Medifocus, Inc. OTCQX: MDFZF TSXV: MFS www.medifocusinc.com Develops and commercializes minimally invasive focused heat thermotherapy systems for the treatment of cancer and other diseases January 2014
Safe Harbor Statement Except for historical information, the statements made in this presentation are forward-looking statements involving significant risks and uncertainties. These risks and uncertainties, including those related to the future financial projections and business strategy of the Company, can be found in the Company s filings with the regulatory authorities. 2
Technology Platforms Covered by 100+ issued and pending patents Endo-thermotherapy Platform A catheter-based focused heat technology platform Prolieve Thermodilatation System: FDA PMA approved (Benign Prostatic Hyperplasia BPH treatment) Future applications: rectal, cervical, prostate and esophageal cancers Adaptive Phased Array (APA) Microwave Focusing Platform Precise focusing technology invented by MIT for U.S. DOD APA 1000 Breast Cancer System in Phase III trial Future applications: other surface, subsurface and deep-seated cancer. 3
Prolieve: Revenue-Generating FDA approved for the treatment of BPH (enlarged prostate) Over $100 million invested in Prolieve commercialization 50% of men over 50, and 90% of men over 70 are affected by BPH Current Medicare reimbursement rate: $2200 4
Prolieve Revenue Growth Since Acquisition $1,400 Prolieve Revenue (in CN$1000's) $1,200 $1,000 $800 $600 $400 $200 $- Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 5
APA 1000 Breast Cancer System - Phase III Over $25 million invested in R&D Significantly increases tumor shrinkage and breast conversation Pivotal Phase III already initiated in U.S. and Canada High probability of meeting end point Early approval possible with results from 50% patients (119) Time Frame Start: 4 th Quarter 2013 Midpoint analysis 2015 Completion: 2016 Expected approval: 2017 6
Product Strategy For Prolieve: 1. Continue to grow revenue and expand Prolieve market share in the US. 2. Achieve positive cash flow for Prolieve operation in 2014 3. Establish distribution network in major international markets For APA 1000: 1. Accelerate Phase III clinical trials by activating more sites in the U.S. 2. Initiate new sites in China and India to expedite patient enrollment. For Future Product Pipeline: collaboration with strategic partners to develop new products for treatment of various cancers utilizing our technology platforms 7
Financial Strategy Maxim Group engaged to provide financial advisory services File Form 20-F registration statement to become a SEC reporting company Raise sufficient capital in Q1-2014 to provide working capital for: Expansion of the Prolieve business in U.S. and worldwide Accelerate Phase III trial for the APA 1000 Breast Cancer System Raise additional capital for future product development, international business expansion and uplisting to a U.S. national exchange in the second half of 2014 8
Industry Overview 9
BPH Treatment Options and Market Potential Traditional Surgery TURP Thermotherapy (Prolieve & others) and Laser Surgery Surgical and Minimally Invasive Treatment Options for BPH is worth $150 million in the US Medifocus goal is to become the market leader in this space due to Prolieve s safety profile and effectiveness Medifocus could convert patients on both the watchful waiting list and drug therapy with the Prolieve s superior safety profile and effectiveness Patients on Prescription Drug Alpha-blocker 5 reductase inhibitors Combination $4 billion in major industrialized countries Two large target groups for the more effective, safer and cheaper Prolieve treatment Watchful Waiting Patients choosing not to take drugs due to side effects, low success rate and high costs Prolieve = Treatment of Choice Source: Medtech Insight; Decision Resources Group 10
Breast Cancer Treatment Market Opportunity Small 26% Breast Cancer Size Medium 52% Treatment Outcome Chemotherapy Alone Focused Heat + Chemotherapy Tumor Size Reduction (Large Tumors) 50% 88% (1) Treatment Outcome Surgery Alone Focused Heat Alone Large 22% Positive Margins (Small Tumors) 10% 0% (1) (1)as demonstrated in Phase II clinical trials Worldwide -- Approx. 1.6 million new cases each year*, $16 billion direct costs in the U.S. alone** Large Breast Tumors when focused heat is added to Neoadjuvant Chemotherapy, tumor size is significantly reduced thus can avoid the need for mastectomies. Chemotherapy alone - low conversion success rate 22%*** from mastectomy to breast conservation Small Breast Tumors when focused heat alone is used prior to surgery positive margin rate was 0% compared to 10% which did not receive the heat treatment. potentially reducing recurrent rates Medifocus Breast Cancer System can address majority of the Breast Cancer treatment marketplace * Susan Komen for the Cure **National Cancer Institute ***NSABP Study 11
