SLIDE 1
Wayra Technology Showcase
22 October 2013
SLIDE 2 About Us
EnXray Limited is a private UK company. Our scientists have successfully developed an innovative &
patented method of generating low-energy X-rays (LEXRs) & demonstrated its ability to sterilize material at high speed.
We offer superior sterilization solutions to the health care
sector, initially focusing on OEM(1) medical device sterilization.
We have attracted serious commercial interest from a number
- f OEM medical device manufacturers and already have
several reference customers committed.
Endorsements from large medical device cos & the Chartered
Institute of Purchasing & Supply’s Health Technology Group.
We are raising £3MM ($5MM) to: build our first industrial scale
prototype; obtain regulatory approvals; build & deliver our first products into the market; and reach break-even by Year 3.
(1) OEM: Original Equipment Manufacturers.
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SLIDE 3
The Sterilization Market
The global sterilization market totalled US$3.8 billion in
2011 (including equipment & consumables).
Sterilization is performed in a variety of methods & in a
number of diverse markets, including: Medical Devices; Pharmaceuticals; Hospitals; Agriculture; and Food & FMCG Packaging.
Methods: Thermal, Chemical, Radiation & Filtration. High costs & environmental impact of existing methods
create attractive market opportunities for new entrants, particularly in the OEM Medical Device sector.
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A large market with a clear entry point
SLIDE 4 54% 3% 36% 5% 2% 43%
ETO Other (H2O2, Steam, etc) Gamma electron beam HEXR (high energy x-ray)
Medical Device Sterilization
OEM medical device sterilization represents a global market in
excess of US$2 billion. The main sterilization methods for OEM medical devices include:
EnXray is first targeting products already sterilized with some form
- f ionizing radiation (Gamma, e-beam or HEXR), which represents
43% of the market today ($860 million).
Ionizing Radiation
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Our technology initially addresses over 40% of the market
Ethylene Oxide (ETO)
SLIDE 5 Potential Markets for EnXray
Medical devices (Replace 3rd party Gamma e-beam & HEXR) Pharma & Biotech (Terminal sterilization) Contact lenses (Potential high volume market) Blood & other IV products (X-ray is used to sterilize blood) Agricultural products (Licensing opportunity) FMCG Packaging (Licensing opportunity)
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SLIDE 6 Medical devices are
shipped in large batches to 3rd parties for sterilization.
The process can take up
to 2 weeks to complete.
Products are returned to
the manufacturer before being shipped to customers.
Average annual cost is
estimated to be in excess of $200k per company, excluding inventory holding costs.
Receiving / Shipping Bay Sterilization Process Return Products to Customers Med Dev Co 1 Med Dev Co 2 Med Dev Co 3
Existing methods are time consuming & costly
Sterilization Logistics 6
SLIDE 7
Problems with Existing Methods
Large, capital intensive systems comprise whole
buildings, and require significant volume throughput to be economical. (see next slide)
Pallet-load batch processing creates product recall risk. Except for the largest companies, sterilization is
performed by external 3rd party service companies, such as Steris, Sterigenics & Synergy Health.
OEM Medical Device manufacturers retain regulatory
responsibility for sterilizing their products, without controlling the process itself.
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3rd Party Service Providers have no incentive to change
SLIDE 8 Traditional X-ray Sterilization Units
Very large footprint machines Sterilization facilities
buildings (left) and require thick lead shielding (above)
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SLIDE 9 Our Technology is Different
Working with Cambridge Consultants, these are some initial concepts for the prototype device(2) to sterilize OEM medical devices, such as those pictured below, left.
(2) Anticipated “footprint”: 2.5m x 1.5m.
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SLIDE 10 Comparison of LEXR and HEXR
1 10 100 1000 1 10 100 1000
E en/[ keV cm
2g
E [keV]
equal "dose efficacy" 8 keV 5 keV 20 keV Grenz-ray region
Similar levels of sterilizing energy absorbed by target. LEXR HEXR
X-axis shows energy of X-rays generated on a Log scale.
