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Page 1: TEAR Investor Presentation (6.1)6.1).pdf · TEAR Investor Presentation (6.1).ppt Author: Stephen Kilmer Created Date: 9/17/2014 4:21:58 PM
Page 2: TEAR Investor Presentation (6.1)6.1).pdf · TEAR Investor Presentation (6.1).ppt Author: Stephen Kilmer Created Date: 9/17/2014 4:21:58 PM

Forward-­‐Looking  Statements  

This  presenta,on  includes  “forward-­‐looking  statements”  within  the  meaning  of  the  Private  Securi,es  Li,ga,on  

Reform  Act  of  1995.  These  statements   include  but  are  not   limited  to  our  plans,  objec,ves,  expecta,ons  and  

inten,ons  and  other  statements  that  contain  words  such  as  “expects,”  “contemplates,”  “an,cipates,”  “plans,”  

“intends,”  “believes”  and  varia,ons  of  such  words  or  similar  expressions  that  predict  or  indicate  future  events  

or   trends,   or   that   do   not   relate   to   historical  maHers.   These   statements   are   based  on  our   current   beliefs   or  

expecta,ons   and   are   inherently   subject   to   significant   uncertain,es   and   changes   in   circumstances,   many   of  

which  are  beyond  our   control.   There   can  be  no  assurance   that  our  beliefs  or  expecta,ons  will   be  achieved.  

Actual  results  may  differ  materially   from  our  beliefs  or  expecta,ons  due  to  economic,  business,  compe,,ve,  

market,  regulatory,  and  other  factors.  A  full  discussion  of  our  opera,ons  and  financial  condi,ons,  including  risk  

factors  that  may  affect  our  business  and  future  prospects,  is  contained  in  our  most  recent  regulatory  filings.  For  

a  complete  account  of  our  official  corporate  documents,  you  are  encouraged  to  review  documents  filed  with  

the  securi,es  regulators  in  the  U.S.  and  Canada.    

2  

Page 3: TEAR Investor Presentation (6.1)6.1).pdf · TEAR Investor Presentation (6.1).ppt Author: Stephen Kilmer Created Date: 9/17/2014 4:21:58 PM

Investment  Highlights  

! 1st  point-­‐of-­‐care  diagnos,c  plaQorm  for  tears  

! Technology  objec,vely  diagnoses  Dry  Eye  Disease  (DED)  

!  Safe,  easy-­‐to-­‐use,  very  accurate  

! Large  IP  porQolio  

! FDA  510(k)  approved  and  CLIA  waived,  opening  the  door  to  all  U.S.  optometry  and  ophthalmology  offices  

! Recurring  revenue  model    

! Medicare  code  83861:  reimbursement  $45.42/pa,ent  ($22.71/  eye)  

3  

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4  

TearLab®  Tear  Collec<on  

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Breakthrough  Technology  ! Accuracy  

–  <  1.5%  coefficient  of  varia,on  (“CV”)  @  50  nanoliters  –  Glucose  ≥  5.0%  CV  @  5  microliters  –  Cholesterol  >  4.0%  CV  @  20  microliters  

 ! Safe,  simple  collec,on  

–  No  reports  of  corneal  or  conjunc,val  trauma  in  468  eyes  TearLab™  FDA  510(k)  submission  

! 2009  Medical  Design  Excellence  Award  (“MDEA”)  for  in  vitro  diagnos,cs  

20  µL   5  µL   50  nL  

Sources:  Kimberly  MM  et.  al.,  Clinica  Chimica  Acta  364  (2006);  Volles  DF  et.  al.  Pharmacotherapy  18:1  (1998)  5  

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Intellectual  Property  

! Large  IP  porQolio  on  tear  collec,on  –  9  patents  issued:  7,017,394;  7,051,569;  7,111,502;  7,129,717;  7,204,122;  

7,574,902;  7,810,380;  7,905,134;  7,987,702;  8,020,433  –  Several  pending  (around  design,  manufacturing  and  other  tests)  

! Electrochemical  plaQorm  that  has  broken  the  nanoliter  volume  barrier  –  Enables  standard  tes,ng  methodologies  on  this  plaQorm  for  many  different  

diagnos,c  tests  for  a  variety  of  markers  –  Patents  pending  on  other  analytes  (proteins,  genes)  and  methods  to  measure  

! Core  claims  around  lab-­‐on-­‐a-­‐chip  in  the  U.S.  and  selected  key  countries  

6  

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First  Test:  Dry  Eye  Disease  

! Tears  are  a  sophis,cated  3-­‐layer  film,  and  are  essen,al  to  the  quality  of  our  vision  –  The  front  layer,  produced  by  the    

meibomian  glands,  is  oil  and  it  keeps    tears  from  evapora,ng  

–  The  middle  (aqueous)  layer,  produced  by                                                                                                                      the  lacrimal  glands,  gives  it  the  thickness    and  uniformity  to  ensure  a  clear  image  

–  The  back  layer  is  a  polish  that  fills  in  any    irregulari,es  in  the  corneal  surface    

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Understanding  Dry  Eye  Disease  

