To Create and Deliver the New Standard of Care in Sterile Reprocessing. Investor Presentation 22 February

Transcription

1 To Create and Deliver the New Standard of Care in Sterile Reprocessing Investor Presentation 22 February

2 Important Cautions Regarding Forward Looking Statements and Other Disclosures The statements contained in this presentation and oral statements made by representatives of TSO 3 Inc. ( Company ) relating to matters that are not historical facts are forward-looking statements that involve certain risks, uncertainties and hypotheses, including, but not limited to, general business and economic conditions, the Company s limited history of sales or distribution, the ability of the Company to obtain the required regulatory clearance to market its products on a worldwide basis, the outcome of patent applications, the condition of the financial markets, the ability of the Company to obtain financing on favorable terms and other risks and uncertainties. Risks and uncertainties about the Company s business are more fully discussed in the disclosure materials filed with the securities regulatory authorities in Canada, which are available on SEDAR under the issuer profile of the Company at You are urged to read these materials. Although management of the Company believes that the conclusions, estimates or projections reflected in such forward-looking information are reasonable and represent the Company s conclusions, estimates or projections at this time, such information involves unknown risks and uncertainties which may cause the Company s actual results to differ materially from the Company s conclusions, estimates or projections expressed or implied by such forward-looking information. You are cautioned not to place undue reliance on these forward-looking statements. Except as required by law, we do not undertake to update any forward-looking statement. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of any securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful. All Dollars in USD, unless noted otherwise. STERIZONE registered trademarks of TSO 3 Inc. US Pats. No. 9,101,679 / 9,474,815 / 9,480,763 / 9,480,765 US Pat. Applications No. 14/820,965; 15/247,450 Canada 2,767,726 EU Pat. EP 2,601,976; EP2,609,937; EP2,482,859; EP2,601,979 Japan Pat. 5,480,975; 5,785,208; 5,785,211; 5,855,045 Corresponding patents granted or pending in other countries TSO 3 Inc., All rights reserved for all countries. No part of this publication may be reproduced or translated in any form or by any means, without the prior written permission of TSO 3 Inc. 2

3 VISION. PURPOSE. To Create and Deliver The New Standard of Care In Sterile Reprocessing A Sterile Device for Every Patient 3

4 TSO 3 Next Generation Technology The STERIZONE VP4 Sterilizer is a dual sterilant, low-temperature sterilization system that uses vaporized hydrogen peroxide (H 2 O 2 ) and ozone. Features Advantages Benefits Dual Chemistry Dynamic delivery Large capacity Simple Single Cycle Operation Large Loads Mixed Loads Lower Risk Higher Throughput Lowest cost per instrument sterilized Cost avoidance Expandability Leverage existing hospital inventory Reduce reputational risk Ability to Process Full Instrument Sets Documented Efficiency 4

5 Value of a Customer Razor Capital Equipment Sales 1-4 units per facility Revenue Potential Per Customer* (Assuming 2 units, 10 Yr Product Life) $240k-$300k Higher-Margin Proprietary Consumables ~$20-30/cycle (dep. on mix and size) Assuming 4-5 Cycles/Day, 250d/yr $50k-$62.5k/yr Approx $0.9m-$1.2m Revenue Opportunity per Customer Razorblades Service Contracts ~10% of Capital Price/year ** $24k-$30k/yr * Assuming two units installed, 10 year product life. Based on Company Estimates. For illustrative purposes only. This illustration is based on assumptions and uncertainties as well as on management s estimate of future events. Actual results may differ significantly from the above illustration. The Corporation has limited sales and distribution history and there is no guarantee that our sales specialists will achieve the results illustrated herein. Refer to additional risk factors contained in TSO3 s disclosure materials filed with the securities regulatory authorities. 5

6 Breakthrough Technologies /// 138 Patents + 47 Patents Pending Worldwide 1. Insert Room Temperature Instruments Into a Warm Chamber 2. Create a Vacuum and Inject Small Amounts of Vapourized Heated Sterilant Over Time 3. Micro Condensation Forms on the Instruments Condensation Layer Dual Sterilants 6

