FLEXible TM

i n s U L I N, L L C
Table of Contents
Executive Summary

Objectives

Background & Trends

Company

Product

Opportunity

Threats

Marketing Strategy

Growth

Assumptions
Income Statement
Vision:
to empower diabetics
to continue their pursuit
of an active lifestyle.
Executive summary
As of 2011, there were 25.8 million people diagnosed with diabetes and 1.9 million Americans
are added to this number each year.One of the largest components of diabetic therapy is
exercise, but the pursuit of an active lifestyle can be difficult due to conventional glucose
management. Flexulin is the innovative solution to this problem.

Flexulin is the first lightweight patch that, unlike traditional pumps, administers both insulin
and glucose to maintain blood-glucose homeostasis. This product is primarily targeted towards
diabetics who desire to be more active. Flexulin is a revolutionary way to manage diabetes,
taking into account the physiological demands of athletic training and competition. Active
diabetics must be conscious of their blood glucose levels and aware of how quickly they can
change during physical activity, but with Flexulin they no longer have these concerns.

This device is both wireless and flexible, keeping active individuals in mind. It adheres to the
individual’s body without introducing noticeable bulk. The design allows diabetics to move
freely without any worry of discomfort. Flexulin continuously collects and transmits data to an
app to provide the users with information about their blood glucose history.

The revenue from the insulin pump market is expected to grow 9% each year, providing
Flexulin with an opportunity to capture 5% of the market share. The company expects to be
profitable in year 2016, only the second full year of sales. The loss of capital incurred in the first
three years of operations is expected to be fully recaptured by year 2018.

Given the large market size and the ingenuity of the product, Flexulin has been approached by
multiple insulin pump manufacturers and distributors. Most notable of these offers is from
Medtronic, a giant in the industry. Moving forward, Flexulin intends to negotiate an agreement
with Medtronic in regards to the distribution and marketing of the product.

Flexulin is seeking an investment in order to create a prototype and launch this product. With
the use of cutting-edge technology, Flexulin’s team is redefining diabetes management.

Sincerely,

Julian R.M. Richter

Julian Richter
Chief Executive Officer
TM
Flexulin
 Background
TYPE I TYPE II
DIABETES DIABETES
Individuals no longer have
Type 2 diabetes occurs
the ability to produce insulin
when a person’s glucose
on their own and require
levels rise higher than
ins uli n therapy. Ins ulin
normal and the body
deficiency can occur at any
can no longer use insulin
age and is the main type of
properly.
diabetes found in children
and adolescents.

25.8 MILLION AMERICANS

HAVE DIABETES

1.9 Million
diagnosed
each year
Insulin Pumps
Current insulin pumps are convenient in some respects and a
burden in another.

The convenience is that the person does not have to

constantly test his or her blood glucose levels and can be
ensured that his or her insulin levels will remain fairly constant.

On the other hand, pumps can be inconvenient because the

person must always be hooked up to it. The computer portion
of the device can be bulky and a burden when the person
does not have pockets.

Insulet Corporation has tried to address this problem with a

wireless pod that sticks to the skin and is managed with a
separate handheld monitor.

300,000

2010

Users of insulin therapy

1998
70,000
 Exercise
Exercising can be a challenge for individuals with Type I diabetes since food
intake and insulin injections must be carefully monitored and balanced.

Competitive athletes with diabetes are at much higher risk of

hypoglycemia due to excessive amounts of strenuous exercise. Currently,
there exists no lightweight wireless device that can regulate levels with both
insulin and glucose injection.

Insulin pump therapy is especially well suited to physically active diabetics as it

allows flexibility and easy adjustment of basal and bolus insulin doses. The risk
of hypoglycemia during and in the hours following exercise is substantially
increased because exercise enhances the body’s sensitivity to insulin. Simply
stopping the basal insulin during the workout can lead to hyperglycemia after
the activity if the body enters a state of insulin deficiency.

Currently, effective dose adjustment strategies include reducing the bolus for
the meal prior to exercise, consuming carbohydrates before and during
exercise, and/or lowering the basal rate starting 1-2 hours prior to exercise.

