Qt vascular treatment

Medical Equipment & Svs│Singapore
May 30, 2014
QT Vascular COMPANY NOTE
The future of vascular medicine
The story of QT Vascular (QTV) has never been about its turnaround. It is
about how a tried-and-tested technology is finding its way back to the
physician’s table, after a breakthrough. It is about how one can participate in
the growth of an early-stage medical company with a star-studded cast of
expert investors. This is the story of QTV!
We initiate coverage with an Add
rating and target price of S$0.64,
a plain-vanilla minimally-invasive
vascular device.
Billion-dollar questionbased on blended P/Sales,
EV/EVITDA, P/E, EV/Sales and
DCF valuations. QTV’s outreach may
seem aggressive but is certainly not
Already
FDA-approved
equipped
peripheral
with
artery
products, the company’s next game
changer lies in a penetration of the
US$8bn worldwide coronary disease
treatment market. In our opinion,
various geographical approvals for
coronary balloon catheters will bring
QTV’s growth trajectory to the next
level.
Playing the money game
outlandish, in our view, given
and
with
product
exclusive
reputable
creations
adoption globally
partnerships
distributors. Pipeline
and staggered approvals
‘‘ are key to transforming thisI spend a lot of time in
early-stage incubator into a serious
contender in the global vascular
market, leading to maiden profits
hospitals all over the world to see
how we can treat patients in very
critical situations, where other
technologies didn’t work.
Avoiding amputations and
decreasing the risk of heart
attacks are important goals. A
patient that asks to be treated
with Chocolate, or a call from a
physician who shares how my
product saved his patient… those
are extremely satisfying.”
– Dr Eitan Konstantino, President & CEO
Globally,
distribution
renowned
QTV has forgedand potential
giants.
M&As with medical
agreements
distributors
with
(Century
Vascular market reshaped
The exit of the-then drug-eluting
stent market leader, Johnson &
Johnson in 2011, and China’s
Shandong Weigao in 2012 offers
Medical, Weigao and Cordis) to
distribute its products. This is
important, as a previous lack of scale
and networks has been addressed,
paving the way for an eventual
lowering of distribution costs and ainsights
patients
invasive
disease.
into how physicians and
are re-thinking the use of
treatments for vascular
The successful penetration
widening catchment of global
hospitals/physicians. Schemes of
distribution agreements are
instrumental in helping QTV lower
its opex, in our view, possibly
turning around its bottom line.
of its flagship Chocolate balloon in
the US and GliderXtreme in Japan
speaks volumes about QTV’s
innovation and success in re-shaping
Financial Summary
Dec-12A Dec-13A Dec-14F Dec-15F Dec-16F
SOURCE: CIMB, COMPANY REPORTS
IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT.
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Revenue (US$m) 1.45 5.47 13.53 28.03 44.93
Operating EBITDA (US$m) (13.13) (16.91) (11.96) 2.17 15.11
Net Profit (US$m) (4.01) (34.52) (13.11) 0.95 11.48
Normalised EPS (US$) (0.007) (0.053) (0.017) 0.001 0.015
Normalised EPS Growth (69%) 626% (67%) NA 1113%
FD Normalised P/E (x) NA NA NA 251.4 20.7
DPS (US$) - - - - -
Dividend Yield 0% 0% 0% 0% 0%
EV/EBITDA (x) NA NA NA 104.1 14.5
P/FCFE (x) NA NA NA NA 41.21
Net Gearing (103%) (60%) (94%) (74%) (67%)
P/BV (x) NA NA 14.44 13.65 8.23
ROE 15% 167% (583%) 6% 50%
% Change In Normalised EPS Estimates
Normalised EPS/consensus EPS (x)
Price Close Relative to FSSTI (RHS)
0.450 155.0
0.400 143.0
0.350 131.0
0.300 119.0
0.250 107.0
100
Apr-14 May-14 May-14 May-14
Source: Bloomberg
52-week share price range
0.40
0.28 0.41
0.64
Current Target
————————————————————————————————————————
Gary NG
T (65) 6210 8699
E gary.ng@cimb.com
Company Visit Expert Opinion
Channel Check Customer Views
————————————————————————————————————————
Notes from the Field
QTVC SP / QTVC.SI
Current S$0.40
Target S$0.64
Prev. Target S$
Up/Downside 62.0%
Market Cap
US$238.0m
S$298.6m
Avg Daily Turnover
US$4.49m
S$5.63m
Free Float
42.0%
755.9 m shares

QT Vascular
May 30, 2014
PEER COMPARISON
Calculations are performed using EFA™ Monthly Interpolated Annualisation and Aggregation algorithms to December year
ends. NPAT/EPS values for calculations and valuations are based on recurring and normalised values for GAAP and IFRS accounting standard companies
respectively.
2
Growth and Returns
FD EPS Growth (See Footnote) ROE (See Footnote) Dividend Yield
Dec-13 Dec-14 Dec-15 Dec-13 Dec-14 Dec-15 Dec-13 Dec-14 Dec-15
Biosensors Int'l -45.9% -14.0% 21.5% 5.0% 4.2% 5.0% 0.65% 0.00% 0.00%
QT Vascular 625.9% -67.2% NA 166.5% -583.2% 5.6% 0.00% 0.00% 0.00%
Valuation
FD P/E (x) (See Footnote) P/BV (x) EV/EBITDA (x)
Dec-13 Dec-14 Dec-15 Dec-13 Dec-14 Dec-15 Dec-13 Dec-14 Dec-15
Biosensors Int'l 21.44 24.93 20.52 1.05 1.04 1.00 13.33 13.69 11.15
QT Vascular NA NA 251.36 NA 14.44 13.65 NA NA 104.09
Peer Aggregate: P/BV vs ROE
5.00 30.0%
4.50 27.0%
4.00 24.0%
3.50 21.0%
3.00 18.0%
2.50 15.0%
2.00 12.0%
1.50 9.0%
1.00 6.0%
0.50 3.0%
0.00 0.0%
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15
Rolling P/BV (x) (lhs) ROE (See Footnote) (rhs)
Peer Aggregate: 12-mth Fwd FD P/E vs FD EPS Growth
50 150%
45 125%
40 100%
35 75%
30 50%
25 25%
20 0%
15 -25%
10 -50%
5 -75%
0 -100%
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15
12-mth Fwd FD P/E (x) (See Footnote) (lhs) FD EPS Growth (See Footnote) (rhs)
Rolling P/BV (x)
5.00
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
Biosensors Int'l QT Vascular
12-month Forward Rolling FD P/E (x)
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
Biosensors Int'l QT Vascular
Research Coverage
Bloomberg Code Market Recommendation Mkt Cap US$m Price Target Price Upside
Biosensors Int'l BIG SP SG HOLD 1,292 0.96 1.01 5.8%
QT Vascular QTVC SP SG ADD 238 0.40 0.64 62.0%

