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Overview of the Urological and Gynecological Devices Market January 2009 Brocair Partners Industry Survey Series Brocair Partners LLC 317 Madison Avenue, 21st Floor New York, NY 10017 212.500.5015 www.brocair.com Table of Contents 1. Select Participants in the Urological Devices Market..............................................................................................................................3 2. Select Participants in the Gynecological Devices Market.........................................................................................................................4 3. Profiles of Select Participants in Urological and Gynecological Devices Market..........................................................................................5 4. Comparable Companies Analysis – Urological and Gynecological Devices Market....................................................................................14 5. Comparable Credit Analysis – Urological and Gynecological Devices Market...........................................................................................15 6. Recent Transactions – Urological and Gynecological Devices Market.....................................................................................................16 7. Indexed Stock Price Performance......................................................................................................................................................24 8. Disclaimer......................................................................................................................................................................................25 9. Contact Information.........................................................................................................................................................................26 Disclaimer This report has been exclusively prepared by Brocair Partners LLC (“Brocair Partners”). This document should not be in any way construed as providing investment advice or investment services. This report does not constitute an offer or invitation to purchase assets or securities of any kind in the companies described herein. This report is being furnished to you for informational purposes only and on the condition that it will not form the basis for any investment decision. Brocair Partners makes no recommendation whatsoever of the merits of any investment in any company listed in this report. Brocair Partners does not provide any warranty or make any representation of the correctness or the completeness of any information provided. Please see page 25 for full disclaimer. Section 1 1. Select Participants in the Urological Devices Market Select Participants in the Urological Devices Market • Urological conditions include: kidney stone disease (urolithiasis), incontinence in men and women, benign prostate hyperplasia (BPH, noncancerous swelling of prostate occurring in men with increasing age), prostate cancer and erectile dysfunction in men • Some of the devices used to treat the above conditions include: stone retrieval devices and catheters; foley urethral bladder catheters; intermittent catheters; prostatic stents; synthetic slings, and penile implants • Factors influencing the adoption of urological medical devices include: an increased number of patients diagnosed with the relevant conditions; the aging of the baby boomer population; commercialization of new techniques/procedures and the associated devices; and ability and the willingness of local healthcare systems to pay for these treatments Company Prostate Cancer BPH Erectile Dysfunction American Medical Systems BioLitec Boston Scientific C R Bard Coloplast Cook Group Incorporated Dornier MedTech GmbH EDAP TMS SA Elron Electronic Industries Endocare Femcare-Nikomed Healthtronics Hollister Intuitive Surgical InvivoSense AS Johnson & Johnson Lumenis Mediwatch Medtronic Misonix Nucletron B.V. Olympus Oncura Plethora Solutions ProstaLund Operations AB Rochester Medical Siemens Tactx Medical/Produxx Inc. Teleflex Theragenics Trimedyne United Medical Systems Unomedical Urologix Uroplasty Utah Medical Verathon Source: Company filings and selected institutional research. Overview