general overview of mc health tech 121213

MCHT: A global medical device company

Confidential – MC HEALTH TECH – Contact: [email protected] – Nov 2013

Outline

The MC Health Tech project.•Team.

•Associated centers.

•Unmet needs in neck and low back pain.

•Solution for chronic pain.

•The best lymphatic draining device.

•Aesthetic market.

•Regulatory and clinical plans.

•Business model & financial projections.

Confidential – MC HEALTH TECH – Contact: [email protected] – Nov 2013 2

MCHT Technology

Product 1

Product 2

Future plans

The MC Health Tech (MCHT) project


Chronic neck and low back pain

• Clinical and regulatory strategy• Marketing and commercial strategy

Physical therapists / chiropractors

Product 1One single technology•Full vacuum

control•Multiple arms

2 Products, 2 markets

Outstanding efficacy,

long-lasting effects,lack of

rhizarthrosis…

…in highly prevalent unmet needs

MCHT2 patent

applications

Breakthrough technology:REPRODUCIBILITY of massage therapy

Lymphatic drainage and cellulite

• Marketing and commercial strategy

Aesthetic

Product 2

Reproducibility is a Revolution in Physical Therapy (PT)


“Revolution similar to the impact of chemistry on drugs: highly variable treatments based on plant extracts become reproducible when single

organic compounds were used.This is what MCHT technology does to massage therapy”

Minimizes variability:•Intra-day•Practice to

practice

Rigorous clinical studies can be run

Optimization of protocols:

•Enhance efficacy•Novel indications

Inventors PHYSIUM and LIPODREN technologies

MCHT Team

Francesc Trias, MBA. CEO18 years experience, startup incubators


Xavier Buxareu, MD, MBA. COO20 years worldwide experience,sales and marketing of devices

Carme Carré, MD, PhD. Medical Director30 years experience in clinical development

Joaquim Trias, PhD. Director20 years experience serial entrepreneur

Mark Stultz, Physical Therapist, MS.15 years experience serial entrepreneur

Jordi Saló, Physical TherapistDirector of R&D and Training10 years physical therapist and chiropractor

Antoni Godayol, EngineerDirector of Manufacturing9 years industrial manufacturing

6Confidential – MC HEALTH TECH – Contact: [email protected] – May 2013

SABJoaquim TriasMark StultzJosep Pous

Admin & FinanceD’Aleph

Business DevelpmentXavier Buxareu

MedicalCarme Carré

R&D and TrainingJordi Saló

ManufacturingToni Godayol

QualityRaül Trias

MCHT Team

CEOFrancesc Trias

Partner’s team

Associated reference and physical therapy (PT) centers

• Reference centers provide guidance and clinical data:

• CAR, elite sports medicine reference center

• Neck and low back pain, sports medicine

• Spanish olympic team, professional athletes

• Professional football club, strong interest, negotiations ongoing

• Teaching hospitals, lead institutions in Spain:

•>16,000 patients treated in 14 PT centers in Spain: Neck and low back pain

• SAB, investigators from reference centers are committed to join: Dr Til (CAR), Dr Pelayo (Guttmann), Dr Pous (CEMATEC)


Centre d’Alt Rendiment


Physical therapist and chiropractor markets

Product 1

Solution for chronic pain

• Investigator driven prospective studies in chronic neck pain, chronic low back pain.

• Over 16,000 patients have been treated in physical therapist practices, excellent efficacy and safety profiles.


• Addressing unmet medical needs in chronic myofascial pain.

• $51.6B WW neck and back pain market in 2007.

• $11.9B out-of-pocket visits in US, $19.2B in OECD countries.

• High prevalence, 14-19% WW.

No other current treatment gets close to the efficacy shown by PHYSIUM:

• Wider and deeper painless massage than MT, without effort.

• Matches 8 physical therapist workforce thanks to its multiple arm system.

• Standarized treatments are tested and improved for efficacy; and prescribed, because they are optimized.

• 60-minute weekly session.

• 4 to 10 sessions to resolve.

• Long-lasting results.

Much more comfortable treatment than manual therapy

(MT)• Protocols result of 2

years of work with patients.

Prospective chronic neck pain study

• 20 non-responders patients with chronic pain (3 to 12 months, Canadell, 2011).


Results• Patients achieved a 45% decrease in

average pain (standard VAS scale) after 2.8 sessions.

