EndoNavEndoNavColonoscopy Made EasyColonoscopy Made Easy

Babak PahlavanBabak PahlavanArnav Sharma Arnav Sharma Ankur PrasadAnkur Prasad

Benjamin KaunBenjamin KaunRandal TruongRandal Truong

Company PurposeCompany Purpose

To deliver an innovative, low-cost To deliver an innovative, low-cost colonoscopy solution that eliminates the colonoscopy solution that eliminates the

need for sedation and increases need for sedation and increases procedure throughputprocedure throughput

ProblemProblem

Traditional scopes cause pain for patients Traditional scopes cause pain for patients and damage to colon from “looping”and damage to colon from “looping”

Sedation procedure during colonoscopy is Sedation procedure during colonoscopy is responsible for 90% of complicationsresponsible for 90% of complications

Large waitlist for colonoscopy proceduresLarge waitlist for colonoscopy procedures

SolutionSolutionEndoNav’s RigiFlex™ disposable OTS EndoNav’s RigiFlex™ disposable OTS

Eliminates the problematic “looping”Eliminates the problematic “looping” Decreases time per procedure Decreases time per procedure Increase revenueIncrease revenue

Reduces the need for sedation Reduces the need for sedation Fewer complicationsFewer complications

Shorter learning curve for physiciansShorter learning curve for physicians Reduces the risk for “difficult cases”Reduces the risk for “difficult cases”

Why NowWhy Now

In 2001, Medicare started reimbursing In 2001, Medicare started reimbursing colonoscopy screeningcolonoscopy screening Substantial increase in demandSubstantial increase in demand Lack of a fast & efficient solutionLack of a fast & efficient solution

Reduction in size of reimbursement by 33%Reduction in size of reimbursement by 33% Lack of low cost solutionsLack of low cost solutions

MarketMarket

$1B market for disposable colonoscopes*$1B market for disposable colonoscopes* 10.4M procedures per year by 200810.4M procedures per year by 2008 Growth rate of 10% per yearGrowth rate of 10% per year

4.4M to 8M procedures from 1999 to 20044.4M to 8M procedures from 1999 to 2004

*Source: Boston Scientific announcement (2004)

CompetitionCompetitionScope developersScope developers Olympus – Traditional scopes, 75% MSOlympus – Traditional scopes, 75% MS Pentax, Fujinon with majority of remainderPentax, Fujinon with majority of remainder

New scopes - $25K-$40KNew scopes - $25K-$40K

Disposable OTS developersDisposable OTS developers Boston ScientificBoston Scientific

New disposable product lineNew disposable product line USGIUSGI

shorter OTS than EndoNavshorter OTS than EndoNav NeoguideNeoguide

Needs proprietary supporting equipmentNeeds proprietary supporting equipment

ProductProduct

Disposable Over-the-Scope (OTS) device Disposable Over-the-Scope (OTS) device has telescoping segments that can lock has telescoping segments that can lock and prevent “looping”and prevent “looping”

Pain + Possible Perforation No “looping”

Target CustomersTarget Customers

Early Adopters: HMO & Teaching Hospitals

Early Majority: General Hospitals

Laggards: Private Physicians

Financing TermsFinancing Terms

$1.6M in equity financing now$1.6M in equity financing now To complete trials & market validationsTo complete trials & market validations

30% stake in company30% stake in company Option to Re-invest after Year 1 at $6M to Option to Re-invest after Year 1 at $6M to

raise equity stake to 40%raise equity stake to 40% $6M to ramp expansion in production & $6M to ramp expansion in production &

SalesSales Overall IRR 99%Overall IRR 99%

2004 2005 2006 2007 2008Revenues

Total Colonscopies -

-

8,969,898 9,687,490 10,462,490 Market Share 0.00% 0.00% 0.11% 0.97% 2.56%

Colonscopies -

-

9,867

93,969

267,840 Revenues $ 1,480,033 $ 14,095,298 $ 40,175,962

COGS -

-

592,013 5,638,119 16,070,385 Gross Profit $ 888,020 $ 8,457,179 $ 24,105,577

Fixed CostsEmployees 4 10 12 20 30Labor Costs $ 480,000 $ 1,200,000 $ 1,440,000 $ 2,400,000 $ 3,600,000

Investment Capital 600,000 2,500,000 780,000

300,000

300,000 Overhead Costs $ 300,000 $ 300,000 $ 300,000 $ 300,000 $ 300,000 Total Fixed Costs $ 1,380,000 $ 4,000,000 $ 2,520,000 $ 3,000,000 $ 4,200,000            Pre-Tax Income ($1,380,000) ($4,000,000) ($1,631,980) $5,457,179 $19,905,577

Tax $ -

$ -

$ -

$ 2,182,872 $ 7,962,231            Net Income ($1,380,000) ($4,000,000) ($1,631,980) $3,274,307 $11,943,346

Valuation $ 81,857,682 $ 298,583,654

Assumptions

Price $ 150

COGS $ 60

Fully Loaded Employee/year $ 120,000 Industry PE Ratio 25Income Tax 40%

5-Year Financial Projections

The TeamThe Team