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(AMEX Symbol: XCR)
Presentation
January 14, 2008
Forward-Looking Statements
Except for statements of historical fact, the matters discussed in this
presentation are forward looking and pursuant to the safe harbor
provisions of the private Securities Litigation Reform Act of 1995.
These forward-looking statements reflect numerous assumptions and
involve a variety of risk and uncertainties, many of which are beyond
the company’s control that may cause actual results to differ materially
from stated expectations. These risk factors include, among others,
limited operating history, difficulty in developing, exploiting, and
protecting proprietary technologies, the risk that our technology may
not be effective, uncertainty as to the outcome of legal proceedings,
intense competition, and substantial regulation in the medical device
and healthcare industries, as discussed in the Company’s periodic
reports filed with the Securities and Exchange Commission, available
on its website at http:/www.sec.gov.
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Management Team
• Terren Peizer
Executive Chairman
• Winson Tang, MD, FACP
Chief Operating Officer
• Victor Gura, MD
Chief Medical Officer
• CEO, Chairman &
Founder Hythiam
• Amgen, Vertex, Tularik,
Isis, Pacific Capital Grp
• Cedars-Sinai Med. Cntr,
Assoc. Clin. Prof., UCLA
• Robert Weinstein, CPA, MBA • Citi Private Equity, Able
Chief Financial Officer
Labs, GE Capital
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Selected Board Members
• Hans Polaschegg, PhD
Fresenius, Chairman Extracorp Circ & Infusion
Tech Committee
• Dan Goldberger, MSME
Sound Surgical, Glucon,
OSI Systems, Optiscan,
Nellcor
• Kelly McCrann, MBA
DaVita, PacificCare, KPMG,
McKinsey
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Xcorporeal Highlights
• Extra-corporeal medical devices that could replace the
function of failing or failed organs
• Multiple initial products
– Portable Hospital Hemodialysis device
– Portable Home Hemodialysis device
– Wearable Artificial Kidney
• First U.S. 510(k) filing Q4, 2008 - FDA clearance
expected Q1, 2009
• Minimal to low risk strategy
– Prototype device tested successfully in humans
– Well defined and straightforward regulatory strategy
– Well delineated reimbursement codes
• Multi-billion dollar and clearly defined markets
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Xcorporeal
Renal Replacement Therapy Devices
• Portable Hemodialysis Device
- Hospital CRRT/Acute Hemodialysis
• Portable Hemodialysis Device
- Home Hemodialysis – ESRD
• Wearable Artificial Kidney
- Home Hemodialysis – ESRD
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Xcorporeal Hospital Portable Renal
Replacement Device
• Truly portable device
– Smaller (< two cubic feet) and lighter than competitor
devices (30-40 lbs)
– Reduced fluid (dialysate) requirement
– Easier to operate, reduced training requirement
• Fully functional
– Continuous Renal Replacement Therapy (CRRT)
– Intermittent Hemodialysis
• Product status
– Functional prototype undergoing bench testing
– FDA 510(k) filing in Q4, 2008
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Xcorporeal
Proprietary Disposable Manifold
• The complexity of setting up a dialysis
machine has been reduced to a single step
of inserting a proprietary manifold into the
machine.
• This reduces machine size, disposable
cost, and simplifies operation.