Y-axis indicates the level of energy absorbed by the target in kGy(3).
EnXray is able to deliver the same amount of sterilizing energy because of higher absorption rate of LEXR vs. HEXR.
(3) kGy: Kilogray is the unit of measurement of radiation dosage.
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Our technology delivers equivalent sterilizing energy
SLIDE 11 Our Initial Prototype 11
Circular emitting head , 10 cm in diameter.
Our scientists produced a lab-based
prototype that generated LEXRs to sterilize through plastic and other materials.
The prototype (pictured right) was
used in a randomized dosage trial to measure the levels required to achieve sterility of a bacterial spore test strip.
The trial results were validated by an independent lab, WFC Analytics.
Gas-filled chamber
Demonstrated ability to generate LEXRs
SLIDE 12 Independent Sterilization Trials
5.0 kGy 1.8 kGy 2.7 kGy 2.4 kGy 6.5 kGy
An independently verified trial of our technology confirmed the efficiency of our LEXR sterilization capabilities. Irradiation target:
Bacterial spore strips, B. atrophaeus, (a safe equivalent of anthrax), supplied by Raven Biological Laboratories. The results:
Log10-6 reduction (less than 1 spore per 1 million survived) observed for irradiation doses as low as 1.8 kGy, a dose that typically results in a 1 Log reduction by other irradiation methods.
Gamma irradiation requires ~20 kGy to achieve Log10-6 reduction.
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LEXR delivers industry standard Log10-6 Reduction
SLIDE 13
Our USPs
LEXR is ideal for sterilizing most medical grade polymers &
metal surfaces using HIGH powered yet LOW energy X-rays.
LEXRs penetrate up to 10cm in open air & several cm of
plastic, reducing the need for expensive shielding, so the safety profile will allow for easy operation at customer facilities.
High local absorption rates enable high dosage / throughput
rates.
The equipment will be a compact design to sterilize on site,
eliminating time-consuming & costly logistics.
Very affordable compared to existing technologies, with
significant indirect cost savings (inventory holding cost).
Individual product sterilization & labelling will provide greater
traceability, reducing the likelihood of broad product recalls.
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SLIDE 14 IP Position & Strategy
EnXray has recently filed its core patent on the method
- f generating LEXRs at an industrial scale, and will file
additional patents, as appropriate.
This patent gives us a strong position relative to other
companies seeking to generate LEXRs for a wide range of industrial applications.
We will maintain certain IP as know-how or trade
secrets, and will retain ownership of our technology via an equipment lease model.
Our ability to monitor other parties seeking to apply
LEXR in the medical field can be managed by tracking changes to OEM’s sterilization methods.
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SLIDE 15
Regulatory Strategy
Regulatory approval of LEXR is expected to be via CE
mark in Europe and a 510k application in the US.
ISO 11137 governs sterilization of medical devices using
ionizing radiation, and is dependent upon the kGy dosage delivered, rather than the source of the radiation.
Data for regulatory approval will be generated quickly, as
no clinical trials involving patients will be required.
Initial talks with regulators have all be very encouraging. Prof. Alan Tallentire is the founder of our SAB.
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The regulatory pathway Is clear
SLIDE 16 3rd party sterilization companies (i.e. Steris, Sterigenics
- r Synergy Health) have business models built around
maintaining existing facilities at high throughput rates.
Their pricing models are based upon large volumes,
hence small orders are uneconomic to process.
EnXray’s product offering will initially provide a low cost
alternative for smaller “rush orders” which existing service providers cannot easily accommodate.
OEM’s QA & RA managers are attracted by the concept
- f having direct control of their own sterilization
processes.
Competitive Landscape 16
Large incumbent players will find it difficult to respond
SLIDE 17
Commercialization Strategy
EnXray will lease its technology to OEM medical device
companies on a 5 year term with an annual minimum + per unit sterilization charges, removing cap-ex decisions.
