchange Act of 1934
Subject Company: FoxHollow Technologies, Inc.
File No. of Related Registration Statement: 333-145554
The following is a transcript (and related slides) of a presentation by ev3 Inc. at the Bank of
America 37th Annual Investment Conference on Tuesday, September 18, 2007. The slides will also be
used in other investor presentations by ev3 Inc.
Forward-Looking Statements
This communication contains forward-looking statements about ev3 and FoxHollow Technologies, Inc.
within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements
include, but are not limited to, statements about the benefits of the business combination
transaction involving ev3 and FoxHollow, potential synergies and cost savings and the timing
thereof, future financial and operating results, the expected timing of the completion of the
transaction, the combined companys plans, objectives, expectations and intentions with respect to
future operations, products and services; and other statements identified by words such as
anticipate, believe, plan, estimate, expect, intend, will, should, may, or words
of similar meaning and any other statements that are not historical facts. Such forward-looking
statements are based upon the current beliefs and expectations of ev3s and FoxHollows management
and are inherently subject to significant business, economic and competitive uncertainties and
contingencies, many of which are difficult to predict and generally beyond the control of ev3 and
FoxHollow. Actual results may differ materially from the results anticipated in these
forward-looking statements.
The following factors, among others, could cause actual results to differ materially from the
anticipated results or other expectations expressed in the forward-looking statement: general
business and economic conditions; the ability to obtain governmental approvals of the transaction
on a timely basis; the failure of FoxHollow stockholders to approve the transaction; the
competitive environment; the failure to realize synergies and cost-savings from the transaction or
delay in realization thereof; the businesses of ev3 and FoxHollow may not be combined successfully,
or such combination may take longer, be more difficult, time-consuming or costly to accomplish than
expected; and operating costs and business disruption following the merger, including adverse
effects on employee retention and on our business relationships with third parties, including
physicians, providers and distributors. Additional factors that could cause ev3s and FoxHollows
results to differ materially from those described in the forward-looking statements can be found in
the registration statement on Form S-4 that ev3 filed on August 17, 2007 (and any amendments and
supplements thereto), ev3s and FoxHollows Annual Reports on Form 10-K for the year ended December
31, 2006, and ev3s Quarterly Reports on Form 10-Q for the quarters ended April 1, 2007 and July 1,
2007 and FoxHollows Quarterly Reports on Form 10-Q for the quarters ended March 31, 2007 and June
30, 2007, which are filed with the Securities and Exchange Commission and available at the SECs
web site at
www.sec.gov.
The information set forth herein speaks only as of the date
hereof, and ev3 and FoxHollow disclaim any intention or obligation to update any forward looking
statements as a result of developments occurring after the date of this communication.
Important Additional Information for Investors and Stockholders
This communication is being made in respect of the proposed business combination involving ev3 and
FoxHollow Technologies, Inc. In connection with the proposed transaction, ev3 filed with the SEC a
registration statement on Form S-4, containing an information/proxy statement-prospectus and other
relevant materials and each of ev3 and FoxHollow plan to file with the SEC other documents
regarding the proposed transaction. The final information/proxy statement-prospectus has been
mailed to the stockholders of ev3 and FoxHollow.
INVESTORS AND SECURITY HOLDERS OF ev3 AND FOXHOLLOW ARE URGED TO
READ THE INFORMATION/PROXY STATEMENT-PROSPECTUS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS) AND OTHER
DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT ev3, FOXHOLLOW AND THE PROPOSED TRANSACTION.
Investors and security holders will be able to obtain free copies of the registration statement and
the information/proxy statement-prospectus and other documents filed with the SEC by ev3 and
FoxHollow at the SECs web site at
www.sec.gov
. Free copies of the registration statement and the
information/proxy statement-prospectus and other documents filed with the SEC can also be obtained
by directing a request to ev3, Attention: Investor Relations Dept., telephone: (763) 398-7000; or
at ir@ev3.net or to FoxHollow, Attention: Investor Relations Dept., telephone (650) 421-8449, or at
investorrelations@foxhollowtech.com. In addition, investors and security holders may access copies
of the documents filed with the SEC by ev3 on ev3s website at www.ev3.net, and investors and
security holders may access copies of the documents filed with the SEC by FoxHollow on FoxHollows
website at
www.foxhollowtech.com
.