8  

*Report  of  the  Diagnosis  and  Classifica,on  SubcommiHee  of  the  Dry  Eye  Workshop  (DEWS).”  The  Ocular  Surface  5(2):  75-­‐92,  2007    

- Systemic auto immune Disease (Inflammation) - Androgen deficiency - Contact lens use - Surgery/ Ocular Damage - Medication side effect - Environmental stress

DED Dry Eye Disease As defined and characterized by: 1.  Meibomian gland dysfunction 2.  Lacrimal Gland dysfunction 3.  Breakdown of Neuro-pathways 4.  Ocular surface dysfunction (Mucin)

RESULTS IN: High Osmolarity and an Unstable Tear-Film*

Causes 1.  Damage to the Ocular surface

(irregular) 2. Inflammation 3. Fluctuating Vision

Page 9: TEAR Investor Presentation (6.1)6.1).pdf · TEAR Investor Presentation (6.1).ppt Author: Stephen Kilmer Created Date: 9/17/2014 4:21:58 PM

•  “The  main  test  for  dry  eye  is  the  Schirmer  test  –  Requires  repeated  examina,ons  at  up  to  five  

minutes  per  examina,on  

•  Unfortunately,  this  test  misses  detec,ng  many  pa,ents  with  dry  eyes  

•  Other  tests  should  also  be  done  before  ruling  out  a  diagnosis  of  dry  eyes”  

(hHp://www.uic.edu/com/eye/LearningAboutVision/EyeFacts/DryEyes.shtml)  Schirmer  Test

1.  Tomlinson  A.,  McCann  L.,  Pearce  E.I.  Comparison  of  OcuSense  and  Cliron  Nanolitre  Osmometers.  IOVS  ARVO  Abstract,  2009  2.  Report  of  the  Diagnosis  and  Classifica,on  SubcommiHee  of  the  Dry  Eye  Workshop  (DEWS).”  The  Ocular  Surface  5(2):  75-­‐92,  2007    

Current  Diagnosis  Paradigm  

9  

Clinical  Test   Posi<ve  Predic<ve  Value  

Osmolarity1   87%  

Schirmers2   31%  

Tear  Film  Breakup  Time2   25%  

Staining2   31%  

Meniscus  Height2   33%  

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Dry  Eye  Syndrome  To  Become  Most  Common  Eye  Disease  in  Baby  Boomers    

Dry  eye  expert  Dr.  David  Kisling  reports  that  Dry  Eye  Syndrome  will  be  the  most  prevalent  eye  disorder  the  Baby  Boomer  genera;on  faces  in  the  future.  Shi?ing  demographics  in  

an  aging  popula;on  will  result  in  a  ;dal  wave  of  dry  eye  problems  by  2030.*    

*  PRWeb  (June  2,  2011)  

Large  (and  Growing)  Pa<ent  Popula<on  

! Survey  by  Harris  Interac,ve  on  behalf  of  Allergan,  Inc.,  found  that  nearly  half  of  all  U.S.  adults  (48%)  experience  one  or  more  dry  eye  symptom(s)  regularly  

! TearLab  Osmolarity  Prevalence  Study  (8,845  pa,ents)  found  the  overall  incidence  of  hyperosmolarity  amongst  the  study  popula,on  was  48%  

10  

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TearLab  in  the  Prac<ce  

11  

General  Prac<ce    

Properly  diagnose  pa,ents  with  ocular  irrita,ons  and  measure  the  effec,veness  of  DED  therapies  

Laser  Vision  Correc<on    

Iden,fy  pa,ents  with  DED  and  guide  pre-­‐  and  post-­‐surgical  treatment  to  significantly  improve  refrac,ve  outcomes  and  reduce  complaints  of  DED  symptoms  

Cataract  Surgery  and  Premium  IOLs  

Improve  refrac,ve  outcomes  and  pa,ent  sa,sfac,on  while  appropriately  managing  expecta,ons  following  surgery  

Glaucoma  Management    

Improve  compliance  and  manage  the  impact  of  chronic  preserva,ves  used  in  glaucoma  pa,ents  which  is  known  to  cause  DED  

Contact  Lens  FiQng  and  Management  

Approx.  50%  of  contact  lens  users  develop  CLYDE  (Contact  lens  Induced  Dry  Eye  Disease)  in  5  years  

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Protocol  for  Cataract  and  Refrac<ve  Surgery  (Sample)  

12  

TEARLAB  ALL  Pa<ents  Going  to  Surgery      

NORMAL   MILD   MODERATE   SEVERE  

Proceed  with  Surgery  

Proceed  with  Surgery    Check  and  make  sure  there  is  good  lubrica,on  for  an  extended  period  post-­‐surgery  

TREAT  to  Stabilize    

Proceed  with  Surgery    

Manage  Disease  

 SUBTYPE  

-­‐  Exam  -­‐  Stain  -­‐  Schirmers  -­‐  TBUT  -­‐  MMP9  -­‐  LipiView    

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TearLab  Osmolarity  Market  Size  and  Economics  ! Card  Revenue  Economics  based  only  on  U.S.  Doctor  U,liza,on  

! There  are  approximately  20,000  ophthalmologists  +  30,000  optometrists  in  the  U.S.  

