IR Day – Las Vegasfilecache.investorroom.com/mr5ir_varian/120/download/...• MLC120 beam shaping...
Transcript of IR Day – Las Vegasfilecache.investorroom.com/mr5ir_varian/120/download/...• MLC120 beam shaping...
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IR Day – Las VegasMay 16, 2006
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Questions of the Day
• How will the new CEO be different?• Is the management team ready?• Is there room to grow?
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Growing Our Core Businesses
Radiation Oncology /X-ray Imaging
Neurosurgery
Oncology Informatics
Filmless X-rays
Brachytherapy Security andInspection
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Dow WilsonExecutive Vice President
President, Oncology Systems
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Today’s Oncology System’s Topics
• Q2 YTD Share and Orders • Growth Drivers• Varian’s Winning Edge
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Others
Elekta
Siemens
Varian Medical Systems
Tomo
Competitive Environment/Share
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Competitive Product Positioning
• Versatile product line designed for Conformal, IMRT and SRS
• Most cost effective products on market
• Premium price to competitors based upon – Reputation for reliability
and stability– Unique features
• 120 MLC• AS 1000• High dose rate SRS mode• Multi-mode IMRT
Tri TX
Tri
iXw OBI
Price
Performance
ElektaSynergy
Siemens
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Q2 YTD Orders
13%Worldwide
9%International
16%Americas
% change, ’05 vs. ‘06
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Environment Drivers
• Cancer Incidence Rising• Global Market Underserved• Old Installed Base• Expanded Role for RT in Cancer Care
Sustaining 10%-15% Global Growthin Varian Oncology Systems
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Sources of Growth
• IGRT • Software• DART• Stereotactic Products / Trilogy• Brachytherapy• Services
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Growth Update: IGRT
• IGRT is a perfect complement to IMRT• Place dose precisely (IMRT) and position it
accurately (IGRT)• Installations progressing well
– 200 OBIs installed or in process– 164 accepted…50 in Q2 alone
• Huge Upgrade Opportunity … $80M / year opportunity
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IGRTLeadership in Comprehensive Solutions
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CBCT – Karolinska University Hospital
• Excellent image quality
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CBCT – MIMA Cancer Center
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IGRT – Enabling New Clinical Capabilities
Sim CT CBCTFree-breathing
CBCT Breath hold
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IGRT – Enabling New Clinical Capabilities
Planning CT CBCT
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Software – Leadership in Treatment Planning, Medical Oncology and
Radiation Oncology
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Software Order Growth
2002 2006 Est
VarisTPS
16%
24%
Total AAGR20%
Solid Double Digit Growth!
$70M
$150M
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Eclipse Treatment Planning• Eclipse - Planning for
photons, electrons, protons, brachytherapy and SRS in one package
• GEOS - Geometrical beam angle and beam intensity optimization – Automates the planning
process– Allows search for new
IMRT techniques for complex treatment cases
– Provides excellent dose conformity with minimum number of beams to minimize the integral dose to the patient
• >25% orders growth first half
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ARIA Oncology Information Management
• Only integrated environment
• Most comprehensive image management
• Supports IGRT and DART
• Integrated Medical Oncology capability
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3D Image Management on and off-line
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Image Review – Trend analysis
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Medical Oncology
• 2004 OptX Acquisition• Orders doubling this year; 3x since ‘04• Why Med Onc is growing:
– Great installed base sales opportunity– Integration of all cancer information in a single
software tool– Digitization of Med Onc
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Leadership in Dynamic Adaptive Radiation Therapy (DART)
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Dynamic Adaptive Radiation Therapy (DART)
• On Line – Position patient and adapt plan for geometric variation
• Real Time – Account for motion during treatment– Tool set being developed as components– Seed tracking– Motion enhancement– Diaphragm tracking
• Off line – adjust plan periodically for changes in anatomy and physiology
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CBCT
MDCT
7.1 cGy, 125 kV, 50 mA, 20 ms, 2730 projection
On line Innovations: 4D CBCT vs. 4D CT Patient Study
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Radio-Opaque MarkerAutomatic Acquisition and
Tracking
400
420
440
460
480
500
520
540
560
580
600
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61320
325
330
335
340
345
350
355
360
Y -------- X --------
Real Time Innovations: Marker Tracking
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• Tracking of soft tissues in real time for fluorobased gating and tracking variation
Real Time Innovations: MarkerlessTracking
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Leadership in Brachytherapy
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Brachytherapy Growth
2002 2006 Est
InternationalAmericas
13%
44%
Total AAGR21%
APBI Driving Americas GrowthExpanded Int’l Coverage Delivering Growth
$26M
$57M
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Leadership in Services
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Service Growth Drivers
• Installed Base
• Installed Base Offerings … Upgrades
• S/W Service Contract$18M in ‘04 $32M ’06 Est
• Software Support
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Service Growth
Smart Connect Usage - hours
2Q '05 2Q '06
386% V
2,400
11,700
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Service Growth
2002 2006 Est
Total AAGR18%
153.3
300.6
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Lester BoehVP and GM
Surgical Sciences andSecurity Inspection Products
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Varian Surgical Sciences
PurposeLeverage Varian’s experience, talents and technology into other areas of patient careAccelerate business growth beyond Oncology by expanding IGRS access to patients being treated via other methodsAdd value by developing innovative non-invasive alternatives to open surgery
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What is Stereotactic Radiosurgery (SRS)?