7 Opportunity One Core Technology Two Markets Established Base Business Emerging Opportunity Operating Room & Central Sterile Supply Department U.S. ~ 10,000 Hospitals & Ambulatory Surgery Centers 1 Canada ~ 1,400 Hospitals 4 Europe ~ 15,000 Hospitals 5 OR/CSSD $6.0B+ 6 TOTAL ADDRESSABLE MARKET GI 50M+ Procedures/year 7 Gastrointestinal Endoscope Reprocessing ~15M colonoscopies performed annually 2 >500,000 ERCP Procedures (endoscopic retrograde cholangiopancreatographies) performed annually 3 1) The American Hospital Association, US Dept. of Health and Human Services, 2) Centers for Disease Control and Prevention 3) US Food & Drug Administration 4) Statistica.com 5) Eurostat 6) Markets and Markets, June ) Becker s GI & Endoscopy 35 Statistics About GI/Endoscopy 7

8 Commercialization: Original Getinge Infection Control Agreement November 25, TSO 3 and Getinge Infection Control Signed Exclusive Distribution Agreement which included multi-year performance requirements and minimum annual commitments. Why TSO 3 chose Getinge: A global leader in Healthcare sterilization Operations in more than 40 countries Sales in more than 150 countries Did not have a low-temperature sterilizer Up-Front License-Fee of US$7.5M Contractual minimums in each of 5 years (toward a >10% market share objective) 8

9 Getinge Getinge launched sales of our STERIZONE VP4 Sterilizer in North America and Europe. TSO 3 sold 280 STERIZONE VP4 Sterilizers to Getinge. Simultaneously, Getinge experienced a series of organizational changes which had an impact on its businesses. In November 2017, TSO 3 disclosed that 50+ STERIZONE VP4 Sterilizers had been delivered to key medical facility end customers. Result: Distributor inventory overhang. Action: Deal with inventory and accelerate commercialization. 9

10 Near Term Solution: TSO 3 & GETINGE Co-Commercialize January 25, TSO 3 & Getinge entered into a new agreement allowing TSO 3 to sell directly to and service to 50% of hospitals in North America and repurchase Getinge inventory at a discount. Agreed to actively co-commercialize our product - TSO 3 added resources directed at new sales targets not the same targets TSO 3 agreed to purchase 100 STERIZONE VP4 Sterilizers back from Getinge s inventory at $33,000 each - reduces distributor inventory at substantially lower than our production cost Agreed to initiate negotiations on a new and improved agreement What it does for TSO 3 : Gives TSO 3 the ability to sell and market directly to 50% of targeted accounts in North America Allows TSO 3 to create the marketing strategy and messaging Permits TSO 3 to deploy dynamic pricing models to fit customer needs What it does for Getinge: Getinge will continue to sell STERIZONE VP4s to their established targets Getinge will continue to be the exclusive distributor of the STERIZONE VP4 in the rest of the world Getinge will continue to service systems they sell or sold TSO 3 will continue to support Getinge in its sales and installation processes 10

11 Here is Why Click here to open the video 11

12 Proven Value Proposition Independent of Customer Size STERIZONE VP4 50% less cost per instrument sterilized than competitor Decreased Number of Cycles We had 4 [competitor] Sterilizers, now we have 2 STERIZONE VP4 Sterilizers. VP4 cost less than [competitor] in long run Service Expansion: added sleep center, ENT scopes, endoscopy reprocessing, neurosurgeon STERIZONE VP4 Sterilizer is 3 times more efficient than competitor Beds Beds 600+ Beds * Based on actual 2017 customer surveys as compared to competitive low temperature hydrogen peroxide sterilizers. Results will vary depending on the customer and use profile. 12

13 Commercialization Approach - CSSD LEVERAGE EARLY INCREASE MARKET ESTABLISH STRONG SUPPORT WITH ADOPTERS AWARENESS CUSTOMER DIRECT SALES, TARGETING METRICS CLINICAL AND Over 50 sterilizers installed in US and Canada TSO 3 to Lead Messaging in Co-Commercialization Strategy with Getinge High Use Facilities Heavy Orthopedic and Robotic Surgical Centers TECHNICAL PERSONNEL <200 beds to >1,000 Heavy Industry and beds+ Society Presence 13

