Executive Summary of BioSense Corporation

Contact: Vaclav Kirsner, Ph.D.
Phone: 970.484.1272
E-Mail: biosense@email.com

COMPANY SUMMARY:

BioSense Corporation is a visionary early-stage company with a proprietary bio-electronic technology that addresses the problem of population growth control, and the related women's health issues.

Early warning of cervical cancer is an issue of major importance. Providing a diagnostic screen better than the Pap smear screen is designed as an automatically performed function of the core technology. This dual role of the device enhances the consumer appeal of the main product.

The Company's second major market is in agribusiness. By solving the last but fundamental major deficiency in the herd management process, the BioSense technology promises to increase productivity and profitability of milk and meat production. The solution rests in reliably anticipating and detecting ovulation, for efficient breeding practices. The agricultural application of the core technology presents an opportunity for early revenues.

The BioMeter technology for fertility detection gives the company an edge over the competition. The vision of BioSense Corporation is based on the fact that the health of one half of humanity revolves around the menstrual cycle. The reproductive cycle impacts on the happiness of the other half of humanity, too.

The BioSense vision includes improving population growth control in countries such as China, as well as significant positive effects on public health in the West - in addition to personal satisfaction of individual consumers.

Effective management of human reproduction is a major concern for consumers both in the sense of birth control as well as of planned pregnancy achievement. People everywhere are keen to manage the dilemma of being the least fertile species on Earth, and yet suffering with too many unwanted pregnancies. Neither the Pill nor sterilization have solved the problem, and at the same time planned pregnancy has become increasingly difficult to achieve.


KEY PEOPLE:

Vaclav Kirsner, Ph.D. is the founder of BioSense Corporation and the inventor of the BioMeter sensor (in collaboration with his gynecological scientist wife). He was Senior Physical Chemist/Electrochemist specialized in biomedical applications in the pharmaceutical firm Wellcome Research Laboratories of the Glaxo Wellcome Group (England). He has prior experience with founding a medical technology startup company. He holds a Ph.D. in physical chemistry - electrochemistry from the University of Southampton, England, and a Masters degree from Charles University in Prague.

The Company is searching for experienced business executives with appropriate backgrounds in commercial development of medical products.

The core technical team includes seasoned engineering experts on the three aspects of BioSense product engineering: microelectronics - firmware (i.e., hardware and software), mechanical engineering, and manufacturing/project management. The experts are:

Brian Simpson was R&D Engineer for Hewlett-Packard and for Agilent Technologies in Fort Collins, CO. He has expertise in many areas of electronics, including digital, analog, CMOS VLSI chip design, and object oriented software design. He is experienced in all aspects of the software design cycle, including requirements, architecture, coding, debugging and maintenance. Earlier, he was Software Developer/R&D Engineer for IBM in Boulder, CO. He holds a BSEE degree from UCLA (Summa Cum Laude) and an MSEE degree from Colorado State University (4.0 GPA).

Khay Taherkhani was Senior Mechanical Engineer, Product Engineer, and Mechanical Engineer/Designer for several companies including in particular the medical device manufacturers Igen, Inc. in Gaithersburg, MD and DiaSorin Inc. in Stillwater, MN. He has extensive experience developing and applying design for manufacturing, and in servicing principles and practices including ISO, GMP, DFT and GDP. Earlier, he was a CAD Instructor at Denver Technical College and Lead CAD Operator and Lead Layout Editor in Denver, CO. He holds a BS degree in Mechanical Engineering from University of Colorado.

Robert Guthrie was Project Manager/Staff Engineer at Maxtor Corporation, Longmont, CO, Project and Process Engineer at Quantum Corporation in Milpitas, CA and Quality Engineer at Applied Magnetics Corporation in Santa Barbara, CA. He performed process engineering support for overseas manufacturing facilities in Asia, and qualified a third party manufacturer and worked on site in China. Earlier, he served with the US Army in Germany, performed quality control jobs for two instrument manufacturers in California, and served in a supervisory position with Peace Corps in West Africa. He holds a BA degree from California State University.

Otto Fucik, Ph.D. was Assistant Professor of Computer Science at Brno Technical University in the Czech Republic, and was visiting at the University of Wyoming and at the Pennsylvania State University. He is an expert on re-configurable embedded systems, ASIC design, and hardware/software co-design methodology and algorithms including neural networks. He has a medical instrument design and private business experience, and holds Masters and Ph.D. degrees from the Technical University, Brno, Czech Republic.

The company is in process of assembling a strong advisory board. Current candidates are: Charles Anderson, Ph.D., Professor of Computer Science at Colorado State University and a machine-learning expert; Gary Hodgen, Ph.D., Professor and President of the Jones Institute for Reproductive Medicine in Virginia; Ernst Knobil, Ph.D., Professor in the Medical Sciences at the University of Texas Health Science Center in Houston; Michel Ferin, M.D., Professor of Physiology in Obstetrics and Gynecology at Columbia University, New York; Eli Adashi, M.D., Professor at the University of Maryland School of Medicine; Ronald Gray, M.D., Professor at the Johns Hopkins University School of Hygiene and Public Health; John France, M.D., Professor at University of Auckland, New Zealand.

