SANUWAVE'S Letter to Stakeholders

A Look Back at 2018, a Glance Forward to 2019 and Beyond

Suwanee, GA - (NewMediaWire) - February 19, 2019 - SANUWAVE Health, Inc. (OTCQB: SNWV) 

Dear SANUWAVE stakeholders,

This past year marked a turning point for SANUWAVE. We achieved several milestones including record top-line revenue.  Most importantly, we set the stage for even more dramatic growth as we begin the domestic commercialization of our FDA cleared product dermaPACE® System.  Each year we establish 4-5 goals which investors can monitor to make sure we are on the path to achieve our ultimate goal: a dermaPACE® System placed anywhere a Diabetic Foot Ulcer (DFU) is treated in the US. We will achieve this goal in the next 5 years and when we do, we will have at least 2,000 devices placed, performing more than 500,000 treatments per year and generating north of $100 million in revenue.  We are following a playbook that other successful medical device companies have followed when rolling out a new and innovative technology. To achieve this long-term objective, we have broken down the crucial steps along the way, usually five steps per year, and we share them with you, our investors, so you can measure our progress against our ultimate goal.

How did we do in 2018?  Putting the foundation in place

We began the year with the FDA granting us clearance for use of the dermaPACE® System to treat DFU’s.  Diabetes is a disease state that is growing in the US and around the globe.  One of the ailments that affect over 1.9 million Americans annually is a DFU.  There are billions spent in the healthcare system to treat this issue and it touches everyone.  The statistics are staggering when it comes to patients’ struggles.  The statistic that fails to get enough attention is the morbidity rate of DFU patients who suffer an amputation. Within 5 years 65% of DFU patients will die, a rate much higher than most cancer morbidity rates. The dermaPACE® System that works to allow clinicians to manage and ultimately heal wounds. Our data indicates that treatment with dermaPACE® System will reduce the number of amputations that occur compared to Standard of Care alone, with the ultimate goal to subsequently, save lives. As a company, we have financial goals, but our top goal remains improving patients’ quality of life and ensuring everything we do cascades from this.

Having an approved device is just the first step, a MAJOR step, but the first step in commercialization.  During 2018, domestically, we were successful in the following areas: hiring a president, paving a path for reimbursement, supporting publications and establishing distribution partners and financing partners.  These steps were part of the process needed to develop a solid foundation from which to expand.

• In late May we hired Shri Parikh to be President of our healthcare unit and implement the rollout plan. He joined us most recently from Molnlycke Health Care and before that had a successful and progressive career with other successful large health care companies.
• The reimbursement tracking code was published for our procedure, so the reimbursement process can begin with payors.  It is a long process, and this first step allows facilities, doctors, and insurance to benefit from the device. The tracking code went into effect on January 1, 2019, which means we can now begin our rollout in earnest.
• The 336 patient trial results were published in a peer review article in the Journal of Wound Care (JWC) in December adding more credibility to the already positive results.
• We signed and began shipping dermaPACE® Systems to our partner, Premier Shockwave, who is handing our Veterans Administration (VA) and Indian Health Services (IHS) business.  Under the agreement, they have minimum yearly commitments and both companies share in the procedure fees.
• We inked a deal with NFS to help finance the rollout of our equipment, allowing us for rapid expansion during 2019.

Internationally, we set a goal of adding 4 new countries. We exceeded that by adding 15.  The largest of these international deals was announced in June involving our JV partner, FKS Medical.  The agreement establishes a beachhead in Southeast Asia among 10 countries.  They began making payments to us during 2018 and aggressively developed a plan to obtain product registration.  Device licenses in Taiwan and Malaysia were obtained and devices were shipped; three clinical studies were kicked off to support the rollout.  We also launched an agreement with 2 eastern European countries and began the registration process in Panama, Costa Rica, and Mexico.  These international seeds were planted over the past three years and are now coming to harvest at the same time we are seeing a launch in the US.

Lastly, we continued to invest in the science and clinical work that helps build a competitive moat around SANUWAVE.  During 2018 we expanded our patent portfolio with 9 additional issued patents, bringing the IP active patent applications and issued patents up to 62.  We have a full pipeline for 2019 including several projects that began in 2018, which we will report on in the future.

What shall we accomplish in 2019?  Placements, training and spreading the gospel

The groundwork laid in 2018 allows for disciplined growth in 2019.  The goal remains the same, a dermaPACE® System placed and utilized everywhere and anywhere a DFU is treated in the US.  During 2019, the incremental goals by which you should measure us are placements, training, reimbursement, and clinical support.  If we are successful with these goals, investors will see a clear path to achieving our ultimate goal.