• Cervical mobility improved to normal levels.• No relapse after 3 months.

PHYSIUM treatment: 60-min weekly session up to 6 sessions.

PHYSIUM showed efficacy for the treatment of chronic neck pain

Neck mobility (goniometer)

Prospective chronic low back pain study

• 21 non-responder patients with chronic pain that required daily or weekly treatment.


Results• 20 of 21 (95%) of patients showed a

clinically significant reduction of pain, 70% between sessions 3 and 5.

• Mobility improved.

• PHYSIUM treatment: 60-min weekly session, up to 10 sessions.

PHYSIUM showed long-lasting efficacy for the treatment of chronic low back pain

Results• Long lasting effects are impressive.• Patients do not need daily or weekly

treatment any longer.

• Post treatment: Monitor for relapse in pain / mobility for up to 6 months (N=19 patients that responded to original treatment.

Relapse after last treatment

Patients (N=19)

< 6 weeks after last treatment 0

Relapse in 6-8 weeks 7

Relapse in 13-18 weeks 7

Relapse in 26 weeks 1

Discharge (no relapse in 26 weeks) 4

Use in PT practices

• Use of PHYSIUM: 14 PT practices have treated 16,000 patients in 2 years in Spain (€2M of PHYSIUM sales).


PT TESTIMONIALS

“Never could I have these results before.” / “Incredibly fast results.”“I can treat many different disorders with astounding efficacy with a

single device.”“None of the current devices can match the efficacy and versatility of

yours.”“I can treat more patients a day. I no longer go back home exhausted.”

PHYSIUM device N

Sessions per patient, once a week 4.4

Treatments per day 6

Treatments per year 1,488.5

PT Practice N

PT practices 14

Treatment days in practice 250

Patients per practice 672.2

PT practices that use PHYSIUM:

• Acquired the device.• Switch to PHYSIUM.

PHYSIUM users abandon other PT

treatments

Marketing strategy


Why physical therapists (PT) buy MCHT devices:• Efficacy in chronic conditions leads to expanded customer base and higher

income.

• More treatments are provided: increase number of patients.

• Limited physical effort for therapist: more patients can be treated daily.

• PT uses diagnostic tests and requires less physical effort: job is enriched.

• Clinical trials in chronic neck and back pain.

• KOL and reference centers.• Conferences and professional

fairs.• Publish clinical results.• Training in PT schools.

• Access through local distributors (40% commission).

• Demo and training centers in PT offices.

• Support distributors in fairs.

• PHYSIUM basic device:40.000 € retail price.

• Accessories:• Treatment protocols (800

to 2.100 €).• Specific applicators.• Filters and spare parts

Product and price Communication Distribution

Competitive advantage, neck and back pain


PHYSIUM Vacusport Drugs Other PT

Company MCHT LPG Pharma Various

Technology Vacuum, MCHT VacuumNSAID, opioids,

steroidsIR, ultrasound,

microwave laser

Clinical studies

Efficacy

Safety

Lasting results

Chronic neck pain

Chronic low back pain


Aesthetic market

Product 2

The best lymphatic draining device

• Investigator driven prospective study in cellulite.

• Over 35,600 visits in 30 aesthetic centers up to date, excellent efficacy and safety profiles.


• Large market, (estimated body shaping market $792 million in 2012), global growth rate of 11%..

• 22% of market due to volume reduction and cellulite (21% growth).

• Manual therapy (MT) is standard of care but has severe limitations.

No other current treatment gets close to the efficacy shown by LIPODREN:

•Lymphatic drainage, volume reduction, cellulite.

•C-section fibrotic scars.

• 60-minute weekly session.

• 4 to 10 sessions.• Long-lasting results, no

flaccidity.

Comfortable treatmentand fast results

Prospective cellulite study


• 24 women with cellulite in lower extremities, not responding to other treatments.

LIPODREN is efficacious for the treatment of cellulite

Results• Reduction of leg and abdominal perimeters from the first session.• Improved the look of lower extremities.

• LIPODREN treatment: 11 visits (60-min weekly session).

Before treatment After treatment

Marketing strategy


Why aesthetic centers (AC) buy:• Efficacious in volume reduction and cellulite prevention.

• More treatments are provided: increase number of patients

• Limited physical effort : more patients can be treated daily.

• AC uses diagnostic tests and avoids physical effort: job is enriched.