• SRS is the non-invasive delivery of an accurate beam of high-energy radiation to a target, usually in a single session.
• SRS can also be done in several sessions (“phases”).• SRS combines advanced software and hardware to treat
tumors, vascular malformations and functional conditions– Bloodless outpatient procedure – SRS is a valuable treatment alternative for patients
with “inoperable” conditions• IGRS is the next step, enhancing SRS with images of
the patient in the treatment position.
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SRS will continue to grow at a rapid rate
Volume Growth Radiation Oncology by Modality US Market 2005-20015
22%63% 68%
321%363%
3D C
onfo
rmal
IMRT
Brach
yther
apy
Partic
le B
eam
SRS
0.04%9,716Particle Beam
0.2%49,318SRS
4%945,771Brachytherapy
4%972,772IMRT
92%24,372,3883D Conformal
% Share2005 Volumes
Modality
Distribution of Radiation Oncology Procedure Volume by Modality US Market, 2005
Source: SG-2 Cancer Intelligence, Impact of Change, HCUP, CMSAccelitech
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Physician adoption will drive treatment volume and SRS sales
363% Volume Growth
Accelitech
Stereotactic RadiosurgeryMarket Growth Projections
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
20052006
20072008
20092010
20112012
20132014
2015
Ann
ual T
reat
men
ts
0
200
400
600
800
1,000
1,200
Dem
and
for S
RS
Dev
ices
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510(k) Pending
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Works in Progress
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Works in Progress
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Trilogy
• Speed• Accuracy• Versatility
Speed
Accuracy Versatility
“SAVe” the patient
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Trilogy
• Speed– High dose rate
• 1000 MU/min– MLC
• Larger lesions and multiple lesions with one isocenter
– Remote couch motion– Portal Dosimetry– Information
management
Speed
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Trilogy
• The benefits of speed are:– reduced effects of lesion
motion during treatment– more biologically
effective treatments– enhanced patient comfort– More efficient staff and
department utilization
Speed
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Trilogy
• Accuracy– Image-Guided patient
set-up• Optical, kV and MV
imaging systems– Tight mechanical
specifications– Tight dosimetry
specificationsAccuracy
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Trilogy
• The benefits of accuracy are:– Confidence!– The right dose at the right
location– Ability to treat smaller lesions– Spare healthy tissues to an
extent that was unimaginable only a few years ago.
– 3-D kV CT imaging technology allows soft tissue lesions to be seen directly
– Optical guidance cameras monitor the patient with high spatial accuracy and no dose
– MV imaging allows the lesion – and treatment beam to be
directly visualized.
Accuracy
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Trilogy• Versatility
– Cranial and extra-cranial– Invasive and non-invasive fixation– Three treatment beams
• 6 MV, High X, 6 MV SRS– Two beam shaping technologies
• MLC or cones– Three imaging systems
• Optical• kV• MV
– Three localization technologies• FrameArray• FramelessArray• BodyArray
– SRS, IGRS, SRT, IMRS, SBRT, IMRT and 3D CRT
Versatility
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Trilogy
• The benefits of versatility are:– The ability to treat virtually any
case– The ability to treat in the optimal
way– Trilogy has been optimized for
radiosurgery and radiotherapy and is designed to raise the standard of care while lowering the cost of treatment.
– Both neurosurgeons and radiation oncologists can use Trilogy to treat their patients, without having to buy two separate, expensive machines.
