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
Date of report (Date of earliest event reported): January 13, 2020
STRATA SKIN SCIENCES, INC.
(Exact Name of Registrant Specified in Charter)
|
Delaware
|
000-51481
|
13-3986004
|
|
(State or Other
|
(Commission File
|
(I.R.S. Employer
|
|
Jurisdiction of
|
Number)
|
Identification No.)
|
|
Incorporation)
|
|
|
|
|
5 Walnut Grove Drive, Suite 140, Horsham, Pennsylvania
|
19044
|
|
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
|
Registrant's telephone number, including area code: 215-619-3200
(Former Name or Former Address, if Changed Since Last Report)
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:
□ 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))
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class
|
Trading
Symbol(s) |
Name of each exchange on which registered
|
|
Common Stock, $0.001 par value per share
|
SSKN
|
The NASDAQ Stock Market LLC
|
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).
Emerging growth company □
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. □
Item 7.01 Regulation FD Disclosure
On January 13, 2020, Strata Skin Sciences (the “Company”) posted an investor presentation to its website at https://strataskinsciencesinc.gcs-web.com/. A copy of the investor presentation is attached as Exhibit 99.1 to this Current Report on
Form 8-K.
The information in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed subject to the requirements of amended Item 10 of Regulation S-K, nor shall it be deemed incorporated by reference into any filing of the
Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing. The furnishing of this information hereby shall not be deemed
an admission as to the materiality of any such information.
Safe Harbor
This Current Report on Form 8-K, and oral statements made regarding the subject matter hereof, contains "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995, or the Reform
Act, which may include, but are not limited to, statements regarding the Company’s revenue growth estimates, plans, objectives, expectations and intentions and other statements contained in this Current Report on Form 8-K that are not historical
facts, including statements identified by words such as “believe,” “plan,” “seek,” “expect,” “intend,” “estimate,” “anticipate,” “will,” and similar expressions. All statements addressing the Company’s ability to generate the anticipated revenue
stream, the Company’s ability to generate sufficient cash flow to fund the Company’s ongoing operations and research and development activities beginning at any time in the future, the Company’s ability to implement business strategies, regulatory
and political factors or conditions affecting the Company and/or the medical device industry in general, the public’s reaction to the Company’s advertisements and marketing campaigns, the Company’s ability to build a leading franchise in
dermatology and aesthetics, and the Company’s ability to grow revenues and sustain that growth as well as statements expressing optimism or pessimism about future operating results are forward-looking statements within the meaning of the Reform
Act. The forward-looking statements are based on management’s current views and assumptions regarding future events and operating performance, and are inherently subject to significant business, economic, and competitive uncertainties and
contingencies and changes in circumstances, many of which are beyond the Company’s control. The statements in this press release are made as of the date hereof, even if subsequently made available by the Company on its website or otherwise. The
Company does not undertake any obligation to update or revise these statements to reflect events or circumstances occurring after the date of this press release.
Although the Company does not make forward-looking statements unless it believes it has a reasonable basis for doing so, the Company cannot guarantee their accuracy. The foregoing factors, among others, could cause
actual results to differ materially from those described in these forward-looking statements. For a list of other factors which could affect the Company’s results, including revenue growth estimates, see the Company’s filings with the Securities
and Exchange Commission, including “Cautionary Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors,” and “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” set forth in the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2019. No undue reliance should be placed on any forward-looking statements.
- 2 -
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
SIGNATURE
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.
|
|
STRATA SKIN SCIENCES, INC.
