UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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SCHEDULE 14A
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ALPHATEC HOLDINGS, INC.
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NASDAQ: ATEC December 2009 www.alphatecspine.com Solutions For The Aging Spine Acquisition of Scientx Groupe SAS 5818 El Camino Real, Carlsbad, CA 92008 www.alphatecspine.com TM Filed by Alphatec Holdings, Inc. Under the Securities Exchange Act of 1934 Subject Company: Alphatec Holdings, Inc. Commission File No: 000-52024 |
Slide 1 Forward Looking Statements This presentation and our responses to your questions during the question and answer period will contain our estimated or anticipated future results. These forward-looking statements are typically identified by the words "anticipates," "believes," "expects," "intends,"
"plans," "future," "strategy," or words of similar meaning.
These statements reflect our current analysis of existing trends and information, and represent our judgment only as of today. Actual results could differ materially from those anticipated. As a result, you are cautioned not to rely on these forward-looking statements. You should refer to the "Risk Factors" and other information in the reports that we file from time to time with the Securities & Exchange Commission. The Company disclaims any intent or obligation to update any forward-looking statements made here today. |
Slide 2 Alphatec Acquisition of with Scientx Terms of Acquisition Agreement All stock transaction with a fixed exchange ratio of 24M shares of common stock for 100% of the outstanding shares of Scientx Pro Forma Ownership Alphatec Shareholders 69% Scientx Shareholders 31% Transaction is scheduled to close in 1Q 2010, subject to shareholder approval and other customary closing conditions Extraordinary transaction costs in the third and fourth quarter will impact previously issued EPS guidance Transaction expected to be adjusted EBITDA accretive for full year 2010 Key management: Dirk Kuyper CEO, Peter Wulff CFO, Oliver Burckhardt President of International, Chief Marketing Officer The transaction was unanimously approved by a Special Committee of independent members of the board. Following such approval by the Special Committee, the entire board unanimously approved the transaction. |
Slide
3 Highlights of Acquisition Agreement Creates global scale and presence to compete across major markets Complements product portfolio with differentiated products in multiple segments Expands focus on aging spine market segment Provides immediate cross selling opportunities with significant revenue and costs synergies Represents pro-forma combined $180-$182M 2009 revenue, 25-30% growth y/y Pro forma 2010 revenue estimated to reach $220-$225M; $32-$35M adjusted EBITDA (12 month annualized) Highlights & Investment Considerations |
Slide
4 Alphatec Strategic Imperatives Scale Global Presence Differentiated Portfolio Product Breadth Strategic review prioritized the following four key imperatives for sustained growth:
Critical mass: marketplace leverage and augmented shelf space
Maximize production facility investment Purchasing leverage to drive margins Maximize profitability and cash flow Speed to market/revenues for invested technologies International footprint provides access to growth markets and technologies Significant cross selling opportunity Competitive advantage-door opener Gain market share within each segment Build out aging spine portfolio Maximize revenue per procedure Create barriers to entry Compete for hospital contracts |
Slide
5 Scientx The Most Compelling Alternative Scale Global Presence Differentiated Portfolio Product Breadth Combining Alphatec & Scientx significantly improves each growth driver:
$180M to $182M combined global 2009 revenue Extensive US and OUS distribution networks, 450 sales reps Manufacturing scale and efficiencies Enhanced profit and cash flow Distribution in over 50 countries Immediate access to markets for key technologies Leader in scientific education (Inspiration, Argos Spine) Extensive portfolio of differentiated products Key technologies in underserved aging spine segments: Dynamic fusion, Osteoporosis, VCF, and stenosis Disruptive technologies: MIS and stand alone IBF solutions, ceramic cervical disc, and biologics Extensive product portfolio competitive with market leaders Increased ability to control the sale/compete for contracts & tenders Opportunity to maximize revenue per procedure |
