An Introduction to May 2013 Table of Contents I. Executive Summary II. The Value Void III. The Healthios Exchange (“H/X”) Appendices IV. H/X Case Studies & Empirical Track Record Research. Investment Banking. Healthcare. Diabetic Nephropathy Cardiovascular Devices Diabetic Retinopathy Prosthetic Heart Valve Hypercholesterolemia Peripheral Vascular Devices Oral Mucositis Cardiovascular Monitoring & Diagnostic Devices Gout Cardiovascular Surgery Acute Lymphocytic Leukemia Cardiac Rhythm Management Bone Metastasis Cardiovascular Prosthetic Devices Brain Cancer Interventional Cardiology Breast Cancer Cardiac Assist Devices Cervical Cancer Wound Care Management Chronic Lymphocytic Leukemia Hospital Supplies Endometrial Cancer Syringes and Needles Ewing Sarcoma Disposable Hospital & Surgical Supplies Gastric Cancer Drug Delivery Devices Gastrointestinal Stromal Tumors Inhalation Systems Head And Neck Cancer Needle Free Injections Hodgkin Lymphoma Infusion Systems Kidney Cancer Diabetes Care Devices Liver Cancer Insulin Delivery & Glucose Monitoring Malignant Mesothelioma Ophthalmic Devices Medullary Thyroid Cancer Cataract Surgery Devices Melanoma Ophthalmic Diagnostic Equipment Multiple Myeloma Refractive Surgery Devices Non-Hodgkin Lymphoma ENT Devices Non-Small Cell Lung Cancer Hearing Implants Ovarian Cancer Diagnostic Devices Pancreatic Cancer Electrosurgical Devices Testicular Cancer Dental Equipment & Accessories Thyroid Cancer Diagnostic Imaging & MRI Systems Age Related Macular Degeneration C/T Systems & Mammography Equipment Keratoconjunctivitis sicca (Dry Eye) X-Ray & Ultrasound Systems Retinal Vein Occlusion Nuclear Imaging Equipment Acute Respiratory Distress Contrast Media Injectors Syndrome Bone Densitometry Sepsis Anesthesia and Respiratory Devices Staphylococcal Infections Anesthesia Machines & Disposables Executive Summary Acute Coronary Syndrome Respiratory Devices & Disposables Angina Pectoris Sleep Apnea Diagnostic Systems Atrial Fibrillation Healthcare IT Coronary Artery Disease (CAD) Medical Imaging Information Systems Critical Limb Ischemia Nephrology and Urology Devices Hypertension Renal Dialysis Equipment Pulmonary Arterial Hypertension Orthopedic Devices Acute Pain Orthobiologics & Arthroscopy Anxiety Disorders Joint Reconstruction Chronic Pain Trauma Fixation Dementia Orthopedic Prosthetics Diabetic Neuropathy Cranium Maxillofacial Fixation (CMF) Obsessive-Compulsive Disorder Spinal Surgery Osteoarthritis Pain Endoscopy Devices & instruments Parkinson's Disease Rigid & Flexible Endoscope Post-Traumatic Stress Disorder In Vitro Diagnostics Restless Legs Syndrome Genetic Testing Schizophrenia Clinical Chemistry Traumatic Brain Injury Hematology Liver Cirrhosis Immuno Chemistry Childhood Enuresis Infectious Immunology Growth Hormone Disorders Histology And Cytology Hyperparathyroidism Patient Monitoring Hyperthyroidism Multiparameter Patient Monitoring Guillain-Barre Syndrome Micro-Electromechanical Systems Cytomegalovirus Non-invasive Blood Pressure Monitors Fungal Infections Neurology Devices Gram-Negative Bacterial Infections Neurostimulation Devices H1N1 Infection Interventional Neurology Herpes Zoster CSF Management HIV-1 Infection Neurosurgical Products Human Papillomavirus Infections Radiosurgery Staphylococcus Aureus (MRSA) Healthios Overview of the Firm Investment Banking Global Investment