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Corporate Presentation
Creating the Improved Standard in Healthcare Sterile Reprocessing
Third Quarter 2011
Forward-looking Information
The speeches made during this meeting may include forward-looking information with
respect to the Company, including its business operations, strategy, financial
performance and condition. Although management of the Corporation 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. The listener is cautioned not to place undue reliance on
these forward-looking statements. We do not undertake to update any forward-
looking statement that is contained in the MD&A or mentioned during this meeting.
Company Overview
• Founded 1998
• Designed and manufactured a low temperature sterilizer for medical devices
• IPO 2001
• TSX: TOS
• 59M shares outstanding
Key Events Under Initial Management
• TSO3 total 38 placements of its first generation product in North America • Renewed management team
2008
• Received FDA Clearance for additional claims to include rigid lumened instruments (125L)
2006
• Received FDA Clearance for first generation sterilizer (125L) 2003
• Received HC Authorization for first generation sterilizer (125L) 2002
Renewed Leadership • R.M. (Ric) Rumble, CEO – Joined October 2008
– More than 25 years experience within the North American and Global medical device industry, capital and consumables
– Business Unit Manager, Sterility Assurance – 3M – President - MediVators Inc – VP & GM – Global Healthcare Sterilization, STERIS
• Benoît Deschamps, VP Finance – Joined June 2011
– 25 years+ in senior finance roles – Accomplishments focused on investment and financing within large companies
and entrepreneurial organizations – Background in the acquisitions, private and public corporate debt investments
and structured combined debt-and-equity transactions – Holds a M.B.A. in Finance and a Ph.D. in Business Administration (Finance)
• Simon Robitaille, VP Ops/R&D, CSO & Co-Founder
Recent Key Events
• Receives notification of conformity to the CE Mark enabling sales of new
generation sterilizer in Europe • Ships first newly branded 3M™ Optreoz™ 125-Z Sterilizer to 3M for training
purposes
2010
• Adopts new and aggressive strategic plan in order to increase utility of sterilizer • Freezes design of new generation (STERIZONE® 125L+) sterilizer offering
increased compatibility and speed • Receives FDA clearance on additional claims to include multi-channel flexible
endoscopes (125L) • Signs global channel partner agreement with 3M™ for new generation sterilizer
(TSO3 STERIZONE® 125L+) • Receives HC Authorization for new generation sterilizer (TSO3 STERIZONE® 125L+)
2009
2011
• Appoints new CFO (June) • Expands agreement with 3M™ to include new OR sterilizer under development • Ships first Optreoz™ 125-Z Sterilizer to customer locations (June)
Our Vision… To Create the Improved Standard in Healthcare Sterile Reprocessing
In business to win
The Market
The Product/ Solution
The Channel
Why low temperature sterilization?
Market Drivers
10
Growing Population
2010 2020
17% increase
7.9% increase
Annals of Surgery. 2003 August; 238(2): 170-177.
More people = more surgeries
Aging Population
0
10
20
30
40
50
60
2001 2005 2010 2015 2020
% In
crea
se
65 yrs +
45 to 64
15 to 44
- 15 yrs
53% increase
Annals of Surgery. 2003 August; 238(2): 170-177.
65 yrs+ is the fastest growing segment
Impact of Age on Demand for Surgery
45 55 65 75
Number of procedures (average)
88% of ophthalmology surgeries
70% of cardiothoracic surgeries
65% of urology surgeries
60% of general surgeries
As we age, we require more OR time
Annals of Surgery. 2003 August; 238(2): 170-177.
Age
Advancement in Medical Techniques
14
From Traditional Open Surgery To Minimally Invasive Surgery (MIS)
MIS Procedures
15
MIS
Cardiology Gastrointestinal
Urology
Gynaecology
Pulmonary medicine
Neurosurgery
30 million surgeries in US/year
The National Institute of Health (NIH).
Orthopaedic
Increasingly used and finding new applications everyday
MIS Devices are Complex & Delicate
16
$50k Colonoscope
MIS Devices
require low temperature sterilization
Low Temperature Sterilization Trend What customers are saying…
2010 3M™ Commissoned Market Research. Courtesy of 3M™.
Courtesy of 3M™ - 2010 Survey.
Sterile Reprocessing Areas in Hospitals
19
Operating Room Department (OR)
OR OR OR OR
OR OR OR OR
Liquid
Gas
Central Sterilization (CS)
1 CS
Liquid
3 GI
Sterile Storage for OR
Low Temperature Sterilization
Steam Sterilization
Gastrointestinal Department (GI)
1 CS 2 OR
Customers want
THROUGHPUT
TSO3 sterilizer conjoint study July 2009 - Allegheny Marketing Group.
21
Available Sterilization Solutions Ethylene Oxyde
(EtO) Hydrogen Peroxide
(H2O2) Liquid
Peracetic Acid (PAA) Hyg. Per. + Ozone
(H2O2/O3)
Efficacious Fast Specific use in OR Fast
High material compatibility
Limited in efficacy
Liquid = Not terminal sterilization
Efficacious
Long cycles • 16 to 30 hrs for
toxicity removal
Limited in compatibility
Replacement offers reduced claims
High material compatibility
Dangerous • Carcinogenic,
mutagenic, neurotoxic Load restrictive
Only addresses OR Segment
High loading capacity
Regulated Pollutant Expensive 23,000 units in N/A Being pulled out by FDA
Lowest cost /instrument sterilized
Throughput Throughput Throughput Throughput
We sterilize what others can’t…
L o n g e r bigger more complex
We sterilize more in each load…
Superior Loading Capacity
Competitive Maximum Load
Example of TSO3 Load Example of TSO3 Load
We sterilize
fast 46 minutes
Our Technology Enables Throughput
27
By combining:
• Efficacy & Compatibility
• High loading capacity
• Speed
Customer Feedback
2010 3M™ Commissoned Market Research. Courtesy of 3M™. TSO3 – September 30, 2011 Press Release
Mr. Robin Bouchard, Manager of Sterile Reprocessing CHUQ – Hotel-Dieu de Québec 2 weeks after install of the 3M™ Optreoz™ 125-Z • “Improving our standard of care” by…
• “Terminally sterilizing devices previously reprocessed using a liquid chemical sterilization method”.
• “Virtually eliminated the use of the liquid process, as flexible scopes are now terminally sterilized, along with additional devices”
• “Already running up to eight loads a day” • “Obtaining significantly shorter cycle times” • “Already experiencing improved throughput” • “Very happy with this acquisition”
Market Overview / Low Temperature Sterilization
• Capital equipment business – Low temperature gas sterilizers in
hospitals: • ~26,000 installed worldwide • Life span ~ 12 years • Replacement business: 2,000 units/year
USCanadaEuropeROW• