mHealth Israel:Israeli Digital Health Overview

Levi Shapiro

Partner

Veritas Digital Health Fund

Healthcare Spending in the US

Health Spending in Era of Payment Reform

Fragmentation is GREAT for Startups

Obamacare States See Increase in Efficiency

Health IT Funding & Deals

Investment +987% since 2009; 91% YoY

Deals: Digital Health vs. Biotech / Pharma

Emphasis on Diagnosis, Monitoring, Protection

Frost& Sullivan, 2014

Confidential 10

• Mandatory EMRs for 22 years

• Israel leads in relevant technologies:• Sensors• Algorithms• Encrypted communications • Cloud• Personalized medicine• Chronic disease management tools• Inter-Operability IT

Can Israel Lead HIT Innovation?

Israeli Digital Health Startups = Limited Revenue

Source: Levi Shapiro / IVC, 2014

Funding for Israeli Digital Health Startups

Source: Levi Shapiro / IVC, 2014

# Israeli Digital Health Startups, 2005-2014

Source: Levi Shapiro / IVC, 2014

What Does This Mean for Startups?

14

Tip 1: Play Nice with Partners

Opternative: Online Eye Exam

Lead-gen tool to drive visits to local optometrists and opthomologists

Case Study

Raised $2 Million

Fifteen full time employees

Launched product in 2014

Company Highlights

People world-wide who receive an eye exam each year

2.4 BILLION

75 PERCENT

Savings when using Opternativeover an in-person exam

People world-wide need exams but cannot afford or access care

700 MILLIONBusiness Model

Tip 2: Quantify the Value Proposition (Pilots)

- Pilot program with Newton Wellesley Hospital- Collected and shared information that helped win NWH as reference customer- Validation from NWH enabled new client wins

EarlySense Uses signal-processing technology to provide a contact-free and early detection patient supervision system

Case Study

Raised $28 Million in funding

Sixty full time employees

Profitable from operations

Company Highlights

18 Contents are proprietary and confidential.

Tip 2: Quantify the Value Proposition (Savings)

Helps organizations and physicians actively manage contracts and reduce regulatory risk. A mobile app engages physicians to record work, while a back-end portal provides support across the organization

Ludi ensures hospitals manage physician-hospital agreements so the expectations of the agreement are fulfilled and regulatory risks are decreased

Case Study

Raised $1.1 Million in funding

Four full time employees

Company Highlights

Average law suit cost due to inadequate documentation of physician contracts

$19 MILLION

70 PERCENT

Organizations requiring physicians to log their time

Organizations using formal contracts for medical directorships

77 PERCENT

19 Contents are proprietary and confidential.

Tip 2: Quantify the Value Proposition (Efficiency)

Doctor’s offices can identify scheduled patients who are at-risk for not showing up to their appointments and intelligently schedule additional appointments

SmartScheduling Brings an airline load scheduling approach toward doctors visits

Case Study

Revenue positive

Chosen for athenahealth’s internal accelerator program

Utilized in over 30 physician offices

Company Highlights

Doctors currently overbook their schedules in an effort to balance no-show patients

1 IN 2

$19 MILLION

Reduced revenue per clinic due to patients missing appointments

Average no-show rate for outpatient clinics

20 PERCENT

Tip 3: Follow the Money- Pharma Struggles with Digital

Ann.

Date Target Acquiror CE Mark

FDA

Approval

Transaction

Value

LTM

Revenues

TEV / NTM

Revenue

%

Up-front

07/14/14 ~200 NA NA 100.0%

06/30/14 375 NA NA 100.0%

05/27/14 ~305 55 NA ~75.0%

04/02/14 320 80 NA 100.0%

12/04/13 193 49 NA 100.0%

05/23/13

Targeted Therapies Business Unit

200 48 3.5 100.0%

10/23/12 165 NA NA 84.8%

04/05/12

321 68 3.6 100.0%

03/19/12 314 30 10.0 84.1%

11/21/11 413 NA NA 81.8%

11/09/11

313 82 2.8 100.0%

07/27/11 293 NA NA 100.0%

07/07/11 452 65 7.0 100.0%

09/20/10 444 0 NA 43.6%

07/12/10 433 94 3.8 100.0%

06/16/10 335 54 5.0 100.0%

05/05/10

210 56 3.0 100.0%

12/16/09 785 100 NA 100.0%

11/09/09 489 117 NA 100.0%

10/26/09 200 NA NA 65.5%

09/28/09 267 100 1.9 100.0%

Mean: $340 $67 4.2x 91.8%

Median: $314 $65 3.5x 100.0%

Tip 4: Sell The DreamPre-FDA Approval M&A Transactions

Source: Capital IQ.(1) $40 million equity investment and has the option to acquire Spinal Modulation for up to $300 million plus certain revenue-based milestones following U.S. commercialization(2) Includes $150 million potential CVR upon FDA approval. Does not include $1,050 million of potential CVR payments in six years post-approval. Revenue multiples only reflect $150 million in upfront payment.

($Millions)

Post-FDA Approval M&A Transactions