Scientx - Company Overview DYNAMIC SOLUTIONS COMPANY: Founded 1988 in France Acquired by HealthpointCapital in 2007 Headquarters: Guyancourt, France Manufacturing: Beaurais, France Sales forecast 2009: est. $52M 150 global employees MANAGEMENT: CEO: Oliver Burckhardt CFO/COO: Ann Custin DISTRIBUTION: Regional offices: USA, LA, AP, EU, MEA Distribution network in 52 countries Direct distribution: France, UK, Italy 180 sales representatives worldwide PRODUCT PORTFOLIO: Dynamic solutions for fusion and non-fusion Platforms: cervical TDR & semi rigid rods Full line of spinal offering Pioneer in IFD PEEK and dynamic fusion Slide 6 |
France: 20% mkt share #2 mkt position MEA: 8% mkt share #3 mkt position Spain, Italy, UK: 5% mkt share #5 mkt position China/Japan: 1% mkt share Eastern Europe: 2% mkt share Brazil: 14% mkt share #6 mkt position Mexico: 3% mkt share #6 mkt position Global distribution network in 52 countries France: #2 market position Spain, Italy, UK: #5 market position 180 sales reps worldwide (70% exclusive) Scientx Broad Global Distribution Slide 7 |
Training & Education Science + SX Clinical Marketing + Global training initiatives 3,000 physicians trained under the Inspiration philosophy www.inspiration-group.com Global alliances with Key Opinion Leaders and leading institutions Internal analysis of clinical data Longstanding collaboration with OUS SAB Scientx Tradition of Education & Science Slide 8 |
Scientx - Innovator in Spine TECORP VBR: Expandable Multiple footprints Clinical implantations worldwide ISOBAR SEMI RIGID ROD: First dynamic fusion device Multiple configurations 30,000 implantations worldwide DISCOCERV: First ceramic-ceramic TDR 3,000 implantations worldwide PCP CERVICAL CAGE-PLATE: First PEEK cage plate Multiple configurations 10,000 implantations worldwide PLATFORM TECHNOLOGIES VBR DYNAMIC FUSION TDR CAGE PLATE Slide 9 Not all products are currently approved for sale in the USA |
*Dynamic Fusion: Load
Sharing versus Load Bearing Wolffs Law: Bone Structure Adapts to the Loading Conditions RIGID FUSION: LOAD BEARING DYNAMIC FUSION: LOAD SHARING Dynamic Fusion Addresses Unmet Needs and may Potentially: Improve fusion rates Allow for graft settling Protect adjacent levels Standard of Care is Fusion Clinical outcome of fusion procedures need improvement Adjacent degeneration leads to significant number of re-operations (cost) Isobar Dynamic Fusion Addresses Unmet Fusion Needs Slide 10 *Dynamic Fusion concept Intl market strategy, US strategy pending FDA 522 post-market
study |
One of
the Largest & Most Unique Market Potentials is *Dynamic Fusion Continuum of Spine Care Progression of Degeneration The Dynamic Fusion Concept is Applicable Across Multiple Fusion Pathologies Non-Fusion (Motion preserving) 10% of Market Dynamic Fusion (Dynamic motion stabilization) 70% of market Fusion (Motion stabilization) 20% of market Dynamic Fusion: Differentiation within Fusion Market Slide 11 *Dynamic Fusion concept Intl market strategy, US strategy pending FDA 522
post-market study |
Strengthening of the Aging Spine Strategy The Fusion of Technology & Science AGING SPINE DYNAMIC FUSION + Enhances aging spine portfolio Build aging spine brand by introducing new technologies OUS prior to US launch Distribution in more than 50 countries Capitalize on aging spine investments: OsseoFix, OsseoScrew, HeliFix Dynamic Fusion concept adapted for aging spine: Clinical data supporting benefits for aging population Differentiated products in each major market segment Build clinical and comparative data for reimbursement: Come to market in US with clinical data from international markets Scientx Key Opinion Leaders (KOLs) provide credibility Slide 12 |
USA Over 65 population to double to 70+ million by 2030 Globally
Over 65 population to double to 1 billion by 2030 1/8 of world population will be over 65 by 2030 Chart: National Institute on Aging, US Dept. of State and National Institutes of
Health Dramatic increase in % of global population over 65 Scientx distribution in 50+ countries outside USA effectively increases opportunity by over 14x Scientx Globalizes Aging Spine Opportunity Slide 13 |