Business Overview 12
Prolieve Thermodilatation System Overview First product developed based on the Endo-thermotherapy Technology Platform FDA approved for the treatment of Benign Prostatic Hyperplasia (BPH), a medical term for enlargement of prostate 50% of men over age 50 and 90% over age 70 will develop symptoms of BPH BPH symptoms Includes urgency, nocturia, hesitancy, weak stream, dysuria, retention and intermittency The quality of life of BPH sufferers are badly compromised Most other treatment options are either less effective, or have many side effects, or both Celsion Corp and Boston Scientific together invested approx. $100 million in the development and commercialization of Prolieve before it was acquired by Medifocus in July 2012 Prolieve therapy: A better alternative to medication and other more invasive surgical based treatments without the complications and the side effects associated with those procedures 13
Prolieve Treatment Module and Disposables Treatment Module: minimal or no cost to doctors. 250 installed, 120 in inventory Disposable treatment catheter provides a recurring revenue source 14
Prolieve Treatment Procedure Heat + Dilation = Biological Stent Immediate Relief Placement of Prolieve Constricted Urethra Proprietary heat/dilation catheter 1 2 3 Anchor Balloon Biological Stent Prolieve System Catheter Thermodilatation Balloon BEFORE Prolieve Treatment 45-minute in office treatment, no general anesthesia or incision Formed in the Urethra AFTER Prolieve Treatment 15
Prolieve - Proven Technology and Product Prolieve Drug Therapy Immediate Relief Yes Yes - only if taking daily Long Term Relief Last two years plus Daily medication Side Effects Minimal Many 2 Year Cost to Payers $2,200 $3,948 2 Year Cost to Patient $155 $870-$1,388 Prolieve is the only microwave therapy randomized against drug therapy and showed superior results over medication in the FDA clinical trials Prolieve is also more effective compared to Flomax and Avodart or Flomax and Avodart combined in improving BPH symptom score Prolieve saves up to $1,748 for payors and $1,233 for patients over 2 years Approximately 85,000 patients have been treated since PMA approval Application for China FDA approval in process Prolieve: Better, Safer and Cost Less $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 Comparative Effectiveness Cost Savings Over 2 Years: Prolieve VS Drug Therapy $2,200 $1,748 $3,948 Prolieve Cost Saved Drug Therapy* *The average costs of Flomax and Avodart Source: Consumer Reports 16
Prolieve Treatment Benefits Patient Benefits: Approx. 85,000 patients have been treated since PMA approval Immediate and long term symptom relief Patients resume normal activities after a 45-minute non surgical treatment at doctor s office Quality of life improvement Less invasive and very few side effects reported, topical anesthesia only Does not affect sexual function in 99% of patients studied in clinical trials Eliminates the need for multiple-office visits for BPH medications and the related side effects, costs and inconvenience Doctor s Benefits: Patient satisfaction and significant revenue source ($1,000-$1200 net per treatment for doctors) Practice-friendly, requires little setup time or office space and limited office recovery time Using our mobile service, no capital investment or operational training is required for doctors 17
Marketing Strategy - Prolieve Currently focus on urologist market in the U.S. Application for China FDA approval in process Promote Prolieve treatment as a better alternative to BPH drugs to penetrate the much larger BPH drug therapy market For physicians with no Prolieve system, our Turn-key in-office mobile service brings comprehensive Prolieve treatment capability as they request it on their schedule Mobile service technicians deliver equipment and disposables in mobile vans and operate treatment procedure, with minimal involvement by physicians 18
Pipeline 19
