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Safeguard Scientifics Inc. Analyst Day Conference Call Transcript

We had 2 exits so far in 2011, Advanced BioHealing and Portico Systems. Just to give you a case study on ABH, this was a regenerative medicines company that was once upon a time inside of the British firm, Smith and Nephew. Smith and Nephew penetrated the marketplace to a small degree. They built a lavish, beautiful manufacturing facility in Southern California, but they never figured out the pricing and reimbursement model. So what did they do? They closed the whole business; they shut it down.

Safeguard acquired the assets along with the syndication partner and worked with their management team. We hired back all the people and brought in another management team. We worked with that CEO and his management team. So we defined the pricing and reimbursement model, and they went back to the marketplace with their lead product Dermagraft in 2007. This was a cellular-based artificial skin used for diabetic foot ulcer and burn patients.

They increased their revenue from nothing in 2007 to $145 million in 2010 and filed an S1 and were getting ready to price an IPO when Shire came in and offered a 25% premium on the midpoint of that pricing range. And that was earlier this year.

The aggregate proceeds for Safeguard on that was $145 million back for the $10.8 million we put in. That was over 13 times cash-on-cash return or 90% IRR. That’s the example of the ten-bagger. We want to do that everyday, but it sure is nice when you do it. So we were just thrilled with how well ABH had built itself and were pleased to be a partner with them.

Portico Systems was a IT healthcare firm with the piece of software that enabled health insurers to design, build, manage, reimburse and support their healthcare provider networks. If the mandates that the payer and provider Portico Systems just to give you a case study on ABH. This was regenerated to the medicine’s company that was once upon a time inside of the British firm Smith & Nephew. Smith & Nephew penetrated the marketplace to a small degree, they built a lavish beautiful manufacturing facility in Southern California, but they never figured out the pricing in reimbursement model. So what did they do? They closed the whole business, they shut it down.

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