QT Vascular
May 30, 2014
BY THE NUMBERS
Normalised EPS Growth
400%-1,000%
200%
-4,000% 0%
-6,000% -200%
Turnaround hinges on wider
sales channels achieved
through anchored
distributors. EBITDA
breakeven could come about
in 2H15.
Cash burn is improving
significantly with the
commercialisation of
products worldwide. IPO
proceeds are instrumental in
turning its operating cash
flow (and eventually free
cash flow) positive in a year’s
time.
3
Cash Flow
(US$m) Dec-12A Dec-13A Dec-14F Dec-15F Dec-
16FEBITDA (13.13) (16.91) (11.96) 2.17
15.11Cash Flow from Invt. & Assoc. 2.76 5.78 (3.02) 0.00
0.00Change In Working Capital 0.26 0.75 0.19 (2.42)
(1.63)(Incr)/Decr in Total Provisions
Other Non-Cash (Income)/Expense
Other Operating Cashflow 0.33 14.15 5.61 4.71
(1.53)Net Interest (Paid)/Received (2.86) (17.84) (1.40) (0.81)
(0.77)Tax Paid 0.00 0.00 0.00 (0.09)
(1.69)Cashflow From Operations (12.64) (14.08) (10.58) 3.55 9.49
Capex (0.10) (0.18) (2.00) (2.30)
(2.50)Disposals Of FAs/subsidiaries
Acq. Of Subsidiaries/investments
Other Investing Cashflow (0.58) (4.08) (2.00) (3.00)
0.00Cash Flow From Investing (0.68) (4.26) (4.00) (5.30)
(2.50)Debt Raised/(repaid) 12.32 14.61 1.50 (6.40)
(1.22)Proceeds From Issue Of Shares 0.96 3.94 40.65 0.00
0.00Shares Repurchased
Dividends Paid 0.00 0.00 0.00 0.00
0.00Preferred Dividends
Other Financing Cashflow 0.00 0.00 (3.00) 0.66
0.43Cash Flow From Financing 13.28 18.55 39.15 (5.74)
(0.79)Total Cash Generated (0.04) 0.22 24.57 (7.50)
6.20Free Cashflow To Equity (1.00) (3.73) (13.08) (8.16)
5.77Free Cashflow To Firm (10.46) (0.50) (13.47) (1.16)
7.49
Profit & Loss
16FTotal Net Revenues 1.45 5.47 13.53 28.03
44.93Gross Profit (1.17) (0.39) 4.74 16.82
35.95Operating EBITDA (13.13) (16.91) (11.96) 2.17
15.11Depreciation And Amortisation (0.96) (0.96) (0.68) (0.68)
(0.68)Operating EBIT (14.09) (17.87) (12.64) 1.48
14.43Financial Income/(Expense) 8.31 (17.74) (0.82) (0.38)
(0.23)Pretax Income/(Loss) from Assoc. 0.00 0.00 0.00 0.00
0.00Non-Operating Income/(Expense) 0.00 0.00 0.00 0.00
0.00Profit Before Tax (pre-EI) (5.78) (35.60) (13.46) 1.10
14.20Exceptional Items
Pre-tax Profit (5.78) (35.60) (13.46) 1.10
14.20Taxation (0.00) (0.00) 0.00 (0.13)
(2.41)Exceptional Income - post-tax
Profit After Tax (5.78) (35.60) (13.46) 0.97
11.78Minority Interests 1.76 1.08 0.35 (0.02)
(0.30)Preferred Dividends
FX Gain/(Loss) - post tax
Other Adjustments - post-tax
Preference Dividends (Australia)
Net Profit (4.01) (34.52) (13.11) 0.95
11.48Normalised Net Profit (5.78) (35.60) (13.46) 0.97
11.78Fully Diluted Normalised Profit (4.01) (34.52) (13.11) 0.95 11.48
P/BV vs ROE 12-mth Fwd FD Normalised P/E vs FD
2,000% 700%
1,000% 600%
0% 500%
-2,000%
300%
-3,000% 100%
-5,000% -100%
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15
Rolling P/BV (x) (lhs) ROE (See Footnote) (rhs) 12-mth Fwd Rolling FD Normalised P/E (x) (lhs)
Diluted Normalised EPS Growth (rhs)
Share price info
Share px perf. (%) 1M 3M 12M
Relative 14.3
Absolute 16.2
Major shareholders % held
Three Arch Partners 20.8
Luminor 14.4
BMISIF (EDB) 8.8

QT Vascular
May 30, 2014
BY THE NUMBERS
Financing is needed for the
development of its pipeline
products for commercial
marketing. There is room in
its balance sheet for further
leverage funding.
4
Key Drivers
ASP (% chg, main prod./serv.) N/A N/A N/A N/A
N/AUnit sales grth (%, main prod./serv.) -37.8% 328.6% 137.7% 74.5%
55.0%Util. rate (%, main prod./serv.) N/A N/A N/A N/A
N/AASP (% chg, 2ndary prod./serv.) N/A N/A N/A N/A
N/AUnit sales grth (%,2ndary prod/serv) 21.3% -3.4% 222.6% 290.9%
67.4%Util. rate (%, 2ndary prod/serv) N/A N/A N/A N/A
N/A
Key Ratios
Revenue Growth (28%) 276% 148% 107%
60%Operating EBITDA Growth 22% 29% (29%) NA 598%
Operating EBITDA Margin (904%) (309%) (88%) 8% 34%
Net Cash Per Share (US$) (0.059) (0.010) 0.021 0.018 0.028
BVPS (US$) (0.053) (0.016) 0.022 0.023
0.038Gross Interest Cover (4.93) (1.00) (11.38) 2.48
28.83Effective Tax Rate 0.0% 0.0% 0.0% 12.0%
17.0%Net Dividend Payout Ratio NA NA NA NA
NAAccounts Receivables Days 208.6 80.6 85.2 74.0
63.2Inventory Days 357.0 197.9 142.4 148.1
267.7Accounts Payables Days 380.8 477.2 343.9 178.7 308.4
ROIC (%) (262%) (416%) (78998%) 9%
56%ROCE (%) (37%) (489%) (80%) 6%
46%
Balance Sheet
16FTotal Cash And Equivalents 5.00 5.20 29.39 21.34 27.09
Total Debtors 0.54 1.87 4.45 6.91
8.62Inventories 2.83 3.53 3.34 5.76
7.39Total Other Current Assets 0.00 0.00 0.00 0.00
0.00Total Current Assets 8.36 10.59 37.18 34.01
43.10Fixed Assets 0.79 0.38 2.08 4.08
6.28Total Investments 0.00 0.00 0.00 0.00
0.00Intangible Assets 3.13 6.83 8.45 11.07
10.68Total Other Non-Current Assets 0.19 0.19 0.00 0.00
0.00Total Non-current Assets 4.11 7.39 10.53 15.14 16.96
Short-term Debt 11.36 6.90 4.40 0.00
0.00Current Portion of Long-Term Debt
Total Creditors 3.18 12.78 4.45 6.53
8.62Other Current Liabilities 0.00 0.00 0.00 0.00
0.00Total Current Liabilities 14.54 19.68 8.85 6.53
8.62Total Long-term Debt 25.99 5.48 9.48 7.48
6.26Hybrid Debt - Debt Component
Total Other Non-Current Liabilities 2.41 4.82 12.89 16.34 14.14
Total Non-current Liabilities 28.40 10.30 22.36 23.81 20.39
Total Provisions 1.00 0.00 0.00 0.00
0.17Total Liabilities 43.94 29.98 31.22 30.34
29.18Shareholders' Equity (29.48) (11.99) 16.48 17.43 28.92
Minority Interests (1.99) 0.00 0.00 1.38
1.96Total Equity (31.47) (11.99) 16.48 18.81
30.87

QT Vascular
May 30, 2014
The future vascular medicine
1. BACKGROUND
1.1 Most exciting emerging leader in the treatment of
complex vascular diseases
QTV is an emerging leader in the development and commercialisation of
next-generation minimally-invasive products for the treatment of complex
vascular diseases. It works closely with leading physicians and scientists from
around the world to create differentiated devices that can improve procedural
and clinical outcomes. QTV is based in Singapore, with a US subsidiary,
TriReme Medical, in Pleasanton, California. It was listed on the Catalist of the
SGX on 29 Apr 14.
‘h
‘osp
‘itals all over the world to
I spend a lot of time in
1.2 Leaving nothing behind
QTV’s flagship product, Chocolate, was invented and designed in Singapore
with the collaboration of its team in Silicon Valley. It is a device that provides
stent-like results without stents. Essentially, patients get the same results as
stents, without leaving anything in their systems.
Peering into angioplasty’s history, the first balloons were invented in the late
1980s, with later stents developed to address the shortcomings of balloons and
keep arteries open longer.
Stents have been very effective in addressing coronary blockage but not in the
legs, where blockages are much longer and calcified, with a more hostile
environment for implants. With Chocolate, instead of proceeding to the next
level of stent creation, QTV went back to fundamentals and made a better
balloon. The clinical outcomes for patients and physicians alike have been
fascinating.
see how we can treat patients in
very critical situations, where
other technologies didn’t work.
Avoiding amputations and
decreasing the risk of heart
attacks are important goals. A
patient that asks to be treated
with Chocolate, or a call from a
physician who shares how my
product saved his patient… those
are extremely satisfying.
– Dr Eitan Konstantino, President & CEO
1.3 From an American medical-device start-up to a Singapore
listed company
QTV started out as TriReme in the Silicon Valley nine years ago, founded by its
current President and CEO, Dr Eitan Konstantino.
While its products gained wider acceptance in the US and Europe (FDA
approved with CE marking), Dr Konstantino was adamant that Asia would be
one of the largest markets for QTV’s range of vascular treatment devices.
Singapore makes sense to the group as a springboard to Greater Asia, since the
Republic has a business-friendly environment and its regulators are
enthusiastic about promoting healthcare companies in the country.
Indeed, establishing a presence here has allowed management to understand
the region and conduct business in China, in fact, anywhere in Asia. It has also
enabled the company to attract investors from around the region.
5
Table of Contents
1. BACKGROUND p.5
2. CHOCOLATE EXPLAINED p.6
3. OUTLOOK p.14
4. RISK p.17
5. MANAGEMENT TEAM p.17
6. FINANCIALS p.18
7. VALUATION AND RECOMMENDATION p.21

