* Included in Asking Price
This firm is seeking funding to take a new advanced patient monitoring device from fully functional and clinically tested prototype stage to commercial stage. The device, called a "Pulse Flowmeter, is potentially disruptive technology in the operating room, recovery room and intensive care unit, changing, in a fundamental way, doctors' approach to these acute care patients. The Pulse Flowmeter detects blood loss and heart failure very early, before there are changes in blood pressure. This can allow physicians to treat and thereby prevent their patients from going into shock. The Pulse Flowmeter does this measuring peripheral perfusion (blood flow in the arms and legs), which decreases very early as a patient is heading in the direction of developing shock. The initial target market is very large, including operating rooms, recovery rooms, surgi-centers and intensive care units. This is a platform technology with many other uses, other than those stated above. Other markets to be addressed with different versions of the device include management of chronic congestive heart failure, triaging injured soldiers on the battlefield and the management of peripheral vascular disease.
THE PULSE FLOWMETER – THE 6TH VITAL SIGN: The need and inspiration for the device originated when the inventor of the technology observed a patient die overnight from occult bleeding following minor elective surgery. This experience led directly to the invention of the Pulse Flowmeter. Every year, 40 million patients undergo surgery in the USA. Many of these will have significant bleeding. In fact 20% of all surgical patients 65 years of age and older require blood transfusions. Many of these will become hemodynamically unstable and die. It is very difficult to detect shock in its early stages because of the body's compensatory mechanisms which constrict peripheral blood flow to preserve blood flow to the heart and brain.
Every year 5 million patients in the USA are admitted to intensive care units. These patients are often hemodynamically unstable and are monitored intermittently with invasive Swan-Ganz cardiac output catheters. The Pulse Flowmeter provides similar information, but does so easily, safely, non-invasively and continuously.
MARKET FACTORS: The current medical economic climate favors innovations that result in cost-savings and improved patient outcomes. As the Pulse Flowmeter provides an early warning sign in the ICU, OR and recovery room that patients are experiencing hypovolemia or heart failure, corrective treatment can be instituted early, thereby saving money by avoiding complications, reducing prolonged hospitalization and improving outcomes.
SALES PROJECTIONS: The expected price of the monitors is $13,000 and the disposable $60 (These are comparable to the Cardio-Q Cardiac Output Monitor and its disposable TEE probe). The total addressable market (domestic only) for the initial target applications is 200,000 monitors ($2.6 billion) and 50 million electrodes per year ($3.0 billion/yr). Predicting 1% market penetration by year 5 results in (domestic only) monitor sales of $26 million and annual electrode sales of $30 million.
THE COMPANY: This firm is a New Jersey Corporation, registered in 1998, with all stock owned by its 2 principals. They have invested $2 million of personal funds in this firm. The President: A board certified cardiologist, MIT trained electrical engineer and inventor with 23 US Patents (19 on medical devices). As Division Chief of Pediatric Cardiology, he managed a team of 5 doctors and 20 support staff. He developed the original Pulse Flowmeter prototypes and conducted the clinical trials establishing the device’s validity and utility.
The Vice President: A biomedical engineer and inventor with 10 US Patents. He is the founder and CEO of a firm, which is a leader in EMS Communications and mobile telemedicine. In addition to management and engineer expertise, the Vice President is experienced in securing FDA 510(k) approvals.
FUNDS REQUIRED AND USE OF PROCEEDS: The firm is requesting $ 2,500,000 which would allow the firm to accomplish the following milestones over an 18 month period. 1) Repackage our current prototype in a metal enclosure suitable for the OR and ICU and develop software to redesign the user interface with a touch screen panel (start immediately, complete at 9 months). This is being done to reduce the time for FDA approval and to begin field testing. This testing will acquaint users with the technology, provide feedback that may influence the final commercial device, and result in initial publication of academic papers. 2) Development of a disposable electrode (start immediately, complete 9 months) 3) Begin field testing with repackaged device (start 6 months) 4) Submit for FDA approval with the assistance of a consulting firm (9 months) 5) Begin design and development of the final commercial version of the device using an outside medical design and development firm (such as MPR associates) (9 months) (see MPR proposal) 6) Open an office in a shared office space facility (9 months) 7) Obtain FDA approval (18 months) After FDA approval, an additional $2,500,000 will be required to reach self sustainability. These funds would be used to hire a full time in-house engineering staff for development of platform products (18 months), complete the outside design and development of the manufacturable, commercial version of the device (18 months), submit for FDA approval of commercial version (18 months), hire a CEO (18 months), hire a full time sales and marketing team (21 months), obtain FDA approval (24 months) and begin sales (24 months).
The milestones are shown graphically in the business plan. The commercial version of the Pulse Flowmeter will have a new user interface, a molded plastic case, improved software for digital signal processing, incorporation of pulse oximetry, incorporation of non-invasive blood pressure, and calculation of additional parameters from blood pressure and pulse flow data. For $500,000 the firm can accomplish steps 1, 3, 4, and 7, but this would delay development of the electrode and commercial device by 12-18 months. PERFORMANCE AND EXIT STRATEGY: The business plan reports that this firm will become cash flow positive at 48 months. As an exit strategy, this firm and the Pulse Flowmeter will be an attractive acquisition by a supplier of conventional medical monitoring equipment because of three factors: 1) competitive need for product differentiation; 2) overcoming challenges from foreign competition; 3) pulse flow is a natural adjunct to existing patient monitoring functions. Some potential acquirers would be several large health care providers.
REASONS FOR SUCCESS • Recognized need for a simple, non-invasive method for detecting the early changes of blood loss and/or heart failure. • Significant advantages over current patient monitoring. • Clinical testing has established effectiveness in target areas. • FDA approval through 510(k) process (Class II, non-invasive, diagnostic, several predicate devices). • Highly capable and seasoned team . • Potential to lower cost of care by decreasing length of stay and early readmission rate. • Easy to use, safe, non-invasive, quantitative, robust and continuous. • Multiple applications for partitioning and licensing. • Multiple barriers to entry (6 patents plus technical knowhow). • Solid exit strategy. SUMMARY: This is an excellent investment opportunity with good short-term payback and a solid exit strategy. The Pulse Flowmeter addresses a recognized unmet need and satisfies the market’s cost-cutting and risk reducing needs. Unlike many start-ups, this firm has already developed a working prototype that has been successfully tested under clinical settings. The firm’s principals have extensive experience in their respective fields. The development of the commercial version of the device can be performed in-house. If the firm chooses to use a subcontractor, this company has identified a quality medical device design-and-development firm that can advance the device to commercial status. Also, an excellent relationship with a medical marketing and sales company has been established that will result in rapid market introduction.
|Sale Reason:||This is a brand new business looking for Investors|
Seller Reference #LINDENJ001-N627
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