The following is a presentation that was initially made available by the Company in meetings with investors starting on August 13, 2008.
 Thermage, Inc.
Thermage, Inc. (Nasdaq: THRM) (Nasdaq: THRM) Stephen Fanning Stephen Fanning Chairman and CEO Chairman and CEO Filed by Thermage, Inc. Pursuant to Rule 425 Under the Securities Act of 1933 and Pursuant to Rule 14a-12 Under the Securities Exchange Act of 1934 Subject Company: Thermage, Inc. Commission File No.: 001-33123 |
 Additional Information and Where You Can Find It This communication may be deemed to be solicitation material in respect of the proposed
transaction between Thermage and Reliant. In connection with the transaction, Thermage filed a registration statement on Form S-4 with the SEC containing a proxy statement/ prospectus/
information statement. The proxy statement/prospectus/information statement
will be mailed to the stockholders of Thermage and Reliant. Investors and security holders of Thermage and Reliant are urged to read the proxy statement/prospectus/information statement when it becomes available because it will
contain important information about Thermage, Reliant and the proposed
transaction. The proxy statement/prospectus/information statement, and any other documents filed by Thermage with the SEC, may be obtained free of charge at the SEC's web site at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by Thermage by contacting Thermage Investor Relations by e-mail at IR@thermage.com or by telephone at (510) 259-7117. Investors and security holders are urged to read the proxy statement/prospectus/information statement and the other relevant materials when they become available before making any voting or investment decision with respect to the proposed transaction. Thermage and its respective directors and executive officers may be deemed to be participants in the solicitation of proxies from its stockholders in favor of the proposed transaction. Information about the directors and executive officers of Thermage and their respective interests in the proposed transaction is available in the proxy statement/prospectus/information statement. 2 |
 Forward
Looking Statements Forward Looking Statements This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding potential transaction timing, projected financial results, and anticipated cost savings, synergies and other opportunities. Forward-looking statements are based on management's current, preliminary expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from the statements contained herein, including the risks that the transaction is delayed or ultimately not consummated, and that the anticipated financial and operating benefits of the transaction are not realized, among other risks. Further information on potential risk factors that could affect Thermage's business are detailed in the Company's Form 10-Q for the quarter ended June 30, 2008, and additional risk factors relating to the proposed transaction discussed in this presentation are presented in the Form S-4 as filed by Thermage on August 11, 2008. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made. Thermage undertakes no obligation to update publicly any forward- looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events. 3 |
 Creating
a Global Leader Creating a Global Leader • Combines the leaders in two of the largest segments of the aesthetic device industry – skin tightening and skin resurfacing • Strong economies of scale and substantial cost synergies • Creates one of the largest sales forces in aesthetic devices with significant cross-selling opportunities • Industry leading recurring revenue model • Anticipated cash flow generation of over $15 million and accretive to GAAP EPS in 2009 • Expected to close in the fourth quarter of 2008 4 |
 Aesthetic Market
Overview Aesthetic Market Overview Key Growth Drivers Key Growth Drivers • Aging of U.S. Population • Broader Range of Non-invasive Treatments • Changing Practitioner Economics – managed care and government reimbursement restrictions • Increased Acceptance of Aesthetic Procedures Enormous U.S. Aesthetic Market with 11.7 Million Procedures and $13.5 Billion in Spending in 2007 (1) (1) Source: ASAPS Cosmetic Surgery National Data Bank, data derived from core
