imt angel & vc pitch deck

y o u r h e a l t h . o u r s c i e n c e . ®

1

NEXT GENERATION HEALTHCARE BLUEPRINTMANAGEMENT PRESENTAT ION NOVEMBER , 2012

yo u r h e a l t h . o u r s c i e n c e . ®


2

SAFE HARBOR STATEMENT

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH OR APPROVED OR DISAPPROVED BY

THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,

NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY SUCH STATE SECURITIES

COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PRIVATE PLACEMENT

MEMORANDUM. THIS PRIVATE PLACEMENT MEMORANDUM DOES NOT CONSTITUTE AN

OFFER IN ANY JURISDICTION IN WHICH AN OFFER IS NOT AUTHORIZED.

The Information Contained Herein is Confidential and Proprietary; Intended Only for the Entity or Person to Which or Whom it is Given or To Whom it is Transmitted Electronically

Innova Medical Technologies, Inc. All Rights Reserved.


3

COMPANY

Through market leading External Counter Pulsation (ECP) technology Innova

Medical provides a clinically relevant, FDA Cleared, non-surgical alternative

for millions of cardiovascular disease (CVD) care patients. Innova has

adopted a proven distribution program which offers physicians the potential

for six figure revenue gains with no out of pocket expense, while reducing

total health care costs to 75% of surgical interventions.

In September of 2012, IMT acquired 31 year ECP industry founder, Cardiomedics, Inc. (CM)

together hereafter referred to as the “Company”.

1 http://www.cdc.gov/nchs/fastats/heart.htm2 http://www.biomerieux-diagnostics.com/servlet/srt/bio/clinical-diagnostics/dynPage?node=cardiovascular_diseases_2

http://www.cdc.gov/nchs/fastats/heart.htm

http://www.biomerieux-diagnostics.com/servlet/srt/bio/clinical-diagnostics/dynPage?node=cardiovascular_diseases_2


4

EXTERNAL COUNTER PULSATION (ECP)

External Counter Pulsation (ECP) is a non-invasive, outpatient

procedure to relieve or eliminate Congestive Heart Failure and

Angina.

Clinical Studies indicate that ECP can cause the recruitment and

expansion of collateral arteries to areas of the heart deprived of a

normal blood supply.

Acts as a ‘natural bypass’ around areas of the heart and throughout

the body.

Forces the peripheral benefits of exercise without any effort or risk

Restores vital blood flow to all organs.

Now clinically proven to effective treat up to 16 other serious health

conditions.


5

MANAGEMENT TEAM Founders

George P. Nelson

Principal Partner

Innova Capital Holdings, Inc.

Chief Strategic Officer

Innova Medical Technologies, Inc.

Lisa R. Terry, MBA

Managing Partner

Innova Capital Holdings, Inc.

Chief Executive Officer

Innova Medical Technologies, Inc.

Located In:Corporate/Sales: 1005 Alderman Drive

Alpharetta, GA 30005

R&D / Logistics: 19186 E. Prentice Circle

Centennial, CO 80015

Manufacturing: Spectrum Assembly Inc.

6300 Yarrow Drive, Suite 100

Carlsbad, California, 92011

2011: Founded Innova Medical Technologies, Inc.

2012: Acquired 31 yr mfr. Cardiomedics, Inc.

Key Employees

John McCallumCOO & President

Former CEO Cardiomedics, Inc.

David GregoryCSO / Worldwide Sales

Former Industry Sales Leader

Applied Cardiac Systems, Inc.

Irwin Zucker, MSECTO / R&D Director

Former President & COO

Innovative Medical Systems, Inc.

Steve PorterCMO / Marketing Director

Former CEO

Porter Design Group, Inc.

