Biofund investment in Medicalgorithmics

Functional merger of MDG with Kardiolytics

17 October 2022

Investor Presentation | 1

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Presenting today

Maciej Gamrot MDG CFO

Previously at: PWC, EY, Agora, Platige Image, Audioteka, Dobroplast Fabryka Okien/ Arbonia A.G.

Education: University of Łódź; ACCA, CIA

CFO of Medicalgorithmics since 2021.

Jarosław Jerzakowski MDG Board Member

Previously at: Konica Minolta Business Solutions, Adrem Software

Education: Cracow University of Economics; University of Mannheim,

At Medicalgorithmics since 2013 responsible for foreign business development outside the USA

Dr. Kris Siemionow, MD PhD Kardiolytics/Biofund

Previously at: University of Illinois, Holosurgical, Inteneural Networks

Education:

Cleveland Clinic Lerner College of Medicine, Ohio University, PUM

Founder of Holosurgical and Inteneural; AI-based medtech companies, both acquired; cofounder Dystrogen Therapeutics, cofoudner Biometryks; co-founder of Biofund

Przemysław Tadla Kardiolytics, COO

Previously at: Medicalgorithmics, UL Intenational

Education:

Poznan University of Technology, Master's degree, Automatic Control Engineering and Management

Last 15 years in the Med-Tech industry; Medicalgorithmics, Biometryks & Kardiolytics and in the certification industry at UL International. 2013 to 2021 at Medicalgorithmics as Strategy Director, and later as an Operations and Product Compliance Director.

MDG current, pre-merger outlook

1) Stabilized liquidity and financial situation, "clean" auditor's report after the review of the semi-annual financial statements
2) Significant revenue concentration and dependence on a major customer and US market
3) Need for additional investments to accelerate the completion of key technology projects

Merger rationale

Kardiolytics break-through technology
170,000+ patients undergo long-term ECG monitoring using MDG technology, globally
2,000+ US cardiologists are currently active users of MDG products and will have access to Kardiolytics products
Kardiolytics will leverage the current MDG patient base to accelerate penetration of the market by VCAST

Unique AI technology for heart structure imaging

Unique AI for ECG analysis

Key transaction benefits and goals

1) Increase revenue
2) Optimize the cost structure
3) Complete the key technologies and obtain the related regulatory clearances
4) Start executing on a new, clear technology roadmap
5) Regain investor credibility

Key transaction highlights

▪ Offer valued at PLN 220m for the acquisition of 49.99% of new shares and votes

A cash contribution of PLN 13.8m and an in-kind contribution of all shares in Kardiolytics, which are valued at USD 44.9m (appraisal of Baker Tilly TPA). A cash contribution of PLN 13.8m within 36 months as (if) needed

▪ Value creation potential from synergistic merger of offerings from MDG and Kardiolytics

Leveraging MDG client and patient base, doubling competence of AI technology in cardiological diagnostics and monitoring, sharing other know-how and resources: FDA approvals, distribution networks, US contact and presence, corporate resources. The sole competition in the Kardiolytics space is HeartFlow with a valuation of more than \$2 billion ¹

▪ New leadership and direction

Biofund comes with clear strategic vision, scientific background and strong business track record

▪ Attractive valuation – 44.27 PLN per share

Approximately 6x higher than the market value prior to the deal announcement; after the announcement stock price almost doubled

▪ Conclusion of the strategic options review

By signing the investment agreement with Biofund, MDG Management Board has concluded its strategic options review

Transaction structure

Biofund Capital Management LLC to acquire 49.99% - 4,976,384 new shares for PLN 13.8m in cash and 100% shares in Kardiolytics valued by Baker Tilly TPA at USD 44.9m
The issue price PLN 44.27 per share

Nearly 6x times the average pre-deal share price of PLN 7.66

▪ Corporate Governance

For two years following the Transaction Closing, Investor will vote for the election of two members of the Supervisory Board from among candidates proposed by the Company's minority shareholders, other than individual shareholders, who hold shares that entitle them to no less than 3% and no more than 10% of votes

About Kardiolytics and Biofund

The mission of Biofund is to develop and facilitate the use of advanced technologies based on AI to dramatically accelerate progress in medicine, make advanced medical procedures available to those who currently have no access to advanced care and this way, make the world a better place.