ev3, FoxHollow and their respective directors and executive officers and other persons may be
deemed to be participants in the solicitation of proxies from the stockholders of FoxHollow in
respect of the proposed transaction. Information regarding ev3s directors and executive officers
is available in its Annual Report on Form 10-K for the year ended December 31, 2006, filed with the
SEC on March 14, 2007 and the proxy statement for ev3s 2007 Annual Meeting of Stockholders, filed
with the SEC on April 16, 2007. Information regarding FoxHollows directors and executive officers
is available in its Annual Report on Form 10-K for the year ended December 31, 2006, filed with the
SEC on March 13, 2007 and the proxy statement for FoxHollows 2007 Annual Meeting of Stockholders,
filed with the SEC on April 30, 2007. If and to the extent that any of the ev3 or FoxHollow
participants will receive any additional benefits in connection with the merger that are unknown as
of the date of this filing, the details of those benefits will be described in the definitive
information/proxy statement-prospectus relating to the merger. Investors and stockholders can
obtain more detailed information regarding the direct and indirect interests of ev3s and
FoxHollows directors and executive officers in the merger by reading the definitive
information/proxy statement-prospectus.
Webcast Transcription
ev3 Inc. at the Bank of America 37th Annual Investment Conference on Tuesday,
September 18, 2007 11:00 a.m PT
Pat Spangler (Chief Financial Officer, ev3 Inc.):
I really want to take this time today to
walk through the current state or our business and financial results. ev3s mission is to improve
the lives of patients with vascular disease through the development of innovative endovascular
technologies. And I really want to stress that I have two sets of forward-looking statements
here. One is just kind of the normal forward-looking statements that are identified. And then
further in my presentation I have additional forward-looking statements surrounding our
most-recently announced merger with FoxHollow Technologies. This is a revenue/growth slide. And
the most recent results for the fiscal year, 2006 was $202 million. We grew at a 50% compounded
annual growth rate since 2002. And its mainly organic growth. There really wasnt any
acquisitions in that revenue growth. And for our most recent quarter, we reported a 29% increase.
$65.4 million was our reported revenue versus $50.6 million the same quarter last year. Our
revenue is pretty balanced on an overall basis both between the geographies as well as our
business. We have two businesses: cardio peripheral and neurovascular. And as you can see from
the most recent quarter we had 33% growth in our cardio peripheral business, a 24% growth in our
neurovascular business. And we have roughly about 40% of our business outside of the U.S. And our
international growth is 30%, and the U.S. growth is 20%. So well-balanced and growing well across
both businesses. Were often asked in terms of where are our opportunities in terms of going forth
with the business, and we really identify four key areas that we focus on. Were not in the
cardiac space, were in the peripheral space and the neurovascular space. And the markets that
weve identified as rich opportunities for us are in the self-expanding stent area, which weve
identified as about a half of a billion dollar market, and thats where our Everflex family of
products resides. In the coils, which is our neurovascular business, is a $350 market, and that is
where our most-recently introduced product, the Axium coils, which we introduced here in the U.S.
in the third quarter and will be introducing in Europe in the fourth quarter. And Ill be talking
a little more about that later. Embolic protection, which is a filter device (and Ill show you a
picture of that in a second) that captures debris inside of the artery during a procedure. And
that is our SpiderFX device. And then carotid stenting, which is the stents only, is a $150
million, and thats where our Protégé stent is. From a cardio peripheral side, this is a picture
of both the carotid stent as well as the Spider filter that I was talking about. And as you can
see, the filter is a device that captures debris that would move upstream during a procedure, and
the stent obviously is placed behind that after the debris is cleared in order to sustain the walls
of the artery. One of the challenges that weve had in the industry has been understanding the
problem for both the patient as well as the physician in trying to solve stent fracture. And if
you think about it, one of the reasons that stents fracture is that if you have a long stent in a
highly moveable part of the body, ultimately it will start to break down. And eventually it can
crack and break into sludge. And if youll look at the four types of fractures that you have here,
A through D, what you see is that initially you have a fracturing of the stent wall. And it
further breaks down under the Type II fracture., and then Type III and Type IV. Whats important
about this is this was really the driver behind the development of our Everflex technology. And we
have a fracture-free guarantee stent that right now we plan on 25,000 or more stents where we have
less than a
1
/
2
percent fracture rate. On a comparison basis, if you look at the industry, the
industry fracture rates are north of 25%. So this was a serious problem for the patient, because
typically what happens is when this stent fractures, they have to go in to put a new stent in.