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Benefits of Xcorporeal Hospital
Portable Renal Replacement Device
• Decrease workload for hospital ICU staff
– No plumbing requirements
• Use simple tap water versus bagged dialysate
– Simple to use operator interface
– Snap-in disposable unit
– Simple set-up, tear down and clean-up
• Cost effective
– Decrease in medical staff time (nurse, pharmacist)
– Decrease in staff training downtime
– No need for bagged dialysate ($180/treatment)
• Flexibility
– Truly portable, no utility hookup limitations
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Portable Device
Development Timeline
Q1
Q2
Q3
2008
10
Q4
Q1
Q2
2009
Hospital Hemodialysis Device Market
• US Market Opportunity = $1.4 billion
– Growing at 10% per year
• Aging Population
• Increasing severity of hospitalized patients
• Disposable Market
–
–
–
–
242,000 patient hospitalizations per year estimated 2008
Average 8 days per hospitalization
$500 revenue per day for fluids and disposables
Disposable Market = 242,000 x 8 x $500 = $968 million
• Device Market
– Market = 62,000 beds x .25/bed x $30k/machine = $465 million
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Xcorporeal Home Portable
Renal Replacement Device
• Truly portable device
– Smaller (< two cubic feet) and lighter than competitor
devices (30-40 lbs)
– Reduced fluid requirement
– Easier to operate, reduced training requirement
– No special plumbing nor electrical requirements
• Fully functional
– Wide range of flow rates – treat larger patients
• Product status
– Working prototype
– FDA 510(k) filing in Q2 2009
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Benefits of Xcorporeal Home
Portable Renal Replacement Device
• Truly portable
– Substantially smaller and lighter than any existing device
– No utility requirements, tap water and 110VAC only
• Ease of Use
– No fluid handling device
– Fully disposable fluid circuit, no cleaning or sterilization
– 50 – 600 ml / minute range of flow rates
• Ease of Treatment
– One step, one-handed set up
– Graphical user interface
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Home Use Development Timeline
Q1
Q2
Q3
2008
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Q4
Q1
Q2
2009
Chronic Hemodialysis Market
• U.S. Market Opportunity = $6.7 billion
–
–
–
–
357,000 chronic dialysis patients
3 treatments per week
$120 Medicare reimbursement / treatment
Market = 357,000 x 3 x $120 x 52 weeks = $6.7 billion
• Home hemodialysis penetration is less than 1%
today but will grow because
– Appropriate equipment becomes available (Xcorporeal,
NxStage, Fresenius off label)
– Longer, more frequent therapy is better medicine (4+
treatments per week versus 3)
– Home hemodialysis reduces capital and skilled labor
requirements
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Home Hemodialysis is a significant
Growth Opportunity in ESRD
• Patient Benefits
– Increased time on hemodialysis with improved
outcomes
– Potential for daily dialysis
– Improved quality of life: diet, sleep, time
• Provider Benefits
– Decreased need for nurses/techs
– Increase in revenues without need for
additional infrastructure
– More frequent treatments decreases need for
expensive medications
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Home Hemodialysis Device Comparison
Renal
Solutions (*)
NxStage
Fresenius
2008K
150 - 400
50 - 600
20 - 600
50 – 500
6
Yes
< 40
200 - 400
50 - 200
100 - 800
6
20 - 30
120
Yes
No
No
195
80
160
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5
16
No
Partial
No
Drainage Required
< 2.0
Yes
No
No
Yes
Yes
Installation Cost
Low
Medium
Medium
High
Blood Flow Rates
Dialysate Flow Rates
Dialysate/4-hr (liters)
Dialysate Regeneration
Dry Weight (pounds)
Size (cubic feet)
Portable
* Not marketed.
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Xcorporeal
50 – 600
Xcorporeal
Wearable Artificial Kidney
•
•
•
•
•
“Disruptive” technology
Wearable, battery operated light-weight device
Fully automated, simple to use
Prototype tested successfully
Successful human trials published in The
Lancet & Kidney International December 2007
• 24 hrs/7 days therapy with potential to
revolutionize care of ESRD patients
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Wearable Artificial Kidney
Feasibility Prototype
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Wearable Artificial Kidney
Bi Phase Pump
Metering
Pump
Metering
Pump
Sorbent 3
Heparin
Infusate
Bubble
Sensor
Blood Loop
Sterile
Change weekly
in clinic
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Dialyzer
Patient
Metering
Pump
Blood
Sensor
BiCarbonate
Sorbent 2
Sorbent 1
Metering
Pump
Waste
Drain Valve
Dialysate Loop
Change daily at
home
Clinical Trial Results
• Initial clinical study conducted with a prototype
device at The Royal Free Hospital, London
– 8 ESRD subjects dialyzed for mean of 6.4 hrs
– Clearances of creatinine, urea, and beta-2microglobulin achieved (chart follows)
– No adverse events reported
– Subjects were able to walk unhindered during dialysis
treatment
– Presented at ASN November 5, 2007
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Clinical Trial Results
Time (hrs)
0%
-5%0:00
2:00
4:00
6:00
8:00
-10%
% Change
-15%
-20%
-25%
Urea
-30%
Creatinine
-35%
Beta2 Microglobulin
-40%
-45%
-50%
• Sustained reductions in key blood chemistries
• Clearance of both small and middle molecules
