Presentation Transcript

1. November 2013
2. Safe Harbor Statement Statements made in this presentation regarding VeriTeQ Corporation (“VeriTeQ” or “Company”) and VeriTeQ that are not historical facts are forward-looking statements based on our current expectations, assumptions, estimates and projections about VeriTeQ and our industry. These forward-looking statements are subject to risks and uncertainties that could cause actual future events or results to differ materially from such statements. These forward-looking statements include, without limitation, statements about our proposed name change and reverse stock split, our commercialization activities, market opportunities, our strategy, our competition, FDA regulation, partnership opportunities, market penetration, and all other forward-looking statements. You should not place undue reliance on any of the forward-looking statements made in this presentation. Our actual results could differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including risks and uncertainties related to the timing or successful completion of our product commercialization activities, VeriTeQ’s ability to raise capital, and other various risks and uncertainties. Additional information about these and other factors that could affect VeriTeQ’s business is set forth in its various filings with the Securities and Exchange Commission, including those set forth in its Form 10-K filed on June 28, 2013, and Form 10-Q filed on July 16, 2013, under the caption "Risk Factors." The Company undertakes no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future. This presentation does not constitute a prospectus or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, or any offer to underwrite or otherwise acquire any shares in the Company or any other securities, nor shall they or any part of them nor the fact of their distribution or communication form the basis of, or be relied on in connection with, any contract, commitment or investment decision in relation thereto, nor does it constitute a recommendation regarding the securities of the Company.
3. Company Background VeriTeQ originated as a private company founded in 2011 to acquire and develop core implantable RFID intellectual property for healthcare Acquired/licensed/developed 100+ patents (issued or pending) Multiple regulatory clearances: FDA and CE Mark Completed share exchange agreement with Digital Angel Corporation on July 8, 2013; company changed its name to VeriTeQ VeriTeQ shareholders own ~88% of resulting company Currently trading as OTC: DIGAD following 1:30 reverse stock split Ticker to change to “VTEQ” on Nov. 19
4. Unique Value Position In July 2012, the President signed into law the Healthcare Safety and Innovation Act and in Sept. 2013, the FDA issued a Final Rule, that requiresall medical devices distributed in the U.S. that are intended to be used more than once and intended to undergo any form of reprocessing before each use to carry a UDI with a direct part marking VeriTeQ’s FDA cleared UDI, which can serve as a direct part marking to meet the AIDC portion of the FDA Final Rule, can also identify an implantable medical device, in vivo, on demand VeriTeQ’s UDI, called “Q Inside Safety Technology,” goes beyond pure identification to help device manufacturers comply with the FDA Final Rule; Q Inside Safety Technology provides clinical and healthcare benefits
5. Company Overview VeriTeQ provides proprietary, innovative healthcare solutions for Unique Device Identification and Bio-Sensing applications Core Technology: implantable radio frequency (RF) microchip technology Cleared by the FDA as the Predicate Class II medical device in the industry UDI products enable access to UDI information, in-situ, on demand, at the point of use A leading industry position to enable compliance with FDA Final Rule Branding VeriTeQ UDI as “Q Inside Safety Technology” Q Inside Safety Technology product launch in silicon-filled breast implants targeted for Q4 2013; vascular ports to quickly follow Partnership with Establishment Labs (“Motiva” brand name); additional partnerships pending Partnership with Medcomp and initial launch targeted for 1H 2014 Bio-sensing technologies for radiation dosimetry provide real-time measurements of received radiation dose from the patient, not the machine External and internal product applications
6. Lead Business Areas
7. The VeriTeQ UDI System Medical Devices with Inside Safety Technology
8. FDA Final Rule The Final Rule requires devices intended to be used more than once and intended to undergo any form of reprocessing before each use, i.e. re-useable/reprocessed medical devices to have a direct part marking (vs. basic labeling on device packaging) Requires the direct part marking to be provided through either or both of the following: Easily readable plain text; Automatic Identification and Data Capture (AIDC), or an alternative technology, that will provide the UDI of the device on demand Benefits of a UDI System Allows more accurate reporting and analysis of adverse events to quickly identify problem devices Reduces medical errors by quickly and accurately identifying a device and its characteristics Provides a standardized identifier that allows manufacturers, distributors and healthcare facilities to more effectively manage medical device recalls Provides a consistent way to enter information about devices in electronic health records and clinical information systems Provides a foundation for a global, secure distribution chain, helping to address counterfeiting and diversion and prepare for medical emergencies
