STABILIZ Exec Summary 190301

Executive Summary 2019

Executive Summary Stabiliz Orthopaedics develops revolutionary approaches to bone fracture care. Our lead product is the first FDA-cleared plate and hybrid metallic/polymer screw system that changes with the body during fracture healing. This system addresses the shortcomings of current plate and screw implants by providing early fracture stability, then increasing the micromotion necessary for optimal bone healing. Stabiliz aims to reduce healing complications, curtail the incidence of additional surgeries and extensive rehabilitation, and thus lower healthcare costs.

03 The Problem Roughly 1.7 million Americans will be hospital- EXECUTIVE SUMMAR Y ized for a broken bone this year. The majority EFFECTIVE MOTION WINDOW | 0.2-1.0MM of these fractures will be surgically repaired LOCKED PLATE NEAR with rigid locking plate and screw systems. CORTEX Ideal for early fracture healing, this system prevents the micromotion necessary for AXIAL AXIAL proper bone healing during the later phases LOAD LOAD of the fracture healing process. Alternative- ly, clinicians may use traditional non-locking FAR plate and screw systems, which permit mi- CORTEX cromotion but do not achieve the stability necessary for the early phases of the fracture Fig. 1 Illustration depicting how the rigidity of locked plating causes the plate to bend healing process. Both systems may delay or while still inhibiting sufficient interfragmentary motion. prevent bones from completely healing, leading to additional surgeries and extensive rehabilita- fractures, resulting in hundreds of millions of dollars in additional healthcare tion. The high overall rigidity of locked plating spending annually. Clinicians seek a single product that can provide both the has led to healing difficulties in up to 23% of early rigidity and later micromotion needed for optimum bone healing. The Stabiliz Solution Stabiliz has solved the problem of poor healing by creating a Fig. 2 Illustration depicting dynamic plate and screw system that delivers the early ben- Stabiliz Polymer efits of locked plating and the late benefits of non-locked plat- Locking (SPL) Screw changing ing. Our patented technology combines the best of both worlds over time. by using a polymer locking interface between the screw and plate which resorbs into the body over time. As a result, the AT TIME TIME OF system remains locked during early healing and allows for SURGERY (4-6 MONTHS) ELAPSED increasing amounts of motion as the biodegradable polymer is naturally absorbed by the body. This natural transformation decreases stiffness, reduces stress shielding and allows the motion needed to promote optimal bone healing. In developing the first truly dynamic plate and screw system Bone healing is supercharged by micromotion, when that — one that changes with the body as it heals — we uniquely motion is activated at the right time in the healing process. merged two areas of established science. We took the ben- Knowing this, Stabiliz brings a balanced system in tune with efits of flexible fixation and joined them with the benefits of the body’s natural healing response. Our devices allow sur- delayed motion to enhance bone healing when it’s neces- geons to follow standard repair principles, with no changes sary, with the goal of avoiding the inconvenience and ex- in established surgical procedures. penses of extra surgeries and further rehabilitation.

Market Summary According to iData Research, the US orthopaedic trauma market was estimated at $4.91B in 2013, with the plate and screw segment accounting for $1.78B of all trauma sales. Forecast to grow to $3.42B by 2020, this implies a growth rate in excess of 9%. Rigid locking plates ac- counted for nearly 60% of all plates and screws implant- ed, while costing approximately 4 times more than non- locked systems. A handful of large companies, led by Depuy Synthes, Stryker, and Zimmer Biomet, hold the majority of the plate and screw market. Smaller niche The Stabiliz companies remain acquisition targets as major players seek to incorporate novel technologies into their stag- Advantage nant device lines. The widening gap between a grow- ing market and minimal innovation has left the trauma space ripe for a market transformation. The primary advantage of the Stabiliz Fixation System over competitors’ current attempts to promote micromo- Competitor tion is its ability to transition over time, delivering early fixation and late-stage micromotion, coordinated with Products the healing process, in a single product. Additionally, the Stabiliz system is simple to implant as it follows tradi- tional surgical procedures. There are no requirements on While locked plating continues to dominate the market, minimum quantity or placement options for Stabiliz SPL an industry-wide movement toward micromotion has screws. SPL screws provide bi-cortical fixation (they do substantiated the clinical need for such technologies. not deform), thereby avoiding the creation of large holes This is evidenced by the 2010 launch of Zimmer Biom- in the bone under the plate. et’s MotionLoc technology. MotionLoc screws deform, creating an internal pendulum, which produces micro- To facilitate user adoption, Stabiliz also offers a full kit motion. Behaving statically, this product promotes mo- of traditional implants, including stainless steel locking tion at the fracture site from the time of implantation screws, cancellous screws and cortical screws. Further, onwards, failing to address the need for early rigidity to Stabiliz has streamlined surgical instrumentation to an ef- aid the healing process. Other drawbacks include place- ficient complement of simple, multi-function tools that are ment restrictions for and a minimum required quantity easy to use and serve to improve the surgeon experience. of screws, additional operative steps, and the generation of large holes in the bone underneath the plate as the deforming screw impacts the bone under load.