They cant actually go in and take the stent out. And so as youre going through the procedure for
the patient and you know youre going to be in a high-movement area, you definitely want a stent
thats going to be durable and thats going to sustain itself. And our fracture-free guarantee is
a two-year guarantee for the product replacement. To support that we had done a number of bench
studies in terms of basically validating the strength of the stent itself. And what we are now
doing is that we are investing in clinical studies to really support that and get the clinical data
to prove the resistance on the fracture. And so we have the Durability II trial, which is a U.S.
trial, and we have approximately 287 patients that will be enrolling in that trial. And the key
here is that were going to follow these patients for five years. And so if you looked at the
studies that are out there, this is going to be one of the longest studies with regard to stents
and looking for the fracture data. And its for lesions that are seven to sixteen centimeters, or
up to 160 millimeters. And whats important about that is that there are some studies out there
that are for shorter
stents, and the fracture rate amongst the shorter stents is much lower,
because basically what youre
dealing with is the longer that the stent is and the higher movement part of the body that its
placed, theres a higher chance that its going to fracture. And so our studies are really to
support the longer stents that are used in the SFA and other areas. We also have the Durability I
study, which is our European efficacy trial, and that has 152 patients. And then we have the
Prospero European registry, which is essentially going to be up to 1,000 patients, where we have
814 patients already enrolled. So were going to have approximately 1,500 patients that were
going to follow for five years to really gather the data to support the our claims fracture-free
portion of that. Another big area for us this year is in the neurovascular business segment, and
its around our coils that are used for aneurisms. And theres three types of coils. Theres the
framing, filling and finishing coil. And the Axium family for us was the first time weve come out
with an entire family of coils. And what we did is we have made a softer coil and we have also
developed a unique delivery system. If you look at the picture on the right, it reminds you of
kind of a clicker that you would light your barbeque with. And thats essentially what it is.
What you do is you take the push wire and you put it at the front of this device and you click it.
Now youd think whats the importance or significance of that? When youre doing a procedure and
you need to put thirty coils in an aneurism, thats something thats going to take an extended
period of time that the patient is essentially under anesthesia and is going through the procedure.
And what happens is that in the current technology, they have what they call an electrolytic
detachment system. What it looks like is taking battery cables that youre going to put on the
battery of your car to jump-start your car, and you put it on the wire and essentially you burn the
coil off into the brain. Well that can take ten seconds and it can take eighty seconds, depending
on how long it takes to actually burn through the coil. If youre going to do thirty coils and you
add up all that time, youre looking at the danger to the patient for being under for an extended
period of time plus the actual amount of work that the doctor has to do in order to fulfill this
procedure. So this is a real game-changer in the industry for us and its a real breakthrough
product and its one that were extremely excited about. The design actually comes out to be
fairly simple on how this all works, but at the same time it was kind of one of those strokes of
genius where simplicity is best. This is a picture of a brain AVM. And what an AVM is is where
veins and arteries come together an co-mingle. And what happens is that you have a constriction of
blood flow. And if you look at this picture, what would happen in the old days is they would have
to do a craniotomy. They would have to go in and clip out this portion of the brain and
essentially seal it back up. Thats obviously not a fun procedure and not something that youd
want to recommend for anybody, and the mortality rate was fairly high for people who have had
craniotomies. And what this is is this is a liquid embolic that is inserted through a catheter and
it fills the space where the AVM is. And essentially what it works like is it acts as a
slow-drying glue, and the alternative in the market place is basically Superglue. And what happens
is you push it through a catheter and then you seal this off. The problem with the current
technology before Onyx was that you couldnt work with it because the catheter tip would get stuck
in the brain from the glue and other things. It was a very cumbersome procedure and it was
actually easier for the doctor to do a craniotomy. So in this particular case, we were able to
fill up the AVM, seal it off and then at the end of the day, the patient gets up and essentially
leads a full life. We actually had a patient who was a fourteen-year-old jazz singer, she was kind
of a prodigy. And she was told by her doctor that, because of her AVM, they were going to go in
and do this craniotomy procedure and she wasnt going to be able to sing or play her instruments
after the procedure. And so she got a second opinion and she was fortunate enough that she had
talked to a doctor who had been trained in this procedure. Its about a four day training for any
doctor to really learn how to do this procedure correctly. And so what happened is that the doctor
donated his time, and we donated the product, and she cut an album in order to pay for the hospital
bill. And shes up walking around today with the ability to continue to sing and continue to play.
