First Warning Systems, Inc.Breast Health

Predictive Analytics Medical DeviceUS/EU/Russia Business Plan

 

September 2012

Confidential & Proprietary

2

Women’s Breast Health Screening TechnologiesProblem Overview

Current Technologies

• Breast Health Screening Process Broken using Screening Mammogram

– Not Effective: < age 40 because of dense tissue

– Mammogram 70% accurate published statistic for limited population ages (40-70)

– 6.4% of women under age 44 (NCI data) die from breast cancer

– 37.5% of women over age 70 (NCI data) die from breast cancer

– Uncomfortable: 33% do not test according to ACOG/ACS recommendations

– Toxic: repetitive mammogram screening causes excessive radiation exposure

– Over 750,000 potentially unnecessary biopsies annually US

• Accessibility

– Imaging center economics limit number of locations

– Too expensive for developing countries

• Thermography & Screening Mammogram rely on:

– Static Imaging with subjective interpretation

– Skin Surface Temperature or Image is not Deep Tissue Cell Microenvironment

– Surface Skin Screening Misses Typical Tumor: approximately12 years old when large enough to image

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Women’s Breast Health Screening TechnologiesUnmet MarketUS, EU, Russia

• Total Addressable Annual Market: $12.8B

• Total Available Market: $11B

• Total Capturable Market: $540M (Reference LSSG Market Research & Sales Forecast)

• Plus Asia, India and South America

• Plus Developing Countries– Reusable Garment Technology– Telemedicine

4

Women’s Breast Health Screening TechnologiesStrategy to Capture Unmet Market

• Expand Screening Market to women ages 20-40 and Over 70

• Expand Screening through Clinicians– 90% of current screening done by OBY/GNs (37,000-US)– Primary Care (82,000-US) & Internists (106,000-US) could use

FWS—no special training required– Predictive Analytics Software Delivers Objective & Quantified

Clinical Decision Support– Can order more Frequent Monitoring because not Toxic

• Expand Market for Repetitive Use– 33% of Women Do Not Complete Mammography Clinical Order

in Annual Physical– Non-toxic Comfort Encourages Repetitive Use Beyond Physical– Breast Health Subscription Service Tracks Repetitive Use

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Women’s Breast Health Screening Technologies First Warning Systems Problem Solution

Technology

• Dynamic Cell Chaos Measurement– Abnormal cell deterioration in Circadian Clock Function– 9,600 deep tissue temperature data points– Currently at a 12 hour measurement period of cell Microenvironment– Temperature change over the testing period

• Predictive Analytics Software Develops Comparison Classification of Deep Tissue Cell Microenvironment

• Predicts Cancer Probability with 90% Accuracy in Clinical Trials

• Secure Internet Delivery (HIPPA Compliant) of Predictive Analytics Report

• Non-Invasive, Non-Toxic, No Compression & No Radiation

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Women’s Breast Health Screening Technologies First Warning Systems Problem Solution

Process

• Predictive Analytics Minimizes Human Subjectivity

• Has Been Shown to Predict Six Years Prior to Imaging Technologies

• Increased Usage– Can be used monthly from ages 20-70– Increased Annual Physical Usage because discrete, more comfortable

and affordable

• Secure Internet Delivery (HIPPA Compliant) of Predictive Analytics Report

• Remote Unserved Population Availability– Imaging Center Not Needed—Both Domestic & Developing Country

Economics– Telemedicine Can be Used

7

Technology Status

• Patents– One Hardware, Three Software: Device, Method, & System – FDA 510K Approval on Hardware

• Three Clinical Trials Completed– Over 650 Women– Achieved 90% Accuracy

• Fourth Generation Upgrades in Process– Device for Modified 510(k) Currently in Place– Integrated Software with Predictive Analytics

• Cloud Computing Service Model Designed• European Market CE Mark

– No Further Clinical Trials Required– Technical File Completion in Process for CE Application– CE Approval Process to be Managed by Identified EU Market Strategic

Partner• FDA Limited Trial for US Market After EU Revenues

8

Marketing Status

• Independent Primary Market Research Completed by Life Sciences Strategy Group focused on U.S. Market only– 83% of consumers stated they would use the device– 60% of Clinicians stated they would use Overall– 87% of Clinicians stated they would use with High Risk Patients– Average Clinician usage 126 times per year

• EU & Russia Marketing & Distribution Partner Identified– Negotiations to be completed Q4, ‘12

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Team and Advisors

• COB, CFO, Acting CEO - Jim Holmes• Director Research, Chief Scientist, and Founder - Dr. Bill Reeves, Ph.D• VP & Medical Director - Dr. Louis Keith, M.D., Ph.D.• Senior Medical Advisor - Kefah Mokbel, M.D., M.A.• Senior Business Advisor – Nola Masterson of Science Futures, Inc. • Senior Business Advisor – Larry Udell of Licensing Executives Society• Technical and Operations Consultant - Matthew Benardis • Marketing and Risk Management Consultant - Dave Wertzberger• Controller - Fred Schiemann • Chief Software/Technical Consultant - Roger Warren • Predictive Analytics Software Consultants - Lytix Inc.

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Team Gaps

• CEO Expertise– Medical Device– Worldwide Device Marketing– Female

• VP Marketing– Medical Device– Worldwide Device Marketing– Female

• Chief Technology Officer– Software Executive– Cloud Computing Database

• Key Opinion Leaders– Europe– US

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Milestones

Date Milestone

Q4, ’12 Finalize Distribution Partners

Q4, ’12 Complete Product Upgrades

Q4, ’12 Finalize Technical File

Q4, ’12 Submit CE Mark Application

Q4, ’12 Secure Hungary & UK Clinical Locations

Q1, ’13 Begin Clinical Limited Use

Q2, ’13 Document Clinical Results

Q2, ’13 Begin Manufacturing

Q2, ’13 Complete CE Application

Q2, ’13 Begin EU/Russia Sales

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Milestones (Cont.)

Date Milestone

Q3, ‘13 Secure Grant for US FDA Trial

Q4, ‘13 Start Limited FDA Clinical Trial

Q4, ’14 Complete US Market Clinical Trial

Q4, ’14 Sign US Distributor(s)

Q4, ‘14 Submit 510 (k) Application (3-6 Mo. Clearance)

Q1, ’15 Start US Sales or Liquidity/Exit Potential

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Clinical Channel Capture Rate*

% Capture per Independent LSSG Primary Market Research Survey

126 uses per Yr per Clinician*

’13 ’14 ’15 ‘16# of Docs-EU 2,508 7,453 21,267 32,429

# of Russian 1,755 5,217 14,887 22,700

% Docs Capture-EU* 1.6% 5.2% 11.1% 14.7%

# of Docs-US 3,606 11,721

% Docs Capture-US* 1.6% 5.2%

# Uses: EU & US* 84,950 798,245 2,504,898 4,211,578

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Pro Forma ProjectionsEurope, Russia & US

($ M)

‘12 ’13 ’14 ’15 ‘16

Sales $ 11,851 $101,545 $319,656 $539,783

Expenses $12,544 $ 70,818

$215,071 $359,285

EBITDA$ (693) $ 30,718 $104,584 $180,499

15Source: Life Science Strategy Group, LLC; Primary Interviews, Web Surveys

Using a scale of 1 to 5 (1 = Not at All, 5 = Definitely), how likely would you be to use Product X as part of your breast cancer screening algorithm? Where would Product X fit into your breast examination algorithm?

LIKELIHOOD TO USE PRODUCT X IN CURRENT SCREENING REGIMEN

Physicians are somewhat likely to include Product X in their current screening regimen, most likely use it in parallel with mammography or CBEs, but not as a replacement. The Avg. shows 60% acceptance. 2015 revenues of $200M based on 3% acceptance.

1Not

at All

5Def.

2.9

Avg.

PCP(n=10)

1Not

at All

5Def.

3.2

Avg.

OB/GYN

(n=14)

0% 10% 20% 30% 40% 50%

4%

8%

13%

17%

42%

46%Use in parallel with screening mammography

Use in parallel with CBEs

Use to determine need for screening mammography

Use to determine need for CBE

Use as replacement for screening mammography

Use as replacement for CBEs

Percentage of Respondents

N=24

16Source: Life Science Strategy Group, LLC; Primary Interviews, Web Surveys

How often would you recommend a LOW-risk patient to use Product X? How often would you recommend a HIGH-risk patient to use Product X?

USE OF PRODUCT X IN HIGH VS. LOW RISK PATIENTS

Approximately 87% of physicians would recommend high-risk patients use Product X at least once a year, compared with 42% for low-risk patients.

N=24

LOW Risk HIGH Risk0%

20%

40%

60%

80%

100%

120%

29%

8%

42%

50%

17%

8%4%4%

8%

29%

Once every > 3 years

Once every 3 years

Once every 2 years

Annually

Biannually

>2 per year

Would not recommend

Perc

enta

ge o

f R

esp

ondents

17Source: Life Science Strategy Group, LLC; Primary Interviews, Web Surveys

Do you have any final comments regarding Product X?

FINAL COMMENTS ON PRODUCT X

Comments on Product X are generally positive or neutral and reiterate the need for additional clinical data as well as support from ACS and ACOG.

“I would LOVE to try this technology!”- Primary Care Physician

“It sounds like a promising technology, but I think it needs more clinical trials and it needs to show that it changes outcomes. I would love to see that it does those things! If it does, then I would welcome a non-invasive, painless, radiation-free technology.”

- Primary Care Physician

“I've not heard of this technology. I hope this technology comes to market.”

- OB/GYN

“Niche product, need to see more long term data.”

- OB/GYN

“Interested in further info. Need studies to back up and need endorsement of American Cancer Society and ACOG.”

- OB/GYN

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Jim Holmes – CEOjholmes@FirstWarningSystems.com775-852-3222

First Warning Systems, Inc.1325 Airmotive Way, Ste. 175Reno, NV 89502775-324-3822

www.FirstWarningSystems.cominfo@FirstWarningSystems.com 

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