Accolade QS Alexandrite 755 nm Benign Pigmented Lesions and Tattoo Removal

Market Size and Incidence Epidermal Lesions- Superficial 30% of population has solar lentigines 10% of population has café-aulait 60% have freckles Dermal Lesions Nevus of Ota and Ito (Acquired Dermal Melanocytosis) 0.014%-0.034% of Asian population 0.4-0.8% of people of Japanese and Korean descent Cosmetic, Medical, Body Art Tattoo Permanent makeup tattoos Reconstructive medical tattoos after mastectomy and surgery Cosmetic tattoos to cover up scars and other skin imperfections Body Art Tattoos

Treatment Market Size Benign Pigmented Lesion Removal Tattoo Removal Global treatment size $2.50 Billion to $6.48 Billion 2008 expected US market size $38 M at CAGR 12%* Tattoo Removal 2008 expected US market size $120 M at CAGR 17%* International market estimated $45 M In 2005, pigmented lesion removal laser systems generated revenues of merely $27.0 million in the US (see Exhibit 7-1), representing a 12.5% increase from 2004. Contributing to this modest growth is the US population’s desire for youthful looking skin and the growing demand for supplementary treatment offerings in aesthetic laser practices. Pigmented lesions are generally a secondary concern to patients, who are most often concerned with hair removal or wrinkles, so it is often performed as an adjunct procedure or included in skin rejuvenation. This leads to cannibalization of the pigmented lesion removal laser market and limits growth. The market for pigmented lesion removal lasers will grow slower than the overall aesthetic laser market, rising to $48.2 million in 2010 at a CAGR of 12.1% over the forecast period. Pigmented lesions are created by a concentration of melanocytes in a particular area of the skin. The melanin (the biological pigment that gives skin and hair its color) produced by melanocytes in the dermis is normally distributed uniformly throughout the body; however, the high concentration of melanocytes in pigmented lesions leads to discoloration on the skin. Examples of pigmented lesions include brown age spots (lentigines), freckles (ephileds), melasma, and moles (nevi). Prior to the advent of laser pigmented lesion removal, pigmented lesions had to be covered with makeup, or removed using painful dermabrasion or cryosurgery. Even if a pigmented lesion is removed with dermabrasion or cryosurgery, it is likely that a scar or a visibly lighter area of skin will remain after the procedure. Lasers remove pigmented lesions through a process that is known as photothermolysis. The distinct color of the pigmented lesion absorbs light more intensely than the surrounding tissue. As the laser targets and rapidly heats the pigmented lesion, the melanin is fractured. The fractured melanin is then eliminated by the patient’s immune system. As a result of this rapid heating and fracturing, the process of pigmented lesion removal is moderately painful and the treatment feels akin to being struck with specks of hot grease or being snapped with a rubber band. *Source: Millennium Research Group

Nano vs microsecond Pulse Width Effectively destroys melanosomes and tattoo pigments Ultra-short pulse widths required to shatter melanosome/ pigments by photoacoustic effect Power Equal amounts of energy Nanosecond Pulse Width Microsecond Courtesy of: Dr. Wang Hongwei Peking Union Medical College Hospital Time

Benign Pigmented Lesions Discoloration caused by high concentration of melanocytes in a particular area Treatments include cover up with makeup, or painful removal by dermabrasion or cryosurgery Mostly for pediatric treatments or as an adjunct procedure in skin rejuvenation for adults Lasers remove pigmented lesions through photoaccoustic effects Melanin absorbs laser energy more intensely than the surrounding tissue which leads to fracturing of the pigment and melanocyte cell death Fractured melanin/melanocyte is removed by the immune system

Nevus of Ota First described in 1861 Bluish hyperpigmentation along the first or second branches of trigeminal nerve Most patients have no family history Age of onset- perinatal period or puberty Significant predominance among women Male to female ratio 1:4.8 Female hormones suggested as potent stimuli Other stimuli include infection, trauma, or ultraviolet light exposure Source: Chan and Kono et al Nevus of Ota: Clinical Aspects & Management, SKINmed, 2003