Kardiolytics Inc. is one of Biofund members. It is a Chicago-based Artificial Intelligence company specializing in Cardiology. The company was founded in 2018 by a pioneer in Data Mining and Big Data Learning - Paul Lewicki PhD (the founder of StatSoft and STATISTICA) and a surgeon Kris Siemionow MD, PhD (the founder of Holosurgical and Inteneural; AI-based medtech companies, both acquired), and it includes a team of clinicians, researchers, and AI software engineers. The headquarters and R&D center are located in the US (Chicago), with the external support of two other R&D groups located in Poland (Poznan and Zabrze).

The goal of Kardiolytics is to make advanced, highly accurate diagnostics of the heart - inexpensive and widely available, including the parts of the world that currently have limited access to advanced medical diagnostics. The technology developed by Kardiolytics allows clinicians to rapidly analyze medical imaging data of the heart and its blood vessels in order to allow doctors to effectively develop treatment plans.

Past Professor of Psychology UT
Founder and CEO of StatSoft (acquired by Dell in 2014)
Big Data Pioneer
Entrepreneur, large multinational company CEO (StatSoft had 30 overseas offices in all major markets and over 1M B2B users across various industries)
Past director NASDAQ med tech company
h-index 22
8,000 citations

Prof. Paul Lewicki, PhD Dr. Kris Siemionow, MD, PhD

Past Chief of Spine Surgery and Associate Tenured Professor of Orthopaedics and Neurosurgery at the University of Illinois
Past Co-founder Holosurgical (AI for neurosurgery)
Past Co-founder Inteneural Networks (Brain MRI analytics); acquired
Past Chief Medical Officer NASDAQ medtech
Over 100 scientific publications
Over 50 patents
h-index 18

Investor Presentation | 9 Investor Presentation | 9

Kardiolytics: technology overview

Kardiolytics Inc. has developed technology that uses Artificial Intelligence to derive crucial diagnostic information about narrowing of the heart blood vessels (atherosclerosis), from inexpensive and widely available imaging (CT-scans) of the heart. This diagnostic information has been one of the most important and most widely used in Cardiology, but one that normally can be obtained only by applying complex, expensive, and highly invasive procedures that involve inserting probes into the heart and require highly qualified staff and infrastructure.

The Kardiolytics cardiac test (VCAST) is rapid, inexpensive and entirely noninvasive. It provides personalized, color-coded, 3D modeling of the coronary arteries combined with detailed, functional diagnostic information regarding blood flow. This includes computed quantities of blood, pressure, and velocity and is designed to assist the physician both in completing the diagnosis and designing the treatment plan for coronary artery disease.

VCAST is a cloud-based software, and its unique technological advantage is a set of AI algorithms for segmentation and stenotic vessel reconstruction.

Kardiolytics: VCAST supported patient diagnostics

Kardiolytics: intellectual property

Kardiolytics Inc. holds a wide range of patents and patent applications pending (10) protecting the technology used by VCAST system. Among the most important ones are:

Autonomous segmentation of contrast filled coronary artery vessels on computed tomography images
Method for determining the significance of stenosis
Method for machine learning based segmentation of contrast filled coronary artery vessels on medical images
Method for modeling blood vessels and blood flow

