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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