Marketplace Healthios is a boutique investment bank focused exclusively on the global healthcare industry. Healthios seeks to be the premier investment bank serving the global healthcare industry by combining the experience of (52) transactions in 17 countries with transformational capital markets solutions which broaden access to financing, lessen risk and maximize value. Research. Investment Banking. Healthcare. Executive Summary In 2013, the 2nd generation of Healthios Exchange (“H/X”) will seek to transform the healthcare capital markets. Inspired by extraordinary economic and regulatory paradigms, the H/X will combine revolutionary technology with direct access to the individual healthcare investor, worldwide. In the process, H/X will generate $5 of NEW growth capital to support every $1 of institutional and strategic commitment. Opportunity Healthcare is the largest, fastest growing and most dynamic market in the world Superior investment returns driven by favorable global demographics, universal need, persistent innovation and rapid, sustained growth Problem Value Void: “Gap” in global healthcare capital flows alters the risk/reward equilibrium and provides transformational investment opportunities Context 2012 JOBS Law establishes new structural paradigm for capital markets Private Capital phenomenon & direct listing framework are catalyst for new capital formation model Solution www.healthios.com / hx: End-to-end, cost effective, capital efficient, high- velocity, standardized, transparent and secure transaction platform Financing the healthcare industry in the manner in which it capitalizes itself Database of 100,000 accredited investors, worldwide Proprietary asset classes designed to complement institutional, strategic capital CrowdFinanceTM, Foundation PlaceTM, EX.PR.E.S.S.TM, InMarketTM, LiquidNETTM Research. Investment Banking. Healthcare. Global Healthcare Investment Environment In total, healthcare is the world’s fastest growing industry. It generates superior investment yields. It attracts capital more readily and regularly. RELATIVE RETURN: S&P HCX vs. S&P ABSOLUTE RETURN: NBI vs. S&P 600% 100% 80% 500% 60% 400% 40% 300% 20% 0% 200% -20% 100% -40% -60% 0% -80% -100% -100% TOTAL RETURN: NBI vs. HCX vs. S&P 400 Biotech vs. NASDAQ Healthcare Index vs. S&P 500 250% 200% 150% 100% 50% 0% -50% -100% Research. Investment Banking. Healthcare. The Global Healthcare Industry Healthcare represents a $3 trillion global industry, growing 16% annually, capitalizing itself $13.8 million at a time through more than 9,000 negotiated transactions in 6,000 companies into which, on average, $49 million of capital is deployed over 6.2 years, yielding a “Cash-on-Cash” IRR equal to 4.1x and generating 81% liquidity on invested capital through 892 “Exit” events, of which 86% are M&A.. PUBLIC CAPITAL MARKETS Size Trading Multiples Operating Statistics % of 52 3 Yr. LTM LTM Stock Wekk LTM Total Marke t To t a l De bt / TEV/LTM TEV/LTM Revenue Gross EBITDA Company Name Price high Rev C a p TEV LTM EBITDA To t a l Re v EB ITDA Growth Margin Margin Johnson & Johnson$ 64.74 95% 65,030.0 177,716.4 165,082.4 1.0x 2.5x 8.5x 0.7% 68.8% 29.8% GlaxoSmithKline plc$ 22.26 95% 42,629.0 110,143.4 125,497.1 1.5x 2.9x 7.9x 4.0% 73.5% 36.7% Abbot t Laborat ories$ 57.95 100% 38,851.3 91,118.1 98,521.6 1.4x 2.5x 8.8x 9.6% 60.2% 28.7% AstraZeneca PLC$ 45.16 90% 33,591.0 57,232.8 54,961.6 0.6x 1.6x 3.6x 2.1% 82.2% 44.7% Medtronic, Inc.