US2021290076A1; EP3884848A1; EP3719744A1; US2020105420A1; EP3629341A1; US2020320751A1; EP3726460A1; US2020349712A1

Kardiolytics: VCAST product development roadmap

Kardiolytics: competitive landscape

	VCASTTM
FFRct	✔️	✔️	➖
RFR	✔️	➖	➖
EFR	✔️	➖	➖
Stenosis	✔️	✔️	✔️
Plaque assessment	Full	Full	● Non-Calcified Plaque (NCP) ● Calcified Plaque (CP) ● Low-Density Non- Calcified Plaque (LD- NCP)
Distance Measurements	✔️	✔️	✔️
Segmentation of region of interest	Automatic	Manual and Semi-Automatic	Manual and Semi-Automatic
Turnaround time	< 2h	> 4h	> 2h
Product Approvals	USA, Europe (planned)	USA, Europe, Japan	USA
Amount Raised	-	\$650M	\$280M
Company Valuation	N/A	\$2.4b 1	\$0.9—1.3b 2

2023 POST MERGER KL-MDG product portfolio

The combined MDG+KL portfolio of products by the end of 2023 can diagnose and treat a population of 10 million+ potential patients in the USA alone

NEW product portfolio – business continuity products (SHORT TERM)

NextGen software

Web-based platform for ECG analysis. The successor of the PC Client software
NextGen is integrated with DRAI and can analyse signals recorded by Qpatch and PocketECG
Can deliver automatically generated reports
Can be integrated with thirdparty ECG devices

NextGen(cloud) software platform

P4 LTEm

An updated and upgraded version of the "tried and true" PocketECG recorder developed for the OUS markets
Integrated with the NextGen software
Has a communication module compatible with telecommunication infrastructure worldwide

DRAI

▪ AI algorithm that can automatically analyze signals from Q Patch and PocketECG IV

Under development and review (MID TERM)

VCAST

Automatic analysis workflow powered by AI algorithms:

AI-powered coronary analysis for uploaded CT-scans (Segmentation of 3D models and vessel reconstruction using the mesh models)
Numerical simulation performed in AWS cloud
Plaque location and basic plaque classification - soft, calcified
User will have available vessel parameters like color-coded diameter and diameter in mm, degree of coronary stenosis and FFR value
Automatically generated reports

NextGen P5 Monitor

The product will allow monitoring patients with arrhythmia, CHF, undergoing cardiac rehab
2 in 1 device. Modular, multichannel ECG device (Patch, 4 channel Holter & MCT)
Built-in additional sensors: temperature, SpO2, microphone
Compatible with MDG AI algorithms

DRAI 2.0

▪ AI algorithm that can automatically analyze signals from Patch (including thirdparty products), multichannel Holter, and MCT ECG recordings (including third-party products)

NEW product portfolio and new research projects (LONG TERM)

NextGen ICM

Implantable Cardiac Monitoring is a device for very long-term cardiac patient AIdriven monitoring (up to 3 years)
The product is designed to detect arrhythmias and all basic vital parameters in patients with Congestive Heart Failure
- Cough, heart and lung auscultation
- Position and activity
- Temperature

Vagal Nerve Stimulator (VNS)

Implantable device for treatment of Heart Failure patients
It is designed to treat patients recovering from heart attack and stroke
It is also designed to be used for rheumatoid arthritis, epilepsy and depression treatment

Long-term wellbeing monitoring

Cooperation with wearable device manufacturers
The goal is to build a new type of AI-based software for longterm monitoring of patients with a wide variety of disorders
The new software will use PPG data together with additional information collected by the patient's phone and smartwatch (i.e., in the Apple Health app) to support healthy living

Strategic Initiatives roadmap

NOW

New Corporate Strategy for the next 3 years
New technology roadmap aligned with Corporate Strategy (Imaging & ECG products)
Employment optimization, Gap analysis of required staff needed to deliver new technology roadmap
RnD reorganization and expansion based on the identified gaps in competencies
Overhaul of marketing, KOLs, rebuilding Investor Relations
KPIs for each team to be reviewed monthly, quarterly and annually
Initiation of the validation testing of VCAST 1.0
Initiation of R&D of NextGen P5 for arrhythmia with CHF monitoring capabilities (multisensor, modular device)