Adaptive Phased Array Technology Platform Adaptive Phased Array (APA) technology originally developed by MIT for the Star War missile defense system, licensed exclusively to Medifocus for medical applications Directs precision-focused microwave energy at tumors to shrink or eradicate them without undue harm to surrounding tissue To detect and destroy an enemy missile, microwave energy is targeted on it, simultaneously nullifying enemy jamming To kill a cancerous tumor, microwave focused heat is targeted on the tumor while simultaneously nullifying any energy that would burn surrounding tissue 20
APA 1000 Breast Cancer System Phase III An RF needle probe inserted at tumor center provides feed-back signal to focus microwave energy at tumor center to induce shrinkage or eradication without harming surrounding tissue Focused microwave energy beam also destroys microscopic tumors along its path throughout the breast. (Selective heating of breast tumors due to higher water content) Focused heat (43-44 C) combined with chemotherapy achieves an average of 88% tumor size reduction, improving surgical outcomes! Value proposition (Same treatment system can be used for most stages of breast cancer, including recurrent chest wall, primary small tumor, DCIS Pre-cancerous and benign lesion) 21
Completed Phase II Multi-Center Randomized Study Results Demonstrate Statistical Significant Improvement Evaluation Population 24pts T2, T3 tumors > 2 cm at enrollment Thermochemo:88.4% (Median) Chemo Alone: 58.8% (Median) P=0.048 Vargas et al, Cancer Therapy, Vol 5, Nov. 2007 With neo-adjuvant chemotherapy, focused heat can significantly improve breast cancer patients chance for survival and breast conservation 22
APA 1000 Final Pivotal Phase III Trial Design High Probability of Meeting the End Point 238 Patients with Large Tumors 119 neo-adjuvant chemotherapy 119 neo-adjuvant chemotherapy + heat Primary Clinical Endpoint To demonstrate 40% or more in tumor shrinkage over chemotherapy alone (control arm) 50% increase in tumor shrinkage with chemo + heat over chemo alone already observed in Phase II More heat dose to be used (two heat treatments in Phase II and three in Phase III), thus better results are expected than in Phase II High probability of meeting or exceeding endpoint Early submission for PMA possible if 50% or more tumor shrinkage is attained Time Frame Start: 4 th Quarter 2013 Complete: 2016 Expected Approval: 2017 Midpoint Analysis : 2015 23
Conclusion Leader in minimally invasive focused heat thermotherapy for the treatment of cancer and other diseases Comprehensive IP portfolio for multiple product pipeline FDA approved Prolieve generating revenue APA 1000 Breast Cancer System in pivotal Phase III Collaboration with strategic R&D partners for future product development High profit margin business model with a recurring revenue stream Underlying business and technology assets and potentials are vastly undervalued Plan in place to uplist to a U.S. exchange to increase exposure, liquidity and increase shareholder value 24
Financial Overview 25
Income Statement Snapshot (In Canadian Dollars) For the Qtr Ended 09/30/2013** For the Qtr Ended 06/30/2013** For the Year Ended 03/31/2013 For the Year Ended 03/31/2012 Revenue 1,233,948 1,311,251 1,805,969 - Cost of sales 381,519 463,349 699,573 - Prolieve IP amortization 95,890 95,890 285,000 - Gross margin 756,539 752,012 821,396 - Operating expenses 2,145,452 2,048,968 6,514,914 1,493,567 Net loss before other income (1,388,913) (1,296,956) (5,693,518) (1,493,567) Others (80,779) 64,735 (135,044) 38,742 Net loss and comprehensive loss Fully diluted loss per share (1,469,692) (1,232,221) (5,828,562) (1,454,825) (0.013) (0.011) (0.050) (0.046) *Medifocus acquired the Prolieve business from Boston Scientific in July 2012. **Unaudited 26
Balance Sheet Snapshot (in Canadian Dollars) 09/30/2013* 06/30/2013* 03/31/2013 03/31/2012 Assets Current assets 2,236,926 2,355,159 3,110,394 426,175 Non-current inventory 1.010,250 1,010,250 1,026,250 - Intangible assets-prolieve IP 3,358,830 3,454,720 3,550,610 - Equipment, net 33,236 31,352 33,792 10,467 Total assets 6,639,242 6,851,481 7,721,046 436,643 Liabilities and shareholders equity Current liabilities 3,152,149 1,972,022 1,561.758 3,000,793 Long term liabilities (to Boston Scientific) 1,909,427 1,915,693 1,991,926 - Total shareholders equity 1,577,666 2,963,481 4,167,361 (2,564,151) Liabilities and shareholders equity 6,639,242 6,851,481 7,721,046 436,643 *unaudited 27