PRIMARY PRODUCT:

The BioMeter is a microelectronic device for personal use by women at home. It anticipates and then detects ovulation. Unlike any of the other fertility diagnosis products, the BioMeter actually detects ovulation, and this is independent of its two unique predictive signals. The patented biosensor enables in vivo monitoring of the development of the ovum or egg (folliculogenesis), which permits determination of the actual period of female fertility. The older commercially available diagnostic products have not solved the fertility detection problem and, unlike the Company's elegant BioMeter, they are cumbersome to use, expensive and ultimately ineffective.

The BioMeter device looks like a vaginal tampon applicator with a small electronic readout. The woman's friendly companion tool is applied for only a few seconds, daily or almost daily, to indicate the fertility status. It simply informs the user whether or not conception can result at the time the self-diagnostic measurement is made. The measurement data are stored in an internal memory and can be optionally used by a physician. The sensor is free of any chemical side effects. It is also free of any religious, ethical or political controversy because it does not interfere with any natural processes in the woman's body.

The Vatican has approved of this type of products, and the US FDA has given a prototype of the BioMeter the 510(k) pre-market notification stamp of approval. The BioMeter can also provide other medically useful information, and those additional applications require additional FDA acceptance. A number of derivative products are planned.

DERIVATIVE PRODUCTS:

BioSense is not a single product company. The enabling technology yields not only several primary product implementations but also some additional derivative products.

For example, our patent application "Apparatus and Method of Personal Screening for Cervical Cancer Conditions In Vivo" is a development of major importance. This is a device for personal use at home, enabling the early detection of cervical cancer or of pre-cancerous state, and providing the diagnosis in a manner that does not cause the anguish and anxiety associated with the Pap smear screen of the prior art.

Another user-friendly special-purpose information appliance is the Interface Unit, which will provide for an optional downloading of the BioMeter data for review by physicians. The unit will also be made for the patients, who will thus be able to add to the measured data other daily-noted information about their symptoms. Personal computer, palmtop, net computer, web TV or conventional TV may be the input/output devices. Some of the patient's communication with the physician can be over the Internet, and this will contribute to rationalization of medical services, to reduce costs while improving quality of care. For more information about the use of the conventional TV, click here for the BioMeter-TV Interface Unit page.

KEY INNOVATION:

The detection of fertility where and when it actually occurs is a fundamental innovation. This is because the menstrual cycle is the result of complex integration of many inputs, hormonal as well as neurological. This complex integration is the reason why menstrual periods vary from one menstrual cycle to the next. It is also the reason why a smart-technology tool is needed to make the fertility awareness method readily accessible to the population at large.

PATENTS:

The technology is protected by a strong patent portfolio. Three patents have issued and four patent applications are pending, providing protection for different aspects of the technology. Two of the pending applications have been allowed for issuance and another application is in the process of being drafted for submission. For an overview of intellectual property assets go to http://vaclav.o-f.com/IPassets.htm . The issued patents may be read at http://www.uspto.gov. Search for Kirsner - Vaclav under Inventor Name (IN).

COMPETITION:

There are a number of companies in the field of personal fertility diagnosis but none of them has attained a dominant position. This is because the need to determine the variable boundaries of the intermittent fertility window - at most 3 or 4 days wide - remains unsatisfied by their products. A number of these products may be found at http://www.fertilityproducts.com.

For example, Quidel Corporation is a specialized manufacturer of immuno-chemical kits. They produce in vitro diagnostics for analysis of women's urine. These so-called LH kits are purchased by women who find it difficult to achieve pregnancy. The kits contain chemical reagents for use over the several critical days, which the user must guess so as to include the presumed ovulation day. She must then assess the color end point. OvuStick and OvuQuick are examples retailing at around $ 60.00 for one-month use. Cheaper brands of these LH kits from other manufacturers, less respected by physicians, are also available in retail outlets.

Potentially more important as a competitor, the Unilever-financed British firm Unipath Ltd. has been dedicated to the development of an electronic version of a two-hormone urine analysis system. The same messy urine sampling is involved, but the method is an improvement on the chemical kits, albeit even more expensive. The price of the electronic monitor is $ 200 and replacement packs of 30 test sticks retail for $ 50.

However, the Clear Plan Easy system has not become the long-awaited definitive solution of fertility diagnosis after its recent introduction in the U.S. The Clear Plan Easy has not been approved for birth control purposes. The system does not determine the beginning of the window of fertility and it does not detect the end of fertility - because it merely assumes ovulation based on one of the predictive hormones.

The Unipath technology detects urinary estrogen in addition to the LH but it does not detect ovulation independently of the two hormones. Another fundamental shortcoming is that it cannot integrate the hormone signals with the acute neurological inputs from the brain, which cause the variability of the fertile period. Neither can the Unipath system compete in terms of the user-friendliness and the broad applicability of our technology.