Medtronic
The leader in medical technology, Metronic provides technologies and therapies
that cover many diseases and medical conditions. Last year Medtronic reached
the lives of over 9 million people in 140 countries who had problems such as
cardiovascular disease, diabetes, and neurological and musculoskeletal
conditions. Their Diabetes Group brings in a revenue of $1.5 Billion dollars
annually. Currently, Medtronic does not carry a device that monitors both
glucose and insulin levels. Medtronic has approached Flexulin with an offer to
purchase and distribute their new insulin pump that is still under development.
Current issues
1.Painful when bumped into
2.Bulky and noticeable ; causes a person to be self-
conscious
3. Can get caught on chairs and desks
4.Complicated for children to use
5.Can easily be removed, fall off, etc with lots of
activity
6.Not fully waterproof
7. Multiple devices to manage diabetes
8.Constant manual regulation of pump
9.Failure to recognize different kinds of sugars in
bloodstream
 Company
Chief Executive Officer
Julian Richter graduated from the Business University of Vienna with a
degree in Finance and Entrepreneurship. He worked at Volksbank
Raiffaisenbank Rosenheim Bank as a financial consultant and then was
involved in the start-up “Hellofresh” on the supply chain and sales side.

Chief Operations Officer

Lizzie Farquhar, after receiving her BBA in Marketing at the College of
William & Mary, began her career at APT Test & Learn as a marketing analyst.
She then moved to Johnson & Johnson to be an assistant product manager.
When Julia approached Lizzie with a proposal to create a revolutionary device
that would change the way active diabetics live, she could not turn it down.

Chief Technology Officer

Julia Swalchick graduated from Virginia Tech with a degree in Computer
Engineering. She was a former technology consultant for Accucheck. She
contributed to the creation of the first CGM device that allowed for
continuous blood-glucose monitoring.

Chief Marketing Officer

Meghana Indurti worked at Leo Burnett with various Health insurance
accounts and eventually became Account Executive. She holds an
MBA in brand management from Stanford and has been a Marketing
Manager at Tylenol for the past five years.

Chief Finance Officer

Jake Marshall received his BBA and Masters in Accounting at the College of
William & Mary. Following graduation, he began working at Ernst & Young LLP.
Following years of service in public accounting, Jake welcomed the opportunity
to work for a company invested in improving the lives of diabetics.
Board of Advisors
Rick Spatz
Spatz began his 30-year career in advertising with Leo Burnett Company,
moving to internationally acclaimed D'Arcy, Masius, and Benton &
Bowles for a 21-year run in management that included several overseas
assignments. He led strategic and advertising development for agency
clients that included Procter & Gamble, Mars Inc., Nestle, Roche,
Cadbury, Heinz, Union Carbide, and Chi Chi's Mexican Restaurants.

Richard Ash
Currently a professor at the College of William & Mary, Ash had previously
founded Dilon Technologies, Inc., a medical device company. He has also
contributed to the success of several venture capital firms, most notably
Mentech Advisors, Inc. and Mentor Technology Ventures, LLC.

Dean Kamen
Kamen has extensive experience in the creation of new technologies, most
notably the Segway. While an undergraduate, he developed the first portable
infusion device, which delivers drug treatments that once required round-the-
clock hospital care. Through his DEKA Research and Development, which he
co-founded in 1982, he developed a portable dialysis machine, a vascular
stent, and the iBOT -- a motorized wheelchair that climbs stairs.