physicians 5 |
 Aesthetic Market
Overview Aesthetic Market Overview Strong U.S. Non-surgical Growth Strong U.S. Non-surgical Growth • U.S. procedures increased 105% from 2000 to 2007 • Non-surgical procedures are driving the trend (+123%) 1.4 2.1 0.0 0.5 1.0 1.5 2.0 2.5 2000 2007 4.3 9.6 0.0 2.0 4.0 6.0 8.0 10.0 12.0 2000 2007 Surgical +50% (millions of procedures) Non-Surgical +123% (millions of procedures) Source: ASAPS, data derived from core physicians 6 |
 Market Size
Market Size U.S. Practitioners Core Market Over 11,000 Dermatologists & 7,000 Plastic Surgeons Non-Core Market 133,000 physicians in other specialties Over 1,300 systems have been installed in the U.S. 67% to Core Physicians & 33% to Non-Core Physicians 7 |
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 Thermage
Solution Thermage Solution • Non-invasive, Non-ablative Alternative to Surgery • Single Procedure Treatment • Controlled Heating of Collagen through Clinically- Proven Technology • Compelling Physician Economics 9 |
 Capacitive Coupling Treatment Tip 1 Thermistor (Temperature Sensor) at each corner of treatment tip surface (total of 4) Internal EPROM Programmable Memory Chip Tip-to-Skin Detection: Prevents RF delivery if all four corners are not in contact with the skin Single-Patient-Use ThermaTip ThermaTip 10 ~ 90% Margin |
 Dominant Proprietary
IP Dominant Proprietary IP • 114 Patents Filed Worldwide – 32 Issued in the U.S., 21 Issued Overseas, 62 pending • Validated by Competition – Syneron, Inc. > Paid license settlement in 2005 > Admitted patents are valid > Thermage licensed bi-polar conductive RF to Syneron 11 |
 Demonstrated Efficacy
and Safety Demonstrated Efficacy and Safety Robust FDA 510k Clearances: • Periorbital - November 2002 • Face - June 2004 • Full body - December 2005 • Cellulite - October 2006 • Upper & Lower Eyelids – June 2007 > First & Only Non-invasive Device Indication for Eyelids < Over Five Years of Clinical Experience: • Over 500,000 procedures: > 99.8% with no reported complications • Over 2,500 installed systems Extensive Peer Reviewed Studies: • More than 45 peer reviewed scientific journal articles 12 |
 Quotes from
Scientific Journals Quotes from Scientific Journals “94% were satisfied with the treatment and only 5% felt the treatment was too painful “ Survey of 5,700 patient treatments Dr. Jeffrey Dover & Dr. Brian Zelickson, American Society for Dermatologic Surgery, August 2007) "Our data… indicate that monopolar RF for skin tightening is a very safe procedure. The treatment algorithm and tips have evolved over several years leading to increased safety and efficacy. Side effects are infrequent, self-limited, and minor, comparing favorably to other non-ablative devices utilized for facial rejuvenation." Dr. Robert Weiss et al, over 600 patient retrospective study, Journal of Drugs in Dermatology,
September 2006 13 |
 Current
Applications Current Applications Body by Thermage Tighten, contour and rejuvenate skin anywhere on the body Face by Thermage: Full face and neck Eyes by Thermage: Eyelids and periorbital area Hands by Thermage: Top surface of hands (Q1 ‘07) Lips by Thermage: Fuller, smoother, more defined looking lips (Q2 ‘07) ThermaCool STC: Designed to reduce procedure time up to 25%; treats larger volume of tissue (Q3 ‘07) Body Shape Procedure : heats deeper into the skin to promote increased collagen tightening for body shaping (Q4 ‘07) Cellulite Procedure: rebuilds collagen connective tissues and improves blood flow to the tissue helping to smooth appearance of the skin’s surface(March ‘08) 14 |
 Face by
Thermage Face by Thermage Pre-Treatment 2 Months Post Treatment 15 |
 Eyes by
Thermage Eyes by Thermage Pre-Treatment 2 Months Post Treatment 16 |
 Tummy by
Thermage Tummy by Thermage Pre-Treatment Three Months Post Treatment 17 |
 Cellulite Procedure
by Thermage Cellulite Procedure by Thermage 18 |
 Revenue
