Duravest acquires controlling interest in Bio-Magnetic Therapy Systems

30 November 2005

Frankfurt, Germany. Duravest, Inc. has completed an agreement to acquire a controlling stake in Bio-Magnetic Therapy Systems, Inc. (BMTS). BMTS is a German-US medical technology firm dedicated to the safe, non-invasive treatment of osteoarthritis, osteoporosis and orthopedic injuries using its innovative and patented "Pulsed Signal Therapy" (PST) system. This delivers a unique pulsed electromagnetic signal that has been shown to stimulate the healing of connective tissue (cartilage, tendons, ligaments and bone) injuries.

These electromagnetic pulses mimic (without any discernable side-effects) the body's own natural signals that in the absence of pathology would otherwise stimulate connective tissue growth and repair. The PST system has been extensively validated by more than 25 clinical studies and 60 peer reviewed publications worldwide; in addition, 51 international patents are currently in force that cover all the essential technical innovations as well as current and future treatment indications for PST. To date more than 300,000 patients have been treated using proprietary CE-Mark approved and ISO-9000 certified equipment with a documented clinical success rate of over 75%.

BMTS has reported audited 2004 revenues of $7.5M with an associated EBITDA of $0.76M and net income of $0.87M. Over the past two years revenue growth has exceeded a 35% average annual growth rate. The Duravest acquisition and accompanying investment will help accelerate BMTS' historical earnings growth by enabling the company's strategy to internationalize the distribution network. The BMTS market is presently well established in Germany and sales will be expanded to include Benelux, France, Spain, Scandinavia and Italy in 2006 and Asia in 2007/2008.

Investigational Device Exemption (IDE) status has already been granted by the U.S. FDA to BMTS and the company plans to achieve FDA approval in 2008. Dr. Ogan Gurel, CEO of Duravest, Inc., commented that "the acquisition of a controlling interest in BMTS is a significant milestone in the advancement of Duravest's mission and business strategy. This non-invasive, safe and strongly patented technology is a breakthrough in the treatment of musculoskeletal disorders and associated pain management. Furthermore, this enhancement of the Duravest portfolio to include BMTS — a company with outstanding earnings growth potential, an impeccable balance sheet, no bank debt and both historical and projected positive cash flow — will substantially bolster Duravest's financial strength and its ability to deliver new treatments for patients and increased value to shareholders for many years to come."

As part of the acquisition transaction, active discussions with Dr. Rolf Kaese to replace the scientific founder Dr. Richard Markoll as Chief Executive Officer of BMTS have been accelerated. Dr. Kaese was previously CEO of Impella CardioSystems AG at which he successfully restructured the company, obtained EUR 17M in venture capital investment, introduced four new products in Europe and led the sale of the company to Abiomed — the leader in cardiovascular circulatory support technologies — for $65M in April, 2005.

Dr. Kaese remarked: "I am very much looking forward to filling the CEO role at BMTS in the very near future. Personally, I am absolutely convinced that the BMTS technology will be a critical part of the armamentarium of safe, efficient pain management and treatment for a number of orthopedic conditions. I am also very excited to be associated with the innovative team at Duravest and am looking forward to potentially joining the Duravest Board of Directors."

Dr. Gurel also added that: "In addition to Dr. Kaese's upcoming leadership of BMTS, his industry-leading background and outstanding experience in the cardiovascular device sector will also provide Duravest with invaluable expertise, scientific input, and industry contacts towards the development and commercialization of our other cardiac-related technologies in our portfolio."

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