BioSculpture Investor Presentation 7-14-16
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Transcript of BioSculpture Investor Presentation 7-14-16
July 14, 2016
Investor PresentationHighlights
© 2016 BioSculpture Technology, Inc. All rights reserved.
REGULATION A+ Allows companies to raise up to $50M from retail investors in an SEC registered offering.
REGULATION D - RULE 506(c) Allows companies to raise capital from accredited investors only and market the offering.
BIOCULPTURE TECHNOLOGY, INC. (“BIOCULPTURE”) HAS LAUNCHED A TEST THE WATERS CAMPAIGN FOR A REGULATION A+ OFFERING. WE ARE NOW ACCEPTING NON-BINDING INDICATIONS OF INTEREST
(RESERVATIONS)
NO MONEY OR OTHER CONSIDERATION IS BEING SOLICITED FOR OUR REGULATION A+ OFFERING AT THISTIME AND IF SENT IN TO BIOCULPTURE WILL NOT BE ACCEPTED. NO OFFER TO BUY SECURITIES IN AREGULATION A+ OFFERING OF BIOCULPTURE CAN BE ACCEPTED AND NO PART OF THE PURCHASE PRICECAN BE RECEIVED UNTIL BIOCULPTURE’S OFFERING STATEMENT IS QUALIFIED. ANY SUCH OFFER TO BUYSECURITIES MAY BE WITHDRAWN OR REVOKED, WITHOUT OBLIGATION OR COMMITMENT OF ANY KIND,AT ANY TIME BEFORE NOTICE OF ITS ACCEPTANCE GIVEN AFTER THE QUALIFICATION DATE. ANYINDICATIONS OF INTEREST IN BIOCULPTURE’S OFFERING INVOLVES NO OBLIGATION OR COMMITMENT OFANY KIND.
PRIVATE PLACEMENT RULE 506(C) OFFERING
AN INVESTMENT IN BIOCULPTURE THROUGH PRIVATE PLACEMENT IN OUR 506(C) OFFERING MAY ONLY BEMADE BY ACCREDITED INVESTORS THROUGH THIRD PARTY VERIFICATION AND WRITTEN CONFIRMATIONFROM ONE OF THE FOLLOWING: A REGISTERED BROKER DEALER, A REGISTERED INVESTMENT ADVISOR, ALICENSED ATTORNEY OR A CPA, THAT THEY HAVE VERIFIED ACCREDITED INVESTOR STATUS IN THE LASTTHREE MONTHS, WITH AND FOLLOWING REVIEW OF A CONFIDENTIAL PRIVATE PLACEMENTMEMORANDUM. THIS PACKAGE OF INFORMATION IS NOT MEANT TO REPLACE OR SUPPLEMENT THECONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM.
Disclaimer 1
Forward Looking Statements
Any forecasts and pro forma financial information contained herein or which are part of the Company’s business plan, are for illustrative purposes only and are based upon assumptions made by Management regarding hypothetical future events.
Management believes these assumptions are reasonable and furthermore to the best of its knowledge that all the facts contained herein are true and there are no material errors or omissions.
There is no assurance that actual events will correspond with the assumptions or that factors beyond the control of the Company will not affect the assumptions and adversely affect the illustrative value and conclusions of any forecasts.
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BioSculpture Technology, Inc. Company Profile
Company Profile Key Financials
BioSculpture Technology, Inc. (“BST”) is acommercial-stage medical device manufacturerdeveloping a patented minimally invasive methodand device for the endoscopic removal of visceralor “belly” fat as a new treatment of obesity,metabolic syndrome and type 2 diabetes mellitus.
Large IP portfolio: 3 patents on method and devicewith numerous more U.S. pending.
Proven concept: first generation of successfultechnology was licensed to UAM, NuMed, ByronMedical/Mentor/Ethicon generated $150 MM inrevenues annually.
Small & medium volumeliposuction
Airbrush®
Liposculptor IIIAirbrush®
Liposculptor IIE EVL®
Medium & Large volumeliposuction
Precision liposuction Endoscopic Visceral
Lipectomy
FQE 6/30/16 $1,000‘s
2016 2017 2018 2019 2020SALES $0 $1,909 $20,050 $31,104 $44,536 EBITDA ($2,401) ($398) $2,844 $4,987 $7,480 NET INCOME ($2,572) ($533) $2,687 $4,433 $4,761
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Experienced Management Team
Name Title Background
Robert L. Cucin, MD,
FACS
Founder,President
& CEO
Inventor of both PAL and TCAL; board-certified plastic and reconstructiveand general surgeon.
