First Warning Systems, Inc.

Transcription

1 First Warning Systems, Inc. Breast Cancer Early Detection System US EU/UK & Russia Executive Summary September 2012 i

2 1. EXECUTIVE SUMMARY 1.1 FIRST WARNING SYSTEM INTRODUCTION First Warning System (FWS) is a novel, disruptive breast health screening device and method based on tissue health biology measured by Predictive Analytics software technology. The FWS is the first noninvasive breast physiology screening system, with much more sensitivity and cost effectiveness than mammography for screening. The goal of the FWS is not to replace diagnostic mammography, but to provide a means for more accurate, efficient, and improved early detection when used as part of the annual physical exam and/or the monthly breast self-exam (BSE), as well as use in therapeutics monitoring and screening for those subjects outside the current screening recommendations. The technology platform has applications for hospitals, women s health clinics, research centers and the target markets of the OB/GYN and primary care in-office use, as well as potential use as an over-the-counter (OTC) screening system. Three clinical studies including more than 650 women have been completed yielding compelling results, demonstrating an average accuracy of 92.1% (percentage of correct classification), an average sensitivity of 94.7% (true positive cases), and an average specificity of 91.1% (true negative cases). In comparison, the specificity and sensitivity of the gold standard mammogram averages 70%. Independent primary market research 1 with physicians, patients and managed care executives indicates FWS addresses an unmet need to identify breast tissue abnormalities, as part of the annual physical, more reliably and much earlier than other screening modalities. 1.2 BUSINESS STRATEGY Finalize the development of state-of-the-art hardware with analytic software integration and bring to market the first non-invasive, non-radiogenic early cancer screening system using Predictive Analytics software to report an objective breast tissue profile as a Clinical Decision Support System (CDSS), addressing an $11B capturable annual market. 1.3 ADDRESSABLE MARKET PROBLEM 70% accurate published statistic for mammography is for a limited population ages (40-70) Not Effective: < age 40 because of dense tissue 6.4% of women under age 44 (NCI data) die from breast cancer 37.5% of women over 70 (NCI data) die from breast cancer Uncomfortable/Compression: 33% do not take test in annual physical Toxic: repetitive use screening causes excessive radiation exposure 750,000 potentially unnecessary biopsies annually US that are negative but mammography results recommended a biopsy Mammography compression busts cancer cells releasing into body (Lawrence Livermore, November, 2011 paper Mammography is not effective as a frequent screening protocol 1 Life Sciences Strategy Group, US Qualitative Market Opportunity Assessment of a Novel Breast Cancer Detection System, Prospector Report, 6/10/2010 1

3 1.4 SITUATION SUMMARY & ACCOMPLISHMENTS First Warning Systems is a medical device and software company which has completed a robust proof of concept with plans to launch marketing and sales operations in early To date, FWS accomplishments include: Independent Primary Market Research 1. Market research results place current value of company (pre-revenue) at $23M (US Market Only), by LSSG 2. Market research results project future value of company (post revenue) at $160M (US Market Only ), by LSSG 3. Market research results show 83% of women will use the system 4. Market research results show 60% acceptance, on average by Clinicians, 87% for high risk patients- See Section detailing consultants conclusions regarding clinician acquisition rate Accomplishments include: 1. Raised over $13M of capital investment 2. Completed three clinical trials demonstrating proof of concept 3. Achieved product accuracy up to 90% as compared to 70% of mammography 4. Demonstrated effectiveness for women under age 40 and those with dense breast tissue where mammography is not recommended because of ineffectiveness 5. Awarded four patents 6. Completed and awarded a 510 (k) for marketing clearance in the U.S. on the hardware device 7. Completed design of the fourth generation of the system, prototyping underway 8. Developing a strategic, interested go-to-market partner for EU/UK and Russian markets 9. Closing on Series A of $1,000,000 at $0.50 per share 10. Planning Series B for $5M at no less than $1.50 per share 11. Developed a strategic plan to achieve an estimated $17.01 per share by TOTAL ADDRESSABLE & TOTAL AVAILABLE MARKET 12.38% of US women born today will be diagnosed with cancer of the breast at some time during their lifetime. 250,000 US women living with the disease are under the age of 40. US EU* Russia* Total # of Women Ages M 95M 66M 273M # of Doctors** 225, , , ,114 # of Uses (126)** per year-tam 28.4M 24.1M 16.7M 69.2M Interpretation Revenue TAM-$19 ea $540M $458M $321M $1.3B Device Revenue TAM-$180 ea $5.1B $4.3B $2.1B $11.5B Total Addressable Market $5.64B $4.76B $2.42B $12.8B Total Available Market $4.85B $4.09B $2.08B $11.02B Projections are based on annual use. Additionally, if used monthly as a BSE, the usage rates and revenues could be 12x *EU estimated at 85% of US market of 150M women ages 20-70; Russia is 70% of EU. **Our Primary Market Research with Life Sciences Strategy Group states a clinician will use First Warning device 126 times per year in average practice in annual physical. ***Consumer and Clinician acceptance per LSSG primary research 2

