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Vteq nov 2013-reduced


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VTEQ Presentation

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Vteq nov 2013-reduced

  1. 1. November 2013
  2. 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. 2
  3. 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 3
  4. 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 requires all 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 4
  5. 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 5
  6. 6. Lead Business Areas Medical Device UDI/Q Inside Safety Technology Bio-Sensing/ Radiation Dosimeter Technologies Breast Implants and Breast Implant Sizers External Radiation Dosimeter Vascular Ports Implantable Radiation Dosimeter Other Reusable and Implantable Medical Devices 6
  7. 7. The VeriTeQ UDI System Medical Devices with Inside Safety Technology 7
  8. 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 8
  9. 9. VeriTeQ’s UDI System: —  Implantable RFID —  Pocket Readers Microchips —  Patented and FDA —  Patented and FDA cleared —  Provides the primary key information Cleared —  Pocket Reader —  Pocket Reader EX Inside —  Database —  Customization for device manufacturer —  Informatics —  Integration with FDA database 9
  10. 10. Target Markets Implantable Medical Devices Reprocessed Medical Devices Breast implants Breast implant sizers Vascular ports Artificial joint sizers Artificial joints Heart valve sizers Traumatic fracture repair devices Endoscopy equipment Surgical instrumentation 10
  11. 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 11
  12. 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 12
  13. 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 13
  14. 14. Targeted Customers Breast Implant Manufacturers Vascular Port Manufacturers Artificial Joint Manufacturers Other Manufacturers 14
  15. 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 15
  16. 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. 16
  17. 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 24/7Wall St.s Eleven Most Implanted Medical Devices In America ’ 17
  18. 18. Inside Global Market Opportunity 5 Years Year 1 Year 2 Year 3 Year 4 Year 5 11,542,602 4,963,800 2,088,800 18,595,202 16,485,205 5,613,120 3,101,600 25,199,925 39,188,930 12,395,920 6,568,160 58,153,010 45,224,971 14,413,395 7,988,180 67,626,546 46,566,446 15,293,395 8,362,589 70,222,430 159,008,154 52,679,630 28,109,329 239,797,113 Breast Implants Artificial Joints Vascular Ports Total Cost of Sales 4,530,173 3,271,993 915,680 8,717,846 6,420,347 3,512,782 1,185,760 11,118,889 13,930,715 6,138,912 2,522,976 22,592,603 15,803,926 5,813,572 2,931,888 24,549,386 16,390,516 6,253,572 3,063,483 25,707,570 57,075,676 24,990,831 10,619,787 92,686,293 GROSS PROFIT 9,877,357 14,081,036 35,560,407 43,077,160 44,514,860 147,110,821 Revenue Breast Implants Artificial Joints Vascular Ports Total Revenue Cost of Sales Average Gross Profit Margin53% 56% 61% 64% 63% 61% 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. 1 International Society of Aesthetic Plastic Surgeons performed in 2012 18
  19. 19. VeriTeQ BioSensors In Situ Measurement of Radiation Dosages 19
  20. 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 20
  21. 21. VeriTeQ Dosimetry Radiation Dose Verification External Technology Implantable Technology 21
  22. 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 22
  23. 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) 23
  24. 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 immediately measure 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 24
  25. 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: 25
  26. 26. VeriTeQ Market Opportunity Year 1 Year 2 Year 3 Year 4 Year 5 5 Years One Dose Reader Kit One Dose Standard Dosimeter Kit One Dose Revenue Subtotal 0 0 0 69,860 8,782,400 8,852,260 139,720 35,129,600 35,269,320 279,440 87,824,000 88,103,440 449,100 131,736,000 132,185,100 938,120 263,472,000 264,410,120 DVS Dosimeters Kit DVS - Reader DVS Revenue Subtotal 0 0 0 0 0 0 4,894,800 375,000 5,269,800 9,789,600 1,125,000 10,914,600 19,579,200 2,250,000 21,829,200 34,263,600 3,750,000 38,013,600 Total Revenue 0 8,852,260 40,539,120 99,018,040 154,014,300 302,423,720 One Dose CT Revenue Potential 0 46,781,250 233,906,250 467,812,500 701,718,750 1,450,218,750 Cost of Sales: One Dose Total Cost of Sales One Dose 0 0 1,770,452 1,770,452 7,053,864 7,053,864 17,620,688 17,620,688 26,437,020 26,437,020 52,882,024 52,882,024 0 0 0 0 1,053,960 1,053,960 2,182,920 2,182,920 4,365,840 4,365,840 7,602,720 7,602,720 Overhead Costs 0 885,226 4,053,912 9,901,804 15,401,430 30,242,372 Total Cost of Sales 0 2,655,678 12,161,736 29,705,412 46,204,290 90,727,116 Gross Profit 0 6,196,582 28,377,384 69,312,628 107,810,010 211,696,604 DVS Total Cost of Sales DVS 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% (Yr 3), 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 26