• Clinical trials in cellulite and scarring.

• KOL and reference centers.• Conferences and professional

fairs.• Publish clinical results.• Training in AC or PT schools

• Access through local distributors (35% commission).

• Demo and training centers in AC or PT offices.

• Support distributors in fairs.

• LIPODREN basic device:28.000 € retail price.

• Accessories:• Treatment protocols (200

to 800 €).• Specific applicators.• Filters and spare parts

Product and price Communication Distribution

Future plansClinical and regulatory path


Regulatory Path in Europe

• Follow 2 distinct paths for LIPODREN and PHYSIUM.

• Merce Camps regulatory expert (GTF SL, Barcelona).

• Jordi Franquesa, engineering (ADTEC AMI SL, Barcelona).


Class IIA in EuropeRequires regulatory approval•CE mark•Expected in Q1 2014

Sports devices do not require regulatory approval for sports medicine use

Aesthetic marketNo regulatory approval required•Marketed in Spain•CE mark Q3 2014

Clinical and regulatory path

• PHYSIUM will get CE mark certification in Q4 2013.

• Engage FDA in Q3 2013 to prepare for regulatory filing in 2015.

• Clinical studies for low back and neck pain in Europe and US with PHYSIUM.

• Support FDA filing, marketing in Europe, publication.

• Multicenter study for chronic low back pain (similar study for neck pain) in 2014.

• LIPODREN can be marketed in Europe without additional requirements.

• Cellulite study in US for equivalence requirement at FDA in 2014.


Patients: chronic low back pain, VAS≥6.Primary endpoints: pain (VAS), disability.Secondary endpoints: mobility, relapses, QOL (α=0.05, power 90%).

PHYSIUM Regulatory Path in US

• Phase1, get to the market as soon as possible as sport device

• Class 1 massager/vibrator for sports medicine.

• Claims limited to muscle spasms, improvement of circulation, relief of aches and pain, relief of muscle soreness.

• Phase 2, get clinical claims by equivalence using 501k.

• Meeting with FDA to agree on regulatory path.

• Phase 3, additional clinical claims using De novo process.

• Pre-De novo meeting with FDA.

• Reach agreement with FDA on clinical studies.

Regulatory expert Richard Quinn Esq. (from BLEA, LLC and FDAimports, Glen Burnie, MD).


3 parallel phases

LIPODREN Regulatory Path in US

• Market as soon as possible.

• Class 1 massager/vibrator for aesthetic market.

• Claims limited to cellulite, improvement of circulation.

• Do not seek regulated claims.


Does not require premarketclearance from FDA

Regulatory expert Richard Quinn Esq. (from BLEA, LLC and FDAimports, Glen Burnie, MD).

Future plansFinancial projections


Financial needs and future plans


2014 milestones (1)


Neck pain pivotal trial:• High prevalence and unmet need, endpoints fast to track, easy patient recruitment

• Start regulatory approval path for EMA and FDA.

Increase number of investigator driven studies:• Priority study fields: chronic back pain, chronic pain, fibrotic scars, lymphatic drainage,

• Involve professional sports clubs and KOL in sports medicine,

• PT network to create and train for new treatment protocols.

• Publish clinical data.

Establish evidence of PHYSIUM efficacy and regulatory path for approval

Expand range of treatments and get KOLs involved

1

2

Goals

Get regulatory approval:• CE mark for LIPODREN.

• 510(k) for PHYSIUM and LIPODREN in the US.

Expand range of treatments and get KOLs involved

3

Clinical and regulatory strategies

2014 milestones (& 2)


Strengthen the commercial position in Spain:• Expand and train sales force through sales agents.

• 3 additional demo centers to cover all the spanish area.

• Sales expected to take off in Q2 after sales force training (€ 1 M).

Set the commercial structure in 5 major European markets:• Distributors in France, Italy, Germany, Austria and United Kingdom (Q3).

• 6 demo centers: Fr (2); I (1); G (1); A (1); UK (1) (Q3).

• Train distributors sales force and technical support (Q3).

• Start sales in Q4.

• Attend MEDICA 2014 professional fair

Set up sales force and supporting demo centers in Spain

Set up sales force and supporting demo centers in major european markets

1

2

GoalsCommercial strategy

LAUNCH MCHT SALES IN 5 MAJOR EUROPEAN MARKETS

Long term sales & marketing development


LIPODREN booth at COSMOPROF(march 2013, Bologna, It)

Market access through local distributors• Set up showrooms in reference centers.• Provide training and technical support.• Attend professional fairs and conferences.