$ 37.67 87% 16,479.0 39,199.1 47,117.1 1.8x 2.9x 8.5x 4.0% 75.4% 33.8% Baxter International Inc.$ 58.89 94% 13,893.0 32,998.8 35,531.8 1.3x 2.6x 9.2x 4.0% 51.4% 28.0% Covidien plc$ 52.39 91% 11,703.0 25,322.1 27,990.1 1.4x 2.4x 8.6x 3.3% 57.5% 27.9% Stryker Corp.$ 52.90 81% 8,307.0 20,156.0 18,506.0 0.7x 2.2x 7.5x 7.3% 67.9% 29.5% Becton, Dickinson and Company$ 76.82 86% 7,874.5 16,140.1 17,617.7 1.9x 2.2x 7.9x 3.6% 51.8% 28.3% St . Jude Medical Inc.$ 41.80 77% 5,611.7 13,333.7 15,105.9 1.7x 2.7x 9.2x 8.7% 73.5% 29.1% Synthes Inc.$ 169.51 98% 3,973.8 20,135.5 17,685.8 0.1x 4.4x 10.9x 7.6% 79.4% 40.3% Essilor International SA$ 82.54 99% 5,442.7 17,251.3 18,104.0 1.0x 3.3x 14.9x 10.9% 55.4% 21.4% Boston Scientific Corporation$ 5.95 75% 7,622.0 8,631.7 12,625.7 2.4x 1.7x 7.2x (1.8%) 63.3% 22.9% Zimmer Holdings, Inc.$ 61.56 88% 4,451.8 10,965.3 11,468.4 1.2x 2.6x 7.8x 2.6% 75.1% 33.0% Smith & Nephew plc$ 9.90 88% 4,270.0 8,830.7 8,969.7 0.3x 2.1x 7.5x 4.0% 73.5% 27.9% Median 1.3x 2.5x 8.5x 4.0% 68.4% 29.7% PRIVATE INVESTMENT Most Active Venture Investors / Rounds Most Active Strate gic Acquirors / De als Liquidity New Enterprise Associates 140 General Electric Company 39 # of Companies 3507 Johnson & Johnson Development Corporation 99 Alere Inc. 38 # of Investors 679 Delphi Ventures 98 Koninklijke Philips Electronics NV 33 Investors / Company 0.2 Kleiner, Perkins, Caufield & Byers 94 Medtronic, Inc. 33 # of Rounds 991 Versant Ventures 93 Johnson & Johnson 31 # of Rounds / Company 0.3 InterWest Partners 91 RoundTable Healthcare Management, LLC 28 Avg. Round Size ($M) 8 Domain Associates, L.L.C. 81 Total Invested ($M) 8,366 Three Arch Partners 77 # of Exits 892 3i Group plc 75 Initial Public Offerings / Date / TEV ($M) M&A Exits 747 SV Life Sciences Advisers LLP 69 Intrasense SAS 2/3/2012 - Public Offering Exits 145 De Novo Ventures 63 EOS imaging SA 2/1/2012 140 # of Illiquid Companies 2615 Oxford Bioscience Partners 62 Sphere Medical Holding PLC 10/20/2011 51 Illiquid Capital ($M) 39,217 Frazier Healthcare Ventures 60 3-D Matrix, Ltd. 9/16/2011 89 Illiquid Capital (3 Yrs) ($M) 11,460 Polaris Venture Partners, Inc. 58 Greenway Medical Technologies, Inc. 7/15/2011 546 % of Illquid Capital (3 Yrs) 29% MPM Capital 56 Boule Diagnostics AB 5/19/2011 23 7 The Value Void Healthios is the first to define the Value Void: A series of irrational, systematic dysfunctions – or, “Gaps” – in global healthcare capital flows in which financing requirements and investment returns are mis-aligned at sequential points along the development pathway. These dysfunctions are irrational in that they do not reflect extraordinary risk for which investors cannot be rewarded. Therein lies immense opportunity … ment IND Phase I Mature Mature Launch Growth Growth NDA NDA Phase II Phase III Develop - Approval Approval Discovery THE VALUE VOID Financing Requirements Investment Returns Angels / Grants Venture Capital IPO Growth Equity / PE Strategic Buyers Private Institutional Investors Public Markets Healthcare’s Investment Bank 2012 JOBS Law Recent legislation has introduced a new paradigm in the financing of Emerging Growth healthcare companies, as the increasing prominence of the private markets will be underpinned by the “Crowd” and the deployment of advanced technologies.