A similar argument applies to other electronic devices including the Cue fertility monitor from Zetek, Inc.


FUNDS SOUGHT: $ 2.0 million - $ 10 million.

The higher figure is for equity financing to introduce the products in both the medical and the agricultural markets. The lower figure is for a much less aggressive project plan, and a different type of investor(s).

USE OF PROCEEDS:

The proceeds of financing will be used for product manufacturing, statistical clinical trials in multi-center studies as required for product introductions, further development of the products, further prosecution of patents, and operating expenses.

We have projected the introduction of the lower-priced birth-control device well after the introductions of the product into the clinical market in year 2 and into the self-help conception (reduced fertility) market in year 3. The earlier product price will be at least 3 to 4 times higher than the price of the last-introduced birth-control product. The birth-control aid device is conceptualized as every woman's friendly companion that should be priced so low as to be easily bought on impulse.

The profit margin, inherent in the product, is so high that we can contemplate the price of $ 30 for the birth-control product and still be profitable. The unit cost has been estimated to fall below $ 10 at not too high quantities, and it will be below $ 5 when quantities go really up, upon the introduction of the birth-control model.

The IPO exit for investors is planned before the launch of the inexpensive product version, as the costs of marketing will rationalize the IPO. As can be seen in the Financial Projections table below, net profit is projected at $ 11 million in year 3 and at $ 39 million in year 4, with net earnings per share at $1.38 and $ 4.88, respectively, in those years. The fifth year projections are for net profit of over a hundred million dollars, and net earnings per share approaching ten dollars. These projections are based on fairly conservative revenue projections.


For a 5 year financial proforma, please scroll down to the Table of Financial Projections

EXIT STRATEGY:

The Company anticipates an initial public offering within two to four years. If the Company does not go public, it will be a target for acquisition in the medical and/or veterinary technology industry. Management buy-out is also a conceivable alternative, contingent upon optimal conditions for the development of the start-up business.

MARKET POTENTIAL:

The customer base for the women's health line of BioSense products is comprised of several categories:

1 ... birth control,
2 ... aiding conception, and
3 ... non-reproductive diagnostic uses.

The different product introductions are planned in a logical sequence. First the most expensive product for the strongly motivated clientele desirous of the elusive pregnancy, at about $ 100.00 unit price. Only at the end of a logically structured FDA process, the launch of a birth-control aid at the highly affordable and yet profitable retail price of about $ 30.00. The product concept is one of a woman's daily companion, much like a lipstick (or, indeed, like a tampon applicator).

The largest market for BioSense Corporation is assumed to be the birth control market, which in the U.S. means approximately 60 million reproductive-age women. Of these, about 20 million are in their thirties, and many have postponed pregnancy until late in life. The medically recognized consequence is that the need for reversible birth control is growing. These mature women will be the most important user group of the Company's BioMeter.

There are two distinct categories of women experiencing difficulties with conceiving a baby: Clinical infertility is defined as the failure to conceive after 12 months of trying, and sub-fertility as involving less than a year of trying. In the self-help category of the sub-fertile women, up to 15 million Americans annually need timing help in their effort to conceive a baby. In the clinically infertile category, out of a total of 10 million infertile couples in the U.S., currently about 5 million actively seek the very costly clinical ART (Assisted Reproductive Technologies) treatments. These ART procedures require the kind of information the BioSense technology provides. The other 5 million clinically infertile women, who cannot afford the extremely expensive ART, naturally become part of the self-help market segment for the BioMeter, and are highly motivated customers.

In the category of non-reproductive diagnostic use, effective medical treatments require correct timing with respect to ovulation. The premenstrual syndrome afflicts an estimated 45 million American women, of which about 5 million women seek clinical help with the severe (PMDD) form of the syndrome. Further, up to 20 million of aging baby-boomers need help with the timing of hormone uptake in personalized hormone replacement therapy, to reduce the side effects and the cost of medication.

Last but not least, there are prospectively two disparate areas of application that may both help to lower the costs of medical care. One is the reliable projection of the expected date of delivery, based on the BioMeter data on the menstrual history of the expectant mother. The other is the speculatively expected capability to detect early stages of cervical cancer, and the diagnosis of pelvic inflammatory disease. The speculation is based on the mode of operation of the BioMeter. Also, developments in the animal use of the technology for birth alarm may lead to analogous fundamental improvements in human obstetric care.

FINANCIAL PROJECTIONS FOR 5 YEARS

	Year 1	Year 2	Year 3	Year 4	Year 5
Revenues	$ 270,000	$ 14,171,000	$ 44,484,000	$ 127,740,000	$ 219,327,480
Net Income	-$ 1,504,500	$ 8,775,750	$ 18,264,339	$ 59,451,514	$ 104,351,765
Net Earnings Per Share	-$ 0.24	$ 0.54	$ 1.38	$ 4.88	$ 8.62

For a more detailed discussion in the short form business plan of BioSense, click on the link to Business Plan of BioSense Corporation. You can also request the even more detailed hard copy of the business plan.