Versatility
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What Is IGRS Used For In The Brain?
• Brain tumors• Arteriovenous malformations (AVMs)• Trigeminal neuralgia• Acoustic neuromas• Pituitary tumors
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Cranial Example: Single Metastasis
• Eclipse TPS • MLC120 beam shaping• 7 beam IMRS
– Cone-based plan would require 1 isocenter and 7 arcs
• Dose = 20Gy to 80% of max dose
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Spinal Example: Lumbar Spine Metastasis
• Eclipse TPS • MLC-120 beam
shaping• 9 beam IMRS• 3-D Conebeam CT
localization• Total IGRS treatment
time ~25 minutesRed is the 16 Gy treatment line Green is the 10 Gy dose gradient linePink is the 8 Gy dose gradient line
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Extracranial Example: Lung Metastasis
• Eclipse TPS • MLC-120 beam
shaping• 9 beam IMRS• Respiratory controlled
imaging and beam delivery
• Total IGRS treatment time ~35 minutes Red is the 60 Gy treatment line
Green is the 30 Gy dose gradient lineYellow is the 20 Gy dose gradient line
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Cyberknife Plan
Prescribed to 80% of DmaxDelivered in 60 minutes
95%75%68%30%
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Trilogy Plan
7 beam IGRS planPrescribed to 90% of DmaxDelivered in 5 minutes
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Comparing Revenue from TechnologiesP a t i e nt M i x : S R S =5 0 , S R T=5 0 , 3 D =10 0 , I M R T=5 0 , I GR T=5 0 pa t i e nt s pe r y e a r
$351,168
$1,706,386
$3,390,448
$1,519,298
$2,040,985$2,424,873
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
Gamma Knif e Synergy S Tr ilogy Cyberknif e Tomot herapy Novalis
SRS SRT 3D IMRT IGRT Tot al
Revenue Comparison According to AMAC (2006 Data)Patient Mix SRS=50, SRT=50, 3D=100, IGRT=50 patients/year
Source: AMAC
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0
5
10
15
20
25
30
1987
1989
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Gamma Knife® CyberKnife® Novalis®
Synergy™ Trilogy™
SRS device growth
NUMBER OF U.S. INSTALLATIONS
Source: Elekta; Accuray; BrainLAB; Varian; NeuroSource Inc.
Cum
ula
tive
U.S
. ded
icat
ed S
RS p
roce
dure
s
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
105,000
130,000
150,000
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Summary
• Trilogy is the first in a new generation of non-invasive radiosurgery systems.
• The power of Trilogy yields treatment times that are shorter, making the experience more comfortable for the patient.
• The accuracy of Trilogy allows us to spare healthy tissues to an extent that was unimaginable only a few years ago.
• The versatility of Trilogy enables us to treat a wide variety of patients using a single machine.
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Robert KlugeVice President
President, X-Ray Products
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• Medical X-ray Tubes• Diagnostic X-ray • CT Scanner Tubes• Mammography Tubes
• Industrial X-ray Tubes
• Flat Panel Imaging Systems
XX--ray Product Linesray Product Lines
2
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Product OverviewProduct Overview
• X-ray Tubes• Imaging Panels
3
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RadiographicRadiographic
4
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PortfolioPortfolio
PaxScan® 2520 PaxScan® 2020
PaxScan® 1313PaxScan® 4030A / CBPaxScan® 4030R
PaxScan® 2520E
®
5
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2520V 3D Image2520V 3D Image……
Mental Foramen
6
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2520V 3D Implant 2520V 3D Implant Visualization andVisualization and PlanningPlanning
Mental Foramen
7
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Dental ImplantsDental Implants
8
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Radiographic SystemRadiographic System
9
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Mobile C ArmMobile C Arm
10
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Hitachi FPD SystemsHitachi FPD SystemsHitachi FPD Systems
11
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Integral MammographyIntegral Mammography
12
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Mammography XMammography X--ray Systemray System
13
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Computerized Tomography TubesComputerized Tomography Tubes
14
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MCSMCS--70787078
15
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Baggage ScreeningBaggage Screening
Baggage Screening
Image Courtesy of InVision Technologies
16
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XX--ray Tube Marketray Tube Market
• X-ray Tube Market $700M Wholesale
• Relatively Flat Market (2 – 5 % Growth)
– Growth At High End
17
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Market DriversMarket Drivers
• Growth Of Helical CT
• Trend Toward Longer Tube Life
• Higher Power Requirements
• X-ray Equipment
18
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Varian StrategyVarian Strategy
• Sell On Technology• Fast Rotation Speed On CT Tubes
• High Power Capability