Integrate sales network in major markets• Joint ventures, merge or develop own sales network.• Distributors in small markets.

Manufacturing is subcontractedcurrent capacity is 500 units/year

Phase 1

Phase 2

Sales & EBITDA projections

• Forecast data based on OECD countries (No data available from BRIC markets).

• Estimated physical therapists offices in OECD market: 1,000,000.

• Estimated aesthetic centers in OECD market : 1,50 0,000.


Years

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Set up sales force UK, GE, A, FR, IT

USA (LATAM, south Asia)

Japan (China)

Other

Sales launching SP, North IT

UK, GE, A, FR, IT

USA (LATAM, south Asia)

Japan (China)

Other

PHYSIUM sales (MM €) 0.9 3.5 18.3 55.8 99.1 155.2 231.9 280.6 270.1 280.6

Units 21 85 438 1,337 2,373 3,717 5,553 6,718 6,468 6,718

LIPODREN sales (MM €) 0.6 3.0 12.6 26.8 62.8 131.8 185.5 250.4 297.5 297.5

Units 20 100 419 891 2,086 4,378 6,161 8,317 9,882 9,882

= Total sales 1.5 6.6 30.9 82.7 161.9 287.0 417.4 530.9 567.6 578.1

EBITDA (MM €) -0.7 -0.7 4.6 14.6 33.2 67.9 98.9 125.4 139.6 139.4

Market Share accumulated

(OECD countries)0.0% 0.0% 0.1% 0.3% 0.8% 1.6% 2.7% 4.1% 5.6% 7.2%

Backup slides


Financial needs and exit strategy

(1)Fixed costs includes common fixed costs of 2 years :personnel, facilities rental, communications, etc.). Investments includes: patents, demo devices, engineering & manufacturing (moulds, treatment software, etc.).

(2)Clinical & regulatory includes chronic neck and back pain clinical trial (Phase III) external costs (CRO, . MCHT internal costs are included in (1).

(3)Commercial development includes commercial costs (fairs, travels expenses, etc.) inventory and accounts receivable. Other MCHT internal costs are included in (1).

4,000,000 € = 40% shares of MC HEALTH TECH; ROE: 95% in 5 years

• Raised 400,000 seed capital

• Seeking 3,600,000 round

Exit strategy:

• M&A when sales reach €25/40M and gross margin = 50%.

• IPO after clinical trials and regulatory approvals.


ALLOCATION FIXED COSTS & INVESTMENTS (1)

CLINICAL & REGULATORY (1)

COMMERCIAL DEVELOPMENT (2)

TOTAL (€)

FINANCIAL NEEDS 1,600,000 1,100,000 1,300,000 4,000,000

Competitive landscape


Competing technologies Companies

PHYSIUM

• Manual therapy techniques, vacuum technologies and pharmacology (NSAIDs, corticoteroids and opioid painkillers) are the main competitors technologies.

• Physical therapies (ultrasound, electric currents, microwave, laser and infrared techniques) have not been proved to be effective to date in clinical studies.

Indiba, Vacusport,Cynosure, Syneron, Alma Laser Accent, Chattanooga ITO Physiotherapy & Rehabilitation, Iskra Medical, Bösl, L-Tech, Fysiomed

LIPODREN

• Manual therapy techniques, vacuum technologies, pressotherapy, laser, lontophoresis, carboxytherapy, mesotherapy, radiofrequency and cryopolysis have not been proved to be effective to date in clinical studies.

LPG, Icoone,

MCHT business model


Physical therapists and physicians (orthopedic, cosmetic, rehabilitator, sports medicine); and beauty centers

Manufacture and sell PHYSIUM and LIPODREN (+

accessories)…

…to therapists for myofascial and articular pain, and to aesthetic

sector

Clinical trials, publications,

conferences, FDA, EMA.…prove efficacy and safety…

Competitors have very weak clinical studies

…sell worldwide through distributors…

…and protect our technology with

integratedpatent and regulatory strategies

Competitors have weak regulatory strategy

general overview of mc health tech 121213

Health & Medicine

chronic pain

pain clinical

pain sab

chronic myofascial pain

pain market

years physical therapist

years experience

significant reduction