Dr. Mohan Peter

Mohan was a Cardiothoracic surgeon having trained and worked at the Cleveland
Clinic in Cleveland, Ohio and the Mayo Clinic in Rochester, Minnesota. His past
titles include Assistant Professor of Surgery at the Dartmouth Medical School in
New Hampshire; Chief of Cardiothoracic Surgery at York Hospital, York,
Pennsylvania; and Founder and Principal Cardiothoracic surgeon at Mercy
Medical Center in Oshkosh, Wisconsin. He has served as a visiting surgeon in
both Rockhampton, Australia and on the island of Grand Cayman.
 PRODUCT: H
The Pump
Remove cap and fill Flexulin pouch with insulin and glucose

1 -Cap covers internal needles

-Use of complementary syringes
-Inject through fill ports located on base of pouch

Three devices offered: 100 units, 200 units, 300 units

The pouch is designed for compatibility with U-100 rapid-acting insulin (100
units of insulin per milliliter of fluid). The following U-100 rapid-acting insulin
analogues have been tested and found to be safe for use in the Patch:
NovoRapid®, Humalog®, or Apidra®

2 3
Adhere pouch to skin Latch Flexulin device to pouch
Recommended adhesion sites:

Click OK to initiate insulin release

4 -Auto insertion of both Teflon cannulas at 45 degree angle (depth of 6.5mm 13 or

17mm)
-Auto insertion of glucose sensor
-Omnipod- 6.5mm cannula depth, 60 degree insertion angle

The App
It is proven that manual record keeping techniques, such as a food and exercise diary, still
represent the gold standard. Patients starting insulin pump therapy should be encouraged, at
a minimum, to record blood glucose levels, boluses and basal rate adjustments. A food diary
is also useful for assessing carbohydrate consumption and overall nutritional intake. If the
food diary can be correlated to glucose levels, it can enable the patient and his or her
healthcare team to detect and address behaviors and/or physiological phenomena impairing
tight glucose control. Given that the entire customer base will not have a smart phone, a
complimentary portable device will be included that emulates the app. This device can also
be used by those who hold an app int the event of an emergency.
OW IT WORKS
-Recommended injection sites: top
of thigh, stomach, outer arm, butt,
sides of lower back

-Flexible Teflon cannula with thin

plastic tubing (lasts 72 hours- 3
days)

-Gradually releases the established

basal rate injections, program the
bolus doses to cover meals

Features:
-Flexible, able to mold to your figure
-Different sizes for different users- hold various amouts of insulin and glucose
-detachable insulin pouch, glucose cartridge and adhesive patch (consistent device)
-stores and injects both insulin and glucose
-reads blood glucose levels
-recognizes and reacts to patterns and trends of blood glucose levels based on user’s history
-transmits all data to phone app via the cloud
-fully waterproof
 FLEXULIN
A

C Glucose Storage
B

I CGM
-$615.00-$499.99 per 10 sets
-Roughly 290 readings per day
A tiny electrode called a glucose
sensor is inserted under the skin to
measure glucose levels in tissue fluid.
D It is connected to a transmitter that
C
sends the information via wireless
radio frequency to a monitoring and
display device. The device can detect
and notify you if your glucose is reach
a high or low limit.

Patch
G H
-$195.00 per 10 sets (approx. 1
month)

In a study of 25 volunteers, a
subcutaneous dose of 1 mg
Glucagon resulted in a mean peak
glucose concentration of 136 mg/
dL 30 minutes after injection
(Figure B). No difference in E F

maximum blood glucose I

concentration between animal-
sourced and rDNA Glucagon was
observed after subcutaneous and
intramuscular injection.
 THE FLEXible
insULIN
APP
Storage of all data

1 Accessible by individual’s
endocrinologist via patent
login

Personalized

2 notifications
Dismissible alerts
Loud alert when low on
insulin & high in blood
glucose
Blood Glucose

3 Trend Graph
7, 14, 30-day history
Breakdown of specific
averages for certain time of
day over long period

4
Calendar/Schedule
Daily activities
Smart pump recognizes
average times for exercise,
meals, and alcohol

5
Sport specific
programming
Glucose regulation reacts to
programmed exercise
Anaerobic vs aerobic options

Nutrition Log

6 Manual entry f diet

Pie chart of daily calorie
consumption broken up by
food group

Index of

7 Carbohydrates
Barcode scanning capability
Storage of scanning history
Ability to drag from history to
nutrition log

Image provided by Glucose Buddy, Inc.

