InnovaDerma Acquisition of ProlongTM  

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ProlongTM

World’s only FDA-cleared medical device for premature ejaculation.

Climax control training providing long-term benefits

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Acquisition Rationale

Why ProlongTM?

US$1 billion market and growing at 10% CAGR. Demand for

highly effective treatment for

premature ejaculation

Differentiated and innovative product

which offers pain-free treatment with

long-term benefits

Significant synergies with Leimo

Headmaster. Cross-selling and cross-border sales and

distribution opportunities

Distribute ProlongTM though Direct to

Consumer channel to eliminate patients’

embarrassment

Direct to Consumer enhances cashflow

and creates real-time intelligence

No integration costs. ProlongTM to be

revenue and earnings enhancing in the

second half of financial year 2018

Develop new products or acquire FDA-

cleared or approved products

Diversify income stream – grow life sciences business

division

Drive Group’s revenue and earnings

Grow life sciences to drive revenue and earnings

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•  Class II vibrating medical device as classified by the FDA and used as part of a climax control programme for males who suffer from premature ejaculation

•  Designed to increase the time between arousal

and ejaculation through the use of the training sessions using the stimulating vibratory effects of the device on the penis as part of the “Start-Stop” technique

•  Offers an affordable, pain-free, one-off or long-

term treatment option with no side effects •  ProlongTM offers long-term benefits

•  Delivered efficacy 338% above the combination of the Start-Stop technique with behaviour therapy, which is the current gold standard treatment for premature ejaculation

•  A simpler, earlier version of ProlongTM known as

“Delay Device” which was not FDA-cleared was sold via Boots for a short period between 2010 and early 2013

•  ProlongTM can be sold without prescription, is

patented in 72 countries and ready for mass-market distribution

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About ProlongTM

ProlongTM: At a glance

World’s only FDA-cleared medical device for

premature ejaculation

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A differentiated product

ProlongTM’s clinical studies are a key differentiator from its competitors

Prototype 2 studies •  American Psychiatric Association (Wise et al, 2004) Prototype 2 study - Results

were as follows: •  61% improved 11 fold from 40 seconds to almost 9 minutes using prototype

2 compared to the gold standard treatment which delivered a 40% improvement from 40 seconds to around 2.5 minutes

•  Slam Mental Health Trust - results after 8 weeks (mean latency). Before: 2.6 minutes. After: 8.8 minutes

ProlongTM studies •  Jern study 2013 – 11 participants aged 49 who have failed on all known

treatments of premature ejaculation. Results of using ProlongTM were as follows: •  8 (72%) improved and were satisfied with the outcome. At 6 months all

participants remained satisfied with the outcome. A third of participants reported further improvement

•  FDA Study 2015 – 23 paticipants using 2 different lubricants. 7 drop outs, 16

participated. Results of using ProlongTM were: •  16 (100%) improved with an average time increase of 5 minutes •  Participants reported ease and pleasure during use •  Participants reported on improvement in all parameters in their sexual

relationships

All studies showed 0% side effects

72% of participants improved

Average time increase of 5

minutes

Improvement in sexual

relationships

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What triggers premature ejaculation?

Premature ejaculation can be a permanent condition (hereditary) or be triggered by stress, changes in lifestyle or similar. 37% of patients won’t get treated.

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Un-prescribed medication preferred

Only 9% of sufferers consult a physician. They get their treatment at a pharmacy or online, meaning they get a topical treatment and/or un-prescribed medication.

Non-prescription Topical solutions

Prescribed meds Therapy

Topical solutions

Prescribed meds Therapy

Topical solutions

•  91% of sufferers of premature ejaculation do not improve when they see a doctor •  95% do not improve when they see a therapist •  25% use topical anesthetics •  42% use alcohol to control the problem •  15% use drugs such as cocaine, opiates and amphetamines to control the problem

  Source:  The  Premature  Ejacula9on  Prevalence  and  A>tudes  (PEPA)Survey:  Prevalence,  Comorbidi9es,  and  Professional  Help-­‐Seeking  

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Premature ejaculation market

0

200

400

600

800

1000

1200

1400

2010 2011 2013 2014 2015 2016 (EST) 2017 (EST)

Total PE Worldwide market USD million

Growth +9.5%

Growth +10.0%

Growth +8.9%

Growth +10.0%

Growth +10.3%

Worldwide PE market size is USD$1 billion with a growth rate of +10% and is expected to grow +10.3% to reach US$1.3 billion in 2017

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The premature ejaculation market

The largest market is the US which accounts for 53% of total expenditure of premature ejaculation treatments, followed by Europe with 33%

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US - premature ejaculation market

The US accounts for 40% of the total market, with a yearly expenditure of US$432 million and a total of 114 million PE sufferers (potential customers)

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Europe - premature ejaculation market

In Europe, main countries are Germany with an estimated market size of US$40 million, France US$32 million, UK US$29 million and Italy US$27 million

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Asia - premature ejaculation market

Asia has the most patients, up to 498 million, but per capita expenditure is still low, accounting for a total market of US$120 million. China is expected to be the market that drives growth for the 2017 – 2020 period. The Group has the ProlongTM patent in China which is valid until 2031.