9. VeriTeQ’s UDI System: Inside Database Customization for device manufacturer Informatics Integration with FDA database Implantable RFID Microchips Patented and FDA cleared Provides the primary key information Pocket Readers Patented and FDA Cleared Pocket Reader Pocket Reader EX
10. Target Markets Reprocessed Medical Devices Implantable Medical Devices
11. Regulatory Strategy VeriTeQ’s Q Inside Safety Technology is the Predicate Class II medical device in its class FDA published Class II Special Controls Guidance Document: Implantable Radiofrequency Transponder System for Patient Identification and Health Information based on its clearance of Q Inside (document drafted by VeriTeQ as requested by FDA) Guidance creates a standard for any future human implantable RFID microchips based on VeriTeQ’s technology Creates a barrier to entry for competing technologies Adherence to the FDA guidance document may cause a competitor to violate VeriTeQ’s intellectual property Gives VeriTeQ first-mover advantage VeriTeQ’s Radiation Dosimetry IP/products have multiple patents and FDA clearances/CE Marks DVS® implantable chip for prostate and breast cancer OneDose® skin-adhesive product for external photon beam radiation
12. Clinical and Industry Benefits The use of Q Inside Safety Technology by medical device manufacturers provides the gold-standard in device identification Helps reduce medical errors Allows for rapid and accurate data retrieval and recording Quickly and accurately identifies a problem device in the event of a recall or other adverse event Timely identification of problem devices can manage costs for manufacturers Helps improve inventory management Wide acceptance of RFID in healthcare industry Can be link to patients’ electronic medical records and personal health records Enables more effective post-market surveillance and evaluation studies to improve evidence-based medicine
13. UDI Business Model VeriTeQ acts primarily as a supplier of its proprietary microchips and readers to medical device manufacturers Manufacturers incorporate VeriTeQ’s products into their manufacturing processes/distribution strategy (to hospitals, physicians, etc.) Price per chip = $10-12; gross margin per chip = 65 - 75% margins Price per reader = $300-500; gross margin per reader = 40 – 60% margins VeriTeQ also provides development services to medical device manufacturers Primary development areas include design and manufacturing process to include chip in their medical device, i.e. new encasement technologies such as special polymers and heat resistant microchips Avg. price for development per manufacturer = $250,000; gross margin = 50% Data services include database connectivity to manufactured microchips, application software to collect microchip/medical device model implanted, FDA data base registry and informatics analytics. Priced on per project development ranging from $25,000 to several hundred thousand dollars
14. Targeted Customers Breast Implant Manufacturers Vascular Port Manufacturers Artificial Joint Manufacturers Other Manufacturers
15. Breast Implants VeriTeQ’s Q Inside Safety Technology can be embedded within breast implants and sizers to automatically identify the medical device in situ or after re-sterilization. Ex-US: Agreement with Establishment Labs/Motiva Leading global breast, body and facial aesthetic company that manufactures advanced silicone-filled breast implants, marketed under the Motiva Implant Matrix brand name Manufacturing completed and CE Mark certification achieved Expected launch: Q4-2013 (LA; Europe; Asia) US: Market leading breast implant manufacturer is testing feasibility to integrate the Q Inside in its silicone implants and sizers Discussions ongoing with the two leading global breast implant manufacturers regarding need to identify their sizers to comply with FDA Final Rule Company estimates sizer market at 600,000 devices annually
16. Vascular Ports Partnership with Medcomp (a leading manufacturer of vascular ports) to utilize Q Inside for Medcomp’s FDA-cleared vascular ports $3 million initial contractual PO commitment from Medcomp Enables accurate device identification and medication dosage Hospital studies expected to begin at: Northwestern Memorial in Chicago New York-Presbyterian – University Hospital of Columbia and Cornell in NY Cleveland Clinic in Cleveland, OH or MD Anderson Cancer Center in Houston, TX Medcomp /VeriTeQ targeting to set clinical UDI standard to incentivize other port manufacturers to use Q Inside – e.g. C.R. Bard, Smiths Medical, etc.