|
|
|
|
|
|
|
|
|
Date: January 13, 2020
|
By:
|
/s/ Matthew C. Hill
|
|
|
|
|
Matthew C. Hill
|
|
|
|
Chief Financial Officer
|
|
|
- 3 -
Investor Presentation January 2020 Driving Value to Dermatology Partners Matching Patients with
Clinics NASDAQ: SSKN
Safe Harbor Statement This presentation includes “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995 that are subject to risks, uncertainties and other factors. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any
statements of the plans, strategies and objectives of management for future operations; any statements regarding revenue growth, product development, product extensions, product integration or product marketing; any statements regarding
continued compliance with government regulations, changing legislation, insurance or regulatory environments; any statements of expectation or belief and any statements of assumptions underlying any of the foregoing; any are risks and
uncertainties related to successfully integrating the products and employees of the Company, as well as the ability to ensure continued regulatory compliance, performance and/or market growth. These risks, uncertainties and other factors, and
the general risks associated with the businesses of the Company described in the reports and other documents filed with the SEC, could cause actual results to differ materially from those referred to, implied or expressed in the forward-looking
statements. The Company cautions readers not to rely on these forward-looking statements. All forward-looking statements are based on information currently available to the Company and are qualified in their entirety by this cautionary
statement. The Company anticipates that subsequent events and developments will cause its views to change. The information contained in this presentation speaks as of the date hereof and the Company has and undertakes no obligation to update
or revise these forward-looking statements, whether as a result of new information, future events or otherwise. 2
STRATA Investment Highlights A Win-Win-Win CompanyFor patients – safest, most effective treatment, no
side effectsFor clinics – stable increased revenue baseFor Payers – the least expensive treatment availableExcimer Laser Technology for Dermatology IndicationsPsoriasis, Vitiligo, Atopic Dermatitis and LeukodermaLarge Market Opportunity 35
Million lives – $6 Billion annual revenueTreatment modality use growing > 25% per yearReimbursement - 3 unique CPT codes 25% target clinic penetrationUnique and Proven Business ModelBest in class XTRAC® and VTRAC ® Excimer Laser
technologiesDomestic recurring revenue driven by DTC*OUS recurring revenue - Announced 7/2019 - 10 placed in 2H/2019Providing “business in a box” for dermatology practicesGrowing Install base – low hanging fruit 3 *DTC – Direct To Consumer
awareness and advertising
How XTRAC Works - Psoriasis 4 After 4 tx After 2 tx Baseline Beam of UVB light applied to the
affected area UVB light induces apoptosis of the keratinocytes and T cells in the dermis Promotes immunosuppression Induces alterations in cytokine profile 150+ peer reviewed published clinical studies PASI - A 75% reduction in
the Psoriasis Area and Severity Index (PASI) score (PASI 75) is the current benchmark of primary endpoints for most clinical trials of psoriasis Clinical Protocol – 6.2 treatments to PASI75
How XTRAC Works - Vitiligo Long-term skin condition characterized by patches of skin losing its pigment
Disease is believed to be due to genetic susceptibility where the autoimmune disease is then triggeredPotentially the immune system is attacking and destroying melanocytes of the skinLife-altering disease that leads to low self esteem UVB light
reduces the immune system’s attack on the melanocytes and enhances the migration and proliferation of melanocytes resulting in re-pigmentation 5 STRATA HAS EXCLUSIVE LICENSE FOR TREATMENT OF VITILIGO USING EXCIMER LASER After 29 tx After 18
tx Baseline
XTRAC a True Partnership: A complete business solution Clinical Support Reimbursement Support Call
Center Support Field Service Support Consumables and Parts Laser Upgrades Co-pay Support DTC Marketing 6
Domestic XTRAC Revenue Funnel 7 REOCCURRENCE DTC