QT Vascular
May 30, 2014
2. CHOCOLATE EXPLAINED: GENIUS OF A MEDICAL
DEVICE
2.1 Introducing balloon angioplasty
Lower extremity peripheral artery disease (PAD) affects more than 8m people
in the US and more than 202m people globally. PAD is associated with a high
prevalence of coincident coronary artery disease and cerebrovascular disease,
which serve to increase patient morbidity and mortality.
Balloon angioplasty remains the core of lower extremity
endovascular intervention. For patients with symptomatic lower extremity
PAD, the assuagement of pain, prevention of amputation, preservation
ambulatory/functional status, cardiovascular protection and containment
healthcare costs are important. The safety, efficacy and lower cost
of
of
of
endovascular interventions compared with surgical revascularization have been
previously demonstrated. Balloon angioplasty, either as primary or adjunctive
therapy for stents and other devices, remains the core of lower extremity
endovascular intervention.
Ongoing improvements in angioplasty balloon design, catheters,
and stents serve to further increase acute technical success, primary
patency and the long-term viability of lower extremity endovascular
intervention. However, flow-limiting dissection, the need for bailout stenting,
and the need for target lesion revascularization (TLR) remain frustrating
concerns for the endovascular specialist.
2.2 QTV’s Chocolate PTA
The technique of balloon inflation during angioplasty is of paramount
importance to the end result: under-inflation can lead to elastic recoil, whereas
over-inflation can lead to neointimal hyperplasia, either of which could result in
restenosis. Achieving the best possible result with angioplasty entails
minimising the strain on the vessel wall. The standard angioplasty balloon
unfolds with inflation, resulting in the application of force in a non-uniform
manner to the stenotic lesion.
Uncontrolled expansion with the standard angioplasty balloon results in
increased torsional (Figure 1), longitudinal (Figure 2) and radial (Figure 3)
stresses that can strain the vessel wall and increase the incidence of dissection,
elastic recoil and abrupt vessel closure.
6
Figure 1: Torsional stress can be imparted on the vessel wall through a twisting motion when a plain balloon unfolds
during
inflation
SOURCES: MAY 2014 INSERT TO ENDOVASCULAR TODAY (sponsored by Cordis Corp)

QT Vascular
May 30, 2014
2.3 Controlled dilatation technique can address these
challenges and ultimately lead to much better flow
QTV’s Chocolate Percutaneous Transluminal Angioplasty (PTA) Balloon
Catheter (distributed by Cordis Corporation) is a novel balloon catheter with a
mounted nitinol-constraining structure, specifically designed for uniform,
controlled inflation and rapid deflation, resulting in atraumatic dilatation
without the need for cutting or scoring (Figure 4).
7
Figure 3: Radial stress outwardly expands the vessel wall when a plain balloon unfolds during inflation
Figure 2: Longitudinal stress elongates the vessel wall when a plain balloon unfolds during inflation

QT Vascular
May 30, 2014
2.4 Use of pillows and grooves
The nitinol-constraining structure of the Chocolate PTA Balloon creates balloon
segments or “pillows” that make contact with the vessel and functions to
minimise local forces. The “grooves” facilitate plaque modification (Figure 5).
The distinctive pillows and grooves serve to minimise vessel trauma, reducing
the rate of dissection and decreasing the need for bailout stenting.
In addition, the Chocolate PTA Balloon retains its cylindrical shape while
deflating and facilitates lesion recrossing after multiple inflations. It is an
over-the-wire balloon dilatation catheter that is compatible with 0.014- and
0.018-inch guidewires. It is available in sizes to treat both above- (ATK) and
below-the-knee (BTK) lesions, with balloon diameters of 2.5-6 mm, balloon
lengths of 40-120 mm and catheter lengths of 120-150 cm.
8
Figure 5: The Chocolate PTA Balloon Catheter with distinctive “pillows” and “grooves” that serve to reduce vessel wall trauma
Figure 4: Finite Element Analysis of vessel wall stress of the Chocolate PTA Balloon
Catheter compared with a conventional PTA balloon catheter

QT Vascular
May 30, 2014
2.5 QTV brings forth an amazing medical solution
Chocolate PTA design represents a breakthrough in PTA balloon
catheters (for the treatment of PAD). The Chocolate PTA is used for the
treatment of patients with vascular disease in their legs. It was designed to
provide predictable, uniform and less traumatic dilatation of peripheral
vasculature. It has demonstrated a very low rate of dissections and bail-out
stenting in clinical studies in the US.
QTV’s product pipeline includes a drug-coated Chocolate balloon.
This will combine the acute benefits of the Chocolate PTA with paclitaxel-based
coating, an anti-proliferative drug that has been shown to be efficacious in the
prevention of a re-narrowing of the artery over time (see outlook).
9
Figure 7: QTV’s flagship product, Chocolate: drug-coated and coronary versions
are in the making
* Based on Chocolate BAR clinical study results with 350 patients
SOURCES: COMPANY REPORTS
Figure 6: The Chocolate® PTA Balloon Catheter

QT Vascular
May 30, 2014
QTV’s catheters are available in the US and northern Europe, Germany and
Turkey. In Asia, its Glider range is available in China, Japan and Singapore.
10
Figure 9: Ongoing clinical trials for PAD
Est. study
completion
Study name Product date Sponsor Details
DEFINITIVE AR Cotavance DCB Jun-14 Coviden/MEDRAD Testing DCB use alone compared to atherectomy device and DCB.
EXCITE ISR (Laser) Jun-14 Spectranetics Testing laser and balloon angioplasty together and alone.
DURABILITY II Proteger Aug-14 Covidien Testing use of stent alone.
EverFlex Stent
DESTINY 2 XIENCE PRIME Nov-14 Flanders Medical Research Program Long-term efficacy study of coronary stent in PAD.
PACE (ALDH Bright Cells) May-15 University of Texas & NHLBI Testing use of stem cells injections to improve blood flow.
OSPREY Misago SX Jul-15 Terumo Testing stent.
OPEN FlexStent SX Sep-15 Flexible Stenting Solutions Testing use of stent for PAD.
STANCE Arsenal BVS Sep-15 480 Biomedical Testing bioresorbable scaffold.
IN.PACT SFA I IN.PACT DEB Jun-16 Medtronic Testing DCB use in SFA and proximal popliteal artery.
LEVANT II Moxy DCB Dec-16 Lutonix Testing DCB use in SFA.
INPACT-DEEP IN.PACT DEB CLOSED Medtronic Testing DEB in tibial vessels. Trial stopped and product recalled.
IN.PACT SFA II IN.PACT DEB Jun-18 Medtronic Testing DEB use in superficial femoral artery and proximal popliteal artery.
(MultiGeneAngio) MultiGeneAngio Dec-24 MultiGene Vascular Systems Testing cell therapy products for PAD.
SOURCES: ClinicalTrials.gov
Figure 8: QTV’s current commercialised products: the Glider range of balloon catheters
SOURCES: COMPANY REPORTS