of Urological and Gynecological Devices Market p.3 Urinary Incontinence Premature Ejaculation Fecal Incontinence Urinary Retention Bladder Cancer Kidney Cancer Stone Management Section 2 2. Select Participants in the Gynecological Devices Market Select Participants in the Gynecological Devices Market • Gynecological conditions include: menorrhagia, fibroids, pelvic inflammatory disease, uterine prolapse, endometriosis, chronic pelvic pain and uterine cancers • There are a wide range of devices and tools for treating the above conditions, including: endometrial ablation devices, endoscopes, laparoscopes, cystoscopes, falloposcopes, hysteroscope systems, fluid management systems, hysteroscopy procedure devices, etc. • Factors influencing the adoption of gynecological medical devices include: the aging of the baby boomer population and an enormous untargeted patient population and technological breakthroughs that enable doctors to perform increasingly complex, minimally invasive surgeries with greater ease Company Pelvic Organ Prolapse American Medical Systems Becton Dickinson & Co Boston Scientific C R Bard Coloplast Conceptus Cook Group Incorporated Cytocore Femcare-Nikomed Guided Therapeutics Hologic Intuitive Surgical Johnson & Johnson Lumenis Mediwatch Misonix Nucletron B.V. Siemens SonoSite United Medical Systems Uroplasty Utah Medical Source: Company filings and selected institutional research. Overview of Urological and Gynecological Devices Market p.4 Breast Cancer Menorrhagia Birth Control Fetal Monitoring Cervical Cancer Endometrial Cancer Fibroids Section 3 3. Profiles of Select Participants in Urological and Gynecological Devices Market Company (Minnetonka, MN) Description • Founded in 1972, American Medical Systems is engaged in developing and delivering solutions to physicians treating men’s and women’s pelvic health conditions • The Company’s male product portfolio includes a series of semi-rigid malleable prostheses and inflatable prostheses (AMS 700, AMS 800); and the Tactile Pump and Momentary Squeeze Pump Profiles of Select Participants in Urological and Gynecological Devices Market Key Financial Data ($ in millions) 2003A 2004A 2005A 2006A 2007A 2008E 2009E Sales $168.3 $208.8 $262.6 $358.3 $463.9 $497.2 $522.7 Sales growth – 24.1% 25.8% 36.5% 29.5% 7.2% 5.1% EBITDA $52.3 $67.2 $86.9 $102.5 $111.0 $137.6 $149.8 EBITDA Margin 31.1% 32.2% 33.1% 28.6% 23.9% 27.7% 28.7% 2005A 2006A 2007A 2008A 2009E 2010E Market Cap Enterprise Value $609 $1,165 • The Company’s female product portfolio includes a range of systems to restore female continence, including the AMS 800 Urinary Control System (approved for use in women outside the U.S.) and the In-Fast, SPARC, Monarc, BioArc and MiniArc systems • The Company owns ~250 issued U.S. patents and many international patents (Humlebaek, Denmark) • Founded in 1957, Coloplast is engaged in the development, manufacture and marketing of medical devices and services • The Company’s product range is divided into three principal segments: – Ostomy care segment for people whose intestinal outlet has been surgically rerouted through the abdominal wall. Key products include SenSura, Easiflex and Corsinel – Urology and continence care segment for people with problems in the urinary system or in the male reproductive system. Products include intermittent catheters, urisheaths, urine bags, collectors and pads, penile implants, urinary slings, pelvic organ prolapse grafts etc. – Wound and Skin Care segment, which specializes in ostomy-related wounds and provides therapy for skin compromised by disease, trauma, stoma, radiation, incontinence and immobility Source: Company filings and selected institutional research. Note: Market Cap and Enterprise Value as of 12/29/2008. Thomson Consensus Estimates. Overview of Urological and Gynecological Devices Market p.5 ($ in millions) Sales Sales growth EBITDA EBITDA Margin 2004A $1,159.6 $1,190.8 $1,281.9 $1,536.6 $1,617.1 $1,749.4 $1,887.2 2.7% 7.7% 19.9% 5.2% 8.2% 7.9% $247.4 $262.5 $260.6 $309.4 $317.2 $374.0 $420.6 21.3% 22.0% 20.3% 20.1% 19.6% 21.4% 22.3% – Market Cap $2,981 Enterprise Value $3,636 Section 3 Profiles of Select Participants in Urological and Gynecological Devices Market Company Description (Mountain View, CA) • Founded