17. Artificial Joints and Sizers Identification of implantable and reusable medical devices such as sizers used in joint replacements (subject to Final Rule) Artificial hips in the U.S.: Number of procedures: 230,000 Total annual expenditure: $10.5 billion Average cost per procedure: $45,000 Major manufacturers: Zimmer (24%), Stryker, DePuy/J&J, Biomet, Wright Medical Artificial knees in the U.S. Number of procedures: 543,000 Total annual expenditure: $12 billion Average cost per procedure: $22,000 Major manufacturers: Zimmer (24%), Depuy/J&J, Stryker, Biomet, Smith & Nephew Active initial meetings/dialog with lead target device manufacturers Clinical benefits: Q Inside Safety Technology allows for immediate data retrieval; can help quickly resolve adverse event reporting and recalls As published on July 18, 2011 in 24/7 Wall St.’s Eleven Most Implanted Medical Devices In America
18. Inside Global Market Opportunity Industry data based on 1,205,251 breast procedures performed globally every year1. The Company estimates 600,000 breast implant sizers annually. There are 33,000 plastic surgeons worldwide and two US major manufacturers. This opportunity assumes a unit price of $12 per VeriTeQ Q Inside (two per procedure) and$500 per scanner, at market penetrations of 10% for Year 1, 20% for Year 2, and 40% for Year 3 and 50% thereafter based on government mandates. Assumptions include estimates of 1,546,000 artificial joints implanted globally every year with a unit price of $12 for the VeriTeQ UDI, and 844,000 vascular ports implanted globally every year with a unit price of $10 for VeriTeQ’s Q Inside. 1International Society of Aesthetic Plastic Surgeons performed in 2012
19. VeriTeQ BioSensors In Situ Measurement of Radiation Dosages
20. Sensing Technologies VeriTeQ owns Patent 7,125,382 for an “Embedded Bio-Sensor System,” a biological sensor on the end of a radio frequency chip Temperature (current) Radiation levels (current) Blood oxygen (future) Pulse (future) Medication levels (future) i.e. post surgery Glucose (licensed to a third party) Others
21. VeriTeQ Dosimetry Radiation Dose Verification External Technology Implantable Technology
22. Patient Safety & Radiation Overdose According to the ECRI Institute, radiation or CT overdose make the list of the Top 10 Technology Hazards each year going back at least five years 2013: #3 Unnecessary exposures and radiation burns from diagnostic radiology procedures 2012: #2 Exposure hazards from radiation therapy and CT 2011: #1 Radiation overdose and other errors during radiation therapy 2009-10: #4 CT radiation dose 2008: #8 CT radiation dose 2007: #5 Radiation therapy errors
23. VeriTeQ OneDose ® OneDose® is an FDA-cleared single-use, external dosimetry system used in the radiation oncology suite to verify radiation dose quickly and conveniently at the skin level Significant IP protection CE Mark to market products in the E.U. OneDose is the only wireless, pre-calibrated, disposable, surface sensor on the market that provides an instant readout of the dose delivered Current reimbursement rate per patient (4-6 dosimeters used during treatment) ranges between $260 and $380 In 2010, 1.1 million patients received radiation therapy in the U.S.* with new indications for use in CT and fluoroscopy markets Researchers at the National Cancer Institute estimate that 29,000 future cancer cases could be attributed to the 72 million CT scans performed in the country in 2007 Over 5 million fluoroscopic procedures performed annually in the U.S.** * According to a study published by IMV Medical Information Division **National Council on Radiation Protection and Measurements, report No. 168 (2010)
24. Internal Radiation Sensing World’s first and only implantable wireless radiation dosimeter; FDA cleared for use in prostate and breast cancer radiotherapy Enables radiation oncologists to immediatelymeasure the dose of radiation penetrating a tumor or tumor area Cleared for use in photon external beam and hypo-fractionated treatment protocols Potential additional new indications for use include lung, colorectal and pancreatic cancer Only device that confirms radiation dose delivered to tumor Can also be used as a fiducial marker Device is reimbursable by both Medicare and private insurance FDA cleared & CE mark; significant patent protection Approximately 81,580 patients receive seed implants per year in the U.S. and more than 425,000 patients are diagnosed with prostate and breast cancers total each year in the U.S.* *Source = ASTRO, American Society of Radiation Oncology