So from our side of the world, what happens is we actually see the quality of life improvement
that we can bring to our patients. And sometimes its missed when were sitting here doing the R&D
and the science. This is a picture of our Solo stent, and thats not the name of our product, its
just our internal name. But what it is is a product that were designing for the ischemic stroke
portion of the neurovascular business. And today we are focused on the hemorrhagic stroke part of
the business. If you look at, just in terms of pure numbers, the ischemic stroke side of the
business is really the future of neurovascular procedures.
And its approximately four times the
size of todays hemorrhagic stroke. The
product weve designed here is a retractable stent you put in with a catheter, and you can use it
to seal off an aneurism while you do a procedure. And you could actually remove it and retract it
and take it out of the brain. Or if you need to, you can actually clip it off and leave it inside
the brain as a stent thats going to stay in place. And so whats happened is that its kind of
the first retractable stent thats out there and its amazing because its in this little, tiny
straw and you push it out and it expands. And you can actually pull it out and remove it from the
brain. Its pretty interesting technology. But its really a platform technology for us. Another
product that we have in this area is what were calling the PCR
device, which is
a clot retrieval device to remove thrombus from the brain. And thats another one of our entrants
that were in the process right now of doing some early clinical work and product introduction work
on. From a financial standpoint, I covered the revenue growth in the first part of the
presentation. Whats been an important part of ev3s story is really since our IPO in 2005. And
that has been kind of our path towards profitability and improved operating performance. And as
you can see, not only has revenue grown 50% compounded during that period of time, but weve also
improved our gross margins as well from 59% roughly in Q2 of 05 to 65.8%. And in Q2 of 07 there
is an impact that we actually started at the first part of this year for some royalties that we pay
Medtronic on our nitinol products that also impacted our gross margin
that wasnt in those previous numbers. But the story here is that were continuing to take product
costs out. Were continuing to get better and better at manufacturing our products. As a result,
our EBITDA, excluding stock SBC and compensation had improved dramatically from Q4 of 05 to Q4 of
06. Now the first two quarters of 07 has been slightly impacted our margin not quite being at
the level that we want it, but mainly some litigation costs that were incurring with a couple of
cases that we have with Boston Scientific. But another key measure for us is the sales force
productivity. And as you can see, back in Q2 of 05, our sales force productivity, and its really
a $734,000 territory going to a million and a half. And the base here is pretty much the same
number of reps. So we really havent changed our sales reps picture over that period of time. So
the denominator on this equation is consistent. This is the forward-looking statement on the
FoxHollow merger. Ill just let you glance at it because it is on our public website, and so you
can look at it if you so need to. Really the strategy behind the combination was to combine two
companies that basically had the same mission. And that now allows us to treat more patients per
procedure. So in essence, before we would be able to treat about six patients with our overall
product portfolio, and now well be able to treat roughly nine patients. And so you can see the
size of the markets that were working in. Essentially PTA is $235 million, stents at $635
million, and atherectomy at $200 million. So you see a real opportunity for us to bring the $200
million atherectomy piece into our business and provide a much more comprehensive solution. If you
look at the next slide here, basically what this does is it outlines the product portfolio that we
now have to offer to the patients and to the doctors. And we have best-in-class solutions for
peripheral vascular disease. And theres times when some of these technologies in the past would
be traded off. Lets say in a cath lab what would happen is that maybe a FoxHollow representative
would show up for an atherectomy procedure and instead they would ballloon stent the patient.