BA (Cornell), M.D. (Cornell), JD (Fordham), MBA (Columbia). 18 patents, 5 books, 24 articles, and one ballet score. Founded and Directs Rocin Laboratories, Inc., a biomedical Research and
Development company which licensed his first liposuction patent non-exclusively to NuMed, UAM, Byron Medical, Mentor, and Ethicon.
Founded and directed Plastic Surgical Research to support IACUC studiesand clinical IRB’s carried out at academic centers.
Founded and Directed the American Institute of Plastic Surgery (NYC). Licensed Securities professional: Series 4, Series 7, Series 24, Series 27, Series
63, Series 65, Series 79, Series 86/87, Series 99.
Deborah Salerno
CFO Currently holds 7, 24, 63 and 79 Securities licenses. Managing Director of DAS Consulting LLC. She been active in PIPEs and provides expertise in the alternative Public
Offerings market as well as traditional banking. TerraNova Securities.
Simon Taylor, Esq.
Corporate Counsel
Columbia University and Harvard Law School graduate with broadexperience with biotechnology and medical devices, technology and IP start-ups and ramp-ups, and venture financing.
Former Partner of Snow Becker Krauss.
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Advisory Board
Name Title Background
Peter Ciriscioli,
BS MS PhD
Engineering Consultant
BS and MS in Materials Science and Engineering from the University ofCalifornia and a PhD in Mechanical Engineering from Stanford University.
Director of JLTV Programs for BAE Systems, Program Manager of theEngineering Mechanics Laboratory at General Electric Corporate Research.
Director of Research for the Fiberite Corporation where he led 30 engineersand scientists in U.S., U.K. and Europe and was responsible for the strategyand implementation of new technologies and products.
4 patents, two books, and more than 20 published journal articles.
Brigadier General
Richard B. Yules, MD
Medical Advisor
Yale B.S. and M.D, Board-certified otolaryngologist, having completedsurgical residences at Stanford and Harvard universities, where he stillmaintains a faculty position.
Air National Guard assistant to the deputy assistant secretary of defensePentagon, Washington, D.C.
Published over fifty manuscripts and chapters, including four books. Sits on the Board of several public and private companies.
Thomas J. Perkowski,
Esq.
Patent Prosecution
B.S. E.E Clarkson College of Technology J.D. Franklin Pierce Law Center of Concord, New Hampshire. Former Associate of Hopgood, Calimafde, Judlow and Mondolino (NYC) Successfully prosecuted over 650 patents
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Large Growth Opportunity
Liposuction
Large Addressable Market
2/3 of the U.S. population is overweight; 1/3 is frankly obese; forecast to grow to 43% infew years.
2.1B obese people Worldwide forecast to grow to 50% of the world’s population by 20301
Obesity related disease yearly expenditures exceed $2T worldwide.1 Nearly $14B spent on cosmetic procedures in 2015, 5% increase from 20142.
$668M spent on liposuction in 2015 (4.8%). $3,009 average surgeon’s fee / procedure in 2015.
Traditional liposuction and all other devices aretechnologically limited to small and mediumvolume subcutaneous fat removal.
Disruptive technology: BST’s Twin-CannulaAssisted Liposuction (“TCAL”) allowsliposuction to become an operation of poundsrather than inches.
Bariatric Treatment
A safer and faster alternative to currentrestrictive or bypass bariatric surgery.
No cutting into the stomach, bowel orrearranging alimentary plumbing.
Less invasive with no foreign body to erodeesophagus or skin, or cause malabsorptionsyndromes and diarrhea (no quality of lifecompromise).
Bariatric surgeries reached 220,000 in 2008. Bariatric surgery spending $1.4B in 2014.