ADVERTISING ASSIGNING A DOCTOR PARTNER PATIENTAPPOINTMENT TREATMENT WIN WIN WIN DOCTOR PATIENT STRATA (AND PAYER) INTEREST CREATION IN-HOUSE CALL CENTER INSURANCE ADVOCACY VERIFY APPOINTMENTPrescription of
treatment VERIFY XTRACTREATMENT Patient leads turn into appointmentsAppointments drive XTRAC partner revenueOther revenue for the partner clinicRevenue for STRATA
XTRAC helps patients Live Clear, Live Free… https://youtu.be/GdMBliZYy70 8
50,000 People See XTRAC Ads Daily 9
196% of Psoriasis and 76% of Vitiligo patients had XTRAC as a covered insurance benefit 2New Patients
captured in STRATA reimbursement system 21% 21% new patient growth in 2019; 86% covered by insurance1 10
STRATA’s Domestic Recurring Revenue Model 11 + 74 devices 23% growth 2.3% Growth 13%
Growth 1Reflects only partners that purchase treatment codes on an as needed basis. Other partners purchase codes on a fixed monthly billing 2Revenue is domestic recurring placements, net of discounts and co-pay support As of December 31,
2018 and 2019 ~
Growth of XTRAC Share in Groups *Combination of new XTRAC placements and Clinic acquisitions Domestic
Install Base Growth Drivers 12 1,673 clinics owned by 49 roll-up groups221 (13%) of which are XTRAC partnersStrata signed strategic expansion agreements with major groups Expansion into group clinic roll ups 300-400 clinics own Excimer
lasers Conversion to an XTRAC partner clinic leads to immediate revenue15 Comebacks in 2018 (4 in 2017)19 Comebacks in 2019 Comebacks 820 1,673 221* As of December 31, 2019 As of December 31, 2018 746 1,200 86* XTRAC
Partners Group Clinics
Domestic Market: Installed Base – sales and service engine 13 Territories color coded Overview820
Partner XTRAC clinics155+ sold XTRAC5 Regions26 Sales Territories15 Field Service TechsIn-house call center to qualify leadsOnly one competitor in U.S.
Partner Academic Institutions 14
International Market: Installed Base Strategic Growth TargetsMajor Markets – China, Japan, Saudi
Arabia, South KoreaInsurance covered in most marketsUsage/device higher than domestic market – untapped potential in U.S.1,300 OUS devices sold and in servicePlacement recurring revenue model agreement executed for South Korea July 2019 – 10
devices placed
2H/2019 15
Financial Metrics 16 Note: all quarterly numbers are unaudited Q4 2019 numbers are preliminary and
unaudited * Total recurring revenue over total installed base Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Dermatology recurring revenue $4,770 $5,022 $5,393 $5,867 $5,312 $5,839
$5,991 ~$6,550 Dermatology equipment revenue $1,968 $2,366 $2,336 $2,132 $2,171 $1,886 $1,489 ~$2,300 Total revenue $6,738 $7,388 $7,729 $7,999 $7,483 $7,725 $7,480 ~$8,850 Domestic partner
installed base 746 746 746 746 754 764 784 820 International installed base - - - - - - 2 10 Average recurring revenue/device* $6,394 $6,732 $7,229 $7,865 $7,045 $7,643 $7,622 ~$7,891 Dermatology
recurring revenue margin 58.3% 61.8% 66.7% 71.5% 66.2% 70.3% 67.2% * Total Company margin 50.4% 52.0% 59.9% 65.7% 61.6% 63.6% 61.8% * (in thousands except for average recurring revenue/device and installed
base)
(As of January 9, 2020) * On an as converted basis of the convertible preferred stock** Does not include
750K warrants with a weighted average exercise price of $4.12 as of September 30, 2019 of which 600K expire by June 2020** Does not include 4.0M options with a weighted average exercise price of $1.78 as of September 30, 2019 Common stock
outstanding 32.9M Series C preferred shares* 0.7M Total** 33.6M 17 Financial Profile Shares and Share Equivalents – Market cap*- $73M
STRATA Investment Highlights A Win-Win-Win CompanyFor patients – safest, most effective treatment, no
side effectsFor clinics – stable increased revenue baseFor Payers – the least expensive treatment availableExcimer Laser Technology for Dermatology IndicationsPsoriasis, Vitiligo, Atopic Dermatitis and LeukodermaLarge Market Opportunity 35
Million lives – $6 Billion annual revenueTreatment modality use growing > 25% per yearReimbursement - 3 unique CPT codes 25% target clinic penetrationUnique and Proven Business ModelBest in class XTRAC® and VTRAC ® Excimer Laser