Theres times when the ev3 rep would show up for a balloon procedure or a stent procedure and
basically what you would find is that they would end up with an atherectomy procedure. So now
well have an opportunity to be there to kind of guide either side when the doctor decides what the
best solution is. Well be there to present that for them. The overview of the transaction is:
its 1.45 ev3 shares and $2.75 in cash for each of the FoxHollow shareholders, for approximately a
$785 million transaction. The ownership structure will be 59% ev3, 41% FoxHollow. And the makeup
of the Chairmanship or the Board will be Jim Corbett, who is our president and CEO, will be the
Chairman and John Simpson, who will be our chief scientist and Vice Chairman. ev3 will have six
directors; FoxHollow, four. So you can see how the blend is. And then from an overall
perspective, we expect the transaction to close
on October 5. Were through all the HSR filings,
were through all the FCC filings. Were in the period now of waiting for the shareholder vote.
Ev3 did not need a shareholder vote because we had a 56% joint-ownership between Warburg Pincus.
And we already have a 31% ownership vote between John Simpson and Merck. And so we just have to
close the gap on that between now and the Fifth of October. Through the combination, what we did
is we wanted to give guidance, which we hadnt done in the past.
All kind of beyond into the 08/09 period. And I really wanted to
have people understand what the
benefits of the transaction are. Theres a couple of big benefits. One is that the size of our
revenue base is growing dramatically as a result of the combination. And weve guided for 2008
that our revenues would be somewhere between $585 to $615 million; for 09, $700 to $750 million.
And our EPS, which really feels good that it doesnt have brackets around it, as both companies
were sort of
<unintelligible>
companies before, would be in the range of $.60 to $.70, and
$90 to $1.10 for 2009. Now the EPS thats reflected here has in it a $.25 approximately charge for
amortization for the write-up on the intangibles of the purchase accounting thats required. It
does not have a tax impact other than essentially about $1 million of foreign taxes that we
anticipate paying during this period. If you were going to tax-effect this in your modeling, you
would want to apply a 35% tax rate. And I know some people like to model that for their five-year
tracking. But we have approximately $470 of net operating losses that we need to burn through
before we pay any significant taxes. If you adjust for the amortization, your cash EPS is more in
the $.85 to $.95 range next year, as an example. Thats it.
Unidentified speaker:
Thanks, Pat. If you have questions, well bring the mic to you. Let me
start off the Q&A just starting at your neurovascular business. On the Axium coil, demand has been
very strong, to the point where you think youve had to slow down the launch process. Where are we
now in the launch process? Has your ability to supply and produce these stents or these coils
picked up that youre in full launch now?
Pat Spangler:
Yes. At this point were in full launch. We have full manufacturing capabilities
to produce the product for the salesmen that we have right now. Like I said, weve launched here
in Q3 here for the US site and expect to launch in Q4 for our European operations.
Unidentified speaker:
What is the Axium doing for you? Is it helping you get more business out of
existing accounts? Or is it helping you open new accounts?
Pat Spangler:
I think its a combination of both. Our coil line was not the industry leader.
Onyx was really our strongest product in the neurovascular business. And what this allows us to do
is present a product that we think is game-changing and really industry-changing. And so what its
allowed us to do is get into some new accounts where we couldnt get in before because of some of
the competition, and also to expand the presence of our coils in the accounts that we do have.
Unidentified speaker:
We just have a few more seconds left, so why dont we reconvene. Thanks,
Pat.
Pat Spangler:
Thank you.
This presentation contains "forward-looking statements" about ev3 and FoxHollow
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements include, but are not limited to, statements about the benefits of the
business combination transaction involving ev3 and FoxHollow, including the
potential accretion of the transaction to ev3, potential synergies and cost savings
and the timing thereof, future financial and operating results, the expected timing
of the completion of the transaction, the combined company's plans, objectives,
expectations and intentions with respect to future operations, products and
services; and other statements identified by words such as "anticipate," "believe,"
"plan," "estimate," "expect," "intend," "will," "should," "may," or words of similar
meaning and any other statements that are not historical facts. Such forward-
looking statements are based upon the current beliefs and expectations of ev3's
and FoxHollow's management and are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of which are
difficult to predict and generally beyond the control of ev3 and FoxHollow. Actual
results may differ materially from the results anticipated in these forward-looking
statements.