Peter Helander, MBAPR Director / Online & SEO

Former SVP Branding

Ikea Corporation, Sweden

Kaleigh KohrsOperations Director

Board of Directors

Chairman

R. Richard Schwindt, M.D., FACCCardiovascular Disease Specialists, Inc.

- Diplomat, American Board of Internal Medicine

- Fellow, American College of Cardiology

George NelsonCo-Chair

Lisa TerryExecutive Director

Kaleigh KohrsBoard Secretary

Tom Ulie, CEO First Island CapitalBoard Treasurer

Board Members:

Allan Rubinstein, GlobeDent

Gray Bishop, Nursing Home Association of America

John McCallum

David Gregory

2 Seats Open

Medical Advisors

Dr Kris Vijay

Director of the Heart Failure Program and

Director of Cardiovascular Research at

Scottsdale Healthcare and an Invasive

Cardiologist at Scottsdale Cardiovascular

Center, Scottsdale, Arizona. Serves as Governor

of the American College of Cardiology, Arizona

Chapter. Serves as a Board member of the

South West Lipid Association and is the past

President of the American Diabetes Association

(Arizona Affiliate). A Fellow of the American

College of Cardiology, the American College of

Physicians, National Lipid association and the

American College of Chest Physicians.

Dr Marc Silver

Board certified Cardiologist , Christ Hospital

Oak Lawn Chicago. Past President of American

Heart Failure Society

Dr. Ivo Buschmann

Associate professor at Charité Berlin

Dr Yuri Bushvellia

Head of Cardiology Bacleuv, Moscow,

Leading Hospital in Moscow

Dr. Samuel K. Mathew MBBS, MD, DM

President of the Cardiology Society of India


6

CLINICAL ACCEPTANCE

ECP is recognized as an effective primary (pre-surgery), secondary (post-surgery),integrative, or wellness therapy which effectively treats patients suffering from a variety ofdiseases and health conditions.


7

PRIMARY MARKETThe Company has traditionally provided ECP devices to its Physician Targets asa reimbursable treatment for:

Angina:

Angina is one of the serious causes of chest pain. "Angina" is an abbreviation of anginapectoris, a Latin term for "squeezing of the chest." Angina occurs when there is decreasedblood oxygen supply to an area of the heart muscle. In most cases, the lack of blood supplyis due to a narrowing of the coronary arteries as a result of arteriosclerosis.

Congestive Heart Failure:

Congestive heart failure (CHF) is a condition in which the heart's function as a pump isinadequate to deliver oxygen rich blood to the body.

Congestive heart failure can be caused by: diseases that weaken the heart muscle, diseasesthat cause stiffening of the heart muscles, or diseases that increase oxygen demand by thebody tissue beyond the capability of the heart to deliver adequate oxygen-rich blood.

Blockage of the coronary arteries by plaque may cause a heart attack (myocardialinfarction) or a fatal rhythm disturbance (sudden cardiac arrest).


8

12

25

927

27

Percent of U.S. Population with ECP Treatable Disease Conditions

(Yr 2010)

Cardiovascular Disease

Hypertension

Diabetes

Obesity

Healthy or Other Diagnosis

U.S. MARKET

Source: http://www.cdc.gov/nchs/fastats/heart.htm

Number of non-institutionalized adults with diagnosed heart disease

Number of visits (to physician offices, hospital outpatient and emergency departments) with heart disease as primary diagnosis

Number of discharges with heart disease as first-listed diagnosis

Number of Annual U.S. Deaths from Heart Disease

27.1MM

16.7MM

4.0MM

In the U.S., CVD’s are responsible for one in every three deaths,

equal to 2,200 deaths per day, or one person every 34 seconds.“

“803M

http://www.cdc.gov/nchs/fastats/heart.htm


9

PROPRIETARY OFFERINGS

CardioAssist 4500gs

Beneficial Clinical response rate between

80-87%

Facilitates expansion of collateral blood

vessels/arterial pathways VS. surgical

interventions which target only individual

blockages

Eliminates or reduces recurrent events

Reduces or eliminates nitrate

medications

Sustainable up to five years+ over each

of three (3) 5-year follow-up study

periods

Patent Position 4 patents

3 pending filings

Proprietary Offerings

ONLY portable device VS. competitors’ exam bed unit (removes space requirement as barrier to entry)

ONLY ECP manufactured device with a ZERO adverse effects rate

ONLY FREE ECP device Physician Utilization Lease program in industry

ONLY Patented “Graduated-Pressure” regimen which calibrates precise patient experience

ONLY iPad Wi-Fi remote utilization, and video monitoring capability

Certifications:

FDA Cleared

CE Certification

ISO 13485 Compliant

Made in the U.S.A.


