Medical Equipment Producer

PREMIUM THERAPY, LLC

7500 Miller Street
Cambridge, Massachusetts 02142

Premium Therapy, LLC is a medical device company focused on the field of rehabilitation medicine. It has designed and developed a patented technology to deliver ElectroMagnetic Induction Therapy (EMIT) in large markets that include the treatment of arthritis, pain, and muscular atrophy.

• EXECUTIVE SUMMARY
• COMPANY SUMMARY
• TECHNOLOGY
• MARKET
• PRODUCTS
• COMPETITION
• STRATEGY & IMPLEMENTATION SUMMARY
• MANAGEMENT TEAM
• OPERATIONAL PLAN
• FINANCIAL PLAN
• APPENDIX

Executive Summary

Premium Therapy, LLC is a medical device company focused on the field of rehabilitation medicine. It has designed and developed a patented technology to deliver ElectroMagnetic Induction Therapy (EMIT) in large markets that include the treatment of arthritis, pain, and muscular atrophy.

Technology

Pulsed electromagnetic stimulation is a well-established technique with a long history of use in medical applications. The scientific principle behind this technology is that an electric current passed through a coil will generate an electromagnetic field. These fields, in turn, have been shown to induce current within conductive materials placed within the field. When applied to the human body, pulsed electromagnetic stimulation has been scientifically proven to be effective in: 1) causing muscles to contract, 2) altering nerve signal transmission to decrease experienced pain, and 3) causing new cell growth in cartilage.

Harnessing these benefits, the company has developed EMIT as a new and improved, patented delivery technology. Using this technology, Premium Therapy plans to treat a variety of medical conditions. A full utility patent that provides protection for Premium Therapy's technology has been filed in the U.S. and is currently pending approval.

Market

Premium Therapy will target market segments comprised of persons desiring treatment for muscular atrophy, neurogenic bladder/bowel (a form of paralysis of the muscles in the bladder/bowel), musculoskeletal pain and/or arthritis. Together, the several market segments yield an initial potential U.S. market of greater than 200 million customers.

In a recent survey of individuals suffering from these conditions, a large percentage of them were found to be completely dissatisfied with current therapies. In fact, almost half of all respondents indicated that they would be willing to try new treatments and would spend more on a treatment if they knew it would work. Based on this data, and Premium Therapy's calculations, over 97 million of the greater than 200 million potential customers are completely dissatisfied with all current therapies and suffer from intractable disease (see Market Segmentation). It is this group of poorly-managed patients that Premium Therapy expects to be the earliest adopters of its technology.

Product

Premium Therapy's new device, the EMIT system, consists of two components: a programmable Logic Controller (LC), which generates the required current, and an Array of Overlapping Coils (AOC), through which the current is channeled in generating the pulsed electromagnetic fields. Premium Therapy's novel technology is embodied in the patented form of its AOC, which contains a series of overlapping coils encased within an ergonomic, body-contoured wrap. The ergonomic wraps have been designed for the multiple applications of EMIT and are easily placed by any untrained user around the lower back, knee, shoulder, and other regions of the body to deliver targeted, therapeutic pulses of electromagnetic stimuli. For example, the ergonomic AOC wrap developed for the knee contains strategically placed coils designed to produce therapeutic magnetic fields within the knee.

Premium Therapy's technology is incorporated into the two models of the EMIT system: EMIT MX and EMIT SX. The two models of this system each target a number of different market segments. The EMIT MX model generates a powerful maximal (MX) current stimulus sufficient to cause contraction in targeted muscle groups and is intended for persons desiring the prevention/treatment of muscular atrophy and/or the treatment of neurogenic bladder and bowel. The EMIT SX model, on the other hand, has been designed to generate a less powerful, submaximal (SX) stimulus which will not cause muscles to contract, but which will alter pain sensations and enhance cartilage growth through the modulation of cell signaling pathways.