• Sell On Cost / Quality• Six Sigma Approach
• Cost Reduction
• Sell On Customer Support• Technical Collaboration
19
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XX--Ray Tube SummaryRay Tube Summary
• Varian Is Well Positioned From A Technology/Product Cost Perspective
• Varian Is “By Far” The Strongest Independent Supplier
20
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Varian Medical SystemsVarian Medical Systems
Flat Panel BusinessFlat Panel Business
21
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Key Flat Panel AdvantagesKey Flat Panel Advantages
• Compact, Light Weight, Flexible• Excellent Imaging Quality Across The Entire Panel• Flexibility Of Direct To Digital
– Eliminates Camera And Components– Image Manipulation Capability Eliminates Retakes
22
Key Issues To Address• Difficult Manufacturing Process • Costs Remain High
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02004006008001,0001,2001,4001,6001,8002,000
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
Fluoro / CB RAD Mammo Multi-Slice CT
Millions USD
EstimatedEstimated World Market FPD RevenueWorld Market FPD Revenue(Wholesale value)(Wholesale value)
Key assumptions: 1) Product cost reaches competitive position with film-based systems2) Technological break-throughs make Multi-Slice CT segment a reality
FY05 Fluoro Mkt = $105MFY05 RAD Mkt = $275M
23
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Key Flat Panel AdvantagesKey Flat Panel Advantages
• Compact, Light Weight, Flexible• Excellent Imaging Quality Across The Entire Panel• Flexibility Of Direct To Digital
– Eliminates Camera And Components– Image Manipulation Capability Eliminates Retakes
22
Key Issues To Address• Difficult Manufacturing Process • Costs Remain High
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Flat Panel MarketFlat Panel Market
• Market Has Been Slow To Develop– Panel Cost And Availability
• Market Potential Is Large ($1B - $3B)– Replacement For Image Intensifier
System– Partial Replacement For Film– CT Detector?
24
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Key Flat Panel CompetitorsKey Flat Panel Competitors
Trixell
GE
Other
• Well Funded Consortium Focused On Amorphous Silicon
• Focused On Amorphous Silicon To Enhance Performance Of GE Medical Equipment
• Hologic, Cannon
25
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Varian Medical Systems Varian Medical Systems AdvantageAdvantage
• Long Time Supplier To Medical Imaging OEMs
• Effective Sales And Support Structure• Most Technically Capable Flat Panel Product
Line Currently Available
• 40% Owner of dpiX Consortium
26
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Varian StrategyVarian Strategy
• Develop A Full Line Product Portfolio• Focus On Technology
– Advanced Applications– Next Generation Technology
• Focus On Product Cost– dpiX Consortium– Internal Cost Structure
• Leverage Existing Distribution Channel / Approach• Market Has Been Slow To Develop
27
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Lester BoehVP and GM
Surgical Sciences andSecurity Inspection Products
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SIP at a glanceSIP at a glance
• Two market segments; NDT & Cargo– Typical NDT Applications– Cargo applications – Ports, borders, airports – Cargo Facts & Figures– Sample Images
• What’s next?– Dual Energy– Adding value as an OEM
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Typical Industrial applications Typical Industrial applications for NDTfor NDT
Clockwise from top left – Nuclear Waste management, ASTM Pressure Vessels, Off Shore Oil Rigs and Turbine Blade manufacturing
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Industrial applicationsIndustrial applications
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Industrial applicationsIndustrial applications
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Industrial applicationsIndustrial applications
Orbiter components
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Cargo Inspection Cargo Inspection –– Ports, Borders & Ports, Borders & AirportsAirports
• Focus on intermodal, borders and critical infrastructure
• Priorities: – Identification of nuclear
materials– Identifying suspect cargo
and individuals • Thousands of companies and
products– DHS wants integration– Layered systems
No one is above suspicion
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Cargo Cargo InspectionInspection
Fixed Site (Airports, Borders)
Mobile (Sea & Air Ports)
Relocatable (Ports & Perimeter defense)
Images courtesy of Smiths and L3Portal (Ports & Borders)
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Facts & FiguresFacts & FiguresModern cargo vessels carry on average 4,500-6,000 TEU’s (Twenty Equivalent Units). New vessels carry up to 9,600 TEU’s
Shipping containers enter USA at a rate of 20 per minute, 30,000 per day, 11M boxes or 17.5M TEU’s per year
95% of all cargo coming to the USA enters through one of the nations 361 ports
Overseas shipping accounts for more than 90% of world trade
More than 95% of containers still go uninspected
Inspection times: Manual – 5 people, 4 hours Automated – 3 people, <1 min.