1. McKinsey Global Institute report released 11/20/14.2. American Society of Plastic Surgeons report released 3/9/16.
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Bazzocchi, A Diano, D Battista G How Fat is Fat? Lancet 380:e1 (2012)
Visceral fat removal Subcutaneous fat removal
Different Fat Requires Different Treatments
Endoscopic Visceral Lipectomy with EVL® Liposuction with Airbrush® Liposculptor IIE
Accumulation of subcutaneous and visceral types of fat has different consequences forhuman body and EVL® and Airbrush® Liposculptor IIE provide viable and economicsolutions for effective removal of both types of fat
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Product Overview
Airbrush®
Liposculptor IIIAirbrush®
Liposculptor IIE EVL®
Application
Cosmetic & liposuction Cosmetic & liposuction Treatment & Visceral lipectomyObese patients, overweight patients with elevated waist-to-hips ratios, (~2B people, 43% of population)
$1,700 per procedure, 84% margin
Small and medium volume liposuction (1/3 the population)$ 100 per procedure, 80% margin
Medium and large volume liposuction (1/3 population)
$100 per procedure, 80% margin
InsuranceNo, out-of-pocket, discretionary
procedureNo, out-of-pocket, discretionary
procedure
Yes, reimbursed, indicatedprocedure as well as still
discretionary (or proactive) procedure
PurchaserDermatologists, plastic surgeons and general surgeons performing
liposuction
Plastic surgeons, gynecologists & general surgeons performing
liposuction
General and bariatric surgeons who do endoscopic procedures
Market Size $500M device, up to $1B surgical fees can be targeted with single use per-procedure consumables
$1.4B/yr. and expandable up to the $2T/yr. obesity-related disease
expenditures
Patent & Method Protected Products
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Adjustable reciprocation stroke (1.3 -2”). Eliminates surgeon’s need to stroke the
cannula, saving labor and time whileimproving consistency and control.
No vibration since outer cannula isstationary.
Gentler on surgeon and patient as innercannula doesn’t traumatize patient sinceit is ensheathed in stationary outer one
Intellimotion® control with feedbackclosed loop DSP control and magneticcoupling safe guards.
× Only vibrates (1/4”).× Surgeon must still manually reciprocate
the cannula to aspirate fat.× Vibration annoying to surgeon and can
cause carpal tunnel syndrome and tenniselbow.
× Patient sustains trauma from 10’s of1,000’s of advancing cannula impacts.
× We also invented this technology butdeveloped and adopted labor savingtube-within-a-tube designs.
Airbrush® Advantage
Single Cannula Power Assisted Liposuction Twin Cannula Assisted Liposuction
Vibrates externally
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Competitive Positioning of Liposuction Products
Airbrush® II & IIE(TCAL)
Airbrush® IIIPAL (Power
Assisted Liposuction)
UAL (Ultrasound Assisted
Liposuction)
LAL (LASER Assisted
Liposuction)Stroke Power-assisted Power assisted Manual Manual Manual
Action Twin Cannula, adjustable long Stroke
II: 2” eliminates surgeon’s manual
stroke; electric
Single cannula, short stroke: 3/8” option of
rotation; twin cannulas possible; assists
surgeon’s manual stroke, electric
Single cannula vibrates (~1/8”) at 4KHz; gas
and electric
Single cannula vibrates <1/10” at 40KHz to
melt fat
Fiber directs laser light source to melt fat
Vibration Vibration minimized by tube-within-tube design both in front,
also in rear IIE
Vibration minimized by stationary barb
Heavy vibration; tubing moves with cannula,
repetitive stress injury not common
No aspiration: must remove fat manually
after strokes
No aspiration; must remove fat manually
after strokes
Risk of Burns None None None Significant if surgeon moves hot tip too
slowly
Significant if surgeon moves hot tip too
slowly
Tissue Trauma
Gentler twin-cannula design minimizes
tissue trauma
Single cannula designs minimize tissue trauma
and twin-cannula version possible to minimize it further.
Vibrating tip traumatizes tissue
Hot tip causes cellular injury
Hot tip causes cellular injury
Curved Cannulas
Possible, prototyped and ready for roll out
Possible on twin cannula version
Impossible Impossible Impossible
Price $50,000 $9,000 $14,000 $40,000 $60,000
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Autoimmune diseasesCancers
StrokesHeart attacksAngina
Low energyHunger
Kidney failureBlindness
Obesity Morbidity: Visceral Fat is a Noxious Cytokine Factory
The Marker for Visceral Fat is a Bulging Waistline
An Elevated Waist to Hips CircumferenceRatio Signals Metabolic Syndrome (WHR)
• Visceral fat is responsible for all the morbidities associated with obesity.
EVL® Device Enables a Safer Bariatric Surgical Alternative
Existing Surgical Options
Surgical risks of cutting into the stomach orbowel, rearranging the body’s alimentaryplumbing or leaving behind a foreign body.
Adverse nutritional consequences anduntoward sequelae compromise lifeoutcomes.
Patients eventually encounter a weight lossplateau and gain back lost weight.