Initial target customers will be those currently sterilizing
products with Gamma & other forms of ionizing radiation.
Over time, we plan to develop our technology to treat
products currently sterilized with Ethylene Oxide, and may be able to develop applications for terminal sterilization of pharmaceuticals & biotechnology products.
Maintaining ownership of our technology by leasing it to
customers, combined with our patents & know-how, will help create barriers to entry for OEM on site sterilization.
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Market entry strategy designed for rapid market adoption
SLIDE 18 Manufacturing
EnXray’s initial prototype will be manufactured on an
- utsourced basis, through our development partner,
Cambridge Consultants.
We have also partnered with SMS Electronics to scale up
initial manufacturing, which will enable us to develop our business rapidly and in full compliance with ISO 13485.
We have also established a relationship with University of
Nottingham’s new Precision Manufacturing Centre.
Final assembly, test & certification will be EnXray’s
responsibility.
We plan to bring manufacturing in house over time.
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Outsourced prototyping will speed market entry
SLIDE 19 Sales, Marketing & Distribution
EnXray is initially targeting companies that already have
products sterilized with ionizing radiation.
Sales strategy will position the offering initially as a low
cost method of sterilizing small production runs on site &
Sales will be through national distributors in Europe and
regional distributors in the US.
Distributors may also provide aftermarket service
maintenance for a share of the service maintenance fee.
Training will be provided by EnXray jointly with our
regulatory affairs consultancy partner, Maetrics Ltd.
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Initial focus will be on companies using ionizing radiation
SLIDE 20 2 Year Funding Requirement
EnXray is seeking £3 million ($5MM) which will fund:
£780K Development of prototype machine £650K Regulatory approvals £550K Design & build of first commercial products and £750K General working capital (+ £390K reserve)
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Summary Financial Model (Amounts in US$ in millions) Year 1 Year 2 Year 3 Year 4 Year 5 Income Statement Summary Gross Revenue ‐ 0.201 2.438 6.914 14.395 Distributor Margin / Sales & Marketing ‐ 0.375 ‐ 0.850 ‐ 1.450 ‐ 2.500 ‐ Revenue, less distributor margin ‐ 0.174 ‐ 1.588 5.464 11.895 COGS Amortized ‐ 0.028 ‐ 0.241 ‐ 0.611 ‐ 1.239 ‐ Net Revenue ‐ 0.202 ‐ 1.347 4.854 10.656 Operating Costs 1.775 ‐ 2.005 ‐ 1.650 ‐ 2.239 ‐ 3.125 ‐ EBIT 1.775 ‐ 2.207 ‐ 0.302 ‐ 2.615 7.531 Interest Income / (Expense) 0.082 0.032 0.066 ‐ 0.157 ‐ 0.236 ‐ Taxes ‐ ‐ ‐ ‐ 2.207 ‐ Net Income 1.693 ‐ 2.175 ‐ 0.369 ‐ 2.458 5.089 EBITDA 1.775 ‐ 2.179 ‐ 0.062 ‐ 3.225 8.771 EBITDA‐CapEx 1.775 ‐ 2.779 ‐ 1.422 ‐ 0.905 4.771 Cumulative Operating Cash Burn 1.775 3.780 5.430 7.669 10.793
SLIDE 21 Revenues:
♦ Base lease cost $50K per unit/year(4) + ♦ Per unit processing charge capped at $50K/year, + ♦ Service maintenance fees: 15% of base lease cost
Distributor margin 50% of 1st year lease amount. Service maintenance margin 25% of fees. Volume throughput will vary depending upon size &
density of products, but average processing time/unit is estimated to be 30 seconds per item (~1,000 items/day).
Cost of Manufacture is estimated to be $40K per unit.
Financial Model: Key Assumptions 21
(4) Machines to be leased on a 5 year term.