QT Vascular
May 30, 2014
2.6 Clinical cases for Chocolate are favourable
The Chocolate Balloon Angioplasty Registry (BAR, Principal Investigator, Jihad
A. Mustapha, MD) is a corelab adjudicated registry with up to 500 patients
from up to 40 centres. Interim data from the first 354 patients in the registry
were presented at LINC 2014 by Tony Das, MD, and included 174 patients in
the ATK cohort and 180 patients in the BTK cohort.
Only 2% of the patients who underwent ATK intervention with the Chocolate®
PTA Balloon Catheter were found to have evidence of a flow-limiting dissection;
90% achieved less than 30% diameter stenosis and 94% achieved freedom from
bailout stenting. Six months after intervention, 11% of the patients required
TLR, 96% survived without amputation while 89% were free of major adverse
consequences.
The success rate for BTK intervention was similarly impressive: 99% of the
patients treated with the Chocolate PTA Balloon Catheter had no
flow-limiting dissections, 94% achieved less than 30% diameter stenosis,
and 3% required bailout stenting. Three months later, 7% of the patients
required TLR, the amputation-free survival rate was 97% and the rate for
freedom from major adverse events was 90%.
Other initial cases also verified that the Chocolate is safe for use.
Interim results from the Chocolate balloon angioplasty registry conducted in
the US suggest that the use of the Chocolate percutaneous transluminal
angioplasty balloon achieved high rates of treatment success and limb
preservation in patients with peripheral arterial diseases.
The Auckland Hospital in New Zealand recently concluded a 6-month clinical
study using QTV’s Chocolate PTA Balloon Catheter. Early data present
compelling evidence that the design of the Chocolate Balloon is effective in
reducing procedural complications, thereby improving acute outcomes during
peripheral angioplasty procedures, even with long complex lesions. Six-month
results also show encouraging clinical outcomes in challenging below-the-knee
cases.
11
Figure 10: QTV’s products and competition
Company Product Competitive Products Comments
Chocolate • All other balloons and stents Chocolate is classified as a balloon, but produces results that are similar to stents.
Drug-coated Chocolate (“DCC”) • Medtronic In.Pact Admiral DEB DCC uses the same drug,
• CR Bard Lutonix DCB paclitaxel, which is used by
• Covidien/CV Ingenuity DCB competitors to inhibit tissue growth but utilizes the Chocolate balloon platform.
GliderXtreme (“GX”) • Abbott Fox SV GX uses similar POBA
• BSC Sterling SL technology, but has
“slide-lock” feature for greater push force transmission.
GliderfleX (“GF”) • Boston Scientific Coyote GF is similar to the GX
• Abbott Armada except it also has a continuous braid shaft for further maneuverability.
SOURCES: Company

QT Vascular
May 30, 2014
What about Singapore? QTV recently started clinical cases with the
Chocolate PTA balloon catheter in Singapore. Five cases were performed at the
National University Hospital (NUH) and Changi General Hospital (CGH), in
total.
The vascular surgeon at CGH, Dr Steven Kum, an expert in treating PAD, stated
in a research paper that the Chocolate PTA has an important role in the
peripheral lab as it offers less traumatic treatment without the use of a
permanent implant, after treating several patients with severe disease both
above and below the knee. Dr Kum also elaborated on the potential for the
drug-coated chocolate balloon for below-the-knee disease that is more common
in Singapore as there are no adequate treatment options for those patients.
Dr Julian Wong, Division Head of Vascular & Endovascular Surgery at NUH,
concurred that the Chocolate PTA gives a more uniform angioplasty result with
less intimal dissection. Dr Wong thinks that the Chocolate PTA has great
potential in reducing the use of stents in complex lesions below and above the
knee.
According to Singapore Health Services, PAD is a major cause of limb loss
(amputation) in Singapore. However, it does not receive as much attention as
diseases involving other vascular beds, namely coronary artery disease and
cerebrovascular disease.
12
Figure 11: Recent studies evaluating ATK endovascular interventions
Trial Device Average Number Flow-Limiting Bailout Target Lesion
Lesion of Dissection, Stenting, Revascularization
Length Patients n (%) n (%)
Chocolate Chocolate PTA Balloon 93 mm 180 3 (< 2%) 10 (5.6%) 11% at 6 months
BAR, as of Catheter (Cordis)
2014
Bare-metal stents
ABSOLUTE Dynalink or Absolute 132 ± 71 BMS; 104 PTA group, 9 (16%) PTA group, 17 (32%) Binary restenosis (> 50%)
Schillinger et (Guidant) vs PTA 127 ± 55 PTA at 6 months was 25% for
al the BMS group and 45%
for PTA group
ASTRON Dick Astron (Biotronik GmbH) 98 ± 54 BMS; 73 PTA group, 6 (15%) PTA group, 10 (26%) Binary restenosis (> 50%)
et al vs PTA 71 ± 43 PTA at 6 months was 21% for
the BMS group and 50%
for PTA group
RESILIENT Lifestent (Bard 71 ± 44 BMS; 206 PTA group, 11 (15%) PTA group, 29 (40.3%) BMS group, 1.5%;
Laird et al Peripheral Vascular) vs 64 ± 41 PTA PTA group, 47.4%
PTA
Drug-eluting stents
SIROCCO irolimus-coated 85 ± 44 DES; 93 Not reported Not reported Binary in-stent restenosis
long term S.M.A.R.T. stents 81 ± 52 BMS (> 50%) at 24 months was
Duda et al (Cordis) vs Uncoated 22% for the Sirolimus stent
S.M.A.R.T. Stents group and 21% for
(Cordis) BMS group
Zilver PTX Zilver PTX (Cook 66.4 ± 38.9 DES; 479 Not reported Not reported Patency at 12 months 83%
Dake et al Medical) vs PTA 63.2 ± 40.5 BMS in the Zilver PTX group and
33% in the PTA
group
Drug-coated balloons
PACIFIER Paclitaxel-coated 70 ± 5.3 DCB; 85 Uncoated balloon, 25/34 (74%); Uncoated balloon, 16/47 (34%); Uncoated balloon, 21%;
Werk et al In.Pact Pacific 66 ± 5.5 uncoated balloon DCB, 18/38 (47.4%) DCB, 9/44 (20.5%) DCB, 7%
(Medtronic, Inc.) vs
Uncoated Pacific
Xtreme balloons
(Medtronic, Inc.)
LEVANT Lutonix DCB (Lutonix, 80.8 ± 37 DCB; 101 Uncoated balloon, 10/52 (19%); Uncoated balloon, 6/38 (16%); Uncoated balloon, 10/45
Scheinert et Inc., a subsidiary of C. 80.2 ± 37.8 uncoated balloon DCB, 9/49 (18%) DCB, 1/37 (3%) (22%);
al R. Bard) vs uncoated DCB, 6/47 (13%)
balloons

QT Vascular
May 30, 2014
2.7 Chocolate vs. other balloons and stents
Over the past decade, several specialty balloons and stents have been developed
to address the limitations of conventional balloon angioplasty. To date, while
there are no published randomised controlled trials comparing the Chocolate
PTA Balloon Catheter with the other specialty balloons or stents, the Chocolate
BAR Registry believes that the Chocolate PTA Balloon Catheter is safe
and efficacious for long, complex, ATK and BTK lesions without the need for
cutting, scoring or stenting.
Balloon angioplasty, either as a primary therapy in regions where stenting is
avoided (e.g. popliteal and infrapopliteal arteries) or as an adjunctive therapy
for stents and other devices, remains the mainstay of lower extremity
endovascular intervention. The Chocolate PTA Balloon Catheter has proven to
be safe, highly deliverable and efficacious in ATK and complex BTK
interventions with a low rate of dissections and low need for bailout stenting or
TLR during 3- and 6-month follow-up.
13