10

COMPETITIVE SNAPSHOT


11

REIMBURSEMENT

The FDA and U.S. Health & Human Services Office has approved ECP for use in treating a variety of cardiac conditions, and is currently covered for the following conditions by Medicaid, Medicare and/or private insurers as follows:

ANGINA ICD-9 CM (covered by all insurance)

- 411.1 Intermediate Coronary Syndrome

- 413.0 Angina Decubitus

- 413.1 Prinzmetal angina

- 413.9 Other/unspecified angina pectoris

- 414.9 Chronic ischemic heart disease, unspecified

CONGESTIVE HEART FAILURE ICD-9 CM Codes (covered by Medicare Advantage plans and certain private insurers; covered by Medicaid if filed as secondary diagnosis to Angina)

- 428.0 Congestive Heart Failure

- 428.1 Left heart failure

- 428.9 Heart failure unspecified

- 402.01 Hypertensive heart disease, malignant with CHF

- 402.11 Hypertensive heart disease, benign with CHF

- 402.91 Hypertensive heart disease, unspecified with CHF

- 494.01 Hypertensive heart and renal disease, malignant with CHF

- 404.11 Hypertensive heart and renal disease, benign with CHF

- 404.91 Hypertensive heart and renal disease, unspecified with CHF

Primary CPT Code G0166

AVERAGE THERAPY REIMBURSEMENT

$5,285.00

• Average Medicaid Reimbursement Rate is $151

nationwide per treatment hour, with minimum 35 hrs.

approved, and an additional 12 hours if necessary.

• Rates vary by regional demographic, with the lowest

reported at $142.

• Atlanta Region is $164 p/hour.

• Private insurers sometimes pay up to $232 p/hr.

• Rates have increased year to year an average of 5% vs.

declines in most every other medical service.


12

NEW PHYSICIAN INCOME STREAMS

$85,440$102,528$104,580

$139,440

$190,020

$241,968

3 NEW PATIENTS P/MO 4 NEW PATIENTS P/MO

Additional New Revenue Streams to Physician from ECP(Annual Average)

Min. Insurance Reimbursement from Testing Net ECP Treatment Income Avg. Annual Combined Income

Assumptions:

• Net Reimbursable ECP

Treatment Income Retained by

Physician = $2,905 p/Patient

• 7 Minimum Standard

Reimbursable ECP Qualifying

Tests = $712 p/Patient

• Industry Ratio of Qualifying

Tests to Qualified Patients =

10:3 or 12:4

Source: www.cms.gov/ecp_reimbursement _guide/

http://www.cms.gov/ecp_reimbursement _guide/


13

ECP VS. SURGICAL INTERVENTIONS

ECP GROUP IABP GROUP

LIMA Doppler Velocity VTI Velocity VTI

Baseline 18 6 20 6

Counter pulsation 98 19 95 15

The study referenced above presented ECP as a non-invasive alternative to atraumatic

Intra-Aortic Balloon Pump (IABP) invasive procedures, to produce a persistent improvement

in cardiac blood flow. The studies cited demonstrate that ECP works in angina and heart

attack patients, with and without prior bypass, in part by transmitting an IABP-like diastolic

pressure wave through the coronary arteries and/or their bypass grafts, then utilizing this

pressure wave to recruit and enlarge collateral vessels.

Clinical Study: Effects of Enhanced External Counter Pulsation on Internal Artery

Flow: Comparison With Intra-Aortic Balloon Counter Pulsation. Katz, WE et al.

Oral Presentation 825-1, American Heath Association Meeting 3/31/98.

Diastolic pressure waves generated by ECP can indeed transmit a collateral

producing pressure, the invasive IABP device offers no advantage over

non-invasive ECP, and in fact ECP is more capable of achieving the

desired outcomes over surgical alternatives.

Doppler ultrasound was used to compare the effects of ECP and IABP on

the direction and velocity of blood flow within the LIMA.