• Clearance meets or exceeds daily toxin production
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WAK Development Timeline
Q1
23
Q2
Q3
2008
Q4
Q1
Q2
Q3
2009
Q4
Q1
Q2
2010
Q3
Q4
Intellectual Property
• Portable Artificial Kidney
– 18 patents pending or in process
• Wearable Artificial Kidney
– Exclusive in-licensed patents
• Wearable ultra-filtration device
– Wearable, self-contained, device for continuous excess fluid
management
• Wearable continuous renal replacement therapy device
– Expands on patent above to include renal replacement patients
and battery-operated power source
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Selected Financial Information
September 30, 2007
• Cash and Marketable Securities - $20.3 million
• Shares Outstanding - 14.4 million
• Market Capitalization - $72 million at 12/31/07
• $1.2 million monthly cash burn rate
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Company Near-Term Milestones
• Hospital Portable Hemodialysis Device
– Functional Prototype (completed)
Q4, 2007
– Pre-Production Prototype
Q3, 2008
– FDA 510(k) submission
Q4, 2008
– Commercialization target
Q2, 2009
• Home Portable Hemodialysis Device
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– Functional Prototype (completed)
Q4, 2007
– Pre-Production Prototype
Q3, 2008
– Clinical trial
Q2, 2009
– FDA 510(k) submission
Q3, 2009
– Commercialization target
Q4, 2009
Comparable – NxStage Medical (NXTM)
• Emerging growth hemodialysis company
• “System One” device
– Home hemodialysis: > 2,000 patients; <0.5% market
– Hospital CRRT for acute renal failure
• Financial Metrics
– $560M market capitalization – 12/31/07
• 14x trailing twelve months revenues
• 9x annualized Q3, 2007 revenues
– Quarter ended September 30, 2007 financial highlights
• $33M in cash
• $13M operating expenses
• $16.1M operating loss
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Comparable Acquisition
Fresenius purchase of Renal Solutions
• $190 million purchase price
– $100 million at closing
– $60 million in one year, $30 million contingency
• Sorbent technology
• Allient device
– Cleared by FDA over two years ago
– Not brought to market
• Why significant for Xcorporeal
– Suggests sorbent technology valuable
– High acquisition price for “scarce” assets
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Xcorporeal Highlights
• Extra-corporeal medical devices that could replace the
function of failing or failed organs
• Multiple initial products
– Portable Hospital Hemodialysis device
– Portable Home Hemodialysis device
– Wearable Artificial Kidney
• First U.S. 510(k) filing Q4, 2008 - FDA clearance
expected Q1, 2009
• Minimal to low risk strategy
– Prototype device tested successfully in humans
– Well defined and straightforward regulatory strategy
– Well delineated reimbursement codes
• Multi-billion dollar and clearly defined markets
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APPENDIX
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Management Team
• Nina Peled, PhD, MBA
SVP - Quality & Regulatory
• James Braig, MSME
SVP - Product Dev.
• Barry Fulkerson
VP - Hardware Systems
• Russ Joseph, MS
VP - Disposable Engineer
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Hansen, Cygnus, Amira,
Lumenis, i-STAT, BM
Optiscan, Square One
Tech, Ohio Medical
NxStage, COBE (Prisma,
CS3), Gambro
Gish Biomedical, Sorin,
Baxter Healthcare
Product Development Team
• Internal team of engineers with expertise
in dialysis equipment and disposables who
previously worked at Cobe, Gambro,
Aksys, NxStage and Baxter
• Contract Product Development Group in
Southern California to leverage the
expertise of an additional 10-15 engineers
• Manufacturing to be outsourced
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Renal Disease Overview
• Acute Renal Failure
– Hospital-based, majority in Intensive Care Unit
– 200,000 acute renal failure patients – 50% mortality rate
• End Stage Renal Failure
– Approximately 2 million “known” ESRD patients worldwide
– 65% of patients expire within 5 years
– Patient’s poor quality of life
• Care provided primarily outside the home
• Non-ambulatory
• Intermittent care – Significant peaks and valleys
– Constantly ill
– Majority disabled
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Reimbursement Codes
(CMS/Medicare) are Established
Procedure
Code
Amount
Ultrafiltration
Aquapheresis
36514
$720/tx
Acute / CRRT HD
90935
$406/tx
Home HD
90925
90921
$1800/mo
Includes all HD supplies
Outpatient HD
90925
90921
$96-123/tx
Varies depending on
region
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Comments
Code for plasmapheresis
Regulatory Strategy
Device
U.S.
Hospital
510(k)
Hemodialysis
Home Hemodialysis 510(k)
Wearable Artificial
Kidney
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PMA
E.U.
Clinical Trials
CE
None
CE
30-40 patients
CE
Estimate 100200 patients
Renal Replacement Therapy
Market Opportunity - Company estimates
$ in millions
US
Europe
Asia
Total
Hospital Renal Replacement Device:
Disposables
$968
$660
$484
$2,112
Device
$465
$465
$232
$1,162
$1,433
$1,125
$716
$3,274
$6,704
$7,146 $3,537
$17,387
$8,137
$8,271 $4,253
$20,661
Total Hospital RR Device
ESRD-Home Renal Replacement Device
and Wearable Artificial Kidney:
Total Home RRD and WAK
Total All Devices
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