QT Vascular
May 30, 2014
3. OUTLOOK
3.1 Just how big is the market for vascular disease?
PAD is estimated to affect 202m people worldwide. PAD is caused by
the build-up of fatty substances that collect and adhere to the linings of arteries,
in a process known as atherosclerosis. The build-up causes the internal linings
of arteries to thicken, narrowing the arteries and limiting blood flow to vital
tissues and organs. Commonly affected arteries include those located in the legs,
arms, neck and kidneys.
The vast majority of patients with PAD also have significant
concomitant coronary artery disease (CAD) and a high proportion of
morbidity and mortality in these patients is related to myocardial infarction,
ischemic stroke or cardiovascular death. PAD is estimated to affect 202m
people worldwide.
Due to the nature of the disease, it is estimated that at least 50% of the people
suffering from PAD are currently undiagnosed. With the expansion of
healthcare services in many countries and economic recovery, it is expected
that more people will be diagnosed with and treated for PAD. Many cases of
PAD are treated using minimally-invasive procedures, such as Percutaneous
Transluminal Angioplasty (PTA) balloon catheters. These devices have gone
through many improvements in recent decades, improving their efficacy and
reducing their costs.
3.2 It is not about government healthcare spending but how
governments fund medical treatment effectively and
efficiently
An ageing population, along with increasing awareness of the disease, has been
behind an increase in the number of procedures. With the recent economic
downtown, many governments across the world are looking to reduce
healthcare costs. As most healthcare systems are government-funded, there is
increased pressure on hospitals to bring down the ASPs of existing devices or
the number of devices used.
New devices with better efficacy maintain their ASPs due to their
ability to deliver better clinical results and reduce complications,
leading to better patient outcomes. The need to limit overall healthcare
spending has been driving the trend towards more affordable healthcare. The
US recently enacted an Affordable Health Care Act, which requires people to be
under some form of health insurance coverage. In China, an ageing population
and rapid urbanisation have contributed to the growth of the medical-device
market. China also has a long-term goal of ensuring that its massive population
has good access to healthcare. We believe these trends present substantial
opportunities for the group to expand its business.
14
Figure 12: Peripheral vascular disease device market: estimation in 2011
US$ bn CAGR through 2017
USA 2.6 5%
Europe 1.2 5%
Japan 0.5 1%
China 0.3 >
7%
SOURCES: CIMB, COMPANY REPORTS, Redwood Valuation Partners

QT Vascular
May 30, 2014
3.3 Not a one-trick pony; QTV has more stuff to show
QTV is also developing its next-generation product pipeline, to stay
ahead of the competition. The Chocolate PTCA Balloon Catheter is a
coronary version of the flagship Chocolate PTA, for use in heart artery
intervention. This product has received the CE mark in the EU and is in the
process of obtaining US FDA approval.
Other products in the pipeline include the Drug Coated Chocolate (DCC)
and SILK PTA Balloon Catheter, a version of Chocolate PTA that is made
for intervention in longer lesions.
The coronary business is an important growth element for the group.
The coronary market is larger than the peripheral market. Therefore, it is
important for QTV to start introducing coronary products and help with the
treatment of patients with heart disease. Already, there are plans to launch its
Chocolate PTCA initially in the US, when approved. We understand that the
group will then make this product available in international markets.
FDA CE Mark CFDA Shonin
Indication Stage of Development Anticipated Milestones
Candidate
Chocolate®
• CE Mark submission in 2014
15
of 2015
PTCA
Coronary Design Verification
Figure 14: Product pipeline is exciting with its cardiovascular Chocolate PTCA
awaiting US FDA approval
Product
• FDA 510(k) submitted in Q4
of 2013
Chocolate®
• CE Mark received in
January 2014
Drug • OUS feasibility study in 2014
Coated
Peripheral Design Optimisation
(DCC)
SILK PTA Peripheral Design Feasibility
• CE Mark submission in Q1
SOURCES: CIMB, COMPANY REPORTS
Figure 13: QTV already has key products gaining approval and is in the process
of getting approval in major markets
Product
US EU China Japan
GliderXtreme™
PTA Balloon Approved Approved Approved Approved
Catheter
GliderfleX®
PTA Balloon Approved Approved In Progress In Progress
Catheter
Chocolate®
PTA Balloon Approved Approved In Progress In Progress
Catheter
Chocolate®
PTCA Balloon In Progress Approved In Progress In Progress
Catheter
Glider™ PTCA
Balloon Approved Approved In Progress Approved
Catheter

QT Vascular
May 30, 2014
3.4 Distribution by Cordis, Weigao and Century Medical
increases reach and network of customers
In Feb 14, QTV signed a distribution agreement with Cordis for the distribution
of its: i) peripheral products (excluding DCC) in the US; ii) peripheral and
coronary products worldwide outside the US, with the exceptions of Japan and
the PRC; and iii) coronary products, DCC and drug-coated Chocolate PTCA in
the PRC, on an exclusive basis.
Cordis will only distribute QTV’s Chocolate PTA in the US. This arrangement
should help to validate and rapidly advance the commercialisation of QTV’s
peripheral and coronary products, by opening access to new geographical
markets and customers that QTV does not currently reach.
Globally, QTV has entered into distribution agreements with recognised
distributors such as Century Medical, Weigao and also Cordis to distribute its
products. In the US, QTV presently sells to more than 150 hospitals. Its list of
customers has been growing since the launch of Chocolate PTA.
3.5 Century Medical in Japan
Based in Tokyo, Century Medical is a subsidiary of ITOCHU Corporation, a
US$115bn international trading company. Century Medical has 38 years of
experience in the import, sale and marketing of advanced single-use and
implantable medical devices.
Back in Dec 10, QTV entered into a distribution agreement with Century
Medical for the distribution of its products in Japan (CMI Distribution
Agreement). Century Medical received Shonin approval to market the Glider
PTCA in Mar 13 for treating the stenotic portion of coronary arteries or bypass
grafts to improve myocardial perfusion. In Nov 13, Century Medical also
received Shonin approval for the GliderXtreme PTA for the treatment of
peripheral arterial blockages. Pursuant to the CMI Distribution Agreement,
QTV appointed Century Medical as its exclusive importer and distributor of its
PTA and PTCA products in Japan, with a first right of refusal to import and
distribute future products.
The CMI distribution agreement is valid for four years, beginning with the
expiry of the pre-marketing term, and will be extended automatically for two
years subject to Century Medical’s ability to meet minimum purchase levels.
3.6 Johnson & Johnson’s thinking is suggestive
Johnson & Johnson’s recent history of M&As offers a good proxy for the future
of device makers such as QTV, in our view. In recent years, J&J has been
rebuilding and/or repositioning all its three healthcare divisions (consumer
healthcare, medical devices & diagnostics and pharmaceuticals) around scale
and focus/dominance. In pharmaceuticals, it has targeted five areas:
immunology, oncology, neurosciences, infectious disease and cardiology.
Within each franchise, J&J went about building its pipeline via small
acquisitions, licensing deals and internal development. It was able to take this
earlier-stage focus even when its organic pharmaceutical sales declined yoy
from 2008 to 2010, by channelling profits from its medical-device and
consumer segments to pharmaceutical R&D spending, which never dipped
below 20% of its sales and has remained above this level even when its
pharmaceutical business recovered.
16