in 1992, Conceptus is engaged in developing, manufacturing and marketing the Essure permanent birth control system, a medical device for women approved for marketing in the U.S. by the FDA • The Essure system uses a micro-insert that is delivered into a woman’s fallopian tubes to provide permanent birth control by causing a benign tissue in-growth that blocks the fallopian tubes (cont’d.) Profiles of Select Participants in Urological and Gynecological Devices Market Key Financial Data ($ in millions) 2003A 2004A 2005A 2006A 2007A 2008E 2009E $7.7 $11.6 $21.2 $41.9 $64.4 $103.2 $133.2 Sales Sales growth EBITDA 50.8% 82.3% 97.9% 53.8% 60.2% 29.1% ($38.8) – ($25.3) ($21.7) ($18.4) ($12.5) $3.7 $30.5 NM NM NM (44.0%) (19.4%) 3.6% 22.9% 2003A 2004A 2005A 2006A 2007A 2008E 2009E $0.4 $0.2 $0.1 $0.1 $0.1 NA NA NA EBITDA Margin Market Cap $449 Enterprise Value $512 – The Essure procedure is typically performed as an outpatient procedure and is intended to be a less invasive and a cheap alternative to tubal ligation, the leading form of birth control – The Essure device is manufactured by Accellent, Inc, located in Mexico and the U.S. • As of January 30, 2008, the Company had 20 U.S. patent pending applications, 26 U.S. issued patents, 29 foreign patent applications pending and 61 issued foreign patents (Chicago, IL) • Founded in 1998, CytoCore is a clinical diagnostics company engaged in the design, development and sale of screening and diagnostic products; and therapeutic delivery products in women’s healthcare • The Company is developing a proteomic-based method of screening and diagnosis for endometrial and cervical cancer • The Company’s major product, CytoCore Solutions System, is comprised of four distinct components; the SoftPAP Cervical Cell Collector, Protein-based Biochemical Cocktails and Slide Based Tests, the AIPS Microscope Platform and a Drug Delivery System for treating cervical lesions • In March 2008, the Company entered into a distribution agreement with CoMedical for the distribution of the SoftPAP collector in Alaska, Washington, Idaho, Montana and Oregon Source: Company filings and selected institutional research. Note: Market Cap and Enterprise Value as of 12/29/2008. Thomson Consensus Estimates. Overview of Urological and Gynecological Devices Market p.6 ($ in millions) Sales Sales growth EBITDA EBITDA Margin (35.9%) (51.9%) (19.7%) (11.7%) NA ($5.7) – ($4.1) ($1.0) ($4.7) ($7.8) NA NA NM NM NM NM NM NA NA Market Cap $22.7 Enterprise Value $22.6 Section 3 Profiles of Select Participants in Urological and Gynecological Devices Market Company (Vaulx-enVelin, France) Description • Founded in 1979, EDAP TMS S.A. is a holding company that develops, produces and markets minimally invasive medical devices, mainly for urological diseases through two divisions: • High Intensity Focused Ultrasound (HIFU) – Key product is Ablatherm, an ultrasound guided HIFU device for the treatment of organ-confined prostate cancer (cont’d.) – As of December 31, 2007, the HIFU division had 61 patents consisting of 27 in the U.S., 25 in the EU and Japan and 9 in Israel and RoW Profiles of Select Participants in Urological and Gynecological Devices Market Key Financial Data ($ in millions) Sales Sales growth EBITDA EBITDA Margin 2003A 2004A 2005A 2006A 2007A 2008E 2009E $25.3 $31.0 $29.4 $28.3 $31.2 NA NA NA 22.7% (5.3%) (3.7%) 10.1% NA ($7.1) – $0.8 ($0.2) ($2.2) ($3.6) NA NA (28.0%) 2.4% (0.6%) (7.8%) (11.6%) NA NA 2003A 2004A 2005A 2006A 2007A 2008E 2009E $19.6 $24.2 $28.3 $28.0 $29.7 $32.3 NA Market Cap $12.7 Enterprise Value $10.0 • Urology Devices and Services (UDS) – Key product includes Lithotripters (Sonolith Praktis, Sonolith Vision and Sonolith I-Sys) for the treatment of urinary tract stones by means of Extracorporeal shock-wave lithotripsy (ESWL) technology (Irvine, CA) – As of December 31, 2007, the UDS division had 16 patents consisting of 5 in the U.S., 8 in the EU and Japan and 3 in Israel and RoW • Incorporated in 1994, Endocare is engaged in the development, manufacture and distribution of health care products for cryoablation Sales growth 23.3% 16.9% (1.0%) 6.1% 8.9% NA ($27.3) – ($12.7) ($11.3) ($14.5) ($9.0) NA NA NM (52.6%) (39.8%) (51.7%) (30.3%) NA NA EBITDA Margin • The Company’s key marketed