The insulin pump market volume in 2009 was $453 million and is expected to
grow to $843 million in 2016 in the US. Within this market, Flexulin unites the
two components of quality and comfort in a unique product. Although there
are big competitors, there is a great possibility to enter the market for
Flexulin because of the huge size of the diabetic market and the diabetic’s
need for improved products. Flexulin’s anticipated deal with Medtronic
would mean that the Flexulin pump would penetrate Medtronic’s already
existing market and distribution channels.

DIRECT COMPETITION Flexulin competes directly with diabetes pump and

pod manufacturers Medtronic, Roche Disetronic, Animas Corporation and
Insulet Corporation. The biggest active player in this field is Medtronic,
followed by Roche. Flexulin’s other competitors are relatively small and work
together with strategic partners in the field of diabetes and medical
technology.

OPPORTUNITIES &
The pump distributors are at an advantage, having pre existing relations with
their customers. However, there is not one pump on the market that far
outcompetes any others. Therefore, other direct competitors like the Startup
Asante Solutions which received funding by more than 7 venture capitalists or
Insulet Corporation entered the market comparably late.

For instance, Insulet Corporation was founded in 2000 and only specializes in
pods. Their focal product, “The Omnipod”, includes 2 pods, works wirelessly,
is waterproofed for one hour and has a retail price of approximately $1700.
Insulin pumps are priced between $4500 and $6000. The pods must be
exchanged every three days. This translates into monthly costs of
approximately $300 - $450 by consumers, ordering pods in standard 10 piece
sets. The separate continuous glucose monitoring device costs another $700-
$900. In comparison, Flexulin combines these 2 parts into one product for the
reasonable cost of $4500 and the replaceables for $700.
All in all, the leading companies have some of these good characteristics like
waterproofness, wifi-ability, alerts, painless insertion and lightness but Flexulin
combines several of these characteristics more effectively and has extra
features like maintaining blood-glucose levels and a phone app. In addition to
that, Flexulin is the only pump provider for athletes who do sports for more
than an hour without limitations.

Indirect competitors mostly include companies that sell insulin injections (e.g.
syringes). Using syringes is generally the least expensive method. For
example, 100 syringes (each 1ml of insulin) costs $20 to $30. In addition to
that, wearing no pump is more comfortable and there are fewer dangers when
participating in contact sports. Those people do not have the risk of allergies
or malfunctioning of the pump, as well. However, these people are less flexible
and have worse control of their diabetes.

THREATS.
Moreover, having a pod leads to fewer injections and is important to the
reduction of long-term complications and better predictability. Although,
there are advantages and disadvantages for each side, for most people the
advantages of the Flexulin pump outweigh disadvantages and costs.

Threats One threat is represented by a product which cures diabetes. Since

diabetes has many different causes, there is not one medicine which can cure
diabetes. Recently stem cell research has shown that diabetic cells in the
pancreas can be retrained to behave normally when placed with non-diabetic
cells. These cells can then be transplanted into the pancreas and essentially
stop the manifestation of diabetes in a person. However, the results only last
for about 9 months. This method is not price sustainable, as the patient would
have to get a transplant about once a year and pay for transplant drugs so that
their body does not reject the transplant. Because researchers are far off from
developing a cure for diabetes, this threat is minimal.
Company share of the global insulin pump market (% by revenue), 2009

6% 3%
10%

11%

58%
12%

Medtronic Roche (Disetronic) Animas (J&J)

Insulet Corporation Deltec (Smiths Medical) Others
Flexulin will provide a high-end diabetes pump including the maintenance of
the blood-glucose levels for Type 1 diabetics. Flexulin will not compete with
the other manufacturers in low-cost products, but rather concentrate on
quality. It is a competitive, high-quality product for active people and the
characteristics of Flexulin are unique. By positioning it in the high-quality
sector, the competition will be huge, but the possible share for Flexulin in
market volume will be large. A small market share is enough to be profitable.
Furthermore, being positioned with a competitive, high-tech product will be
most attractive to possible buyers like Medtronic.

