Investor Presentation September 2017 - TearLab · 2017-09-12 · Investor Presentation September 2017. 2 Forward-Looking Statements ... Diabetes (diabetic retinopathy) Neurological

Investor PresentationSeptember 2017

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Forward-Looking Statements

This presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this presentation such as “expects,” “contemplates,” “anticipates,” “plans,” “intends,” “believes” and variations of such words or similar expressions that predict or indicate future events or trends, or that do not relate to historical matters are forward-looking statements, including, among others: statements relating to plans and objectives of management for future operations and future results; the projected growth of the dry eye market; the anticipated shift to increased utilization of diagnostics in eye care; our belief that new and more expensive treatments will increasingly require diagnostics to gain payer support; our expectations for the approval of our next generation Discovery system; and, our belief that the TearLab platform is well positioned to lead and capitalize on the shift in the market to personalized medicine. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Risks and uncertainties include, but are not limited to: our ability to successfully commercialize the TearLab Osmolarity System and the Discovery System in the US; being able to generate sufficient cash flow to service our indebtedness; our financial leverage; operating successfully outside the US; raising additional capital; the ability to comply with and meet applicable laws and regulations; competition; enforcing our intellectual property; maintaining our key personnel; maintaining our listing on the Nasdaq capital markets; and successfully introducing new products. You should review the risks and uncertainties contained in our filings with the United States Securities and Exchange Commission, including risks and uncertainties described in detail under the caption “Risk Factors” in such filings. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

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Our Mission

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Our Journey

Existence Growth Plateau Innovation Maturity

Today

Gro

wth

Time

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Creating a New Paradigm

Our platform uses tears to diagnose disease

Proprietary nano-fluidic technology that leverages molecular data from the tear film

Eye care doctors can now rely on the tear film for information just as general MD’s now look to the blood

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Safe, Fast and Painless Tear Collection

Collection takes only seconds and delivers quantitative results in under two minutes

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Tear Collection Demonstration

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Quantitative and Highly Accurate Results

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

Sample Size Comparative TestsAccuracy

Coeff. Var.

20 Micro-liters Cholesterol 4.0%

5 Micro-liters Glucose 5.0%

50 Nano-liters Osmolarity 1.5%

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First Generation Technical Achievements

FDA approval and registration in 40+ countries

Established our own CPT reimbursement code for $45.00 per patient

First CLIA waiver approval in eye care for point-of-care use

CLIA

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First Generation Commercial Results

Significant scale and brand equity created despite single, obscure biomarker for low interest disease

1,500

1,600

1,700

1,800

1,900

4,000

4,100

4,200

4,300

4,400

4,500

4,600

Q3 2016 Q4 2016 Q1 2017 Q2 2017

Device and Account Base

Device Installed Base Account Base

Scale

• $28M revenue run rate

• 5,000 devices in the field

• More than 8 million tests performed

• 90%+ insurance coverage

Productivity• $22K annualized revenue per account

• $6K annualized revenue per device

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Molecular Data in the Tear Film

Dry eye, Inflammation, allergy, infection

Glaucoma, retinal, macular

Diabetes (diabetic retinopathy)

Neurological (Parkinson’s, systemic sclerosis)

The tear film contains many of the same biomarkers as the blood

Hagan et al. The EPMA Journal (2016) 7:15 DOI 10.1186/s13167-016-0065-3 “Tear fluid biomarkers in

ocular and systemic disease: potential use for predictive, preventive and personalized medicine”,

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Platform Evolution from Single Test to Multiple Disease Panel

Patient Journey

Test Relevance

Initial diagnosis

Drive therapeutic selection

Chronic disease management

Multiple Bio-Markers and Multiple Diseases

Single Test Osmolarity

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U.S. Market Opportunity

Disease Patie

nts

In V

itro

Dia

gnostic

Penet

ration

Trea

tmen

t Cost

Near Term

Dry Eye 30 Million <10% $$$

Allergy 60 Million <5% $$

Infection 6 Million <5% $

Mid Term

Glaucoma 3 Million 0% $$

Retinal 18 Million 0% $$$$

Longer Term

Parkinson's 1 Million <20% $$$$

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Point of CareApplication

• Quantitative and rapid results

• Safe, easy and cost effective

• Multiplexed biomarkers for multiple diseases

• Hardware supports future tests

Clinical Application

• R&D platform for new marker validation

• Customized tests in line with clinical and regulatory strategy

TearLab DiscoveryTM

New Platform with Multiplexing Capability in Single Tear Collection

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Nitrocellulose protein paper

integrated with collection device

Low Risk Regulatory Path

We combine our unique tear collection method and nano-fluidic technology to leverage regulatory friendly lateral flows assays

FDA approved tear

collection technology

Lateral flow spotting technology

FDA friendly

• European CE mark July 2017

• FDA 510(k) filing in Q4 2017

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First Test Inflammation: Universal Importance

Osmolarity

• Well known and established biomarker

• Indicator of severe inflammation

• Highly associated with DED

MMP-9

• Produced in proportion to active inflammation

• 2nd inflammation marker improves therapy tracking

• Highly associated with DED IL-1Ra

• Quality & stability of tear film

• Differential, early stage dry eye disease (DED)

diagnosis

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Drivers of Increased Utilization

Current Test

Discovery Platform

First Test Launched

• Osmolarity not well known or understood

• Osmolarity not clearly linked to therapy selection and effectiveness

Clinical

Reimbursement

• Inflammation is dogma

• Multi-billion dollar market for anti-inflammatory drugs

• $45 per patient• One marker

• $113 per patient• Three markers

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Current U.S.Installed Base

• 1,801 accounts

• 4,587 devices

• Immediate target for upgrade

Conversion

• Today 80% of revenue comes from 40% of accounts

• Immediate target accounts well within current sales force scale

Pricing• $4,000 - $5,000 revenue on capital charge

• 65% - 70% increase in test card price

Launch Velocity of First Test

Current user base provides immediate revenue inflection

point through capital charge and increased test card pricing

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Revenue Model

Discovery launch is the catalyst to significantly reduce cash burn and reach sustainability

$10

$20

$30

$40

$50

$60

Q2 2017 Run Rate Year 1 Launch Year 2 Launch Year 3 Launch

$Millions

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Our Journey

Existence Growth Plateau Innovation Maturity

Today

Gro

wth

Time

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Future Catalyst

• FDA filing for next generation platform (NGP)

• Summary of FDA clinical data

• Professional guidelines

• EU launch of NGP

• FDA approval of NGP

• U.S. launch of NGP

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Summary

• Novel platform: Using human tears to diagnose disease

• Next generation technology: Multiplexing capability to make the tear film a

leading diagnostic platform

• Large and growing market: Eye care diagnostics are in their infancy and

systemic opportunity using the tear film is untapped

• 2018 Launch: Large customer base will drive immediate growth through capital

upgrade and higher test card reimbursement

Investor PresentationNovember 2016