To Create and Deliver the New Standard of Care in Sterile Reprocessing™
Corporate Presentation | May 20191
The statements contained in this presentation and oral statements made by representatives of TSO3 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 evolution of demand for the
Company‘s products and services, the efficacy of sales and marketing plans including whether or not the Company‘s customers commit to purchases, the success of sales and marketing relationships with the
Company‘s partners and suppliers, 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 attract capital and other financial 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 www.sedar.com. 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.
US Pats. No. 9,101,679 / 9,474,815 / 9,480,763 / 9,480,765 / 9,814,795US Pat. Applications No. 14/820,965; 15/247,450 Canada 2,767,726 / 2,808,561EU Pat. EP 2,601,976; EP2,609,937; EP2,482,859; EP2,601,979Japan Pat. 5,480,975; 5,785,208; 5,785,211; 5,855,045; 6,141,950Corresponding patents granted or pending in other countries
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Important Cautions Regarding Forward Looking Statements and Other Disclosures
STERIZONE®
registered trademarks of TSO3 Inc.
© TSO3 Inc., 2019. 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 TSO3 Inc.2
To Create and Deliver The New Standard of CareIn Sterile Reprocessing™
A Sterile Device for Every Patient
VISION. PURPOSE.
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One Disruptive Technology – Two Large Markets
Process/ Technology
1) The American Hospital Association, US Dept. of Health and Human Services, 2) Statistica.com 2015 3) Eurostat 4) Global Low Temperature Sterilization Market: Industry Analyst & Outlook. Koncept Analytics. January 2017 5) Centers for Disease Control and Prevention 6) US Food & Drug Administration 7) Markets and Markets, June 2016 8) Becker’s GI & Endoscopy “35 Statistics About GI/Endoscopy”
OR/CSSD$6.0B+7
GI50M+
Procedures/year8
Operating Room & Central Sterile Supply Department
U.S. ~10,000 Hospitals & Ambulatory Surgery Centers1
Canada ~1,400 Hospitals2
Europe ~15,000 Hospitals3
Installed base of 30,000 units4
Gastrointestinal
~15M colonoscopies performed annually5
>500,000 ERCP Procedures (endoscopic retrograde cholangiopancreatographies) performed annually6
Established Base Business Emerging Opportunity
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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
Breakthrough Technologies /// 201 Patents + Patents Pending Worldwide
Dual Sterilants
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Condensation Layer Dynamic Sterilant Delivery SystemTM
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Capital Equipment Sales
1-4 units per facility
Higher-Margin Proprietary Consumables
* Based on long term Company Estimates. This illustration is based on assumptions and uncertainties as well as on management’s estimate of future events. Recent capital equipment selling prices have been and may continue to be lower than these amounts and actual results may differ significantly from the above illustration due to pricing promotions, customer usage patterns, outsourcing and other material variables. Not all customers enter into service contracts. The Company has limited sales history and there is no guarantee that it will achieve the results illustrated herein. Refer to additional risk factors contained in TSO3‘s disclosure materials filed with the securities regulatory authorities.
Service Contracts
~10% of Capital Price/Year
Potential Revenue Per US Customer*(Assuming 2 units, 10 Yr Product Life)
$200k-$300k
$20k-$30k/Sterilizer/Year
$12k-21k/Sterilizer/Year
Approx.$0.9m-$1.2m
Revenue Opportunity per
Customer*
Value of a Customer - Long Term Model
“Razor”
“Razorblades”
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New Metric: Cost per Instrument Sterilized, not Cost per Cycle
Competition STERIZONE® VP4 Sterilizer
Saves up to 50% in Operating Costs
2 STERIZONE® VP4 Sterilizers = 3+ of the Competition in Throughput
One of the Least Expensive Options In the Market Today
* Actual customer results. Results may vary depending on the customer and use profile.
Proven Value Proposition*
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Disruptive Technology for OR Support
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The STERIZONE® VP4 Sterilizer is a dual sterilant, low-temperature sterilization system that uses vaporized hydrogen peroxide (H2O2) and ozone.
Features Advantages Benefits
• Dual Chemistry
• Dynamic Delivery
• Large Capacity
• Lowest Cost per Instrument Sterilized
• Improved Operating and Service Costs
• Capital Cost Avoidance
• Expandability
• Leverage Existing Hospital Instrument Inventory
• Reduce HAI/reputational Risk
• Simple Single Cycle Operation
• Large Loads
• Mixed Loads
• Lower Cost
• Lower Risk
• Higher Throughput
• Ability to Process Full Instrument Sets
• Up to 1/3 fewer machines and cycles
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“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…”
Proven Value Proposition – Independent of Customer Size
“STERIZONE® VP4 50% less cost per instrument sterilized than competitor”
“Decreased Number of Cycles”
STERIZONE® VP4 Sterilizer is 3 times more efficient than competitor
1-200 Beds 600+ Beds201-600 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.