Forward-Looking Statements
|
The following factors, among others, could cause actual results to differ materially from the
anticipated results or other expectations expressed in the forward-looking statement: general
business and economic conditions; the ability to obtain governmental approvals of the
transaction on a timely basis, the failure of FoxHollow stockholders to approve the transaction;
the competitive environment; the failure to realize synergies and cost-savings from the
transaction or delay in realization thereof; the businesses of ev3 and FoxHollow may not be
combined successfully, or such combination may take longer, be more difficult, time-consuming
or costly to accomplish than expected; and operating costs and business disruption following
the merger, including adverse effects on employee retention and on our business relationships
with third parties, including physicians, providers and distributors. Additional factors that could
cause ev3's and FoxHollow's results to differ materially from those described in the forward-
looking statements can be found in ev3's and FoxHollow's Annual Reports on Form 10-K for the
year ended December 31, 2006, and ev3's Quarterly Reports on Form 10-Q for the quarters
ended April 1, 2007 and July 1, 2007 and FoxHollow's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2007 and June 30, 2007, which are filed with the Securities and
Exchange Commission and available at the SEC's website at www.sec.gov. The information set
forth herein speaks only as of the date hereof, and ev3 and FoxHollow disclaim any intention or
obligation to update any forward-looking statements as a result of developments occurring
after the date of this presentation.
Forward-Looking Statements
(continued)
|
Consistent Revenue Growth
Last 5 Quarters
Annual
Q3 Q4 Q1 Q2
51.9 57.7 61.5 50.6
65.4
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
East 37 68 86 134 202.4
50%+ CAGR
$ Millions
+29%
$37
$68
$86
$134
$202
02
03
04
05
06
$51.9
$57.7
$61.5
$65.4
Q3
Q4
Q1
$ Millions
Q2
$50.6
2006
2007
|
Balanced Revenue Growth
Q3 Q3 Q1 Q2
31.1 34.6 35.1 30.7
39.6
+29%
$31.1
$34.6
$35.1
Q3
Q4
Q1
Q2
$39.6
$30.7
+30%
+24%
+33%
Total U.S.
Total International
Worldwide Cardio Peripheral
Worldwide Neurovascular
Revenues
($ Millions)
Q3 Q4 Q1 Q2
Q3 Q4 Q1 Q2
20.7 23.7 25 20
24.8
Q3 Q4 Q1 Q2
20.8 23.1 26.4 19.9
25.8
$31.2
$34.0
$20.8
$23.1
$26.4
$20.7
$23.7
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
$40.6
$30.6
2006
2007
$20.0
$36.5
$25.0
$24.8
$25.8
$19.9
|
ev3 Growth Drivers 2007
Market
ev3 Product
Protege
ev3 Estimates
$150M
|
Protege Stent
Guidewire
External
Carotid Artery
Internal Carotid Artery
SpiderFX Filter
ev3 Carotid Stent and SpiderFX
U.S. Launch Q1 '07
|
Stents Fracture in Multiple Ways
|
Clinical Research in the SFA: A strategic
Commitment-
Durability II - SFA FDA Trial
30 sites, 287 patients
30 day MAE, 3 month, 6 month, annually for 5 years
Primary endpoints, patency and fracture at 1 year
Lesions treated 7-16 CM
Durability I- European Efficacy Trial
Enrollment Completed 152 patients, up to 14 cm
MAE at 6 month and 12 month patency and fracture
6 month Data to be presented January 2008
Prospero-European Registry for Durability and Patency
Enrollment 814 patients enrolled, 1000 scheduled, up to 14 cm
MAE at 30 days, 12 month patency and fracture
Duplex Ultrasound and Angiography
|
Linear Release System
Axium(tm) Detachable Coil System
Axium 3D Coil
Unique Implant Design
Optimized for softness and packability
Conformable and stable coil design
Platinum and Surface Modified
Instant Reliable Detachment
Single handed actuator
Simple, elegant design
WW Detachable Coil Opportunity
2005
2010
CAGR
$253 M
$570 M
18%
WW Neurovascular Opportunity
