Lenexa Medical SAFE Note 2022
Lenexa Medical Wholesale
This offer is exclusively open to wholesale, sophisticated and accredited investors.
Lenexa Medical have already raised 60% of the $1m raise.
All investments will be held through the Equitise Nominee. The Equitise Nominee is a Bare Trust structure that holds securities on behalf of the investor. The Nominee is in place to handle administrative responsibilities on behalf of the company and to limit total shareholder numbers. Investors are entitled to the same rights as they would directly on the share register. More information can be found in the Investment Agreement, accessible at the final stage of investing.
The minimum investment for this offer is $10K. Lenexa Medical has a limited allocation of $490K remaining via this SAFE note round as a bridge to an upcoming Series A. The company has already raised over $510K in this round through SAFE notes and grant funding. To date, Lenexa Medical has raised close to $1.5m across several rounds, including repeat investment from Artesian Venture Capital and Angel investors.
- Security Type: SAFE note 20% Discount to Series A
- Minimum Investment: $5K
Key Documents
Company Overview
Lenexa Medical Pty Ltd was established with the aim of providing superior care for patients at risk of pressure injuries (PI). The company is currently developing a portfolio of medical technologies aimed at transforming the standard of care for pressure injury management and patient monitoring. Pressure injuries, despite being easily avoidable, are a significant problem in acute health care, long term health care and aged care. Patients who have cardiovascular and respiratory illnesses are at increased risk of developing PI that can lead to a 5x higher mortality rate than patients without PI.
Lenexa is developing an integrated hardware and software driven solution that collects and interprets data using a proprietary machine learning algorithm to provide more effective patient care. The company’s patented solution, the Lenexa Smart Sheet, is a cost-effective way to identify the patients at risk of PI. The Smart Sheet is a continuous patient management system that monitors patient position in real time and provides relevant data and recommendations to health care providers.
Competitors in this area are focused on developing treatments for PI, or are non-specific alarm-based systems requiring manual input. This presents Lenexa Medical with a strategic opportunity to develop a medical device focused on enabling prevention of PI rather than a cure.
Investment Highlights
- ARTG Listing
Lenexa Medical has recently received Australian regulatory approval through listing on the Australian Register of Therapeutic Goods (ARTG). This means that the technology is now allowed to be purchased by hospitals and aged-care facilities.
- Strong traction and early interest
Lenexa has received significant interest from a range of metropolitan and regional Victorian hospitals to trial the Smart Sheet technology. The company has already secured an in-principle agreement to supply 1000 units to a leading US distributor of hospital beds. Lenexa has raised $2m in grant and seed funding to date and is backed by Artesian Venture Capital and numerous Angel investors.
- Innovation recognised
In addition to significant early interest for trials and orders, Lenexa has been chosen as one of Australia's most exciting companies at the Australia Technologies Competition in 2021. Most recently, Lenexa was chosen as a finalist in the Australian Healthcare Week Pitch-Fest, the largest healthcare event in Australia. This recognition further validates the unique and innovative work the company is undertaking.
- Unique product and value proposition
The Lenexa Smart Sheet is a first mover in its category. Lenexa’s software provides clinicians with the information needed for personalised pressure injury prevention reducing the need for treatments or prolonged monitoring. This differs from the majority of existing products which are aimed at treating PI rather than prevention.
- Strong technology and IP
Prototypes and software testing have been completed, and the company is currently undergoing clinical trials at two major Victorian hospitals where over 12,000 hours of observational data has already been captured. The algorithms have been tested to demonstrate on over 99% predictive accuracy in detecting patient position on the bed.
- Strong team, board and advisors
Lenexa is led by an exceptionally talented and capable team of founders with deep experience across healthcare, engineering, business consulting and clinical research experience. The company also has a well-connected Board of Directors and Advisory Panel.
- Regulatory pathway to US and Europe identified
Lenexa has identified a favourable regulatory environment which will drive adoption in our key target markets. Since the product is classified as a low-risk device, the company has begun the process for FDA approval which is expected to be granted by mid-2022 followed by CE approval in 2023.
- Large addressable market
The addressable market includes both hospitals and aged care. The hospital market will be targeted first with an addressable market value of $51 billion. The aged care addressable market is even greater with the US homecare market expected to reach US$225 billion by 2024 representing a CAGR of 10%. There is also an estimated health aide shortage of 446,000 validating the need for auto risk detection provided by the Smart Sheet. Preventable PI complications cost over $2 billion in Australia each year.
How the Smart Sheet works
The Smart Sheet comes is a fabric-based sensor that is incorporated into a regular mattress cover. It is essentially indistinguishable from a regular mattress cover. A monitoring hub is connected to the Smart Sheet and placed beside the bed. Once turned on, the smart sheet begins to collect patient data and processes through Lenexa’s machine learning algorithms. The software solution is flexible allowing the analysed patient positioning and pressure area data to be presented on any communication platform. The Lenexa solution will enable clinicians to provide personalised and targeted pressure injury prevention to the patients who need it most.
"We’re [currently] just relying on our eyes … and if the light’s bad you miss it."
Market Opportunity
Lenexa aims to deploy its technology globally in the US, UK and Australia, with a total addressable market of $51 billion for health care. In the US, the treatment costs for PI are estimated to exceed US$26.8 billion, giving Lenexa a substantial serviceable addressable market. Locally, preventable PI complications cost over $9 billion every year.
If successful, Lenexa will target the aged care market in the same countries. Aged care presents an even more lucrative market where the federal budget in Australia for aged care exceeded $18 billion, or $65,000 per person, in 2016. Research has also shown that the prevalence of PI in long-term health care has been reported between 9-31%, indicating the need for an affordable and effective method of preventing PI before the onset of symptoms.
Revenue Model
Lenexa’s revenue model will comprise two components that will independently generate revenues. The company operates both a hardware and SaaS model, providing strong upfront cash flows bolstered by ongoing recurring revenue.
- Smart sheet sensor (hardware)
- Software system and annual SaaS data subscription model
This diversified revenue model will allow Lenexa to avoid cyclicality of hardware sales and create a sticky ongoing revenue stream for long-term clients.