Exercise is recommended for most diabetes patients as an important tool of

therapy. Experts recommend moderate-intensity physical activity for at least
30 minutes for five or more days of the week. Although light exercise can be
effectively managed, when it comes to competitive athletics, diabetes
patients often have trouble with effective treatment plans. Flexulin can be
positioned for active diabetics who prioritize exercise.

Positioning
 $1000 $4500
Disposable Patch Tech Device
- Insulin cartridge - Electronic device
- Glucose cartridge - Collects and transmits data
- Glucose sensor - Regulates glucose and insulin
- Adhesive patch levels
- 2 Needles with Cannulas - Rechargable Lithium batteries
- Compents are sold in sets of 10 - Syncs with the App
(last a month)

$5500
Price
11.3 % of all people above the age
diabetes. That’s 25.6 million people.
younger than age 20 have
people. Since Insulin is a
a viable option is to
Flexulin targets active
of 14 to 65. Since most kids
this age and begin seriously
sports, the product can be
Prospective pump
caregivers must be
infusion sets, fill pump
pump, and must demonstrate
healthcare providers in achieving
therapy. In general, patients likely
therapy will have had sufficient
using other forms of insulin
competent in assessing the
monitoring blood glucose levels
a day, preferably 6-8 times).
Target Market
of 20 years are diagnosed with
Additionally, 0.26% of all people
diabetes. That’s about 215,000
product with inelastic demand,
straddle different age groups.
customers from the ages
enter high school around
becoming involved in
most useful to them.
users or their
able to change
cartridges and program the
willingness to collaborate with
the goals of insulin pump
to succeed on insulin pump
education and support while
therapy so that they are already
nutritional value of meals and
frequently (minimum four times
Distribution and marketing will be be taken care of by Medtronic, a company that has
already established relationships with doctors and high-quality retailers. Over the first
three years, Flexulin will take care of distribution and marketing strategy with Medtronic
serving as a consultant. Afterward, the services will be outsourced.

It would be viable for Flexulin to be recommended by pediatricians and doctors first

and foremost because patients often will not heed medical advice that doesn’t correlate
with the doctor they have built a personal relationship with. Leveraging Medtronic’s
brand name will be necessary in order to be recommended. Additionally, it is often
more convenient for customers to purchase from big-box retailers like Wal-Mart, Kroger,
CVS, and Walgreens. Therefore, Flexulin components will also be provided there.

Distribution &
It is important to emphasize the flexibility and durability of the product above all else.

Print ads will be published in leading Diabetes magazines, including but not limited to:
Diabetes Self-Management, Diabetes Forecast, and Diabetes Health. Partnering with
the magazines will enable Flexulin to be seen by both customers and those who
research diabetes on a scholarly basis. A 12-month subscription to Diabetes Forecast
comes automatically with membership into the American Diabetes Association, which
as of now holds over 16,000 members.

Typical readers of these trade magazines share certain characteristics:

They are proactive with treatment, have done substantial research, and like branded
subscription. With Medtronic’s brand equity, Flexulin will be able to have an easier initial
entry into the market.

They are responsive and engaged with the community at whole. They trust authorities
about research. They share an easier reach because of how in-tune they must be.

They are influential customers. They are persuasive and good advice regarding
health to not only their own family but also other diabetics.They also engage online
with user feedback and will self-promote Flexulin.

Advertising
TV Spots will also additionally run in the first year and will eventually be faded away.
They will first air at the ADA Trade shows. Extensive advertising isn’t necessary since
Flexulin will be associated with Medtronic and most Diabetes product sales are
increased through word of mouth and patient-led experimentation with products.
However, in order to introduce the product particularly to active and competitive
diabetic patients, Flexulin will be positioned with athletes and sports. Here is a sample
TV storyboard.

Flexulin. Let nothing stop you.