products include: Market Cap $5.9 Enterprise Value $1.5 – Cryocare CS System – A Cryocare Surgical System with onboard ultrasound – CryoGuide – A computerized cryoprobe placement, simulation and guidance system for cryoablation – Urethral Warming Catheter – Disposable catheter used in prostate cryoablation procedures • As of December 31, 2007, the Company had 46 issued U.S. patents and 55 foreign patents relating to cryoablation technology Source: Company filings and selected institutional research. Note: Market Cap and Enterprise Value as of 12/29/2008. Thomson Consensus Estimates. p.7 Sales • Cryoablation is a process to induce extremely low temperatures inside the body to destroy prostate, kidney and other tumors – Cryocare Surgical System – A cryoablation system with eight cryoprobe capability Overview of Urological and Gynecological Devices Market ($ in millions) EBITDA Section 3 Profiles of Select Participants in Urological and Gynecological Devices Market Company (Norcross, GA) Description • Founded in 1992, Guided Therapeutics is engaged in the development of products for noninvasive cervical cancer detection and diabetes markets • The Company’s proprietary Biophotonics technology (using light and other energy to diagnose and monitor disease states) is used for the non-invasive detection of cancers, including cervical cancer (cont’d.) Profiles of Select Participants in Urological and Gynecological Devices Market Key Financial Data ($ in millions) Sales Sales growth EBITDA 2003A 2004A 2005A 2006A 2007A 2008E 2009E $1.6 $1.1 $1.0 $0.6 $1.0 NA NA (32.3%) (8.4%) (38.8%) 72.3% NA NA ($6.0) – ($5.8) ($4.4) ($3.0) ($3.4) NA NA NM NM NM NM NM NA NA EBITDA Margin Market Cap Enterprise Value $5.4 $16.3 • The Company’s LightTouch device uses the Biophotonics technology to detect chemical and structural changes in the cervical tissue – The device is currently undergoing tests as part of a U.S. FDA pivotal trial in which more than 1,300 women have been tested • The Company has been granted 15 U.S. patents and five pending patent applications related to cancer detection (Irvine, CA) • Founded in 1972, HealthTronics provides healthcare services and manufactures medical devices, primarily for the urology market through two segments: Sales • Medical Products 2003A 2004A 2005A 2006A 2007A 2008E 2009E $61.4 $87.1 $152.3 $142.9 $140.4 $167.6 $191.0 Sales growth – 41.8% 74.7% (6.2%) (1.7%) 19.3% 14.0% EBITDA $30.6 $40.5 $77.4 $54.6 $59.8 $75.1 $90.8 – Manufactures, sells and maintains lithotripters and their related consumables EBITDA Margin 49.8% 46.5% 50.8% 38.2% 42.6% 44.8% 47.6% – Lithotripters are devices that pulverize kidney stones by passing shock waves through a water-filled tub in which the paitents sits Enterprise Value • Urology Services – Provides services related to the operation of the lithotripters, including scheduling, staffing, training, quality assurance, maintenance, regulatory compliance and contracting with payors, hospitals and surgery centers – Deploys three technologies in treating benign prostate disease: Trans-urethral Microwave Therapy, Photo-selective Vaporization of the Prostate and Trans-Urethral Needle Ablation Source: Company filings and selected institutional research. Note: Market Cap and Enterprise Value as of 12/29/2008. Thomson Consensus Estimates. Overview of Urological and Gynecological Devices Market p.8 ($ in millions) Market Cap $82 $120 Section 3 Profiles of Select Participants in Urological and Gynecological Devices Market Company (Norcross, GA) (cont’d.) Description • Founded in 1995, Intuitive Surgical is engaged in the design, manufacture and marketing of the da Vinci Surgical Systems • The Company’s da Vinci Surgical System provides the surgeon with the intuitive control, range of motion, tissue manipulation capability and 3-D vision characteristic of open surgery, while simultaneously allowing the surgeon to work through the small ports of minimally invasive surgery Profiles of Select Participants in Urological and Gynecological Devices Market Key Financial Data ($ in millions) Sales Sales growth 2003A 2004A 2005A 2006A 2007A 2008E $91.7 $138.8 $227.3 $372.7 $600.8 $898.1 $1,115.9 51.4% 63.8% 63.9% 61.2% 49.5% 24.2% ($7.7) $28.4 $75.5 $117.4 $219.8 $339.1 $419.7 EBITDA Margin (8.4%) 20.5% 33.2% 31.5% 36.6% 37.8% 37.6% Market Cap $4,823 Enterprise Value $4,415 ($ in millions) 2003A 2004A 2005A 2006A 2007A 2008E 2009E NA NA $0.0 $0.1 $0.0 NA NA NA EBITDA – 2009E • Introduced in January 2006, the da Vinci Surgical System finds applications in various urology (Prostatectomy, Nephrectomy, Cystectomy) and gynecology procedures (Hysterectomy, Myomectomy, Sacral Colpopexy) • As of December 31, 2007, the Company had over 140 U.S. patents and over 60 foreign patents (Trondheim, Norway) • Founded in 1998, Invivosense ASA is a medical technology company that develops disposable invasive sensors for cancer diagnosis and monitoring • The Company’s first marketed product, Temperature Measuring System (TMS), a multi temp device, uses the platform technology of biophysics and fibre optics to detect extreme temperature changes • The Company’s disposable biosensor, Invivosense Prostate Specific Antigen (PSA), for staging of prostate cancer is currently in clinical testing phase at The Norwegian Radium Hospital in Oslo, Norway • The Company’s sensor for Continuous Glucose Monitoring (CGM), is in an experimental phase and is currently undergoing preclinical studies • The Company has 6 issued patents and 7 pending patent applications within the field of fibre optic biosensors, optical measuring and diagnostics of prostate cancer Source: Company filings and selected institutional research. Note: Market Cap and Enterprise Value as of 12/29/2008. Thomson Consensus Estimates. Overview of Urological and Gynecological Devices Market p.9 Sales NA NA NM NM NA EBITDA Sales growth – NA NA ($0.1) ($0.2) ($1.0) NA NA EBITDA Margin NA NA NM NM NM NA NA Market Cap $5.3 Enterprise Value $3.1 Section 3 Profiles of Select Participants in Urological and Gynecological Devices Market Profiles of Select Participants in Urological and Gynecological Devices Market Company Description Key Financial Data (Rugby, UK) • Founded in 1996, Mediwatch is engaged in the development of primary care products used in the diagnosis of urological disorders and early prostate cancer detection Sales • The Company operates through three business segments: – Ultrasound – Offers portable and clinic-based diagnostic ultrasound imaging systems such as Portascan+, Multiscan and Multiscan PVR (cont’d.) ($ in millions) Sales growth EBITDA EBITDA Margin 2003A 2004A 2005A 2006A 2007A 2008E 2009E $1.6 $2.1 $2.6 $2.6 $8.3 $13.2 $14.6 29.5% 22.8% 0.0% 221.6% 60.1% 9.9% ($1.2) – ($1.1) ($0.9) ($0.8) $0.4 NA NA (73.7%) (52.0%) (35.0%) (30.9%) 4.3% NA NA 2003A 2004A 2005A 2006A 2007A 2008E 2009E $0.0 $0.0 $0.0 $7.5 $8.4 $14.0 $17.4 24.7% Market Cap $8.3 Enterprise Value $9.0 – Urodynamics – Offers uroflow and urodynamic systems such as Urodyn 1000, Portaflow, Duet Logic G2, Duet Encompass, Duet Sensic G3, Erectease and Disposables – Biochemistry – Offers point-of-care testing devices for PSA and bladder cancer such as PSAWatch, Bioscan and BTA • The Company has strategic partnerships with Accelerated Care Plus Corp, Bioengineering Laboratories and Device Technologies Pty, to supply a range of diagnostic urological products (London, UK) • Founded in 2003, Plethora is engaged in the development of drugs and medical devices for the treatment of urological disorders effecting both men and women Sales growth – NM NM NM 11.8% 66.2% $0.0 ($3.8) ($8.4) ($8.7) ($15.2) ($8.1) $2.3 NM NM NM NM NM (57.9%) 13.35% EBITDA Market Cap $11.4 • The Company’s female sexual health portfolio comprises of products focused on the treatment of urinary incontinence and gynecological pain Enterprise Value $24.3 • The Company has a collaborative agreement with Johnson & Johnson for PSD401 and codevelopment agreement for PSD506 with Roche Pharmaceuticals Source: Company filings and selected institutional research. Note: Market Cap and Enterprise Value as of 12/29/2008. Thomson Consensus Estimates. p.10 Sales • The Company’s male sexual health portfolio comprises of a range of vacuum erection devices (ErecAid, PSD502 and PSD510/Invicorp) for the treatment of erectile dysfunction • The Company has an exclusive agreement with Sciele Pharma for commercializing PSD502 for premature ejaculation in the U.S. Overview of Urological and Gynecological Devices Market ($ in millions) EBITDA Margin