Patients require indefinite surgical follow-up and regular lab testing.
Invasive and expensive.
Endoscopic Visceral Lipectomy (EVL)
Provides the benefits of existing optionswith fewer possible surgical complicationsand with no lifestyle compromises.
No cutting into the stomach, bowel orrearranging the alimentary plumbing, orleaving behind a foreign body.
No adverse nutritional effects or untowardsequelae
Results expected to be permanent Procedure may be repeated until ideal
weight is obtained. Minimally invasive and cost effective.
EVL® Directly Removes The Noxious Cytokine Factory
https://youtu.be/sVCT1NCz_Rw• If embedded video above fails to play, click on icon or link:
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Projected Development Timeline
QUARTERS FROM COMPLETION OF FUNDING
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Airbrush® II Sell inventory
Use up direct materials for final run
Sell last units
Airbrush® IIE Tweak BetaPrototype
510(k) Start Production CommenceSalesGet CE
Airbrush® III Tweak Beta Prototype
510(k) Start Production
Commence SalesGet CE
Airbrush® Collectors
Tweak Beta Prototypes
510(k) Start Production
Commence SalesGet CE
EVL® Tweak Beta PrototypeAdd cautery
510 (K) without cautery
Start ProductionTweak Cautery
Commence Sales Supplemental
510(k) with cautery
Commence SalesClinicals abroad
Supplemental or modified 510(k) for additional indication
Promote as Lap-Band® AlternativeGet CE
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Sales and Marketing
Management has extensive personal connection with major research hospitals andsurgery centers, respected doctors and Key Opinion Leaders (“KOL’s”). Placement with podium doctors Direct marketing to hospitals and doctor training. White papers and peer-reviewed articles from medical centers.
Promotional budget set at 20% of sales. Direct trade “rifle barrel” advertising with and internet rich media. Cooperative advertising with promotional incentives to multiply the effect of
the advertising budget, establish our brand brand and create patient flow(“pull”). Domestic: combination of salaried representatives in key cities (LA and NYC)
and independent representatives elsewhere fed leads from trade shows andadvertising.
International: use of distributors.
License and refer patients to branded treatment centers cross-selling bariatricsurgery, liposuction, and adipocyte-derived stem cell autografts.
EVL®
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Key Financial Summary
Prices: Airbrush® II: $50,000, Airbrush® IIE: $50,000, EVL® : $50,000, Airbrush® III: $9,000. Consumables: Airbrush® II, IIE and III: $100, EVL® liposuction pack: $300, visceral lipectomy pack: $1,700. Average product margin: 20%, 17%, and 83% respectively. Product Launch and sales begin in Q4 2017 (Oct. 2017). 2017 unit sales: Airbrush® IIE: 15 domestic, 8 international; Airbrush® III: 19 domestic, 9 international;
EVL®: 12 domestic and 6 international. EVL® sold initially as an endoscopic subcutaneous lipoaspiration device only until additional indication of
visceral fat removal obtained, forecast for 2018. Buy/Try conversion ratio: 31%. International/Domestic unit sales: 50% (2016) growing to 100% (2020). Annual unit sale growth: 20%. Liposuctions or bariatric surgeries/year/surgeon: 24; Consumables/liposuction or EV L®: 1. Sales commission: 15% and Promotional Incentives (e.g. Cinch It™): 5%; Product Liability: 5%.
FQE 6/30/16 “Bottom Up” Conservative Projections 1,000‘s
2016 2017 2018 2019 20201Q 2016 2Q 2016 3Q 2016 4Q 2016
SALES $0 $0 $0 $0 $0 $1,909 $20,050 $31,104 $44,536 EBITDA ($42) ($73) ($704) ($1,582) ($2,401) ($398) $2,844 $4,987 $7,480 NET INCOME ($50) ($79) ($726) ($1,717) ($2,572) ($533) $2,687 $4,433 $4,761
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Market Size Estimate of Potential Growth (“Top Down”)
Estimated for treating only the obese patients with metabolic syndrome’s most severemanifestation, diagnosed type 2 diabetes mellitus in the U.S.
U.S. Diabetes Prevalence1
In 2012, 29.1 million Americans, or 9.3% of the population, had diabetes. Approximately 1.25 million American children and adults have type 1 diabetes. Undiagnosed: 8.1 million were undiagnosed 19.75M diagnosed, type 2 Diabetics in the U.S.