Velocity refers to the speed, for our purposes the collateral producing

thrust, of blood flow within the LIMA. VTI, the velocity-time integral, refers

to the "area under the curve" or quantity of blood that flows forward with

each heartbeat. You can see that baseline flow parameters were similar in

both patient groups. Blood flow velocity increased by a factor of five, and

quantity of flow tripled during counter pulsation, both in the invasive IABP

and non-invasive EECP groups.

ECP PROVEN MORE BENEFICIAL THAN SURGERY Clinical Trial Method & Baseline

Study Outcome


14

CLINICAL EVIDENCEThe first randomized, double-blinded, placebo-controlled study was completed in 1997 (MUST-EECP, 6 1995-1997). Itevaluated the effect of external counter pulsation therapy, testing the reproducibility of benefits from earlier studies.

Schecter, Hod et al (Circ. 2003) investigated the influence of short-term external counter pulsation (ECP) therapy on flow-mediated dilation (FMD) in patients with coronary artery disease (CAD). They found that in patients with CAD, thevascular endothelium is usually impaired and modification or reversal of endothelial dysfunction may significantly enhancetreatment.

SUMMARY OF STUDY RESULTS 1-17

Clinically Biochemically Functionally

Long Term sustained benefit Decrease in BNP levels Increase in Exercise Tolerance

Reduction in Angina episodes Increase in VEGF levels Increase in Ejection Fraction

Improvement in CCSF class Decrease in Endothelin levels Increase in ST depression

Improvement in QOL Increase in Nitric Oxide levels Increase in Cardiac Output

Reduction in Nitrate use Increase in Intracoronary pressure

Increase in Blood Flow Velocity

Increase in Cardiac Contractility

Increase in Peak Oxygen Consumption

Decrease in Systolic Pressure

Reduction in Systemic Vascular Resistance

“External counter pulsation therapy

resulted in significant improvement in

post-intervention FMD (8.2 • 2.1%, p •

0.01), compared with controls (3.1 •

2.2%, p • 0.78). There was no

significant effect of treatment on NTG-

induced vasodilation between ECP and

controls (10.7 • 2.8% vs. 10.2 • 2.4%,

p • 0.85). External counter pulsation

significantly improved anginal symptoms

assessed by reduction in mean sublingual

daily nitrate consumption, compared

with controls (4.2 • 2.7 nitrate tablets

vs. 0.4 • 0.5 nitrate tablets, p 0.001

and 4.5 • 2.3 nitrate tablets vs. 4.4 •

2.6 nitrate tablets, p • 0.87,

respectively) and in mean CCS angina

class compared with controls (3.5 • 0.5

vs. 1.9 • 0.3, p 0.0001 and 3.3 • 0.6

vs. 3.5 • 0.5, p • 0.89, respectively).”


15

CLINICAL SNAPSHOT

Cardiomedics currently has FDA 510(k) clearance to market the CardiAssist Counterpulsation System (K022107) and the CardiAssist ECP System (K010261).

ECP Clinical Data Supporting both the Company’s Primary and Expanded Markets, which trials will be utilized to seek additional FDA clearances.

4,288 total clinical trials are available on ECP, with study data evidenced in both primary and secondary outcomes.

http://www.ncbi.nlm.nih.gov/pubmed?term=external%20counterpulsation

9 current clinical trials are in process

http://clinicaltrials.gov/ct2/results?term=external+counterpulsation&Search

Source: The National Library of Medicine via PubMed.gov & National Institute of Health via ClinicalTrials.gov

http://www.ncbi.nlm.nih.gov/pubmed?term=external counterpulsation

http://clinicaltrials.gov/ct2/results?term=external+counterpulsation&Search


16

INDUSTRY ESTABLISHMENTIndustry Inception to Cardiomedics, Inc.

1966: ECP’s first patent issued by Harvard Researchers, Birtwell and Clauss, who produced counter pulsation by introducing a

catheter with a balloon into the ascending aorta via the femoral artery. The Intra-aortic Balloon Pump was thus invented and used still today.

Several Harvard and other scientists were involved in the evolution of counter pulsation to a completely non-invasive technique using externally

applied pressure generated by hydraulic systems.

