MGI MEDICAL

"OVERCOMING THE LIMITATIONS OF
CONVENTIONAL HEMODYNAMIIC MONITORING"

Business Opportunity

MGI Medical, LLC is a New Jersey company that was formed to commercialize a medical instrument called a "Pulse Flowmeter." 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 years, he developed the Pulse Flowmeter, which would almost certainly 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 and other non-vital organs; this keeps the blood pressure from falling, and that 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 compensated shock by directly measuring blood flow to the extremities. It is a non-invasive device that uses a comfortable electrode and presents no risk to the patient. It can detect the loss of just 10% of blood volume (one unit of blood), well before there is a drop in blood pressure, which occurs at about 40% loss of blood volume. When a patient loses 50% of blood volume they are at immediate risk for going into irreversible shock and dying.

Post-operative occult bleeding requiring intervention (transfusion and or re-operation) occurs in about 58% of hip fracture patients, 20% of liver transplants, 6.7% of open heart surgery patients,  and 1.6% % of patients undergoing abdominal minimally invasive laparoscopic surgery. The costs associated with these patients is very high and early detection can significantly reduce these costs. Also, approximately 720,000 patients/year in the US go to the Emergency Room (ER) for gastrointestinal (GI) bleeding. About 20% are discharged home. Of the 80% that are admitted, only 30% end up requiring intervention. The Pulse Flowmeter is able to detect the presence or absence of ongoing blood loss, so many of these unnecessary admissions could be avoided and it could be useful in managing the admitted patients.

There are about 5000 emergency rooms in the US with an average number of 25 beds per ER, resulting in 100,000 emergency room beds.  There are about an equal number of recovery room beds resulting in a potential domestic market of 200,000 pulse flowmeters. In addition, each monitored patient requires the use of a proprietary electrode. There are about 20 million surgical cases (cardiovascular, hip fracture, gastrointestinal, urinary, musculoskeletal, tonsillectomies) which require monitoring for post-operative blood loss and 720,000 GI bleeders per year so the potential number of electrodes is about 21 million. Thus, the addressable domestic sales potential is over $3 billion for monitors and $1 billion per year for disposables. A portable, battery powered version could be sent home with patients at risk for late occult bleeding. (A 35 year old man in our community died at home from an occult bleed after a tonsillectomy!)

For detection of occult blood loss in hospital ER’s and recovery rooms, we project, in year 5, $21M in gross sales, with a net profit of  $7.2M.  (We feel these projections are conservative because they are based on very small market penetration numbers and do not include potential sales to the military (which has expressed great interest in devices which can detect occult blood loss in field hospitals), for ambulatory units to be sent home with post-operative patients and for other non blood loss applications as enumerated below.

As for competition - while there are devices that can assist physicians in assessment of hemorrhagic shock, almost all of these are invasive technologies, must be used by skilled technicians, are lagging indicators, 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 one pending) and by extensive technical knowhow.

MGI Medical is owned by Dr. Lloyd Marks and 3 partners, who are also the principals of General Devices (GD), a leader in mobile telemedicine for 30 years. GD has developed the current version of the Pulse Flowmeter for MGI. Two million dollars of personal funds has been invested to date. Dr. Lloyd Marks, the founder, and Chief Medical Officer, is the former Chief of Pediatric Cardiology at the Children's Hospital of NJ, an MIT trained electrical engineer and inventor with 22 medical device patents and an MBA. We have an excellent team with an established track record. Curt Bashford, the interim COO is President and CEO of GD. Gregory Lowe, MGI's Chief Technology Officer, is the Director of Engineering at GD. Bin Zhu, PhD, is our Chief of Software development. We have recently added a very experienced serial entrepreneur as CEO, Dan Caligor,  who will vest his ownership stake based on milestones.,

Although we have proven that the Pulse Flowmeter can detect just 10% blood volume loss in blood donors we need to do clinical trials to determine how it will perform in an actual clinical environment, where decisions may be made based on it’s measurements. We will be testing the Pulse Flowmeter in ER’s where a reasonably high incidence of GI bleeders require intervention and on post-operative hip fracture patients who, on average, have 1 liter (2 units of blood) of occult post-operative blood loss, requiring multiple blood transfusions and/or trips back to the OR. Approximately 1% of the population (3 million people) undergo hip fracture surgery annually. These studies will provide the statistical power necessary to show how the device can detect ongoing blood loss in a busy clinical environment This information may prevent unnecessary hospital admissions for many GI bleeders (about $1 billion/year) and the high costs associated with transfusion and reintervention for post-operative bleeding.

Also, importantly, the Pulse Flowmeter is a “platform technology. We have recently filed a patent for a screening instrument to be used by primary care physicians to diagnose peripheral vascular disease that makes use of our technology. Furthermore the instrument may prove useful in monitoring heart failure patients after they have been discharged from the hospital to see if they are slipping back into heart failure at home; this allows their medications to be adjusted to prevent early readmissions (which are not paid for by Medicare).

MGI is immediately seeking funds to develop a mass producible, disposable electrode, to develop a new portable version of the Pulse Flowmeter that will be suitable for large scale manufacture and to obtain FDA approval. We project that the company will have self -sustaining revenue after 3 years. The anticipated exit strategy is by sale to a large medical device company after 5 years. We have excellent IP protection and there are no direct competitors.

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.

Contact Lloyd Marks, MD, MBA, FACC at 908-347-2662 or lmarks@mgimedical.com

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