SLIDE 22 22 GANTT Chart
Prototype development & regulatory approvals within 18 mo.
Month: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Topic Develop & Test Emitting Head Build & Test Prototype machine Transfer designs to
Design testing protocols for regulatory submission Develop data for regulatory submission Prepare filings for regulatory submission File for CE Mark & 510k approvals Respond to questions & supply any additional data Receive regulatory approval Develop target customer base Build, Test & Deliver initial products Sales Support to Initial Customers
SLIDE 23 EnXray anticipates a trade sale could occur once
commercial traction has been achieved.
Potential acquirers may include 3rd party sterilization
companies (i.e. Steris, Sterigenics or Synergy Health), and/or scientific equipment manufacturers (i.e. Danaher, Smiths Industries or Perkins Elmer).
A comparable transaction in scientific equipment:
In 2010, Life Technologies acquired ION Torrent(5) (founded in 2007) for $375 million + a 2 year earn out.
A $5 million investment for 50% of EnXray today would
realize a >45% IRR assuming a $50 million valuation in Year 5 (6x EBITDA in Year 5).
Exit Strategy & Potential Returns
(5) A gene sequencing equipment manufacturer that had designed a “desktop” gene sequencer. 23
Attractive financial returns expected within 5 years
SLIDE 24 Edward Cappabianca– CEO. Over 20 years experience
advising & raising capital for early stage technology, medical device and biotechnology companies. Former CEO of a novel anti-infective biotechnology company.
Dr. Sergey Mitko – CSO. Very experienced in both theoretical
& experimental physics, with in-depth knowledge of pulsed power electronics and electronic design. Sergey has published about 80 scientific papers and patents.
Dr. Yuri Udalov–CTO. Background as an experimental
- physicist. He began his career at the P.N. Lebedev Physics
Institute, Academy of Sciences in Russia, where he met & worked with Sergey. In 2004, he won the New Venture Prize (established by McKinsey and Dutch Ministry of Economics) for the best start-up business. Yuri has published over 120 articles in peer-reviewed journals & also has several patented inventions.
Management and Founders 24
SLIDE 25
Advisors and Partners
Dr Bill Mason – Non-executive Chairman designate. Cambridge Consultants – Technology Development
Partner.
Maetrics Ltd – Regulatory affairs & customer training
partner.
3 UK & 1 European Medical Device Cos – Commercial
Development Partners & Reference Customers.
Mathys & Squire (Martin MacLean) – Patent Attorneys. Professor Alan Tallentire – Scientific Advisory Board
(founding member) & Regulatory Consultant.
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SLIDE 26
Summary
EnXray has developed a new, patented method of
generating LEXRs.
We are focused on high value markets, with our initial
entry point of OEM medical devices.
Our approach offers superior performance in cost &
environmental impact.
Our technology can:
♦ be incorporated into existing production processes, & ♦ augment or replace 3rd party sterilization (ie. Gamma).
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SLIDE 27
Contact Details
EnXray Limited Ed Cappabianca, CEO Phone: +44 77 11 98 43 45 Email: ecc@enxray.com
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SLIDE 28
Appendix 28
SLIDE 29 Sterilization of Polymers
Most medical-grade polymers used today are well suited to sterilization using ionizing radiation.
10,000 10,000 1,259 1,259 1,122 1,122 1,122 1,122 1,122 158 251 631 501 631 631 251 631 100 1 10 100 1,000 10,000 Phenolics Polystyrene Polyurethane Epoxy Silicone (filled) Polysulphone Polyamide ABS MBS Natural rubber Nitrile rubber Polyester (PET) Polyethylene Urea-formaldehyde Polycarbonate Polyvinyl Chloride (PVC) Polyvinylidene Chloride Cellulose Acetate Dosage (kGy)
Radiation Resistance of Common Polymers
Resistance
Typical sterilizing dosage: 25 kGy
Source: A Guide to Designing for Sterilization.
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