1987: ECP Cleared by FDA

1999: Medicare approves reimbursement for various classes of Angina patients

1999: Competitor Vasomedical enters ECP market. Known since for sponsoring more than 80% of all of the clinical studies performed.These trials have played a critical role demonstrating the viability of External Counterpulsation Therapy for Angina, Heart Failure anda vast array of other medical conditions.

2002: ECP cleared by FDA as a treatment for Congestive Heart Failure

2012: Innova Medical acquires Cardiomedics.


17

MARKETING PROGRAM

The Company’s primary distribution model is Fee-for-service device

usage charge where the physician will retain 60% of the billable, and

the Company will receive 40% via EFT auto-draft on a monthly basis.

Usage data is stored, and uploaded real-time via cloud based

features built-into the CardiAssist 4500gs unit. This ensures efficient

cash flow, and ensures the correct residual revenue.

This fee based income program will be marketed under the name The

Pulse program.

This ‘Medical Vending’ model will not require a physician to layout

capital of $65-85,000 in advance.

On a conservative 3 new patients per month basis, in addition to

testing revenue, physicians will average $180,000 of gross revenue

from this program per year per machine in service.

Bed utilization per bed is 4.5 patients per month, and bed life is an

average 7 years.

The Pulse

Program

15 Physicians with 800+ p/mo patients selected

p/market

Unit placed under 3 yr.

agreement on 60/40 split on

income on hourly usage

In office video stand/ECP

commercials/ brochures/ iPad

appointment terminals provided

Monthly Account Management,

Patient Identification Retention &

Loyalty Programs provided by IMT


18

CHANNEL DEVELOPMENTMULTIPLE PRIMARY CHANNELS

Channel development of the Company’s Physician Targets shall include:

- Hospitals & Specialty Clinics

- Cardiologists

- General Practitioners

- Internists, Osteopathy (D.O.’s)

- Naturopathy (N.D.’s)

- Sports Medicine Professionals

- Alternative and Holistic practitioner’s, and certain other physician groups.

MULTIPLE TERTIARY CHANNELS

ECP therapy to a broad range of patients as a:

- Preventive

- First

- Secondary, lines of treatment

- And, as part of an integrative health, wellness and/or maintenance plan.


19

U.S. PATIENT BASE

65,800,000

1,900,000

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

CARDIOVASCULARDISEASE

DIABETES ERECTILEDYSFUNCTION

ALL NCD'S

Nu

mb

er

of

Peop

le

U.S. Target Patient Base

11%

12%

27%

50%

% of U.S. Target Patients to Total Population

CARDIOVASCULARDISEASE

DIABETES

ERECTILE DYSFUNCTION

ALL NCD'S

Annual Growth Rate of all NCD’s in Target Patients = 2.9%


20

KEY MEASURABLE

0

1,000

2,000

3,000

4,000

FY1 FY2 FY3 FY4 FY5

ECP

DEV

ICES

IN S

ERV

ICE

FY1 FY2 FY3 FY4 FY5

New ECP Installs 81 193 401 930 1,608

Cumulative in Service 81 268 652 1,541 3,054

ECP NEW DEVICE INSTALLATIONS AND CUMULATIVE IN SERVICE(Factors Annual 5% Attrition Rate)


21

PRE-SALES & PLACEMENTS

11

14

88

61

38

0 10 20 30 40 50 60 70 80 90 100

WITHIN 60 DAYS

WITHIN 120 DAYS

INTL DISTRIBUTOR P.O.S TO HOSPITALS - 12 MO'S

Company Pre-Sales & Pulse Program Placements(Within 60 days Delivery Date = 12/31/12)

(8 week Production Cycle Requirement)

Pulse Program Placements - Hosp & Physicians Direct Sales/P.O.'s - Intl Clinics/Hospitals

11 Units X Distributor Price of $45,000 = $495,000 Rev. or

$330,000 Gross Profit

14 Units X Distributor Price of $45,000 = $630,000 Rev. or

$420,000 Gross Profit


22

PRIMARY REVENUE MODEL

* Does not reflect actual financial model, and is shown here for illustrative purposes only and is based upon gross revenues at 900 units in the market