4 1.6 TOTAL CAPTURABLE MARKET: REVENUE PROJECTIONS Markets Total ($-M) US, EU Russia Sales $ 539,783 Expenses $ 359,285 EBITDA $ 180,498 33% EBITDA/Sales ** EU/UK sales start early 13 *US Sales start in CLINICIAN US, EU/UK, RUSSIAN PENETRATION (NOTE: LSSG CAPTURE RATE) # of EU Docs Captured 2,508 7,453 21,267 32,429 # of Russian Captured 1,755 5,217 14,887 22,700 % EU/Russia Capture Rate* 1.6% 5.2% 11.1% 14.7% # of US Docs Captured 3,606 11,721 % US Capture* 1.6% 5.2% Total # Uses (126 per Yr) 84, ,245 2,504,898 4,211,578 *LSSG REPORT 1.8 CAPITAL REQUIREMENTS $5.1M ($0.5M raised in current Round A) 1.9 RISK MANAGEMENT Key Business Plan Variables Risks # of Clinicians 4,263 12,671 39,760 66,850 Clinician Acceptance Rate 1.60% 5.2% 12.7% 19.9% Annual Interpretations 84, ,245 2,504,898 4,211,578 Daily Interpretations 337 3,168 9,940 16,713 Risk CE Mark Approval EU/UK Clinician Acceptance US Clinician Risk Management Strategies Management Strategies Partner with CE approval experience will manage EU/UK Localized Marketing will communicate appropriately for each culture. Key Opinion Leaders will reference product validity as will white papers from the CE approval testing. KOLs in place in London & Hungary. Leverage EU success. US KOL culture. White papers, conference panels. Market 3

5 Acceptance FDA US Approval Sales Delay Predictive Analytics Accuracy Product Acceptance by Women Marketing Program Acceptable to Women Software Engineering Expertise Product Liability Operating Costs Impact on Margins Manufacturing Quality research says 60% will use. Revenues from UK/EU, Russia, plus Developing Countries Current results confirm minimum of 74%. Additional patient profiles increase Predictive Model Accuracy. NB: Mammography 70% accuracy is for ages 40-70; FWS accuracy is for ages Market research panels will provide product feedback to meet consumer needs Plan CEO & VP Marketing to be women Software engineering being led by a senior technologist with over 35 years of development experience Product Liability Insurance Cloud computing model very scalable with increased operating efficiencies Will contract with experienced ISO/FDA facility who will follow FWS quality plan developed with Emergo medical device consultants 1.10 VALUATION Current Valuation of $22.8M was independently established for the U.S. market only through primary market research conducted by Life Science Strategy Group (LSSG). With a much clearer path to revenue, the First Warning pre-market valuation from LSSG research needs updating to include EU/UK & Russian market opportunities. First Warning Valuation (M) ** US Market* $ 23 $ 160 EU/UK Market $ 19 $ 136 Russian Market $ 14 $ 95 $ 56 $ 391 # of Shares-est Estimated Per Share $2.42 $17.01 *Life Sciences Strategy Group, US Qualitative Market Opportunity Assessment of a Novel Breast Cancer Detection System Prospector Report, 6/10/2010 **Product completion for a 2 hour monitoring period 1.11 EXIT STRATEGY Merger with strategic partner or acquisition for comprehensive markets or EU/UK and Russian markets only. 4