25. BioSensor Business Model To be sold to radiation oncology centers in the U.S. and E.U. Radiation oncologists, therapists, physicists, dosimetrists Over 4,400 radiation oncologists in the U.S., with 4 states representing 33% of the U.S. market To be sold through direct sales,worldwide distribution partners, product specific website, trade associations Price for One Dose Reader Kit = $499; gross margin = 80% Price for DVS Kit = $1,200; gross margin = 80% Potential distribution partners:
26. VeriTeQ Market Opportunity One Dose industry data based on 1,000,000 patients with 88% receiving radiation treatments using external beam treatments. Assumed market share of 2% (Yr 2), 8% (Yr 3), 20% (Yr 4) and 30% (Yr 5). Unit Price for One Dose of $499. One Dose CT based on industry data showing 75mm treatments per year in US. Assumed market shares of 1% (Yr 2), 5% (Yr 3), 10% (Yr 4) and 15% (Yr 5). DVS Industry data showing 81,580 patients received seed implant treatments. Assumed market shares of 5% (Yr3), 10% (Yr 4) and 20% in (Yr 5). Unit price for DVS is $1200 per kit and $25,000 per reader. Source: American Society for Radiation Oncology and Archives of Internal Medicine , Spelic D. Nationwide of Evaluation of X-Ray Trends: NEXT 2005-2006
27. Intellectual Property VeriTeQ has a robust portfolio of more than 100 patents, patents pending and licenses in the U.S. and abroad. VeriTeQ’s foundation patents are an Embedded Bio-Sensor System on the end of a RF microchip (Patent 7,125,382 issued in 2006), and the use of implantable sensors for monitoring tumors in oncology applications (Patent 6,402,689 issued in 2002). A partial list of the Company’s key patents follows.
28. Leadership Team
29. Capital Strategy Completion of Private Financing of $3 to $5 million Dawson James Securities, Inc. providing advisory service and exclusive placement agent Bridge financing of $1,500,000; targeted for completion in October Initiate active Investor Relations program Leveraged from the new FDA Rule for reusable medical devices Target additional financing following Establishment Labs product launch and others Consider concurrent move to national exchange
30. Capitalization
31. Upcoming Milestones Next 30-60 days: Complete bridge financing Vascular Port partner Medcomp expected to file 510k, triggering contractual commitment to buy Q Inside Q4 2013 Initiate first product release: marketing of Motiva breast implants with Q Inside Safety Technology in EU Complete registered offering Enter into more partnership/supply agreements post Final Rule Enter into partnership with UPMC for data analytics platform development First half of 2014 Continued expansion of patent portfolio surrounding Q Inside Safety Technology for medical devices Additional future partnerships
32. Investment Highlights Unique industry technology and market position for its Q Inside Safety Technology unique device identification products FDA cleared device that meets the UDI direct marking portionfor reusable medical devices under the FDA Final Rule provides for “first to market” capability IP provides strong competitive position for long term strategic advantage Launch of Q Inside breast implants targeted in Q4 2013 Commercial partnership with Establishment Labs/Motiva for ex-US markets Major US manufacturer currently in prototype stage Preparing for immediate expansion into markets for Vascular Ports and Orthopedic Implants Commercial partnership with MedComp in place Second product line – VeriTeQ Biosensors – ready to move into commercialization Radiation dosimeters to diagnose and treat cancer Unique patented technologies with multiple regulatory approvals provide competitive advantage in respective markets
33. Q&A Thank you!