QT Vascular
May 30, 2014
4. RISKS
4.1 Competition in the market
New and novel devices are still coming to the market, such as the IN.PACT
drug-coated balloon from Medtronic and Lutonix drug-coated balloon from C.R.
Bard. Both are available for sale in Europe and are completing trials in the US,
with a market launch in the US expected in 2015-16. These new devices are
expected to command high ASPs through their increased efficacy and ease of
use.
4.2 Regulatory approval delays
Any longer-than-expected approval by the FDA could delay
market-share-grabbing chances, allowing the other players to consolidate their
footholds. By and large, we believe that the catalyst for QTV’s share price lies in
FDA approval for the launch of Chocolate PTCA. We do not think that its
current share price has adequately priced this in.
5. MANAGEMENT TEAM
5.1 Dr Eitan Konstantino: founder and CEO
Dr Konstantino has more than 15 years of experience in the medical technology
industry. He founded QTV in 2005 when he set up TriReme US as a
medical-device company focused on providing innovative tools to improve
success rates in challenging peripheral and coronary interventions. He was a
member of the board of directors of TriReme US from its inception to Jul 13.
He was appointed to QTV’s board on 11 Jul 13 and is responsible for the overall
management and business development of the group.
Prior to founding QTV, he was the founder, president and chief scientist of an
angioplasty company, AngioScore, from 2003 to 2007. Dr Konstantino is one of
the primary inventors of AngioScore’s products. In 2002, he was the CEO and
COO of Advanced Stent Technologies, Inc. (AST), a bifurcation stent company
that was acquired by Boston Scientific Corporation in 2004, where he
co-invented the Petal bifurcation stent. Prior to AST, he was chief technical
officer at Bypass, Inc., a developer of nitinol anastomotic devices for
minimally-invasive heart surgery from 1999 to 2002.
He is also one of the founding directors of Singapore Medtech Accelerator, an
appointed Biomedical Science Accelerator (BSA) under the Singapore
Government’s Research, Innovation and Enterprise 2015 plan. The Singapore
Medtech Accelerator and BSA programme are designed to stimulate the growth
of the medical-device industry in Singapore, involving co-funding by SPRING
SEEDS Capital Pte. Ltd., a wholly-owned subsidiary of SPRING Singapore.
Dr Konstantino has more than 48 patents and patent applications worldwide in
the field of medical devices and solar control systems. He received his PhD in
Laser Surface Treatment, Optical Design, Materials Science from
Technion-Machon Technologi Le’Israel in 1999. He also serves as the
17
Figure 15: Swot Analysis
Strengths Opportunities
* New innovative Balloon Angioplasty product * penetration of major developed and developing
* Star-studded cast of investors and partners lend markets through renowned exclusive distributors
weight to new start-up branding worldwide
* Various regulatory approvals for key products * Development of more PTCA, coronary balloon
around the world (e.g. FDA, CE mark) products
Weakness Threats
* Current reliance on distributors and lack of own * Incumbents like stents and other balloon catheters
international sales teams makers could challenge its positioning
SOURCES: CIMB

QT Vascular
May 30, 2014
co-chairman of the F04.30.06 Cardiovascular Standards Task Group of the
American Society for Testing and Materials, a globally recognised leader in the
development and delivery of international voluntary consensus standards.
On top of that, he is a member of SPRING Singapore’s Medtech Network of
Advisors, whose functions are to advise the local medical technology business
on business challenges and strategies and to advise the management of
SPRING Singapore on the development and review of strategies and initiatives
to address the development needs of small-medium enterprises in the medical
technology sector.
5.2 Mark Wan: Non-Executive Chairman
Mr Wan was a member of the board of directors of TriReme US from May 07 to
Jul 13. He was appointed to the board on 11 Jul 13. Mr Wan is a managing
member of Three Arch Management, a healthcare-focused investment firm
formed in 1993 to provide young companies in the healthcare industry with
access to relevant clinical and business resources as well as capital. Mr Wan
started a venture-capital firm in 1987 with Brentwood Associates where he
became a general partner. He has been a founder of or seed investor in
numerous healthcare companies, including ePocrates, Inc., Odyssey Healthcare,
Inc. and Perclose, Inc.
5.3 Michael Kleine: lead independent director
Mr Kleine has more than 25 years of experience in the medical-device and
healthcare industries, having successfully managed several biomedical
companies focused on the market advancement of numerous leading-edge
products.
From 2008 to 2010, Mr Kleine was the President and CEO of Biosensors
International Group, a medical-device company listed on the main board of the
SGX. Under his supervision, the product revenue of Biosensors leapt from
US$44m to US$139m.
6. FINANCIALS
6.1 Chocolate sales to keep testing new highs
QTV’s revenue was US$5.5m in FY13, up from US$1.5m a year ago. 4Q13
revenue (US$2.4m) alone accounted for 44% of FY13 revenue, buttressed by
wider acceptance of its flagship product, the Chocolate PTA Balloon Catheter,
in the worldwide market. This sets the stage for FY14, especially when we
consider the group’s exclusive distributorship agreements (with Shandong
Weigao in China, Century Medical in Japan and Cordis in the US and other
parts of the world), giving it access to new geographical markets and customers.
We believe that its 1Q14 sales will mirror 4Q13 levels, though the big kicker
should almost definitely come in 2Q14, when Cordis starts distributing
QTV’s products (started in Apr 14).
An important measure of value in the medical-device field is the number of
units sold and patients treated. QTV sold 10,311 products in FY13, up from
3,497 products in FY12. We believe that it can continue to increase this number
as well as the number of patients using its products through its distributors’
stronger networks and clinical and commercial channels.
18

QT Vascular
May 30, 2014
2% 9%1% 1%
Europe 6%
6.2 Cost-to-sales ratio to improve significantly
The cost structure of the group should improve going forward, again based on
4Q13 indications. The emergence of exclusive distributors essentially eliminates
the scalability problems that QTV previously had. With a wider network, FY14
should mark a turning point for QTV, when its admin/SG&A costs to revenue
should significantly drop with the help of these distributors, which have
effectively taken over its sales network. Additionally, given its ability to
capitalise development expenses, QTV will not need to scale back its R&D
spending. Such spending has been instrumental in pushing out its blockbuster
products.
6.3 Maiden gross profit in 4Q13; Asia to overtake Europe in
FY16; sustained margins anticipated
Not surprisingly, for the first time since its inception, the group booked a gross
profit (US$0.9m) in 4Q13. It actually recorded a fair-value loss on financial
instruments of US$14.1m in FY13 (vs. a fair-value gain of US$11.2m in FY12).
As such fair-value adjustments are non-cash in nature, we readjust the group’s
reported earnings. With this, its FY13 adjusted recurring loss was not as wide as
its reported US$34.5m loss. In short, the group fared better (with its losses
reduced to -US$20.4m), partly due to its cost-to-sales reduction.
19
Figure 18: Costs to revenue should improve with the help of exclusive
distributorships
2012 2013 2014F 2015F 2016F
COGS 180% 107% 65% 40%
20%
Sales & marketing 293% 142% 47% 30%
18%
Administrative expenses 171% 141% 50% 25% 17%
Net R&D expenses 436% 41% 30% 24%
30%
Figure 16: FY12 revenue breakdown Figure 17: FY13 revenue shows rising contributions from
both the US and Asia
Asia Rest of the world Asia Rest of the world
Europe
24%
United States
73%
United States
84%
SOURCES: CIMB, COMPANY REPORTS SOURCES: CIMB, COMPANY REPORTS