technologiesDomestic recurring revenue driven by DTC*OUS recurring revenue - Announced 7/2019 - 10 placed 2H/2019Providing “business in a box” for dermatology practicesGrowing Install base – low hanging fruit 18 *DTC – Direct To Consumer
awareness and advertising
Investor Presentation January 2020 Driving Value to Dermatology Partners Matching Patients with
Clinics NASDAQ: SSKN
Appendix 20
Additional Creative 21 https://youtu.be/LbmTKkN0Aq4
XTRAC® Excimer laser is FDA cleared for Psoriasis, Vitiligo, Atopic Dermatitis and Leukoderma. It uses a
highly targeted beam of 308nm UVB to treat affected skin without damaging surrounding healthy tissue. Treatment has minimal side effects, avoids messy topicals and high cost of biologics. #1 Prescribed Targeted Therapy for Psoriasis and
Vitiligo by Dermatologists 22
Continuous technology investment and business growth 23 510 (K) FDA
Approval AL-7000 Ultra Velocity 400 Velocity 700 Velocity 7 Series S3 2000 2005 2008 2010 2014 2018 CPT code Approval DTC platform creation 510 (K) FDA Approval (MMD)* Full Insurance
Reimbursement 2012 *MMD tip is a diagnostic accessory for XTRAC used in optimal therapeutic dose (OTD) protocol that helps patients achieve Optimal Clinical Outcomes leading to increased Patient Retention
24 Historical phototherapy utilization. Trend in phototherapy utilization among Medicare beneficiaries
by billing code across all providers, 2000 to 2015. HCPCS, Healthcare Common Procedure Coding System; PUVA, psoralen plus ultraviolet A; UVB, ultraviolet B. 30% 30% annual growth in excimer laser utilization in the US
Multicenter Psoriasis Study1 Scalp Study3 124 patients were enrolled and 80 completed the
protocol. 72% achieved at least 75% clearing in an average of 6.2 treatments. 84% of patients reached improvement of 75% or better after 10 or fewer treatments. 50% of patients reached improvement of 90% or better after 10 or fewer treatments.
Common side effects included erythema, blisters, hyperpigmentation, and erosions, but were well tolerated. All patients improved. 17/35 (49%) of patients cleared>95% (mean: 21 treatments; range: 6-52) and 16/35 (45%) cleared 50-95%.
Conclusion - The excimer laser is a successful approach to treatment of psoriasis of the scalp being a simple treatment that can be performed in a short period of time and which has a high rate of effectiveness. Sample studies from 150+
clinical studies Vitiligo Study2 Out of 221 vitiligo patches treated, 50.6% showed 75% pigmentation or more, 25.5% achieved 100% pigmentation of their patches, and 64.3% showed 50% pigmentation or more. Lesions on the face responded better
than lesions elsewhere. Conclusion: The 308-nm xenon chloride excimer laser is an effective and safe modality for the treatment of vitiligo, with good results achieved in a relatively short duration of time. Pediatric Study4 4 children with
a mean age of 11.0 years and 12 adults with a mean age of 48.8 years completed the protocol. Both the children and the adult groups yielded a significant decrease in psoriatic severity scores of their respective target lesions. The children’s
group had a greater reduction (91.3% reduction) as compared to the adult treatment group (61.6% reduction). 1Multicenter Psoriasis Study - Feldman SR, Mellen BG, Housman TS, Fitzpatrick RE, Geronemus RG, Friedman PM, Vasily DB, Morison WL.
Efficacy of the 308-nm excimer laser for treatment of psoriasis: Results of a multicenter study. J Am Acad of Dermatol; vol. 46, no. 6, June 2002, pp. 900-906 2Vitiligo Study - Suhail Hadi, Patricia Tinio, Khalid Al-Ghaithi, Haitham Al-Qari,
Mohammad Al-Helalat, Mark Lebwohl, and James Spencer. Photomedicine and Laser Surgery. Treatment of Vitiligo Using the 308-nm Excimer Laser. Jun 2006.ahead of printhttp://doi.org/10.1089/pho.2006.24.3543Scalp Study - Morison WL, Atkinson DF and
Werthman L. Effective treatment of scalp psoriasis using the excimer (308nm) laser. Photodermatol Photoimmunol Photomed 2006; 22: 181-1834Pediatric Study - Pahlajani N, Katz BJ, Lonzano AM, Murphy F and Gottlieb A. Comparison of the Efficacy
and Safety of the 308nm Excimer laser for the Treatment of Localized Psoriasis in Adults and in Children: A Pilot Study. Pediatric Dermatology Vol. 22 No. 2, March/April 2005, pp. 161-165Induration Protocol Study - Taneja A, Trehan M, Taylor C.
