In less than a year since beginning our current Phase II SBIR-funded project, we designed and fabricated an exchangeable valve prototype, tested its performance in the sheep model, developed an open-surgery exchange tool set and demonstrated that heavy pannus overgrowth can be managed with our system. We have also shown that ultrasound imaging is sufficient for the placement of a full-size valve into the beating heart via a preliminary prototype of the GUCI.

If you are an accredited investor as defined by the Securities Act of 1933, Rule 501, Regulation D and wish to learn more about ValveXchange, please contact us as noted below.

Contact information:

Chairman, Mr. Larry Blankenship

e-mail: lblankenship@valvexchange.com

phone: (303) 648-4077, ext. 22

Founder, Dr. Ivan Vesely

e-mail: vesely@valvexchange.com

phone: (303) 648-4077, ext. 21

Intellectual Property Information

Overview:

Transcatheter valves are currently the rage, but their utility is limited to the inoperable patient. They do not resolve the long-standing dilemma of the mainstream, operable patient: having to choose between high lifelong doses of Coumadin and their serious side effects or redo open heart surgeriess. Transcatheter valves also have a large list of contra-indications that limit them to only a sub-set of the inoperable patient segment. Here is the VXi story:

• $1.2 billion/year and growing mainstream market for heart valves
• Current limitations of mechanical valves (Coumadin) and tissue valves (open surgery redo's) have remained unsolved for 40 years
• Our exchangeable valve technology solves this problem and thus can capture the majority of this mainstream valve market
• Transcatheter valves have opened up new markets but they have limited durability – estimated to be roughly 5 years due to their inherent design constraints
• ValveXchange is developing both a surgically implanted version of our valve for rapid regulatory approval and market entry and a version that can be implanted and exchanged through the apex of the heart, off pump, just like transcatheter valves: A transcatheter valve done right!
• The ValveXchange valve has a rigid circular base is rigid, not deformable like transcatheter valves. This rigid base controls leaflet geometry and thus enables the 15-year durability of surgically implanted valves
• When the leaflet set is exchanged, the EOA (Effective Orifice Area) is not diminished, and the durability is restored to another 15 years, just as if a new surgical valve had been implanted
• The ValveXchange valve is the only one that can enable the “transcatheter approach” to migrate down to the younger patient population, truly creating a lifetime tissue valve solution
• ValveXchange has proven the exchangeability of the valve leaflets and demonstrated that the docking station can be implanted through the apex of the heart, in animals
• PVT was acquired by Edwards for $155 Million after First In Man and Ventor was acquired by Medtronic for $325 Million after First In Man. ValveXchange is superior to both of these products and is addressing a much larger market TOP

Value Proposition

The primary value proposition of the exchangeable valve is to the patient. By being essentially a copy of the industry-leading, off-patent Edwards pericardial valve, it offers the same safety and longevity. By being rapidly exchangeable it offers the younger patient the only real solution for a lifetime valve without anticoagulation therapy or repeat open-heart surgery.

To the surgeon, the two-piece valve enables the docking station to be inserted without the leaflet set. Being able to snap in the leaflet set after the docking station is inserted avoids damage to the leaflets during knot tying and checking for perivalvular leaks. The two-step implant is a very important feature, as the majority of surgeons implant less than 30 valves per year, are thus not expert at valve implant technique and are always concerned about valve damage during implant. TOP

Time Line

Real value is achieved with the VXi approach right from the first product launch in 2013 with faster implant and exchangeability, even if the exchanges are done surgically. We will then introduce a series of additional value-added products over the subsequent 5 years which can virtually capture the heart valve market. These include MIS off-pump implant capability, pediatric pulmonic valves, MIS off-pump exchange capability and pediatric expandable docking station products.

The sequential nature of building value:

One of the exciting aspects of ValveXchange is the sequential nature of the value proposition – each step adds significant value as the company grows. Below is a chronological product plan outline.

2011-2013:

Generation 1 product (ISO 5840 predictable approval path - start clinicals in 2011, release in EU and USA in 2013 with instant reimbursement)

• Implant easier for a broader range of surgeons (install docking ring only without leaflets in the way. With most CT surgeons performing only an average of 2 heart valve procedures per month, this concept has been enthusiastically received as a time saver and quality improvement).
• The docking ring can be implanted using any method that a current valve can be implanted: sternotomy, mini-sternotomy, or mini-thoracotomy (e.g., using CardioVations on-pump MIS tools).
• The leaflet set can be exchanged surgically much easier and faster than replacing a regular tissue valve. Some of our MAB members say they would do a fem-fem bypass and an on-pump surgical exchange through a mini-thoracotomy, and have speculated that with our tool set cross-clamp times as low as 2 minutes could be achieved.

VALIDATION OF REGULATORY PATH: Our Regulatory Constultants are PPD Medical, ex-FDA staff members who were specifically involved in the area responsible for approving heart valve technology. They confirmed our approach starting with the ISO5840 approval process for a surgically implanted version, and they talk about using the PMS supplement track (easier than a new PMA) to approve the MIS off-pump exchange starting in about 5 years. A letter of opinion form PPM Medical is on file

EXPECTED MARKET REACTION: At release of the Vitality™ product, the mainstream patient population will have an option never before offered. We will have established the in vitro and in vivo (animal) equivalence to the Edwards valve in hemodynamic performance and durability, and met all clinical trial requirements for full market release. The mainstream patient base can be expected to begin showing preference for the Vitality™ product at this time.

2013-2014/15

Pulmonic Pediatric: The exchangeable valve concept is extremely exciting to pediatric surgeons who are eager to place this product in the pulmonic position in their “older” pediatric patients. The valve product itself will be identical to the product approved in the ISO5840 trial, but qualified for the pulmonic position in this program. While waiting until after 2013 allows the PMA supplement approach to be used, this study could be started before 2013.

2013-2015/16

MIS off-pump implantation: The GUCI implantation technology can be developed and qualified before off-pump exchange. Full surgical-quality valve implantation without open heart surgery not only precedes the exchange approval, it establishes the pathway for it by approving the GUCI and related techniques. This can be done using a PMA supplement approach if we wait until approval of the initial product in 2013, or this study could be started before 2013 and become part of the Vitality™ qualification program.

2016-2017/18

MIS off-pump exchange: Valve Leaflet exchange can be done at any time along the way using a variety of surgical access techniques with short cross-clamp times, but the goal is to offer off-pump MIS trans-apical exchange. Clinical trials require patients ready for such an exchange. Per the PPD letter, a portion of the initial clinical trial population will include patients who will need their first exchange in about 5 years. The GUCI access technology will already have been approved for implant, so this PMA supplement is expected to require a one-year follow-up on a subset of patients.

2014 – 2017/18

Pediatric adjustable docking station: This patented approach is for younger pediatric patients, and will be qualified to allow docking station diameter expansion at the time of exchange to facilitate implant of the next larger leaflet set size. Follow up is expected to include initial implantation as well as follow-up after expansion & exchange.

ValveXchange Inc. is developing future heart valves without compromise. This is our mission. No compromise for the patient regarding Coumadin from day one. No compromise on lifestyle. No compromise on durability or hemodynamics compared to the Edwards valve both at initial implant and with each exchange.

The vision, however, is to truly capture the breadth and depth of the heart valve business, so whether by growth, partnership or acquisition, this is exciting and justifiable. TOP