• Placements of dermaPACE® in support of continued performance surveillance and reimbursement policy development will begin en-masse during 2019. If we plan to be at 2,000 in 5 years we need to start now and measure our success along the way.  Our goal in 2019 is 100 device placements.  We will start with a modest Q1 goal of 15 (35 by Q2 & 65 by Q3) and as our target base expands, create a groundswell to reach 100 by the end of the year.  Our business plan is modeled to generate revenue each time our device is used to treat a DFU. The first step towards achieving this is placing the device and developing a knowledge base which we will leverage to expand numbers of placed dermaPACE® Systems.  As we succeed in reaching 100 placements this year, and we scale accordingly, 2020 will lead us to a multiple of that installed base.
• Training is critical with any new medical device or system.  Our expectation is to certify 4-5 professionals per placed system.  A continuous training program is extremely important to make certain patients receive the proper treatment on an on-going basis as we help heal the wound.  Investors will be able to monitor the number of trained users as we progress through 2019.
• Our tracking code for reimbursement began on January 1, 2019.  This does not guarantee payment; however, it is a necessary stage essential for unencumbered claims payment.  We put the right team in place to move the reimbursement process along through the claims process and begin to derive revenue for the facility, doctor, hospital, and us.  We have targeted 6 states initially where we can gain claims volumes needed for coverage.  Our goal for the year is 10 million covered lives.
• Clinical work will never stop at SANUWAVE.  We currently have four (4) clinical initiatives kicked off internationally. Domestically we will have 2-3 studies launched to support the product rollout.  These will have various outcomes measured to support the clinical community and the reimbursement community.  We plan to provide updates when we launch a major study, with enrollment updates throughout the year.  This clinical work is vital for driving usage of the device.  Although 2019 is not a year focused on driving usage, which is a 2020 goal, the work we do this year will allow for measurement of patient-centric outcomes and expansions in the indications for using the device and leads for increasing the daily usage in the future.
• Internationally we will continue to harvest the seeds we have planted. We expect another record shipment year in 2019, most likely doubling our 2018 shipments.  We may not add as many countries as 2018, but we will ship more product and run more clinical trials.  We are hopeful to gain at least one more of our joint venture models which pay us an upfront fee during 2019.

Ultimately, the goals listed for 2019 must translate into revenue and profit.  The leading indicator will be placements and certified users.  As a reminder, placements will take 4-6 months to reach revenue maturity.  The first few months we will work through the reimbursement challenges and help train the staff on proper usage of the dermaPACE® System, but once that is flowing well, we expect a device to be used at least once a day, if not more.  We hope the metrics and goals laid out for 2019 will help investors understand what we are striving to achieve.  This is another step to get to the bigger goal and needs to be monitored along the journey.

Predictions about the future, 2020 and beyond?

We will have a little fun here with our shareholder letter and make a few bold predictions of things to come in the next 24 months.  They will cover random thoughts, which could have an impact on your company in the future.  They are also meant to push the brain when thinking about SANUWAVE over the next several years.

1. SANUWAVE will hold their second ever shareholder meeting, in Atlanta, during the second or third quarter of 2019.  We will use it to show off our product to those who attend.
2. The FDA will move away from 100% closure at 12 weeks, as the only way to approve a wound healing study.  They will begin to realize that quality of life outcomes and helping to bring a wound under control are vitally important as well.  This might start with a guidance document, but it will begin a resurgence and a refocus on wound healing by many larger medical companies wanting to get back into the field.
3. The advances in wound diagnostics and the data flowing from the various wound registries will lead to a capitated environment in the reimbursement realm of wound healing.  Measuring wounds digitally, understanding their perfusion, running bio-marker tests, scanning for bacteria are all new innovations technologically changing the world of wound diagnosis.  Add to this the advent of all the wound registries being developed and it all leads to the insurance world capitating payments and forcing the providers to go at risk when treating wound patients.  Effective, lower cost solutions will finally be able to compete head-to-head with higher cost modalities.   This will also lead to companies cooperating and developing combination therapies.
4. After a lull in clinical wound research hitting the market post the amniotic bubble spending, the next phase will be on preventative and post-closure studies as insurers show a willingness to spend on avoiding the wound all together (maybe this is not a prediction as much as a hope for the future).  Lots of research should be done on ways to keep a wound from ever occurring and the dramatic cost savings and quality of life benefits that will accrue to the patient.  Look for a number of companies to explore innovations like sensors in socks, special detection pads, smart shoes, to post-closure follow-ups to keep the wound in remission.  The drug companies have done a great job keeping chronic conditions like blood pressure and cholesterol in check, wound care will follow this path with some great innovations/treatments pre and post wound.
5. The final prediction is a very hard one to make as a native New Englander.  Despite the Patriots participating in nine of the past seventeen Super bowls and winning six of them, we do not think 2019 will be another victory for the Pats.  Hopefully, this prediction will prove wrong.

CLOSING: THANKS!!!

As always, we want to thank you as our investors for believing.  You believe in our goals, the playbook we are following to achieve them and for patiently supporting us through the years.  2019 will be monumental, as the year the rollout began.  We also want to thank all the doctors and nurses on a global basis who support us and most important treat the patients with so much loving care.  Our employees deserve a huge thank you for staying the course even during the darkest of times and are now increasingly energized you and seeing a paved way to continued success.

Feel free to call or email with any concerns or questions.  Also, visit our website (www.sanuwave.com), explore the blogs and the science sections, it is filled with fascinating information.

Sincerely, 

Kevin Richardson II, 
CEO and Chairman of the Board

Forward-Looking Statements
This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to financial results and plans for future business development activities and are thus prospective. Forward-looking statements include all statements that are not statements of historical fact regarding intent, belief or current expectations of the Company, its directors or its officers. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the Company’s ability to control. Actual results may differ materially from those projected in the forward-looking statements. Among the key risks, assumptions and factors that may affect operating results, performance and financial condition are risks associated with the regulatory approval and marketing of the Company’s product candidates and products, unproven pre-clinical and clinical development activities, regulatory oversight, the Company’s ability to manage its capital resource issues, competition, and the other factors discussed in detail in the Company’s periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statement.

For additional information about the Company, visit www.sanuwave.com.

Contact:

Millennium Park Capital, LLC
Christopher Wynne
312-724-7845
cwynne@mparkcm.com

SANUWAVE Health, Inc.
Kevin Richardson II
Chairman of the Board
978-922-2447
investorrelations@sanuwave.com