14 Opportunity GI Endoscopy Reprocessing One Core Technology Two Markets Established Base Business Emerging Opportunity Operating Room & Central Sterile Supply Department U.S. ~10,000 Hospitals & Ambulatory Surgery Centers 1 Canada ~1,400 Hospitals 4 Europe ~15,000 Hospitals 5 OR/CSSD $6.0B+ 6 TOTAL ADDRESSABLE MARKET GI 50M+ Procedures/year 7 Gastrointestinal Endoscope Reprocessing ~ 15M colonoscopies performed annually 2 > 500,000 ERCP Procedures (endoscopic retrograde cholangiopancreatographies) performed annually 3 1) The American Hospital Association, US Dept. of Health and Human Services, 2) Centers for Disease Control and Prevention 3) US Food & Drug Administration 4) Statistica.com 5) Eurostat 6) Market and Market, June ) Becker s GI & Endoscopy 35 Statistics About GI/Endoscopy 14

15 Endoscopes & Superbugs A Future of Sterilization SUPERBUG = Antimicrobial Resistant Bacteria 2 million+ Americans suffer from antibiotic-resistant bacteria annually 23,000 die 1 CRE is resistant to most available antibiotics - up to 50% of infected patients die 2 CRE infections growing and linked to endoscope use: seven incidents and two deaths at UCLA Medical Center 3 ECRI Institute s 2016 Top 10 Health Technology Hazards List: No. 1 concern is inadequately-cleaned endoscopes 4 1)Centers for Disease Control (CDC) 2) CDC Carbapenem-resistant Enterobacteriaceae in Healthcare Settings 3)Associated Press, February 20, 2015 and Los Angeles Times, January 26, ) ECRI Institute 15

16 Modernizing GI Endoscope Reprocessing Decades old processes with incremental improvement Old Despite reprocessing in accordance with US guidelines, viable microbes and biologic debris persisted in clinically used [GI] endoscopes, suggesting current reprocessing guidelines are not sufficient to ensure successful decontamination. Residual contamination was detected on multiple components after reprocessing colonoscopes and EGDs in accordance with guidelines viable microbes were recovered from patient-ready endoscopes (i.e., 64% post-hld, 9% post-storage). - American Journal of Infection Control (with Mayo Clinic), 2015 Despite adherence to strict guidelines bacteria can at times remain on these scopes microbial contamination was detected in 5% of more than 4,000 individual specimens collected after cleaning. Strong Evidence for Sterilization of Endoscopes - Providence Health & Services, Seattle Times, June 2016 Presented at Stakeholder Meeting - AAMI, September

17 How Change Happens Patient and Medical Facility Demand Patient Safety Technology Advancement STERIZONE VP4 Sterilizer Litigation Cost Reduction Market Change Regulatory Change FDA Regulation Advancement Industry Dialogue and Guidelines 17

18 Duodenoscopes Attempts to deal with Identified Risk Pentax Medical February 7, 2018 Urgent Medical Device Correction and Removal (USA only) Replace elevator mechanism, O-ring seal & distal cap January 17, 2017 Design issues that could lead to increased risk of infection February 19, 2016 FDA Safety Communication Updated reprocessing protocols Olympus Canada November 1, 2017 Quality issue with application of adhesive during previous repair Immediately discontinue Olympus America Inc. January 15, 2015 Urgent Medical Device Removal and Corrective Action Replace forceps elevator mechanism Distal cap Adhesive O-ring seal Elevator mechanism FujiFilm July 21, 2017 Urgent Medical Device Correction and Removal Replacement of Forceps elevator mechanism, O-ring seal, distal cap Source: FDA 18

19 GI Commercialization Approach Value Proposition to Hospital Improve Patient Safety Manage Reputational Risk Manage Litigation Risk Future Proofing the CSSD Evidence Based Practice: Leverage Existing Industry Leading Claims Colonoscopes and Gastroscopes Higher Efficiency Processing of Smaller Scopes Support current submission for Duodenoscope Claim addition Sterilize Known/Suspected Contaminants Strong Evidence for Sterilization of Establish Frequency of Sterilization Endoscopes Presented at Stakeholder Leverage CSSD Installation Meeting Move to G.I. Placements - AAMI, September

20 Next Generation Technology Extensive Patent Portfolio Razor/Razorblade Business Model SUMMARY FDA-cleared Device for Terminal Sterilization of Colonoscopes and other flexible endoscopes Co-Commercial Strategy for North America with Global Distribution Partner Financially Sound 20

21 Key Stats & Target Business Model (TSX: TOS) /// All Dollars in USD, Unless Noted Otherwise (mrq) = most recent quarter at September 30, * 2017 financial data is of September 30, 2017

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