  27. 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. Patent No. Title 7,125,382 Embedded Bio-Sensor System 6,402,689 Methods, Systems and Associated Implantable Devices for Dynamic Monitoring of Physiological and Biological Properties of Tumors 7,378,056 Methods, Circuits, and Compositions of Matter for In Vivo Detection of Biomolecule Concentrations Using Fluorescent Tags 7,011,814 Systems, Methods And Devices For In Vivo Monitoring Of A Localized Response Via A Radiolabeled Analyte In A Subject 7,479,108 Implantable Sensor Housing, Sensor Unit And Methods For Forming And Using The Same 7,495,224 Disposable Single-Use External Dosimeters For Use In Radiation Therapies 7,966,054 Disposable Single-Use External Dosimeters For Detecting Radiation In Fluoroscopy And Other Medical Procedures/Therapies 7,491,942 Disposable Single-Use Internal Dosimeters For Detecting Radiation In Medical Procedures/Therapies 7,010,340 Methods, Systems, and Computer Program Products for Providing Dynamic Data of Positional Localization of Target Implants 7,510,699 In Vivo Fluorescence Sensors, Systems, And Related Methods Operating In Conjunction with Fluorescently Labeled Materials 7,557,353 Single-Use External Dosimeters for Use in Radiation Therapies and Related Methods, Systems and Computer Program Products 27
  28. 28. Leadership Team Scott R. Silverman Chairman & CEO Mr. Silverman has been Chairman and CEO of VeriTeQ since its inception in Dec. 2011. He served as Chairman and CEO of PositiveID Corp. (OTC:PSID) from 2008 to Aug. 2011, and Chairman and CEO of VeriChip Corp. (NASDAQ:CHIP) from Dec. 2006 to Jul. 2008. He was Chairman of Digital Angel Corp. from 2003 to 2007. From 2003 to 2006, Mr. Silverman served as Chairman and CEO of Applied Digital Solutions (NASDAQ:ADSX). Mr. Silverman is an attorney licensed to practice in NJ and PA, and has more than 15 years of executive experience with technology companies. He is a graduate of the University of Pennsylvania and Villanova School of Law. Randolph K. Geissler President Mr. Geissler has been President of VeriTeQ since July 2012. He developed the implantable microchip, with more than 150 million microchips implanted in animals for identification and tracking. He previously served as CEO of Geissler Technologies (2004 - 2008) when he sold the company's product development pipeline. Prior to that, he served as CEO of Digital Angel Corp. (Amex: DOC) (2000 - 2003) and Destron Fearing (Nasdaq: DFCO) (1993 - 1999), a company he founded. He has taken companies public and has broad experience in product development, electronic miniaturization, application of advanced technologies in new markets, and extensive experience in establishing strategic intellectual property and patent portfolios. Lorraine Breece CFO Ms. Breece has been CFO of Digital Angel since Aug. 1, 2011. Ms. Breece worked as a consultant for Digital Angel from July 2010 until July 2011. Prior to that time, she served as Digital Angel’s CFO from March 2008 to June 2010, and acting CFO since March 2007. Prior to joining Digital Angel, from 1991 to 1999, Ms. Breece served as director of finance and chief accounting officer of Nabi BioPharmaceuticals. Ms. Breece began her career as an auditor with PricewaterhouseCoopers LLP. Allison Tomek Sr. VP IR & Corporate Communications Ms. Tomek has served as Sr. VP of VeriTeQ since its inception and has served as Sr. VP, IR and Corp Comm of PositiveID since January 2007. From Jan. 2007 to Jun. 2008 she was also VP of IR at Applied Digital Solutions and Digital Angel. From 2003 to 2006, Ms. Tomek was Director of IR and Corp Comm at Andrx Corp. (NASDAQ:ADRX). Ms. Tomek is the former President of the National Investor Relations Institute, South Florida chapter and a current member of its Board. 28
  29. 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 29
  30. 30. Capitalization S/O at July 8, 2013 DIGA VTEQ Series C Preferred TOTAL Fully diluted Post 1:30 RSS and conversion of Series C Percent ownership 33,624,685 1,120,823 12% 4,107,492 8,215,184 88% 9,336,007 100% 12,417,684 30
  31. 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 31
  32. 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 portion for 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 ! ! ! 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 ! ! Commercial partnership with Establishment Labs/Motiva for ex-US markets Major US manufacturer currently in prototype stage Radiation dosimeters to diagnose and treat cancer Unique patented technologies with multiple regulatory approvals provide competitive advantage in respective markets 32
  33. 33. Q&A Thank you!