Lumbar Interbody Cervical VCF Biologics Core Products: Zodiac TTL IN Xenon Ilico SE MIS Core Products: Novel Interbody line TeCorp Line Core Products: Osseofix+ Core Products: Trestle Solanas Core Products: VIP Allografts XBone Meaningful Differentiation in Multiple Categories Alphatec Offering Scientx Offering Total addressable market: $8.5 - $9 billion worldwide Differentiated and disruptive technologies across multiple segments Differentiated Products: ISOBAR Evolution OSSEOSCREW HeliFix HeliFuse SCS II Differentiated Products: GLIF Samarys Cervical ALIF SA Differentiated Products: OSSEOFIX Differentiated Products: DiscoCerv PCB Evolution Differentiated Products: AmnioShield ProFuse Equivabone Combined Company Product Portfolio Slide 14 Not all products are currently approved for sale in the USA |
Solus Trestle Other Solanas OsseoFix Illico OsseoScrew GLIF Asia Australia Latin America MEA Europe Alphatec benefits from: Distribution in over 50 countries Surgeon education and training Global surgeon societies Not all products are currently approved for sale in the USA or all of the jurisdictions on this slide Cross Selling Opportunity: Alphatec Global Access Slide 15 Helifix/Helifuse |
Isobar USA Scientx product opportunity: US distribution Manufacturing Alphatec regulatory team PCB cage plate TeCorp DOS Dual dampener Not all products are currently approved for sale in the USA Cross Selling Opportunity: Scientx Product Access Slide 16 |
Global
Distribution Manufacturing Marketing SCIENTX ATEC COMBINED R&D Scale Drives Efficiencies Across all Operating Functions Scientific & Clinical Education Combined Strength In Core Competencies Slide 17 *Japan |
Slide
18 Scientx Alphatec Pro Forma Revenues (2009E) Total - $52M Total - $128-$130M Total - $180-$182M Gross Margin* (2009E) 58% 66% 64% Growth rate 10% (YTD09) 30% (YTD09) 25% (2009E) Distribution 180 reps >50 countries OUS 70% exclusive 263 reps US focus 75% exclusive 443 reps Global Focus 73% exclusive 2009 Product Launches 3 12 15 Pro forma Company Snapshot US EU AP ROW 23% 57% 10% 10% 81% 3% 15% 1% 64% 19% 14% 3% *excluding purchase accounting adjustments |
Slide
19 Consolidate US headquarters Consolidate SG&A ($2M + annualized potential) Purchasing contracts/supply chain management Elimination of redundancies Manufacturing of Scientx products Direct sales in key countries OUS Cross-sell Alphatec products into global markets Accelerate aging spine product adoption OUS Drive Scientx product sales in US Immediate Cost Synergies Longer Term Cost Synergies Revenue Synergies Maximizing Sales and Profitability Significant Synergies |
Slide
20 Alphatec Spine Guidance 2009 Revenues: $128M-130M 2009 EBITDA: $12.5M-14.5M Fully Diluted Shares: 52.5M Scientx Guidance 2009 Revenues: $52M 2009 EBITDA: $(2M) Pro Forma Combined Entity 2009 Revenues: $180M-$182M 2010* Revenues: $220M-$225M 2009 EBITDA: $10.5M-$12.5M 2010* EBITDA: $32M-$35M Total Common Shares: 76.5M * 2010 pro forma 12 month annualized Financials (dollars in millions) |
Complementary Strategic Fit Positioning: enhances aging spine and adds cervical non fusion Compete globally in multiple segments Dynamic fusion is a powerful concept for aging spine Distribution - US vs. OUS Global market presence Exclusive distribution relationships Product lines: complements and enhances the line We will compete with market leaders in all market segments Management teams: have worked together in the past No ramp-up time Competence: manufacturing and R&D vs. marketing and scientific education No gaps in competence Joint ownership No surprises and fair value for the acquisition Significant cost synergies and earnings leverage Elimination of redundant US operations Significant synergies across SG&A and manufacturing CEOs Perspective: Opportunities Beyond Growth Initiatives Slide 21 |
Slide
22 Highlights of Acquisition Agreement Creates global scale and presence to compete across major markets Complements product portfolio with differentiated products in multiple segments Expands focus on aging spine market segment Provides immediate cross selling opportunities with significant revenue and costs synergies Represents pro-forma combined $180-$182M 2009 revenue, 25-30% growth y/y Pro forma 2010 revenue estimated to reach $220-$225M; $32-$35M adjusted EBITDA (12 month annualized) Highlights |
