MGI MEDICAL

"OVERCOMING THE LIMITATIONS OF
CONVENTIONAL HEMODYNAMIIC MONITORING"

Business Opportunity

MGI Medical, LLC is a New Jersey company formed to commercialize a new medical monitoring instrument called a Pulse Flowmeter. The Pulse Flowmeter can markedly improve patient care and save hospitals a considerable amount of money.

 

When Dr. Marks, the founder of MGI Medical, was a medical student he witnessed the death of a patient caused by undetected internal bleeding following a minor surgical procedure. He felt that there had to be a way to detect that this was happening using a technological solution. Over the following few years, he developed the Pulse Flowmeter, which would have prevented the death of this patient.

 

How could a patient bleed to death, undetected, in a university hospital?  The reason is that when a patient loses blood, the body restricts blood flow to the extremities; this keeps the blood pressure from falling, and that, in turn, keeps the blood flowing to the heart and brain. This condition is called "compensated shock." But since the blood pressure is maintained in compensated shock, the doctors and nurses may be unaware that their patient is getting into serious trouble. The Pulse Flowmeter detects this state of compensated shock by directly measuring the blood flow to the extremities. It is a non-invasive device that uses a comfortable electrode and presents no risk to the patient.

 

Knowing when to give blood or other fluids to a patient, and just as importantly, when not to give blood or other fluids to a patient is a vexing problem. Unnecessary blood transfusions are responsible for $2 billion of needless hospital expenses annually in the United States alone. When a patient gets a blood transfusion, their hospital costs increase by an average of $9000. This is approximately the cost of a Pulse Flowmeter. Thus, this instrument pays for itself the very first time that an unnecessary blood transfusion is prevented. Also, it has been shown that use of non-invasive blood flow measuring technology can reduce ICU stay by about 2 days on average, which accounts for about $8000 in hospital costs. Multiple interviewed physicians have indicated that this information would be extremely useful to them and that the estimated instrument cost of $10,000 would not be an impediment to purchase.

 

The addressable domestic market includes 76,200 operating rooms, 114,300 recovery room beds and 78,000 ICU beds for a total of 268,500 Pulse Flowmeters. In addition, each use requires a disposable proprietary electrode. In the US alone, there are 38 million surgical cases per year and 5.7 million ICU patients per year (2 electrodes per ICU stay) for a total of 49.4 million disposables per year. Thus, at our projected sales prices, the addressable domestic sales potential is $2.7 billion for monitors and $1.2 billion per year for disposables. In year 5 we project $7.4 million net income on $21 million of sales. Projected ROI in the fifth year is 258%. Net present value by discounted cash flow analysis is $10.8 million.

                                                                                                                        

Regarding competition - while there are devices that can assist physicians in assessment of shock, almost all of these are invasive technologies and/or provide questionably useful information. There are no direct competitors to the Pulse Flowmeter as it is the only device that provides robust, non-invasive, safe and continuous measurement of peripheral blood flow. The technology is protected by 7 US patents and by extensive technical knowhow.

 

MGI Medical is owned by Dr. Lloyd Marks and 4 partners, who are also the principals of General Devices (GD), a leader in mobile telemedicine for 30 years. GD has developed current version of the Pulse Flowmeter for MGI. Two million dollars of personal funds has been invested in MGI to date.

 

MGI Medical has an excellent team with an established track record. Dr. Marks, the founder, president and Chief Medical Officer, is the former Chief of Pediatric Cardiology at the Children's Hospital of New Jersey, an MIT trained electrical engineer, inventor with 26 patents and MBA. Curt Bashford, President and CEO of GD has 30 years' experience in the medical device industry. Gregory Lowe, MGI's Chief Technology Officer, is the Director of Engineering at GD. Bin Zhu, PhD, our Chief of Software development has 25 years' experience developing medical device software. Lynn Youngs, MGI's business and financial advisor is a CPA, successful serial entrepreneur and the Director of the Entrepreneurial Center at the University of Tennessee. Also, MGI Medical has a seasoned and enthusiastic advisory board of anesthesiologists and cardiologists.

 

The current version of the Pulse Flowmeter is suitable for clinical trials and low volume manufacture and sales. It is currently being evaluated at the Combat Casualty Care Center at Fort Sam Houston in San Antonio, by the anesthesia department at Brigham and Women's Hospital in Boston and by the anesthesia department at the University of Cincinnati.

 

It is important to note that the Pulse Flowmeter is a platform technology. Future embodiments of the device will be used for management of heart failure and peripheral vascular disease, both representing very large markets.

 

MGI is seeking $1 million to develop a mass producible, disposable electrode, to develop a new version of the Pulse Flowmeter that will be suitable for large scale manufacture and to obtain FDA approval. One year after initial funding we will require $1.5 million to support manufacturing, marketing and sales. We plan to have a full time CEO and CFO by 18 months. Two years from initial funding we will require an additional $1.5 million to sustain the company until it is self-sufficient which will occur in the third year. The anticipated exit strategy is by sale to a large medical device company after 5 years.

 

The Pulse Flowmeter meets a specific, well recognized medical need in a large market. It provides an ongoing source of revenue because it uses a disposable electrode. MGI medical has an excellent management team and a plan to achieve profitability by the third year of operation. We believe that MGI medical will be an attractive target for buyout by its fifth year of operation.

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