Streams Revenue Streams Key Products ThermaCool NXT(59%), System Upgrades (26%) The ThermaCool System RF Generators Incl. New & Upgrades Other consumables: return pads, coupling fluid, cryogen, grid paper Extended service contracts Other Consumables & Service Gross Margin ~45% ~90% 0.25, 1.0, 1.5, 3.0 cm² tips with various combinations of firings & heating profiles ThermaTips ~25% Percentage of Revenue ~25% ~70% ~5% 19 |
 Thermage 2nd Quarter
Overview Thermage 2nd Quarter Overview • Sales of tips & consumables were up 15% from Q2 2007 • Gross profit margin of 77.1% vs. 72.5% prior year • Operating expenses held in check despite expansion of U.S. sales force • $52 million in cash and $0 in debt • DSO of 36 days 20 3 Months Ended June 30, ($ in thousands, except per share data) 2008 2007 Revenue $17,881 $17,499 Cost of Good Sold 4,095 4,818 Gross Profit $13,786 $12,681 Sales and Marketing 6,993 6,815 Research and Development 2,173 2,232 General and Administrative 3,046 2,784 Total Operating Expenses $12,212 $11,831 Income from Operations 1,574 850 Interest and Other Income 543 598 Income Before Taxes $2,117 $1,448 Provision for Income Taxes (78) (140) GAAP Net Income 2,039 1,308 Stock Based Compensation Charges 923 1,222 Non-GAAP Net Income (Loss) $2,962 $2,530 GAAP Net Income per Share - Diluted $0.08 $0.05 Stock Based Compensation Charges per Share $0.04 $0.05 Non-GAAP Net Income (Loss) Per Share - Diluted $0.12 $0.10 |
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 • Pioneer of fractional technology • One of the most recognized and fastest growing brands in aesthetics • Large installed base of over 1,700 • Growing consumable revenue stream from tip sales leading to increased margins
• A track record of innovation and a strong product pipeline • Broad patent protection with 26 patents issued in the US and 119 patents pending in the US and internationally • Significant home market opportunity through agreement with Philips The Gold Standard in Skin The Gold Standard in Skin Resurfacing & Skin Rejuvenation Resurfacing & Skin Rejuvenation 22 |
 Reliant
Product Overview Reliant Product Overview $79,000 $119,000 $129,000 System – List Price $400 $400 $400 Treatment Tip – List Price 5-6 full face treatments 3-5 full face treatments 1 full face treatment Approximate tip life Yes 1-2 Ablative January 2008 Fraxel re:pair Yes Yes Consumable treatment tip 5-6 3-4 Typical patient treatments Non-ablative Non-ablative Modality June 2007 September 2006 Commercial launch date Fraxel re:fine Fraxel re:store Target customer base: Dermatologists and plastic surgeons Dermatologists, plastic surgeons, and non-core physicians Non-core physicians and med-spas 23 |
 Superior
Fractional Technology Superior Fractional Technology • Continuous motion scanning technology • Faster treatments • More uniform treatments • More effective results • Simpler, safer treatments • Greater reliability at total lower cost of ownership • Wide range in depth of treatment 24 |
 Fraxel Fraxel Results Results Before After 25 |
 Fraxel Fraxel Results Results 26 |
 Fraxel Fraxel Results Results Before After 27 |
 Fraxel Fraxel Results Results 28 |
 An
Industry Leader in Revenue Growth An Industry Leader in Revenue Growth Reliant Has Been One of the Highest Growth Aesthetics Companies 23% 12% 19% 11% 1% 1% 19% 11% 10% 0% 5% 10% 15% 20% 25% 2007 Q1 '08 Q2 '08 Reliant Index NewCo Note: Growth shown as compared to the quarter of the previous year Index consists of CLZR, CUTR, CYNO, PMTI, and ELOS CLZR and ELOS Q2 ’08 revenue from consensus estimates 29 |
 Systems
and Consumables Driving Systems and Consumables Driving Revenue Growth at Reliant Revenue Growth at Reliant Fraxel’s Continued Strong Growth Prospects • Continued momentum for re:pair • Pending foreign registration clearances for re:pair • Expanded application capabilities for re:store • Continued growth of tip sales • Development revenues from home use agreement with Philips Income Statement Year Ending 3 Months Ending ($ in millions) 12/31/2007 3/31/2008 6/30/2008 Systems $43.9 $12.1 $15.5 % Y/Y Growth 2% 28% 29% Tips & Other Consumables 13.9 4.7 4.6 % Y/Y Growth 36% 39% 35% Upgrades & Auxillary Equipment 10.9 0.9 1.0 % Y/Y Growth 266% (71%) (66%) Other 1.8 0.6 1.4 % Y/Y Growth 68% 70% 234% Net Revenues $70.5 $18.4 $22.6 % Y/Y Growth 23% 12% 19% 30 |
