General overview of mc health tech 011614

MCHT: A global medical device company

Confidential – MC HEALTH TECH – Contact: f.trias@mchealthtech.com – Nov 2013

Outline

The MC Health Tech project.

MCHT Technology

• Team.
• Associated centers.

• Unmet needs in neck and low back pain.

Product 1

• Solution for chronic pain.

• The best lymphatic draining device.

Product 2

• Aesthetic market.

•Regulatory and clinical plans.
Future plans

•Business model & financial projections.

2

The MC Health Tech (MCHT) project

Product 1
Physical therapists / chiropractors

One single technology
• Full vacuum control
• Multiple arms
2 Products, 2 markets

Product 2
Aesthetic

Outstanding efficacy,
long-lasting effects,
lack of rhizarthrosis…

Chronic neck and low back pain
• Clinical and regulatory strategy
• Marketing and commercial
strategy

…in highly prevalent unmet needs

MCHT
2 patent applications

Lymphatic drainage and cellulite

• Marketing and commercial
strategy

Breakthrough technology:
REPRODUCIBILITY of massage therapy


3

Reproducibility is a Revolution in Physical Therapy (PT)

Minimizes variability:
• Intra-day
• Practice to practice

Rigorous clinical
studies can be run

Optimization of protocols:
• Enhance efficacy
• Novel indications

“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”


4

MCHT Team

Francesc Trias, MBA. CEO
18 years experience, startup incubators

Xavier Buxareu, MD, MBA. COO
20 years worldwide experience,
sales and marketing of devices
Carme Carré, MD, PhD. Medical Director
30 years experience in clinical development

Joaquim Trias, PhD. Director
20 years experience serial entrepreneur

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

Inventors PHYSIUM and LIPODREN technologies
Jordi Saló, Physical Therapist
Director of R&D and Training
10 years physical therapist and chiropractor


Antoni Godayol, Engineer
Director of Manufacturing
9 years industrial manufacturing

5

MCHT Team

CEO
Francesc Trias
SAB
Joaquim Trias
Mark Stultz
Josep Pous

Sales & Marketing
Xavier Buxareu

Medical
Carme Carré

Board of Directors

Admin & Finance
D’Aleph

R&D and Training
Jordi Saló

Manufacturing
Toni Godayol

Quality control
Raül Trias

Partner’s team

Confidential – MC HEALTH TECH – Contact: f.trias@mchealthtech.com – May 2013

6

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

Centre d’Alt Rendiment

• 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)


7

Product 1

Physical therapist and chiropractor markets


Solution for chronic pain

• 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.

• 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.

• 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.

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.


9

Prospective chronic neck pain study

• 20 non-responders patients with chronic pain (3 to 12 months, Canadell, 2011).
PHYSIUM treatment: 60-min weekly session up to 6 sessions.

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.

Neck mobility (goniometer)

PHYSIUM showed efficacy for the treatment of chronic neck pain


10

Prospective chronic low back pain study

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

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

Results
• 20 of 21 (95%) of patients showed a clinically
significant reduction of pain, 70% between
sessions 3 and 5.
• Mobility improved.

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)

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

4

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

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


11

Use in PT practices

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

PHYSIUM device

N

PT Practice

N

Sessions per patient, once a week

4.4

PT practices

14

Treatment days in practice

250

Treatments per day

6

Treatments per year

1,488.5

PT practices that use PHYSIUM:
• Acquired the device.
• Switch to PHYSIUM.

Patients per practice

672.2

PHYSIUM users abandon
other PT treatments

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.”


12

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.

Product and price
• PHYSIUM basic device:
40.000 € retail price.
• Accessories:
• Treatment protocols (800 to
2.100 €).
• Specific applicators.
• Filters and spare parts

Communication
• Clinical trials in chronic neck and
back pain.
• KOL and reference centers.
• Conferences and professional
fairs.
• Publish clinical results.
• Training in PT schools.


Distribution
• Access through local distributors
(40% commission).
• Demo and training centers in PT
offices.
• Support distributors in fairs.

13

Competitive advantage, neck and back pain

PHYSIUM

Other PT

LPG

Pharma

Various

Vacuum, MCHT

Technology

Drugs

MCHT

Company

Vacusport

Vacuum

NSAID, opioids, steroids

IR, ultrasound,
microwave laser

Clinical studies
Efficacy
Safety
Lasting results
Chronic neck pain
Chronic low back pain


14

Product 2

Aesthetic market


The best lymphatic draining device

• 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.

• 60-minute weekly session.
• 4 to 10 sessions.
• Long-lasting results, no
flaccidity.

Comfortable treatment
and fast results

• Investigator driven prospective study in cellulite.
• Over 35,600 visits in 30 aesthetic centers up to date, excellent efficacy and safety profiles.

No other current treatment gets close to the efficacy shown by LIPODREN:
•Lymphatic drainage, volume reduction, cellulite.
•C-section fibrotic scars.


16

Prospective cellulite study

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

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

Before treatment

After treatment

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

LIPODREN is efficacious for the treatment of cellulite


17

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.

Product and price
• LIPODREN basic device:
28.000 € retail price.
• Accessories:
• Treatment protocols (200 to
800 €).
• Specific applicators.
• Filters and spare parts

Communication
• Clinical trials in cellulite and
scarring.
• KOL and reference centers.
• Conferences and professional
fairs.
• Publish clinical results.
• Training in AC or PT schools


Distribution
• Access through local distributors
(35% commission).
• Demo and training centers in AC
or PT offices.
• Support distributors in fairs.

18

Future plans
Clinical and regulatory path


Regulatory Path in Europe and US

• Follow 2 distinct paths for LIPODREN and PHYSIUM.

Class IIA in Europe. Requires regulatory approval.
• CE mark
• Expected in Q2 2014

No regulatory approval required, marketed in Spain, but
aesthetic distributors are increasingly requiring approval from
regulatory agencies.

Class I in USA. Requires simple regulatory clearance

In Europe:
• CE mark Q4 2014

Get additional clinical claims by equivalence using 510(k) path
Meeting with FDA to agree on regulatory path.
Phase 1

Additional clinical claims using De novo process:
Pre-De novo meeting with FDA.

Class I in USA (Q4 2014), requires simple regulatory clearance

Phase 2

Reach agreement with FDA on clinical studies.

Regulatory expert Richard Quinn Esq. (from BLEA, LLC and FDAimports, Glen Burnie, MD).
MC HEALTH TECH – Contact: f.trias@mchealthtech.com – Jan 2014

20

Clinical studies

• 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.

Patients: chronic
low back pain,
VAS≥6.
Primary endpoints:
pain (VAS),
disability.
Secondary
endpoints: mobility,
relapses, QOL
(α=0.05, power
90%).
• LIPODREN, cellulite study with similar design.


21

Future plans
Financial projections


Financial needs and future plans


23

2014 milestones (1)

Goals

Clinical and regulatory strategies

Neck pain pivotal trial:
• High prevalence and unmet need, endpoints fast to track, easy patient recruitment
• Start regulatory approval path for FDA and KOL.

1

Establish evidence of
PHYSIUM efficacy and
regulatory path for
approval

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

Expand range of
treatments and get
KOLs involved

• Involve professional sports clubs and KOL in sports medicine.
• PT network to create and train for new treatment protocols.
• Publish clinical data.

2

Get regulatory approval:
• CE mark for LIPODREN.
• 510(k) for PHYSIUM and LIPODREN in the US.


3

Expand range of
treatments and get
KOLs involved

24

2014 milestones (& 2)

Commercial strategy

Goals

Strengthen the commercial position in Spain and Portugal:
Set up sales force and
supporting demo
centers in Spain

• Expand and train sales force through sales agents.
• 3 additional demo centers to cover all the Spanish and portuguese area.

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

1

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

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

• 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.

2

LAUNCH MCHT SALES IN 5 MAJOR EUROPEAN MARKETS


25

Long term sales & marketing development

LIPODREN booth at COSMOPROF

Phase 1

(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.

Phase 2

Manufacturing is subcontracted
current capacity is 500 units/year

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


26

Sales & EBITDA projections

Years
2014

Set up sales force

2015

2016

2017

UK, GE, A,
FR, IT

USA (LATAM,
south Asia)

Japan
(China)

Other

UK, GE, A,
FR, IT

USA (LATAM,
south Asia)

Japan
(China)

Other

Sales launching SP, North IT

2018

2019

2020

2021

2022

2023

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%

• 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 : 1,500,000.


27

Backup slides


Financial needs and exit strategy

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

(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.


29

Competitive landscape

Competing technologies

PHYSIUM

LIPODREN

• 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.

• 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.


Companies

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

LPG, Icoone,

30

Prospective spina bifida study

Deep sensivity right

12
10
8
6
4
2
0

15
Pressure
(kG/cm2)

Pressure
(kg/cm2)

Deep sensivity left

10
5
0

(1)

(2)

(3)

(4)

(1)

(2)

(3)

(4)

(1) Iliac spine postero-superior (2) joint pillar of C5-C6 (3) second metacarpal (4) tibialis anterior
P<0,005

P<0,005

Study #1: Improvement of deep sensitivity in the right and left hemispheres
measured by algometry was statistically significant (Gutiérrez et al, 2013)

Results of study #1:
• 5 patients with Spine bifida: injury at L3-L4,
muscles in minimum caudal in quadriceps and
without amputation of members.
• Deep sensitivity: a statistical significant
increase after the 5 weekly treatments.
Improvement maintained at 1 month after last
treatment, (no relapse).
• Superficial sensitivity wasn’t observed. It could
be due to the low sample size and the reduced
number of sessions of treatment applied to
these patients.
• Promising effects when frequent pressure
ulcers by lack of the deep sensitivity and
incontinence. Effects on the sphincter control
should be studied.

Results of study #2:
• 3 patients with spine bifida treated for their fibrotic scars showed a
significant improvement in their knee extension and a reduction of the
stiffness.

Study #2: Patient spasticity before and after
treatment with Physium (Saló Darder et al, 2013)


31

MCHT business model

Manufacture and sell PHYSIUM
and LIPODREN (+ accessories)…

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

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

…prove efficacy and safety…

Clinical
trials, publications, confere
nces, FDA, EMA.

Competitors have very
weak clinical studies

…sell worldwide through
distributors…

…and protect our technology
with integratedpatent and
regulatory strategies

Competitors have weak
regulatory strategy


32

General overview of mc health tech 011614

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