SHORT TERM

MDG NextGen launch in the USA
MDG NextGen launch OUS
QPatch launch for the US customers
Acquire 5 customers for DRAI licensing - test of the new business model
Strategic partnership with at least 3 big ECG equipment manufacturers
VCAST 1.0 FDA certification
Initiate VCAST 1.0 CE Mark (Q1)
Continue with VCAST 2.0 R&D
New research projects Start NextGen ICM for cardiac patient monitoring (arrhythmia, CHF)
Non-dilutive financing (NCBiR, etc.) for R&D projects

MID TERM

VCAST commercial launch for the US customers
VCAST 2.0 FDA certification
Initiate VCAST 3.0 RnD
Launch NextGen P5 v1.0 for arrhythmia with CHF monitoring capabilities (multisensor, modular device: patch and PocketECG capabilities)
Initiate Vagal Nerve Stimulator (VNS) for Heart Failure RnD
NextGen ICM first in Man
NextGen ICM start certification

LONG TERM

Initiation of the VCAST sales in the EU + Australia + Canada
Launch NextGen ICM for cardiac patient monitoring (arrhythmia, CHF)
VNS first in man
Initiate VCAST 4.0 RnD

2025 Future product portfolio for the WHOLE cardiology department

Fully leveraging the know-how of combined MDG+KL will by 2025 create a comprehensive portfolio of technologies covering all stages of the cardiac patient journey

Summary

1) AI powered medical technology company

2) Increased revenue and profitability

3) Optimized operations

Regain investor credibility and increase shareholder value

Next steps

1) October 28 2022 Transaction to be voted on by shareholders

2) Biofund and MDG to decide on the fulfilment of the Investment Agreement conditions and on the execution of the transaction

Appendixes

Investor Presentation Investor Presentation | | 24

Currently planned use of funds

70%

Diversify US distribution (New US distribution for VCAST and strengthen MDG distribution worldwide)
Speed up NextGen release
QPatch introduction to the US and EU market
DRAI as an independent product for third party medical products
Initiation of AI research in the area of resting ECG, signals collected by wearables, automation of the analysis workflow
Hiring marketing, business development, sales

30%

FDA certification (510k)
New AI algorithms for plaque analysis and calcium score assessment
Clinical research in the areas of flow analysis, plaque, calcium score
VCAST integration with PACS systems

Commitment by BioFund to provide additional financing up to PLN 13,8m to combined entity for min. 36 months (as needed):

To speed up combined entities growth
Especially if Medi-Lynx contract is terminated
To support strategic acquisitions and co-development agreements
To support NCBIR and other grant financing (grants for the research projects aiming to automate the analysis process of ECG and imaging data)

Kardiolytics reimbursement

✓ Centers for Medicare & Medicaid Services have established numerousreimbursement codes where VCAST can be used.
✓ The VCAST meets the requirements of FFRCT and plaque analysis reimbursement codes
✓ Centers for Medicare & Medicaid Services (CMS) have established a national payment rate for the FFRCT Analysis in office-based settings,such as doctors' offices and imaging centers of \$930.34
✓ For the analysis in the hospital outpatient setting CMS continues to provide a national payment rate of \$950.50
✓ New reimbursement code for automated quantification and characterization of coronary atherosclerotic plaque to assess the severity of coronary disease, using data from coronary computed tomographic angiography. The estimated rate is ~\$1,000

Benefits from the transaction - global leader

The merger is a strong fit for both companies' strategy to transform cardiac patients monitoring and treatment: the combination of Kardiolytics' breakthrough imaging technology for the inpatient setting with Medicalgorithmics' leading cardiac diagnostics and monitoring technology for the outpatient setting
The total Addressable Market for the combined portfolio will be 10 million+ patients in the USA
Kardiolytics state-of-the-art AI for heart imaging combined with Medicalgorithmics AI for the ECG analysis enables building a future global leader in patient care management solutions cardiac patients from the hospital and outpatient populations
Product Portfolio innovation With our collective portfolios, AI expertise, and services platforms, we will be in an optimal position to improve patient care across care settings for cardiac diseases and medical conditions
Operational efficiencies due to shared sales and marketing teams