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Security Spending 2003Security Spending 2003--20152015
26
95
178
020406080
100120140160180
Homeland Security/Defense Spending 2003-2015 ($B)
200320092015
Regional Spending - 2010
9%
20%
10%
6%
2%
47%
6%
Middle East EU Jap/Pac Rim PRC/IndiaCan/Mex USA Other
Source: Homeland Security Research Corporation
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SIP Growth PotentialSIP Growth Potential
0
2040
6080
100
120140
160180
200
FY06
FY07
FY08
FY09
FY10
NDT Conventional Cargo Dual Energy
Millions USD
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High Energy Screening Market High Energy Screening Market LandscapeLandscape
NUCTECH
VARRapiscan/ARACOR
VARBIR
VARL3
VARSmiths Detection
AS&EVAR
AS&E
VARSAIC
Global Sales/Service
Systems Integration
Imaging Software
DetectorSourceCompany
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Image ComparisonImage Comparison
kV Gamma
6MV 9MVImages Courtesy of Rapiscan
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Image DetailImage Detail
Image Courtesy of BIR
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Image DetailImage Detail
Excellent Resolution
High Contrast
Fast Acquisition
Images Courtesy of L3
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• Fissile materials not wholly contained– Significant amounts of plutonium & uranium (fissile), Co60,
strontium and cesium (RDD) “lost”• The est. amount of fissile material W/W is staggering
– 70,000 KG of surplus uranium– 65,000 KG of highly enriched uranium– 23,000 KG of weapons grade plutonium
• Lack of controls – The standard acceptable inventory reconciliation score is 97%– 0.01% of the inventory is adequate to build 18 Hiroshima-sized
devices– Odds of smuggling material into US in cargo container still
alarmingly high• Now Iran and North Korea want to join the club
Fissile Materials in the Former USSRFissile Materials in the Former USSR
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WhatWhat’’s Next?s Next?
• Dual Energy– Automatic identification of WMD’s & Nuclear materials
in sea & air cargo containers and vehicles– Prototype fabrication complete, radiation testing
underway– New installations plus replacements for existing
systems
• Detectors & Analysis Software– Complete the imaging chain– Increasing value added as an OEM supplier– Upgrades, service revenue opportunity
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1.2 kg of high atomic number material is 1.2 kg of high atomic number material is hidden in this containerhidden in this container
It is difficult to find in a standard X-ray
Base image courtesy of L3 Detection Systems
WMD Detection
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Linatron K9™Fan Beam:Red 9 MeVBlue 5 MeV
Container
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Normal Truck Image
R Truck Image
Algorithm Result
Image Processing
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Steel & Lead behind 3” of Steel Steel & Lead behind 3” of Steel
Integrated images reveal material densityDifference between Steel and Lead clearly visible
Automatically determine density, size and threat potential
No visible difference between the objects in the individual images
Threat 6MV 9MV
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Integrated images reveal material densityDifference between Steel and Lead clearly visible
Automatically determine density, size and threat potential
Threat
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From One Innovation to the Next
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ForwardForward--Looking Statements Looking Statements and Nonand Non--GAAP ReconciliationGAAP Reconciliation
Except for historical information, the information that follows contains certain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include the matters described in the risk factors section of our information statement and other risks detailed from time to time in the company’s filings with the Securities and Exchange Commission.
The company makes reference to certain financial results in the first quarter of fiscal year 2006 which would have been consistent with GAAP if presented in prior quarters, but which are now inconsistent with GAAP due to changes in accounting standards. These results were reached by excluding non-cash, share-based compensation expenses. The company references those results to allow a better comparison of results in the current period to those in prior periods. The company’s reference to these results should be considered in addition to results that are prepared under current accounting standards but should not be considered a substitute for results that are presented as consistent with GAAP. A reconciliation between GAAP and Non-GAAP numbers appears at the end of the financial section of this presentation.