Nevus of Ito, Mongolian spots & Other conditions Variant of Nevus of Ota. Skin pigmentation occurs is more diffuse and less mottled in the acromioclavicular region Mongolian spot Sacrococcygeal region Usually regresses and disappears during childhood. The spot is found in almost all newborn Chinese, Japanese and Mongolian children, as well as some white and black children. Becker Nevus and Henry Nevus

Treatment of Pigmented Lesions

Treatment of Pigmented Lesions

Incidence – Tattoos Sixth fastest-growing retail business in the United States in recent years 80% of tattoo customers are upper middle-class white suburban females 15-20% of US teens and young adults have tattoos (40M Americans) 23% of college students have tattoos 50% of everyone receiving a tattoo, wants it removed (ASDS) “In the 90’s I did five laser treatments a month… now I do that in one day” Elizabeth McBurney, MD Source: The Pulse, Hofstra University and ASDS- American Society of Dermatologic Surgery

Treatment of Tattoos

Treatment of Tattoos

The Accolade Q-Switched Alexandrite Laser Removes Pigmented Lesions The Speed of Alex The Spot Size of Ruby Removes Pigmented Lesions Removes Black, Blue, Brown and Green Tattoos

Correct Wavelength for Specific Treatment Kai-lou-jai-xing Alexandrite 755 nm

Effective Wavelengths 1320nm Nd:YAG Accolade 755nm Absorbed by most pigments Greater depth of penetration for treating deeper structures 50-70 ns pulse width Disrupts melansomes and tattoo pigments

Accolade Specs Wavelength 755 nm Spot Size 2.0 mm (Max Fluence 18 J/cm2) 3.0 mm (Max Fluence 10 J/cm2) 4.0 mm (Max Fluence 5 J/cm2) 5.0 mm (Max Fluence 2.8 J/cm2) Pulse Width Short Pulse: Min 50 nsec Long Pulse: 150 μsec Pulse Rate 1, 2, 5, 10 Hz Beam Delivery Optical Fiber

Accolade Improved Design Faster than other competing systems 2x spot size of other Alex More than 10x the speed of Ruby Faster Treatments and Faster Clearance Larger Spot and Higher Repetition rate give the fastest treatment possible Larger Spot means deeper penetration for faster clearance

Accolade Treatments Characteristics Accolade treatments are gentler Less painful especially for the face Greater specificity towards target chromophore Reduces damage to peripheral tissue Minimum pinpoint bleeding Decreases incidence of scarring

Accolade Features and Benefits

Weakness of Other Lasers

Comparison of Different Lasers

Clinical Results: Nevus of Ota BEFORE AFTER

Nevus of Ota Before & After 4 treatments Courtesy of: Dr. Wang Hongwei Peking Union Medical College Hospital

Nevus of Ota Before & After Courtesy of: Dr. Wang Hongwei Peking Union Medical College Hospital 7 treatments

Pigmented Lesion Before & After 3 treatments Courtesy of: Dr. Wang Hongwei Peking Union Medical College Hospital

Freckles Before & After 1 treatment Courtesy of: Dr. Wang Hongwei Peking Union Medical College Hospital

After 2 treatments (5.8-8.6 J/cm2) Dr. Lu Zhong Huashan Hospital Tattoo Treatment Before & After Eyebrow Tattoo BEFORE AFTER After 2 treatments (5.8-8.6 J/cm2) Courtesy of: Dr. Lu Zhong Huashan Hospital Caution: Spot test first. Tattoo pigments with iron may turn jet black with laser; continue treatment for black

Tattoo Treatment Before & After After 3 treatments (5.8-8.6 J/cm2) Courtesy of: Dr. Lu Zhong Huashan Hospital