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Africa - premature ejaculation market

Africa has a smaller market, in comparison to the other continents, of US$27 million and 137 million patients. The Group has the ProlongTM patent in parts of Africa which is valid until 2031.

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Potential market size

The market is valued at US$1 billion but there are more than 820 million patients worldwide, meaning there is a potential market of more than US$80 billion*.

Non-prescription Topical solutions

Prescribed meds Therapy

Topical solutions

Prescribed meds Therapy

Topical solutions

* Potential market value was calculated with an average yearly expenditure of US$100, which is the minimum cost of treatment (reference: cheapest numbing spray in the market)

•  The consideration is £1 million to be satisfied by the issue of ordinary shares in the Company at a 25% discount to the average closing bid price three days prior to and three days post the announcement of the Acquisition less the number of ordinary shares in the Company which will be issued at the non-discounted average price to settle certain creditors totalling approximately £323,600.

•  The number of ordinary shares to be issued will reduce to the extent there are net current liabilities revealed in the target company

•  A royalty payment of £11 per unit to the Vendor for each ProlongTM device sold (no minimum yearly royalty commitment) for the term of ProlongTM’s patent, due to expire in 2031. 

•  If, during any calendar year, Prolong returns a 20% EBIT of net sales then the sellers will be entitled to a £150,000 bonus payment. Dr Andy Zamar, the inventor of ProlongTM who will act as a consultant to the Group for the first 12 months post-acquisition, will receive a fee of £4,166 per month 

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Terms of the Acquisition

Incentivised to deliver

About Dr. Zamar

Dr. Andy Zamar, the inventor of ProlongTM is the founder of the London Psychiatry Centre and triple qualified in medicine in Egypt (Cairo University), the UK and the USA. He is a Member of the Royal College of Psychiatrists and is on their Roll of Honour having been awarded The Gaskell Gold Medal & Prize. According to the Royal College of Psychiatrists’ publication, the Psychiatric Bulletin, “The Gaskell Gold Medal & Prize has always been considered one of the foremost academic distinctions in clinical psychiatry”. Dr Zamar has taught psychiatry to under- and post-graduate students at Guy’s and St Thomas’ Teaching Hospitals, University College Teaching Hospital, Ain Shams University in Cairo and at Makerere University in Kampala, Uganda.

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Strategy for Sustainable Growth

Our Focus Emerging leader in life sciences, beauty and personal care products

Multi-pronged Strategy

Product Innovation

Distribution and DTC

Product Extension

Synergistic M&A

Delivering Results

Revenue Growth Profitability Cash generative

Strong and focused team: performance culture and incentivised to deliver results

*The Company requested a voluntary suspension of its shares on the Marche Libre in September 2016.  The shares remain suspended pending the Company's negotiations with the Marche Libre regarding the Company's voluntary delisting from the Marche Libre.

2016

February •  Skinny Tan launched in Superdrug. Available in all stores

nationwide since July 2016 June •  Successful launch of Skinny Tan in the US. Winning best new

product award in ECRM (largest retail show in the US). •  Brand becomes best selling brand by revenue in its category

in Superdrug September * •  Admitted to the Official List of the London Stock Exchange

opening up wider access to capital and more liquid secondary market

•  Products ranged in Olive Young Korea November - December •  Two successful fundraisings undertaken of £539,999.60 and

£800,000.30 before expenses. October •  Release of maiden results on the LSE. Strong revenue and profit

growth over previous year •  Entry into the US market •  Production move to the UK

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Key Milestones

February •  Acquisition of Stevie K cosmetics, a makeup brand and

Charles + Lee, a men’s skincare range April •  January and March achieved the highest-ever monthly

revenues and subsequently delivering the highest ever quarterly revenues

•  Skinny Tan brand becomes best selling brand by revenue in its category in Superdrug in 2017

•  Secured leading e-tailers, lookfantastic.com and feelunique •  Launch of Charles + Lee in Australia through its DTC platform May •  Acquisition of ProlongTM, the world’s FDA-cleared medical

device for premature ejaculation

2017