Important Additional Information Will Be Filed with the SEC In connection with the proposed transaction, the Company will file a proxy statement
with the SEC. The proxy statement will be mailed to stockholders of
Alphatec and will contain important information about Alphatec,
Scientx, the transaction and related matters. SHAREHOLDERS
ARE STRONGLY ADVISED TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Shareholders may obtain a free
copy of the proxy statement (when available) and other documents filed by the
Company from the SECs website at http://www.sec.gov. The proxy statement (when available) and such other documents may also be obtained for free from the Companys website at http://www.alphatecspine.com or by directing such request to Alphatec Spine, Inc., Investor Relations, 5818 El Camino Real, Carlsbad, CA 92008, telephone: (760)
494-6746. Alphatec, Scientx and their respective directors and executive officers may be
deemed to be participants in the solicitation of proxies in connection with
the proposed acquisition. Information regarding Alphatecs directors and
executive officers is contained in Alphatecs Annual Report on Form
10-K for the fiscal year ended December 31, 2008 and its proxy statement dated May 8, 2009, which are filed with the SEC. As of December 15, 2009, Alphatecs directors and executive officers
beneficially owned approximately 41.2% of Alphatecs common stock. A
more complete description of the interests of Alphatecs directors and
officers in the acquisition will be available in the proxy statement relating
to the acquisition. |
Use
Non-GAAP Financial Measures Alphatec provides its financial results in accordance with accounting principles generally accepted in the
United States (GAAP). The Company also uses forward-looking non-GAAP financial measures
in addition to and in conjunction with corresponding GAAP measures to help analyze the
performance of its core business, in connection with the preparation of annual budgets, and in
measuring performance for some forms of compensation. In particular, Alphatec presents (i)
adjusted EBITDA, and (ii) combined pro forma financial information, which in each case are
non-GAAP financial measures. Non-GAAP financial measures reflect an additional way of viewing aspects of Alphatecs operations
that, when viewed with the GAAP results, provide a more complete understanding of
Alphatecs results of operations and the factors and trends affecting Alphatecs
business. However, non-GAAP financial measures should be considered as a supplement to, and
not as a substitute for, or superior to, the corresponding measures calculated in accordance with
GAAP. Non-GAAP financial measures used by the Company may differ from the non-GAAP
financial measures used by other companies, including Alphatecs competitors. Alphatec believes the most directly comparable GAAP financial measure to adjusted EBITDA is net income
(loss). Adjusted EBITDA is net income (loss) excluding the effects of interest, taxes, depreciation,
amortization, stock-based compensation costs, and other non-recurring income of expense
items, such as in-process research and development, expenses related to the transaction and
acquisition related restructuring expenses that are expected to occur following closing.
Alphatec has not included in this presentation a reconciliation of these forward-looking non-GAAP
financial measures to the most directly comparable GAAP financial measures because, due to
variability and difficulty in making accurate forecasts and projections or certain information
not being ascertainable or accessible, not all of the information necessary for a quantitative
reconciliation of the forward-looking non-GAAP financial measures to the most directly
comparable GAAP financial measures is available to the Company without unreasonable
efforts. The probable significance of providing these forward-looking non-GAAP financial measures without the directly comparable GAAP financial measures is that such GAAP financial measures may
be materially different from the corresponding non-GAAP financial measures.
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Solutions For The Aging
Spine 5815 El Camino Real, Carlsbad, CA 92008 www.alphatecspine.com TM |