• Potential Market Size and Net Income• $1,700 per single procedure consumable x 19.75M diagnosed type 2 U.S Diabetics x 31%
Net Profit = $10.41B Net Income• 1% Market Penetration = $104M Net Income
• Market Growth1
• 1.4 million Americans are diagnosed with diabetes every year• 1.4 Million new cases x $1,700 x 31% = $744M yearly target market growth• Endocrinologists2 are recommending surgical intervention more frequently and earlier
• Surgery is more effective than diet and exercise for long term weight reduction.
1. American Diabetes Association:http://www.diabetes.org/diabetes-basics/statistics/#sthash.FZsSxxWX.dpuf2. Endocrine Society: http://www.news-medical.net/news/20140624/Weight-loss-surgery-more-effective-than-
diet-exercise.aspx
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Current and Post-Offering Ownership
Current Capitalization TableCommon Stock (Capital Stock + APIC) $2,794,634Options (APIC)1 $289,092Mezzanine Bonds Sold to date2 $92,100R. Cucin Note3 $433,041
$3,608,867
3. Note principally represents Cucin’s Personal Guarantee on three open Corporate Bank credit lines.
2. Mezzanine Convertible Note Offering of $500,000 carries a 10% Coupon and converts at a 10% discount to the OfferingPrice. The $367,900 remaining unsold is presumed sold on 7/3/16 for calculation of maximal dilution.
Share Holders: Shares Common StockConversion Date
Estimated Qualification
Total Currently Outstanding (16 Shareholders) 6,130,267 $2,794,634$500K mezzanine bond sold & converted4 146,585 $461,730 8/31/2016$5M Equity Offering fully sold 1,428,571 $5,000,000Participating Broker Dealers 363,083 Success fee
Total Outstanding After Offering 8,068,245 $8,256,264
Post Offering Common Stock Capitalization
4. All $372,900 mezzanine notes remaining unsold are presumed sold on 6/18/16 for a maximum interest and shareconversion calculation at the estimated date of qualification on 8/31/2016.
1. Under BST’s ESOP of 2011, stock options having an estimated FMV of $289,092 @ issuance and an average effective life of3.8 years have been granted for 759,000 shares. FASB (ASC) 71
Form 1-A filed 6/30/16• Tier 2 Regulation A Offering• $5,000,000 common shares @$3.50/share• Pending qualification
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Sources and Uses of Funds
Sources of Funds
$ %Private Placement $5,000,000 100%
Uses of Funds
$ %Production, FDA $1,550,000 31%Marketing 1,500,000 30%Debt Reduction 467,306 9%Legal, Accounting 295,433 6%Other Corporate 1,187,261 24%
Total $5,000,000 100%
Large OEM Medical Device Company has agreed to finalize prototype development, create afinal production box build, and produce the product. Time to Market: Estimated 12 months.
Offering
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Investment Highlights
Large & Growing Market
Persistence Market Research estimates the global bariatric surgery device(bands, staples, clips, balloons, etc.) market size at $1.4B in 2014 with anexpected CAGR of 9.6% to reach $2.5B by 2020. McKinsey Global Institute reported world wide expenditures for Obesity-
Related Disease Diseases (diabetes, hypertension, sleep apnea, etc.)reached $2T in 2014.
Strong Management
Team
Extensive experience and solid track record of successful execution. Sound vision and strategy for growth: management has extensive.
connections with key hospitals, industry doctors and opinion makers. Depth of professional, regulatory and licensing experience.
Sound Growth Strategy
Subscription revenue base model with add-on products or procedures. Large potential for branded centers opening: usage of extracted fat as
filler in various plastic procedures and cross selling opportunities. Worldwide expansion.
Viable Business Model
Proven concept and strong barriers to entry: third-generation device withlarge IP Protection: 3 patents on method and device and numerous moreUS pending. Short time to market: Estimated 12 months to create and test, large OEM
medical device company agreed to develop prototype and manufacture. Disruptive technology in both applications.
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Contact
BioSculpture Technology, Inc.
Robert L. Cucin M.D., J.D., M.B.A.CEOAdministrative Office1701 South Flagler DriveSuite 607West Palm Beach, FL 33401
Tel (561) 651-7816Tel: (212) 977-5400Fax: (561) 651-7808
rlcucin2
Research & Development OfficeOkeechobee Plaza1550-4 Latham RoadWest Palm Beach, FL 33409
Tel: (212) 300-0060Fax: (212) 400-4234
www.biosculpturetechnology.com www.evl.technology
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