FLEXULIN
Let nothing stop you
Exit & Growth
Flexulin is in negotiations with Medtronic and is currently awaiting the development of
a prototype. Medtronic is a medical technology firm, which specializes in the
manufacturing and distribution of medical supplies. Amongst other products,
Medtronic produces insulin pumps, heart valves, and pacemakers. Medtronic is a
leader in the medical technology market generating over $16 billion in sales in 2012.
The Medtronic brand name should result in increased exposure and demand for the
Flexulin insulin pump. The core goals and values of Medtronic align with those of
Flexulin’s management team resulting in a relatively easy relationship to maintain.
Medtronic is committed to bettering human welfare, and is emphasizes expansion into
foreign markets to better serve universal health care needs.

Under the terms of the agreement, Medtronic will agree to purchase a fixed amount of
Flexulin units (1000 units), and Flexulin will provide additional units each year at the
discretion of Medtronic. Per the terms of the agreement, Flexulin agrees to supply
their insulin pumps and replaceable parts solely to Medtronic at a fixed cost over a ten
year period.

Assuming that no deal can be made with Medtronic, Flexulin will approach various
other medical technology companies such as Insulet, Animas, and Roche to discuss a
potential purchase agreement.

Flexulin plans to maintain high levels of research and development expenses with the
intention of developing more innovative medical technology solutions. Additionally,
Flexulin plans to decrease the marginal costs of production by taking advantage of
economies of scale as the level of production increases.
Strategy
Worst Case: If Flexulin cannot come to an agreement with any of the above medical
technology companies, there is still a strong likelihood that Flexulin will be able to
recoup their investment. Flexulin has received strong interest in purchasing the patent
for their insulin pumps. Management has determined that should the sale of patent
and trade secrets occur, the proceeds from that sale should be sufficient enough to
cover the research and product development expenses.

Exit Strategy: Flexulin plans to offer investors a put option which takes effect in the
seventh year of business. This option guarantees that Flexulin will repurchase the
investors interest, and provide a minimum return of 25%. For the investors who
choose to hold their interest with Flexulin, they can expect to recoup their investment
with dividend payments beginning in 2016, the third full sales year.

Terms of Agreement:

Flexulin requires an initial investment of $4,

000,000 in return for 40% equity in the company
in order to create a prototype and cover start-up
costs for the first year of operations.
Assumptions
1. Each year, 15% of previous Tech Device owners no longer use the product and/or have to
repurchase it.
2. Initial profit margin is 15% based off of the margins of currently established companies, such as
Medtronic, Insulet, Animas and Roche,
3. Units of adhesive patches sold based upon the number of tech strips sold
4. Due to relatively low sales volume in the first year, profit margins will not be as large as competitors.
5. The growth in sales is more than 2% and continues to increase up and after 2019.
6. Legal expenses also cover patent and trademark costs.
7. The market for insulin pump therapy will continue to grow at an increasing rate. This is based off of
ADA growth projections.
8. The return on sales of insulin pumps is 2% of sales revenue.
9. Selling begins in January of 2015.
10. Liability Insurance cost is included in SG&A Expenses
11. Shipping costs are based on competitive shipping prices.
12. Rent expense for the office is $3000.00 per month. Utilities expenses are assumed to be constant at
$10,000 a year.
13. Dividend payments are 40% which is based on their equity ownership in the company.
14. The worst case scenario was based off of sales volume is reduced by 50% holding all fixed costs
equal. The best case scenario will be an increase in 25% of the sales volume of the projected sales.
This based on the assumption that Flexulin will be operating at the forefront of Medtronic’s sales.
15. Each partner in the executive team has contributed $200,000.
16. R&D is lower than competitors because of the low amount of start-up capital and focus on a single
product in. The ratio of R&D to sales revenue is higher than that of Flexulin’s competitors.
17. Price is based off of competitive insulin pump prices as well as glucose monitoring systems.
18. Medtronic has agreed to a purchase floor of 1000 units. Additionally, the total units sold is based off
of the percentage of market share Flexulin is positioned to capture.
19. Glucose storage is assumed to be feasible in a wireless insulin pump. This is based off of current
research by Medtronic.
20. There can be three automated insertions that coexist in one device.
21. The device will be completely water-proof.
22. The data will be transmittable via cloud storage.
23. Flexulin will be covered by insurance.
References