QT Vascular
May 30, 2014
We believe that volume growth alone in key markets like the US and Asia will
underpin QTV’s earnings improvements, given the extensive coverage of its
new distribution networks. We forecast that Asian markets, especially China
and Japan, will overtake Europe in sales contributions, given the penetration
rates of products marketed through Shandong Weigao and Century Medical. All
this can deliver gross-margin advantages (through cheaper assembling costs
and economies of scale), which could lift its net margins to 75-80%, on par with
industry peers.
6.4 Net cash; manageable capex; but R&D spending will rise
We believe that working-capital requirements will be stable amid longer
receivable days due to larger sales volumes. The group has also turned net cash
following its IPO, with additional cash flowing in from better working-capital
management and manageable capex. That said, we are not expecting QTV to
pay dividends, as it could potentially use its cash to develop more products for
commercialisation.
We believe that the group will continue to invest money and effort in R&D,
though a portion of its net spending on R&D expenses can be capitalised. The
group capitalised US$4.1m in development expenses back in FY13. While we
have built in progressively higher R&D expenses (US$6.6m for FY14; US$8.9m
for FY15 and US$10m for FY16), these should hit no more than 40% of group
consolidated revenue.
20
Figure 20: The US will remain QTV’s biggest market. Asia to overtake Europe in 2016
2012 2013 2014F 2015F
2016F
United States 1.1 4.6 10.9 19.0
29.4
yoy growth -38% 329% 138% 74% 55%
Europe 0.4 0.3 1.1 4.3
7.2
yoy growth 21% -3% 223% 291% 67%
Asia 0.0 0.5 1.5 4.7
8.1
yoy growth 188% 2078% 199% 210% 74%
Rest of the world 0.0 0.1 0.1 0.1
0.2
yoy growth 125% 467% 18% 83% 110%
Total Revenue 1.5 5.5 13.5 28.0 44.9
yoy growth -28% 276% 148% 107% 60%
+329%
-3% +2,078% +467%
Figure 19: Penetration of key markets in the US and Asia in 2013 was already great,
prior to the engagement of Cordis, Weigao and Century Medical as distributors
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
United States Europe Asia Rest of the world
2012 2013

QT Vascular
May 30, 2014
7. VALUATION AND RECOMMENDATION
7.1 Explaining an early-stage medical-device company
Young start-ups are difficult to value for a number of reasons. Some are
start-up and idea businesses, with little or no revenue to boast and operating
losses. Even those young companies that are profitable have short histories
with most dependent on private capital (owners’ savings, initially) and venture
capital and private equity later on. As a result, many of the standard techniques
we use to estimate cash flows, growth rates and discount rates either do not
work or yield unrealistic numbers.
Young companies can span the spectrum. Some have yet to hit the commercial
stage, where the owner of the business has an idea that he thinks can meet a
need among consumers. Others have scaled a little up the value chain and
converted their ideas into commercial products, albeit with little to show in
revenue or earnings.
QTV has moved up the curve to hit some respectable commercial
success and has a market for its products, with revenue and the potential for
some profits.
situation.
We believe valuation methods have to be adjusted to fit its
21
Figure 21: Stabilising capex with stronger operational and free cash flows
30.0
20.0
10.0
0.0
-10.0
-20.0
-30.0
-40.0
FY11 FY12 FY13 FY14F FY15F FY16F
Change in working capital CAPEX Free Cash Flow to Firm Free Cash Flow to Equity Net cash

QT Vascular
May 30, 2014
7.2 M&As of peers in the device universe provide the biggest
hint of QTV’s real market value
Market leaders in the treatment of PAD include large medical companies such
as Boston Scientific, Johnson & Johnson, Covidien, CR Bard, and Abbott
Laboratories. These have already carved out niches in particular segments of
the peripheral vascular market. However, as instances and awareness of PAD
increase, more and more companies will be interested to break into the market,
leading to ever-shifting market shares, price pressures and the development of
new devices as companies strive to differentiate their offerings.
The large incumbents often grow by swallowing up smaller companies in the
market, for their new and upcoming devices. Transactions done in recent years
included:
(i) Metronic’s US$500m acquisition of Invatec
(i) CR Bard’s acquisition of Lutonix in 2011 for its drug-coated balloons (DCB)
(ii) Covidien’s acquisition of CV Ingenuity Corp. for its DCB in 2013.
The acquired devices are often still completing clinical trials at the point of
acquisition. This is especially true of the new drug-eluting balloons (DEB) and
DCB devices, the majority of which have CE marks and are going through
clinical trials in the US with expected launch dates in 2014-16.
We do not rule out strategic partnerships with the established players, though
more likely than not, JVs and distribution agreements would give QTV an
immediate footprint in its specific market. While we have not built in such
prospects in our earnings, our SOP target price includes such potential. The
listing of QTV has also put a price tag on the company.
22
Figure 22: Early stages of the life cycle
SOURCES: Aswath Damodaran, Stern School of Business, New York University

QT Vascular
May 30, 2014
2013
US$ 325 million
Sold to CR Bard in 2011undisclosed US$ amount
Sold to Covidien in 2013
For illustrative purposes only.DEB, Lutonix wasCV Ingenuity was sold platform and generated
7.3 Valuation methodology
Blended valuations. In establishing a target price for QTV, weightage has
been given to valuations derived from: 1) a discount to multiples for more
mature biotech companies; 2) multiples for QTV’s forecast revenue, operating
earnings and profitability that are benchmarked to peers in the high-growth
stage; and 3) discounted cash flows. Last but not least, we also referred to
privatisation valuations in various buy-out deals for companies such as QTV.
23
US FDA (Target 2017)
DEB FIM Trials DEB FIM Trials
DEB FIM Study Complete
(35 products)
$120M
(‘09)
Vietnam Approval
GliderXtreme : China CFDA Approval
Japan Shonin Approval
Chocolate & Glider Revenue
FDA & CE Mark Approval
Figure 23: Historical M&As in the vascular device market and QTV’s market proposition
Valuation (US$) End-User Revenue (US$)
2015
SILK PTA : CE Mark Submission
2014
US$ 500 million Chocolate PTCA : CE Mark Approval
($350M + $150M earn-outs) DCC : CE Mark Submission
Sold to Medtronic in 2010 Peripheral DEB Study
Chocolate PTCA : US FDA Submission
DEB FIM Study Complete
Chocolate, GliderfleX & Glider :
USD
DEB US FDA Chocolate PTA : Singapore HSA Approval
US FDA (Target 2014) DEB Sales in Europe Glider PTCA & GliderXtreme
:
First Revenue
First Revenue DEB CE Mark PTA Balloon US FDA Chocolate Registry (n=350)
Multi-Product Platform Chocolate PTA & Glider PTCA :
Solely focused on DEB, Solely focused on Invatec had a multi-product QTV figures do not represent value.
following FIM Trials sold following FIM substantial revenue. The
Trials and CE Mark company was sold shortly
after attaining US FDA
approval on its PTA balloon
and commencing DEB sales
in Europe.

QT Vascular
May 30, 2014
7.4 Initiate with Add and target price of S$0.64
We initiate coverage of QTV with an Add rating and a target price of S$0.64,
based on blended P/Sales, EV/EBITDA, P/E, EV/Sales and DCF valuations.
QTV’s outreach may seem aggressive but is not outlandish, in our view, given
product adoption globally, made better by exclusive partnerships with
reputable distributors. We believe that pipeline creations and staggered
approvals are key to transforming this early-stage medical-science company
into a serious contender in the global vascular
profits and perhaps M&As with medical giants.
market, leading to maiden
24
Figure 24: Blended valuation
2012 2013 2014F 2015F 2016F
Revenue (US$ m) 1.5 5.5 13.5 28.0 44.9
EBITDA (US$ m) -13.1 -16.9 -12.0 2.2 15.1
Recurring PATMI (US$ m) -15.2 -20.4 -13.1 0.9 11.5
Multiples Basis
Price to sales Multiples 10 10% discount to peers took out multiples
EV/EBITDA Multiples 18 Similar to US high growth Medtech
companies
P/E Multiples 25 Similar to US high growth Medtech
companies
EV/sales Multiples 6 15% discount to peers trading value
DCF 5.6% WACC 3% terminal growth
Implied equity valuation based on :- US$ m S$ m Per share (S$) Weightage
(%)
Price/sales 449 553 0.73 30%
EV/EBITDA 265 326 0.43 10%
P/E 287 353 0.47
10%
EV/sales 262 323 0.43
10%
DCF 445 547 0.72
40%
Fully diluted shares 756
Blended valuation 485 0.64