2005
2010
CAGR
$550 M
$1,350 M
20%
|
Brain AVM
Angio confirms arteriovenous malformation
Final angiogram: patient well, no surgery, back to work, no deficit
|
Hemorrhagic Stroke
Aneurysm neck bridging
WW Market Opportunity
2005 2010 CAGR
$25M $65M 20%+
Ischemic Stroke
Stenotic disease
Clot retrieval
Flow restoration
WW Market Opportunity
2005 2010 CAGR
$5M $260M 100%+
SOLO(tm) Neurovascular Stent
Platform
Product
Self expanding
neurovascular stent
Placed with a
standard .018 or.027
micro-catheter
Fully re-capturable
Physician controlled,
on demand
detachment
SOLO is an emerging
platform
Hemorrhagic
Stroke - Today
Ischemic Stroke
- Future
Neck Bridging
Note: 360° loop
With 180° stent
placement
|
Improved Operating Performance
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
East 37 68 86 134 202.4
Increasing Sales Force
Productivity
EBITDA, Excluding SBC
Consistent Revenue Growth
Improving Gross Margin
Q4 '04 Q4 05 Q4 06 Q1 07 Q2 07
-21.1 -16.5 3 -1.8 -3.5
$(16.5)
$3.0
59.5%
Q2 05 Q2 06 Q2 07
59.5 64.1 65.8
64.1%
65.8%
Q2 '05
Q2 '06
Q2 '07
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
East 37 68 86 134 202.4
02
03
04
05
06
$37
$68
$86
$134
$202
$ Millions
50%+ CAGR
Q2 05 Q2 06 Q2 07
734 1196 1511
$734
$1,196
$1,511
Q2 '05
Q2 '06
Q2 '07
106% Growth
Q4 '05
Q4 '06
Q1 '07
Q2 '07
$(1.2)
$(3.5)
|
CREATING A GLOBAL
LEADER IN ENDOVASCULAR DEVICES
|
Important Additional Information for
Investors and Stockholders
This communication is being made in respect of the proposed business combination involving ev3 and
FoxHollow. In connection with the proposed transaction, ev3 filed with the SEC a registration
statement on Form S-4, containing an information/proxy statement-prospectus and other relevant
materials and each of ev3 and FoxHollow plan to file with the SEC other documents regarding the
proposed transaction. The final information/proxy statement-prospectus will be mailed to stockholders
of ev3 and FoxHollow. INVESTORS AND SECURITY HOLDERS OF EV3 AND FOXHOLLOW ARE
URGED TO READ THE INFORMATION/PROXY STATEMENT-PROSPECTUS (INCLUDING ANY
AMENDMENTS OR SUPPLEMENTS) AND OTHER DOCUMENTS FILED WITH THE SEC
CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT EV3, FOXHOLLOW AND THE PROPOSED
TRANSACTION.
Investors and security holders will be able to obtain free copies of the registration statement and the
information/proxy statement-prospectus (when available) and other documents filed with the SEC by
ev3 and FoxHollow at the SEC's website at www.sec.gov. Free copies of the registration statement
and the information/proxy statement-prospectus (when available) and other documents filed with the
SEC can also be obtained by directing a request to ev3, Attention: Investor Relations Dept., telephone:
(763) 398-7000; or at ir@ev3.net or to FoxHollow, Attention: Investor Relations Dept., telephone:
(650) 421-8449, or at investorrelations@foxhollow.com. In addition, investors and security holders
may access copies of the documents filed with the SEC by ev3 on ev3's website at www.ev3.net, and
investors and security holders may access copies of the documents filed with the SEC by FoxHollow on
FoxHollow's website at www.foxhollowtech.com.
|
Participants in the Solicitation
ev3, FoxHollow and their respective directors and executive officers and other persons
may be deemed to be participants in the solicitation of proxies from the stockholders of
FoxHollow in respect of the proposed transaction. Information regarding ev3's directors
and executive officers is available in its Annual Report on Form 10-K for the year ended
December 31, 2006, filed with the SEC on March 14, 2007 and the proxy statement for
ev3's 2007 Annual Meeting of Stockholders, filed with the SEC on April 16, 2007.