05 Intellectual EXECUTIVE SUMMAR Y Property Regulatory Stabiliz holds three issued US utility patents with broad FDA 510(k) clearance has been granted for the Stabiliz claims. An additional three US filings that further define Fixation System, including indications for our target launch and reinforce our intellectual property position are cur- and subsequent product line expansions. rently pending. We also have patents pending in key for- eign markets with high reimbursement: Canada, Japan, and the European Union. Business Strategy Stabiliz intends to profit from its innovations through a variety of opportunities including direct commercial- ization, technology license, distribution partnership and acquisition. Current efforts toward direct commercializa- tion are focused on a limited product release with Stabiliz acting as the original equipment manufacturer. Launch of and engaging independent sales representatives and the Stabiliz Fixation System with SPL screws is anticipat- distributors to expand its physician user base. All prod- ed for the third quarter of 2017. To this end, Stabiliz has uct releases will remain within the scope of current identified ten surgeons at trauma centers in California, trauma CPT coding and will be reimbursed in accor- Texas, Florida, and several states in the Northeast who dance with existing codes. have expressed a desire to become early adopters of the Stabiliz technology. Stabiliz will then drive product and Additionally, Stabiliz is currently exploring licensing regional expansion simultaneously by broadening its deals that would complement its own product release, product platform with timed new product launches such as applications for the foot/ankle and wrist/hand.

Management DOUGLAS L. CERYNIK, MD, MBA DIRECTORS President & CEO, Director Stabiliz co-founder and co-inventor of the Stabiliz BRADLEY S. GROSSMAN technology. Previously, Doug served as Director of SVP, Marketing, Director Orthopaedic Research, Drexel University College of Brad is a Stabiliz co-founder and an Medicine. He has over 12 years experience in ortho- experienced entrepreneur with a strong paedics with multiple patents, grants, regulatory track record in marketing and operations. successes and over 25 peer-reviewed publications. DAVE WASHBURN BOB PETERHANS CFO, Acuitive Technologies Dave has over 36 years of orthopedic COO, Director start-up experience having successfully Previously, Bob served as Philips Healthcare’s built and sold multiple businesses General Manager, Emergency Care & Resuscita- including a $110M acquisition by tion Businesses. From 2007-2010, Bob was Pres- Zimmer and a $120M acquisition ident of Zimmer Trauma, where he oversaw the by Stryker. launch of Zimmer’s MotionLoc plate and screw system and had full P&L responsibility over a $250 JENNIFER HARTT million global business. From 2006-2007, he was a (Advisor) Director of Investments, Life Sciences, General Manager at Zimmer Trabecular Metal. Ben Franklin Technology Partners of Southeastern Pennsylvania DAVID G. JENSEN CCO, Director David spent over 21 years at Acumed contribut- ing to the design, marketing and launch of several successful products in the orthopaedic trauma segment. He led the company through 5 years of double-digit revenue growth (from $2MM to $200MM). R. MICHAEL ADELIZZI SVP, Quality, Director Mike is a Stabiliz co-founder and biomedical en- gineer with experience in medical device engi- neering, implementation & integration, product development and commercialization, and medi- cal device startups. He is a company co-founder.

07 Funding Strategy To date, the company has raised $2.2M while validating the technology, securing multiple US E X E C U T I V E S U M M A R Y patents, obtaining FDA clearance, building inventory and launching its initial product. Having successfully executed our plan, Stabiliz is seeking capital for its commercial growth phase. We currently seek to raise $1.5M to further product line and market expansion. Ultimately, we expect to attract interest from the strategics who primarily innovate through acquisition. Summary Financial Projections INCOME STATEMENT (USD, in thousands) 2019 2020 2021 2022 2023 Total Revenue $399 $2,558 $6,039 $15,410 $23,577 Cost of Goods Sold $193 $1,100 $2,114 $5,393 $8,252 Gross Profit $205 $1,458 $3,925 $10,016 $15,325 Total Operating Expenses $702 $1,097 $2,083 $5,316 $8,134 Income from Operations $(496) $361 $1,842 $4,700 $7,191 Use of Funds 6% Inventory 9% 27% Product Development Marketing & Sales Administration, Executives & Staff 6% 41% Consultants 11% Office, Insurance, etc.

STABILIZ ORTHOPAEDICS | 574 WHARTON BOULEVARD | EXTON, PA 19341 [email protected] | 610.458.8555 | STABILIZORTHO.COM