Top Medical Markets

Physicians p/Market

ECP Devices

p/Physician

New Patients

Per Device p/year

ECP Patients/ Therapy Sessions Per Year

20 14,40036210

Annual ECP

Therapy Sessions

Net $ Per Patient

Therapy Session to Company

Total Gross Revenues to Company*

14,400 $2,380 $34,272,000


23

5 YR. REVENUE PROJECTIONS

FY 1 FY 2 FY 3 FY 4 FY 5

Revenue $6,476,520 $20,561,485 $48,559,671 $109,840,951 $231,572,563

EBITDA $1,476,508 $9,446,726 $40,093,784 $65,124,281 $159,756,995

Net Income $278,891 $6,352,890 $19,298,661 $46,923,192 $115,036,592

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

Revenue EBITDA Net Income

$-

$50

$100

$150

$200

$250

$300

$350

$400

$450

Millions

Revenue By Sales Channel

ECP PROFIT SHARE INCOME PER TREATMENT

ECP UNITS (INDV DIRECT SALES)

SOFTWARE PACKAGE ON DIRECT SALE UNITS

WARRANTY/MAINTENANCE 13TH MO AFTER PLACEMENT DATE

Total Revenues

Income Projections

FY 1 2 3 4 5


24

PARTNERS & ALLIES

2

4

Alliances and partnershipsdeveloped with industry, national,local, civic and community partnersto advance its business and healthcare reform and patient centeredhealth care initiatives.


25

MARKET EXPANSION OPPORTUNITIES

The Company shall provide ECP devices to its

Physician Targets as both a reimbursable procedure,

and an elective treatment option. As the Company

secures additional 510(k) clearances, it will provide

reimbursable treatment in any or all of these 16

additional areas where clinical support has

evidenced its beneficial effects.

With or without 510(k) clearances, clinical efficacy

and safety statistics will allow the Company to

market ECP beyond CVD patients and expand

elective, preventative and maintenance benefits as

part of an Complementary, Alternative and/or

Integrative Medicine approach.

ECP Clinical Benefits:

1. Cardiac: Angina, CVD, Hypertension, Congestive Heart Failure, Stroke

2. Metabolic: Diabetes

3. Circulatory: Erectile Dysfunction in men

4. Biological: Infertility in men with low sperm count

5. Brain: Multiple Sclerosis, Alzheimer’s, Parkinson’s, Memory

6. Renal: Kidney Disease, Renal Insufficiency

7. Respiratory: COPD, Improved Lung Function & Oxygen Uptake Capacity

8. Stem Cell: Creation of new stem cells uses in repair of damaged organ tissue

9. Digestive: Detoxification of all vital organs and improved elimination

10. Cellular: Eliminates cellular toxins, improves cell strength

11. Immunity: Improves immune function

12. Circulatory: Phlebitis, Restless Leg Syndrome, Thrombosis

13. Macular: Macular Eye Degeneration; Cataracts

14. Metabolism: Increased metabolic rate resulting in weight loss*

15. Mental: Decreases depression and improves overall sense of well-being

16. Energy:

Improved stamina, exercise tolerance, duration and

effectiveness of exercise through improved oxygen and

blood flow

“Many Americans use complementary and alternative medicine (CAM) in pursuit of health and well-being. The 2007 National Health Interview

Survey (NHIS), which included a comprehensive survey of CAM use by Americans, showed that approximately 38 percent of adults use CAM.”

Source: http://nccam.nih.gov/

http://nccam.nih.gov/


26

INVESTMENT OPPORTUNITY

Round Details

Funding Amount: $2.75MM

Series: Expansion Round

Valuation: $8,000,000

Company Age at Funding:

Less than 1 yr

Convertible Debt

15% Interest

Redemption at Investor’s Option

Anti-Dilution Protection

No Cumulative Dividends

Warrants up to 4%

Equity

25% Stake

Valuation: $8,000,000

Board Seats: 1 out of 2

Multiple of Liquidation Preference: 1X

No Capped Participating Preference

Anti-Dilution Protection

Cumulative Dividends

imt angel & vc pitch deck

Documents