QT Vascular
May 30, 2014
25
Figure 25: Peers Comparison
Target Market Recurring Dividend
Bloomberg Price Price Cap Core P/E (x) 3-year EPS P/BV (x) ROE (%) Yield
(%) Company Ticker Recom. (lcl curr) (lcl curr) (US$ m) CY2014 CY2015 CAGR (%) CY2014 CY2014
CY2014
QT Vascular QTVC SP Add 0.40 0.64 238 na 251.4 na 14.44 -583.2%
0.0%
Asian Peers
Biosensors Int'l BIG SP Hold 0.96 1.01 1,292 24.9 20.5 10.7% 1.04 4.2%
0.0% Shandong Weigao Group Medic 1066 HK NR 7.41 NA 4,278 24.0 19.7 11.4% 2.73 11.5%
1.1% Microport Scientific Corp 853 HK NR 5.35 NA 976 23.0 17.4 -0.4% 2.32 9.1%
1.2% Terumo Corp 4543 JP NR 2,114 NA 7,906 23.5 18.3 2.0% 1.58 7.7%
1.4%
Global Peers
Abbott Laboratories ABT US NR 39.60 NA 59,477 17.9 15.9 90.5% 2.44 12.9%
2.2%
Boston Scientific Corp BSX US NR 12.99 NA 17,182 16.2 14.5 na 2.55 11.7%
0.0%
Covidien PLC COV US NR 72.62 NA 32,743 17.7 16.3 5.9% 3.22 18.9%
1.8%
Johnson & Johnson JNJ US NR 100.8 NA 285,060 17.1 15.9 17.2% 3.42 20.6%
2.8%
Medtronic Inc MDT US NR 60.62 NA 60,669 19.8 14.2 7.7% 2.90 18.5%
2.0%
Mindray Medical International MR US NR 30.70 NA 3,633 15.8 14.1 12.2% 2.12 14.2%
1.6%
Hospitals
IHH Healthcare IHH SP Add 1.61 1.85 10,472 53.4 38.7 35.7% 1.86 3.5%
0.5%
Raffles Medical Group RFMD SP Add 3.67 3.89 1,627 28.1 23.6 17.1% 3.92 14.5%
1.4%
KPJ Healthcare KPJ MK Hold 3.31 3.48 1,054 28.7 25.9 3.8% 2.67 9.9%
1.8%
Bangkok Chain Hospital BCH TB Reduce 7.65 6.60 582 30.5 25.4 11.0% 4.53 15.2%
2.0%
Bangkok Dusit Med Service BGH TB Add 16.40 19.50 7,745 32.9 27.7 17.4% 5.61 18.0%
1.2%
Bumrungrad Hospital BH TB Hold 112.5 98.00 2,499 29.3 25.1 11.1% 7.47 27.1%
1.7%
Simple Average 25.2 34.4 16.9% 3.81 -21.5%
1.3%
SOURCES: CIMB, COMPANY REPORTS, BLOOMBERG

QT Vascular
May 30, 2014
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QT Vascular
May 30, 2014
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27

QT Vascular
May 30, 2014
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Spitzer Chart for stock being researched ( 2 year data )
QT Vascular (QTVC SP)
Price Close
0.450
0.400
0.350
0.300
0.250
Apr-14 May-14 May-14 May-14 May-14
As at the time of publishing this report CIMB is phasing in an absolute recommendation structure for stocks (Framework #1). Please refer to all frameworks for a definition of any
recommendationsstated in this report.
CIMB Recommendation Framework #1
Stock Ratings
Add
Hold
Reduce
Definition
The stock’s total return is expected to exceed 10% over the next 12 months.
The stock’s total return is expected to be between 0% and positive 10% over the next 12 months.
The stock’s total return is expected to fall below 0% or more over the next 12 months.
The total expected return of a stock is defined as the sum of the: (i) percentage difference between the target price and the current price and (ii) the forward net dividend yields of the
stock.
Stock price targets have an investment horizon of 12 months.
Sector Ratings
Overweight
Neutral
Underweight
Country Ratings
Overweight
Neutral
Underweight
Definition
An Overweightrating means stocks in the sector have, on a market cap-weighted basis, a positive absolute recommendation.
A Neutral rating means stocks in the sector have, on a market cap-weighted basis, a neutral absolute recommendation.
An Underweightrating means stocks in the sector have, on a market cap-weighted basis, a negative absolute recommendation.
Definition
An Overweightrating means investors should be positioned with an above-marketweight in this country relative to benchmark.
A Neutral rating means investors should be positioned with a neutral weight in this country relative to benchmark.
An Underweightrating means investors should be positioned with a below-marketweight in this country relative to benchmark.
CIMB Stock Recommendation Framework #2 *
Outperform
Neutral
Underperform
Trading Buy
Trading Sell
The stock's total return is expected to exceed a relevant benchmark'stotal return by 5% or more over the next 12 months.
The stock's total return is expected to be within +/-5% of a relevant benchmark'stotal return.
The stock's total return is expected to be below a relevant benchmark'stotal return by 5% or more over the next 12 months.
The stock's total return is expected to exceed a relevant benchmark'stotal return by 3% or more over the next 3 months.
The stock's total return is expected to be below a relevant benchmark'stotal return by 3% or more over the next 3 months.
* This framework only applies to stocks listed on the SingaporeStock Exchange, Bursa Malaysia, Stock Exchangeof Thailand, Jakarta Stock Exchange,Australian Securities
Exchange,Taiwan Stock Exchangeand National Stock Exchange of India/BombayStock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily
28
Distribution of stock ratings and investment banking clients for quarter ended on 31 March 2014
1416 companies under coverage for quarter ended on 31 March 2014
Rating Distribution (%) Investment Banking clients (%)
Outperform/Buy/Trading Buy/Add 56.2% 4.6%
Neutral/Hold 28.0% 2.7%
Underperform/Sell/Trading Sell/Reduce 15.8% 1.0%

QT Vascular
May 30, 2014
outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specificreasons.
CIMB Research Pte Ltd (Co. Reg. No. 198701620M)
CIMB Stock Recommendation Framework #3 **
Outperform
Neutral
Underperform
Trading Buy
Trading Sell
Expected positive total returns of 10% or more over the next 12 months.
Expected total returns of between -10% and +10% over the next 12 months.
Expected negative total returns of 10% or more over the next 12 months.
Expected positive total returns of 10% or more over the next 3 months.
Expected negative total returns of 10% or more over the next 3 months.
** This framework only applies to stocks listed on the Korea Exchange, Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Occasionally, it is
permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specificreasons.
CorporateGovernance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of DirectorsAssociation (IOD) in 2013.
AAV – Good, ADVANC - Excellent, AMATA - Very Good, ANAN – Good, AOT - Excellent, AP - Very Good, BANPU - Excellent , BAY - Excellent , BBL - Excellent, BCH – Good,
BCP - Excellent, BEC - Very Good, BGH - not available, BJC – Very Good, BH - Very Good, BIGC - Very Good, BTS - Excellent, CCET – Very Good, CENTEL – Very Good, CK -
Excellent, CPALL - Very Good, CPF – Excellent, CPN - Excellent, DELTA - Very Good, DTAC - Excellent, EGCO – Excellent, GLOBAL - Good, GLOW - Very Good, GRAMMY –
Excellent, HANA - Excellent, HEMRAJ - Excellent, HMPRO - Very Good, INTUCH – Excellent, ITD – Very Good, IVL - Excellent, JAS – Very Good, KAMART – not available,
KBANK - Excellent, KKP – Excellent, KTB - Excellent, LH - Very Good, LPN - Excellent, MAJOR – Very Good, MAKRO – Very Good, MCOT - Excellent, MEGA – not available,
MINT - Excellent, PS - Excellent, PSL - Excellent, PTT - Excellent, PTTGC - Excellent, PTTEP - Excellent, QH - Excellent, RATCH - Excellent, ROBINS - Excellent, RS – Excellent,
SAMART – Excellent, SC – Excellent, SCB - Excellent, SCC - Excellent, SCCC - Very Good, SIRI – Very Good, SPALI - Excellent, STA - Good, STEC - Very Good, TCAP -
Excellent, THAI - Excellent, THCOM – Excellent, TICON – Very Good, TISCO - Excellent, TMB - Excellent, TOP - Excellent, TRUE - Excellent, TTW – Excellent, TUF - Very Good,
VGI – Excellent, WORK – Good.
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