The competitive advantages of the EMIT system include:

• Unique therapeutic application of EMIT
• Patented delivery device with multiple user-friendly applicators
• Two models for multiple applications in the treatment of a variety of diseases
• Reduction of healthcare costs with home healthcare applications

Development Status

Research involving the EMIT system has produced encouraging laboratory results and a formal request to perform human clinical trials has been filed. Once this approval is obtained, several leading U.S. medical institutions, including Harvard University, University of California - Berkeley, the Therapeutic Institute, and the University of Arizona, have expressed interest in participating in collaborative research and clinical trials. Given encouraging results, each has also indicated an interest in purchasing the EMIT system.

Competition

Currently, the two main technologies competing with the EMIT system are Electrical Stimulation (ES) and existing Pulsed Electromagnetic Stimulation (PES). While each of these technologies attempts to treat the same conditions as the EMIT system, both have severe limitations. ES devices, for example, are unable to penetrate tissues to reach deep muscles without causing skin burns and irritation. PES devices, on the other hand, can penetrate deeply and painlessly, but have been developed exclusively for diagnostic applications, such as nerve or muscle testing. As a result, these devices, while effective in a diagnostic setting, make ineffective therapeutic tools and currently are not available in any form that is appropriate for home healthcare.

Leading products in this field include Rehabilitation Center's ES device, which grossed over $62 million in revenues last year, and Top Line Stimulus's Model 500 PES device which sells for $12,500 and has grossed $32.5 million in revenues since its market entrance in 1998. While these technologies are currently among Premium Therapy's main competitors, the company believes that the focus of competition in the future will be between the different technologies, with a paradigm shift to more effective therapy.

Strategy

Premium Therapy will initially market its technology to healthcare providers through established medical device specialty distributors. The specialty distributors will provide sales, support, and distribution functions. Premium Therapy will complement the distributors' sales force with an internal program focused on highlighting the increased efficacy of the EMIT system in research publications and journals in order to encourage adoption of its technology. Premium Therapy expects those involved in the distribution and sales of the EMIT system to be able to charge a sustainable premium for providing patients with access to this breakthrough technology. Premium Therapy will also market its technology to patient/consumers once healthcare providers have begun to adopt the EMIT system.

Regulatory Issues

Medical devices such as the company's EMIT system are subject to regulatory review and approval by the U.S. Food and Drug Administration (FDA). While it is expected that full FDA approval will be gained quickly based on the approval of similar devices, Premium Therapy will seek an expedited market entrance by obtaining an Investigational Device Exemption (IDE) and clearly labeling the device "For Investigational Use Only." IDE approvals are typically obtained within an average of 3 months including necessary revisions. This strategy has been successful with a similar device, Leetonus' LeeTone, where an IDE was obtained and devices were sold prior to full FDA approval.

Despite this accelerated market entrance, Premium Therapy is cognizant of the fact that full FDA approval will be necessary in order to claim therapeutic efficacy of the EMIT system for each of its indications.

Management Team

Premium Therapy's management team includes founders with extensive experience in rehabilitative medicine and in the design and development of novel technology. Credentials include two M.B.A.s, two B.S.E.s in Biomedical Engineering, two M.D.s and a B.S.E. in Electrical Engineering. Furthermore, active consultation is being provided by a serial entrepreneur and technology development expert, an FDA specialist, the director of clinical studies for Harvard University's Physical Therapy Department, and a patent agent specializing in biomedical devices.

Financial

Premium Therapy's principals are heavily invested in the company's success with a planned $100,000 worth of capital input prior to any external funding. Assuming a product diffusion that parallels comparable technology in the medical field and receipt of an additional $1,000,000 in funding, Premium Therapy anticipates profitable operations by year four with a net profit of $1.3 million. International populations were not included in the financial analysis, as global expansion is not anticipated until late in the business plan.

Company Summary

Technology

Market

Products

Competition

Strategy & Implementation Summary

Management Team

Operational Plan

Financial Plan

Appendix