Information regarding FoxHollow's directors and executive officers is available in its Annual
Report on Form 10-K for the year ended December 31, 2006, filed with the SEC on March
13, 2007 and the proxy statement for FoxHollow's 2007 Annual Meeting of Stockholders,
filed with the SEC on April 30, 2007. If and to the extent that any of the ev3 or FoxHollow
participants will receive any additional benefits in connection with the merger that are
unknown as of the date of this filing, the details of those benefits will be described in the
definitive information/proxy statement-prospectus relating to the merger. Investors and
stockholders can obtain more detailed information regarding the direct and indirect
interests of ev3's and FoxHollow's directors and executive officers in the merger by
reading the definitive information/proxy statement-prospectus when it becomes available.
|
Use of Non-GAAP Financial Measures
In addition to the financial measures prepared in accordance with generally accepted
accounting principles (GAAP), ev3 uses the non-GAAP financial measures, such as
"adjusted EPS" as supplemental measures of performance and believes these measures
facilitate operating performance comparisons from period to period and company to
company by factoring out potential differences caused by variations in capital structure,
tax positions, depreciation, non-cash charges and certain large and unpredictable charges.
ev3 also believes that the presentation of these measures provides useful information to
investors in evaluating the company's operations, period over period. Non-GAAP
measures have limitations as analytical tools, and should not be considered in isolation, or
as a substitute for analysis of the company's results as reported under GAAP. When
analyzing ev3's operating performance, investors should not consider these non-GAAP
measures as a substitute for net income (loss) prepared in accordance with GAAP.
|
The union of need and solution
MINIMALLY INVASIVE SOLUTIONS
THE PAD CHALLENGE
PTA
$235 M
Atherectomy
$200 M
Stents
$635 M
Total
Prevalence
8 million people
Receive Treatment
2 million
No Treatment
6 million
Estimated 2007 US Market Size
Estimated US Prevalence
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
East 2 6 90 20.4
|
Diverse Endovascular Product Offering
Best-in-Class Solutions
For Peripheral Vascular
Disease
Stents
Everflex
Everflex Long
Nanoflex*
Primus
Protege Rx
Protege Biggs
PTA
.014
.018
.035
Longs and large diameters
Atherectomy
SilverHawk Plaque Excision System
TurboHawk
RockHawk
NightHawk
Embolic Protection
SpiderFX
Procedure Support / Other
Wires
Snares
Infusion catheters
Combination Facilitates Physician Choice
Amongst Variety of Treatment Alternatives
Thrombectomy
Rinspirator Removal System
X-Sixer
Helix
* Pending 510(k) approval
|
Transaction Overview
Fourth Quarter of 2007
FoxHollow stockholders, customary closing conditions and anti-
trust clearance, including HSR
Warburg Pincus and The Vertical Group, together owning 56.8% of
ev3 shares, have approved ev3's issuance of shares in connection
with the transaction and the amendment to ev3's amended and
restated certificate of incorporation to increase the number of
shares of common stock ev3 is authorized to issue
Certain FoxHollow stockholders including Dr. John Simpson and
Merck, together owning 31.7% of FoxHollow shares have agreed to
vote in favor of transaction
Chairman and CEO: Jim Corbett
Vice Chairman and Chief Scientist: John Simpson, M.D., Ph.D
ev3: Six Directors
FoxHollow: Four Directors
ev3: 59%
FoxHollow: 41%
1.45 ev3 shares and $2.75 in cash for each FoxHollow share valued
at $25.92 per share, for approximate total consideration of $780
million, based on the companies' closing stock prices on July 20,
2007
Purchase Consideration
Pro Forma
Ownership
Board / Management
Approvals
Anticipated Timing to
Close
|
Guidance
Revenues:
2008: In the range of $585-$615 million
2009: In the range of $700-$750 million
Projected EPS*:
2008: In the range of $0.60 - $0.70
2009: In the range of $0.90 - $1.10
Including the impact of new and existing amortization expense, excluding the impact of one-time costs related to the
transaction; EPS guidance is based on pro forma, post merger, shares outstanding of approximately 107 million.
ev3's guidance currently anticipates no provision for U.S. Federal or State income taxes, and an approximately $1.0 million provision for
foreign taxes. As a result of ev3's existing $468.8 million in U.S and foreign gross net operating loss carryforwards ("NOLs"), the
company does not expect to pay U.S. Federal income taxes in 2008 or the foreseeable future. In the event that ev3 deems it necessary
to record a provision for U.S. Federal taxes, the company expects that the tax rate would be approximately 35 percent.
|
CREATING A GLOBAL
LEADER IN ENDOVASCULAR DEVICES
|
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