13  

Addi<onal  opportuni<es  for  TearLab  in  …    

! Refrac,ve  surgery  pre-­‐  and  post-­‐opera,ve  tes,ng  

! Cataract  Implantable  lens  fiyngs  

! Clinical  trials  

! Rest  of  the  World  

 

Market  Poten<al  based  on  U.S.  (only)  Doctor  Access  

Assuming  50,000  Doctors,  seeing  an  average  of  6  dry  eye  pa<ents  per  day  tes<ng  both  eyes,  assuming  a  $10  card  cost  and  working  250  days  per  year.  

$1.5  Billion  market  based  only  on  rou<ne  examina<ons  

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U.S.  Sales  and  Marke<ng  Strategy  

Marke<ng  Strategy:    

To  Build  our  Osmolarity  test  as  an  essen,al  ocular  health  indicator  

 

Marke<ng  Plan:  ! Trade  shows  ! Focus  on  Key  Opinion  Leaders  and  medical  marke,ng  programs  ! Peer-­‐reviewed  clinical  trial  studies  u,lizing  TearLab  technology  ! Introducing  prac,ce  management  programs  and  accredited  DED  prac,ce  

program  

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Program  Op<ons  1.  Purchase  ! Purchase  the  System  for  $9,500  with  no  minimum  card  commitment  

2.  USE  Agreements  

! Free  use  of  the  system  with  a  minimum  3  year  commitment  to  purchase  cards  –  1,500  cards  per  year  at  $12.50  per  card  –  2,400  cards  per  year  at  $10  per  card  

3.  MASTERS  Mul<  Unit  Program  

! Designed  to  accommodate  large  prac,ces  (more  than  5  units)  that  want  to  integrate  TearLab  into  each  of  their  examina,on  lanes.  There  are  no  minimum  card  guarantees,  but  specific  volume  expecta,ons  in  line  with  our  revenue  expecta,ons  

15  

TearLab  will  be  introducing  a  new  Use  Agreement  that  will  consolidate  all  of  the  above,  simplifying  the  program  while  maintaining  all  exis<ng  business  aspects  

 

Details  of  program  will  be  announced  at  our  Analyst  &  Investor  Day  next  week  

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Installed  Base  

16  

03/31/14   06/30/2014  

Ac,ve  Purchased  Devices   190   254  

Ac,ve  Devices  Under  Use  Contracts   802   774  

Ac,ve  Devices  Under  Masters  Contracts   1,462(1)   1,718(2)  

Total  Ac<ve  Devices   2,454   2,746  

Devices  Not  Yet  Ac,vated   224   92  

Total  Devices     2,678   2,838  

Devices  Sold  Outside  the  U.S.   518   529  

(1)  176  Masters  Accounts  (2)  206  Masters  Accounts  

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Revenue  /  Device  /  Account  

17  

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19%  Sequen<al  Growth  Q2-­‐2014  Over  Q1-­‐2014  

18

Revenue  Growth  Post  CLIA-­‐Waiver  

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2014:  A  Year  of  Growth  

19  

1.    Sales  Organiza<on:  ! Added  23  people  to  our  sales  organiza,on  ! Established  a  reimbursement  support  team  ! Created  a  corporate  training  and  sales  analy,cs  func,on  

Current  team  consists  of:  37  Territory  Mangers,  6  Area  Managers,  11  Implementa,on  Specialists,  4  Reimbursement  Analysts,  4  Sales  Opera,ons  Coordinators,  1  person  in  Training  and  Analy,cs,  2  Regional  Directors,  1  Director  of  Sales  Opera,ons  and  1  VP  Sales  

2.    Marke<ng  Group  (New  Messaging  and  Campaign):  ! Create  segmenta,on  analysis  ! Reposi,on  Brand:  an  essen,al  measure  of  ocular  health    ! Support  many  studies  and  publish  peer-­‐reviewed  ar,cles  suppor,ng  brand  

3.    Management  Team  (3  VP  and  1  Director  Level  Hires):  ! Paul  Smith  for  global  market  development  (to  discuss  in  more  detail  on  Analyst  &  Investor  

Day)  ! Venkiteshwar  Manoj  to  improve  medical  affairs  strategy  &  output  ! Delano  Ligu  to  build  our  IT  infrastructure  and  our  opera,ons  backbone  ! Lynne  PraH  to  raise  level  of  performance  and  value  add  from  HR  func,on  

4.    R&D:  ! Completed  research  of  new  panel  of  tests  and  moved  into  the  development  phase  (to  discuss  

with  more  detail  on  Analyst  &  Investor  Day)  

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Summary  

! 1st  point-­‐of-­‐care  diagnos,c  plaQorm  for  tears  

! Ini,al  test  objec,vely  diagnoses  Dry  Eye  Disease  

! Safe,  easy-­‐to-­‐use  plaQorm  requiring    only  50  nL  of  tear  film  

! Recurring  revenue  model  

! Large  IP  porQolio    

! Medicare  reimbursement  $45.42/pa,ent  ($22.71/eye)  

20