 Reliant
Achieves Break-Even Non- Reliant Achieves Break-Even Non-
GAAP Operating Income* GAAP Operating Income* *Non-GAAP Operating Income excludes SBC and extraordinary charges Income Statement Year Ending 3 Months Ending 3 Months Ending ($ in millions) 12/31/07 % of Rev 3/31/08 % of Rev 6/30/08 % of Rev Comments Net Revenues $70.5 100% $18.4 100% $22.6 100% Strong revenue growth Gross Profit 38.0 54% 11.0 60% 13.9 61% Expansion of gross profit margin driven by increased new system sales, growth in tip revenues and improved manufacturing costs Operating Expenses 62.1 88% 16.0 87% 15.9 70% Total expenses remained relatively constant GAAP Operating Income (24.1) (34%) (5.0) (27%) (2.1) (9%) Stock Based Compensation (SBC) 6.3 9% 2.0 11% 2.0 9% SBC expected to reduce significantly as part of combined entity Extraordinary Charges IPO Expenses 2.6 4% - - M&A Expenses - 0.7 4% 0.1 1% Severance Expense - - 0.2 1% Inventory Charge 1.7 2% - - SBC and Extraordinary Charges 10.5 15% 2.8 15% 2.4 10% Non-GAAP Operating Income (13.5) (19%) (2.2) (12%) 0.3 1% Reliant had positive operating income in Q2 '08 excluding SBC and extraordinary charges 31 |
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 Combining
Two Highly Combining Two Highly Complementary Business Models Complementary Business Models Revenue Streams for the 6 Months Ending June 30, 2008 72% 26% 2% 23% 72% 5% 45% 51% 4% 0% 20% 40% 60% 80% 100% Thermage Reliant NewCo Tips Systems Other 33 |
 Enhanced
Opportunity to Grow Enhanced Opportunity to Grow Consumable Revenue Stream Consumable Revenue Stream Treatment Tips and Consumables Revenue 6 Months Ending June 30, 2008 • Dedicated consumables sales force markets to Reliant’s installed base • Proven cooperative marketing campaigns with physicians • Enhanced resources to increase visibility with physicians and patients Installed Base of Systems as of June 30, 2008 Thermage $24.6mm Reliant $9.3mm Total: $33.9mm Thermage >2,500 Reliant >1,700 Total: >4,200 34 |
 Creating
One of the Largest Sales Creating One of the Largest Sales Forces in Aesthetic Devices Forces in Aesthetic Devices Largest Bifurcated U.S. Sales Force Focus on Disposables Focus on Generators Enhances Market Penetration 35 |
     Cross
Selling Opportunities Cross Selling Opportunities Installed Base Over 1,700 Installed Base Over 2,500 Cross-Branding Opportunities Strong Combination Therapy One Stop Shopping For Physicians Potential to Bundle Technology Improved Leverage with Distributors 36 |
 Substantial Synergies Identified Substantial Synergies Identified Headcount Related – 66 positions • Sales $2.2mm • Marketing $2.3mm • Operations $1.4mm • G&A $3.4mm TOTAL HEADCOUNT $9.3mm Other Costs • Marketing $2.0mm • Facilities $0.5mm • R&D $1.0mm • Consulting, Legal, Insurance, Audit $1.2mm TOTAL OTHER $4.7mm TOTAL SYNERGIES $14.0mm 37 |
 70% 68% 66% 62% 50% 56% 56% 0% 20% 40% 60% 80% CYNO CLZR ELOS Post- Merger CUTR PMTI THRM Reliant Benefit From Economies of Scale Benefit From Economies of Scale Q2 ’08 Operating Expenses as a % of Revenue Avg. of 54% Avg. of 67% $39 Q2 ’08 Revenue ($ in millions) $40 $38 $40 $25 $23 $18 $23 CLZR and ELOS from analyst estimates *Includes 25% of $14mm in synergies, or $3.5mm in synergies 61% Including Synergies* 69% Excluding Synergies 38 |
 Projected
Liquidity of Combined Company Projected Liquidity of Combined Company Cash $52.2mm $25mm Cash Paid to Reliant at Close $0 $5mm Cash Lent to Reliant $8mm Transacti on/One- Time Expenses Cash ~$16mm $1mm Repayment of Assumed Debt and Interest 6/30/08 12/31/08 $2.5mm Reliant Cash Assumed 12/31/09 Estimated Cash Flow from Operations ~$15mm 39 |
 Summary Summary • Combines the leaders in two of the largest segments of the aesthetic device industry – skin tightening and skin resurfacing • Strong economies of scale and substantial cost synergies • Creates one of the largest sales forces in aesthetic devices with significant cross-selling opportunities • Industry leading recurring revenue model • Anticipated cash flow generation of over $15 million and accretive to GAAP EPS in 2009 • Expected to close in the fourth quarter of 2008 40 |