308-nm Excimer Laser for the Treatment of Psoriasis – Induration-Based Dosimetry. Arch Dermatol, Vol. 139, June 2003, pp. 759-764High Dose Protocol Study - Michael Abrouk,1 Ethan Levin,2 Merrick Brodsky,1 Jessica R Gandy,1 Mio Nakamura,2 Tian
Hao Zhu,3 Benjamin Farahnik,4 John Koo,2 and Tina Bhutani, 2 Excimer laser for the treatment of psoriasis: safety, efficacy, and patient acceptability. Published online 2016 Dec 12. doi: 10.2147/PTT.S105047 25 25
Maximizing Dermatologist Partner Clinical Revenue 26 Data collected directly from the lasers
demonstrates the importance of following treatment guidelines Revenue = # of lasers x # of treatments/pt x # patients x cost/tx x recurrence factor
Source: National Psoriasis Foundation XTRAC a preferred treatment for 90% of psoriasis patients (<10%
BSA) 27
Opportunity map for XTRAC Indications Prevalence Source Atopic dermatitis 18 Million National
Eczema Association Vitiligo 2-5 Million Vitiligo Support Psoriasis 7.5 Million NPF Topicals/ Targeted Phototherapy Systemics/Biologics/UVB Booth Recommended Actual XTRAC Biologics 28
Source: Findings From the National Psoriasis Foundation Surveys, 2003-2011 (n=5604) Source: Real-world
health outcomes study sponsored by Eli Lilly (n=2200) Phototherapy has highest patient perceived treatment effectiveness 29
Leads, Appointments, RDX
Charts 2015 2016 2017 2018 2019 Leads 36,473 21,296 7,269 22,213 47,911 Appointments 10,032 6,524 2,563 3,856 5,924 RDX Charts 26,237 23,481 18,747 18,107 21,989 30
Total Calls in call center 31
XTRAC adds (delegated) recurring revenue driver for its partners Treatment Patient Type Reimbursement
Details Annual Revenue per Patient Can be delegated** XTRAC Mild / moderate / severe CPT Code 96920-96922 ($168-$251) average $186; 16 tx/course (2/yr) and Office Visit -$70 (2/Yr) $6,092 Phototherapy* Moderate / severe Office visit
- $70 (2/yr) $140 X Biologics Moderate / severe Office visit - $70 (6/yr) $420 X Systemics Moderate / severe Office visit - $70 (3/yr) $210 X Topicals Mild / moderate Office visit - $70 (3/yr) $210 X CPT
CODE Description 2018 National AverageMedicare Payment Rate 96920 Laser treatment for inflammatory skin diseases, (psoriasis); total area less than 250 sq cm $168.12 96921 Laser treatment for inflammatory skin diseases, (psoriasis);
total area between 250 – 500 sq cm $184.32 96922 Laser treatment for inflammatory skin diseases, (psoriasis); total area greater than 500 sq cm $250.92 Number of Treatments / Weeks 20 30 # of Weeks / Year 48 48 Total # of
Treatments / Year 960 1,440 Average Revenue Per Treatment $186 $186 Physician Gross Revenue (Annual) $178,485 $267,728 *Phototherapy Center Revenue – CPT Code 96910 $40 per tx; 30 tx/course (2/yr) - $2,400**Subject to state
legislation 32 32
How XTRAC works for offices: $250 revenue in less than 7 minutes Established CPT Codes 2019 National
Medicare Average Rate 96920 - $167.2296921 - $183.4496922 - $249.03 33