Fewer Cycles Fewer Sterilizers Better Efficiency
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Commercialization Approach - CSSD
SUPPORT WITH DIRECT SALES, CLINICAL AND
TECHNICAL PERSONNEL
LEVERAGE EARLY ADOPTERS
• Name-brand user-base and references
• <200 beds to >1,000 beds+
INCREASE MARKET AWARENESS
• >5,000 Targeted Customers
• Value Proposition Selling
ESTABLISH STRONG CUSTOMER
TARGETING METRICS
• High Use Facilities
• Heavy Orthopedic and Robotic Surgical Centers
• Heavy Industry and Society Presence
• Trained in-house Personnel
• Shipment and Installation backlog
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Goal to sell 200+ units in inventory
450+ opportunities
identified
~5,000 accounts targeted
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Sales and Marketing Activity
As of March 27, 2019. “Units” = STERIZONE VP4 Sterilizers. “Sold” = Units for which POs or Commitment Indications were received directly or indirectly from end users.
75 Units Installed
> 30 Units Sold in Last Six Months
>110 Units Sold
• Sell Direct to End Users
10 Sales Representatives
Signed Partners/Agents
• GPO and IDN Contracts and System Sales
• Strategic Pricing: Lower ASPs for Speed
• New Approaches
Cost of Ownership Tools
Digital Ads
Trade Shows
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Endoscopy Sterilization – A Greenfield Opportunity
Process/ Technology
OR/CSSD$6.0B+7
GI50M+
Procedures/year8
Operating Room & Central Sterile Supply Department
Gastrointestinal
~15M colonoscopies performed annually5
>500,000 ERCP Procedures (endoscopic retrograde cholangiopancreatographies) performed annually6
Established Base Business Emerging Opportunity
1) The American Hospital Association, US Dept. of Health and Human Services, 2) Statistica.com 2015 3) Eurostat 4) Global Low Temperature Sterilization Market: Industry Analyst & Outlook. Koncept Analytics. January 2017 5) Centers for Disease Control and Prevention 6) US Food & Drug Administration 7) Markets and Markets, June 2016 8) Becker’s GI & Endoscopy “35 Statistics About GI/Endoscopy”
U.S. ~10,000 Hospitals and Ambulatory Surgery Centers1
Canada ~1,400 Hospitals2
Europe ~15,000 Hospitals3
Installed base of 30,000 units4
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Modernizing GI Endoscope Reprocessing
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“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
“Strong Evidence for Sterilization of Endoscopes
Presented at Stakeholder Meeting”
- AAMI, September 2017
Decades old processes with only incremental improvement
“In an ominous sign for patient safety, 71 percent of reusable medical scopes deemed ready for use on patients tested positive for bacteria at three major U.S. hospitals, according to a new study.
- American Journal of Infection Control, 2018
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Technology Advancement
Patient and Medical Facility Demand
Regulatory Change
• Patient Safety
• Litigation
• Cost Reduction
• STERIZONE® VP4 Sterilizer
• FDA Regulation Advancement
• Industry Dialogue and Guidelines
How Shifts Happen
= MarketChangeMarketChange
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TSO3 Obtains Expanded Endoscope Clearances
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Source: Olympus America Inc.
May 9, 2018 - TSO3 received FDA 510(k) clearance for the terminal sterilization of multi-channeled flexible endoscopes using the Company’s STERIZONE® VP4 Sterilizer
• Hospitals can terminally sterilize gastrointestinal endoscopes within the cleared intended use
• Includes certain colonoscopes, duodenoscopes and gastroscopes (see claims).
STERIZONE® VP4 Sterilizer is the only terminal sterilization method that is FDA cleared to sterilize multi-channeled flexible endoscopes (with a maximum of four channels) with inside diameters of 1.2mm or more and lengths of 1955mm or less, or 1.45mm or more and lengths of 3500mm or less (see claims).
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Recent Customer Activity
Altru Health System Improves Patient Care with Expanded Use of Cutting-Edge Sterilization Technology
June 15, 2018 - “Being the inaugural facility to offer terminal sterilization of endoscopes using the TSO3 technology, provides our patients with a level of safety above current best-practice standards in the industry,” says Stacie Avdem, Director of Surgical and Procedural Services at Altru Health System.
“Altru has achieved industry leading practices with centralization, cleaning verification, and borescope inspection in endoscope reprocessing. The ability to sterilize endoscopes, specifically duodenoscopes, is paramount to achieving our mission of delivering world-class care to the residents of our region. It shows our ongoing investment in and commitment to patient safety,” says Jenni Gibbs, Manager of Central Sterile Department at Altru Health System.
Next Generation Technology
Extensive Patent Portfolio
Razor/Razorblade Business Model
First-to-Market FDA-cleared Device for Terminal Sterilization of Colonoscopes, Duodenoscopes and Gastroscopes (see claims)
SUMMARY
Direct Commercialization Strategy
Growing Installation Base
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Key Stats (TSX: TOS) /// All Dollars in USD, Unless Noted Otherwise
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$0.3
$0.4
$0.8
$1.1
$1.0
Q1-18 Q2-18 Q3-18 Q4-18 Q1-19
Quarterly Revenue$ Millions US
Stock Price (At May 3, 2019 close) $0.32
52 Week High - Low $1.15 - $0.28
Shares Outstanding (May 3, 2019) 93,465,238
Average Daily Volume (50 days) 132.17 k
Market Capitalization $29.9 M
Institutional Holdings ≈ 15%
Total Revenue - FY 2018Q1 2019
$2.5 M$1.1 M
Cash and Equivalents (March 31, 2019)
$11.3 M
Chart source: TMX Infosuite
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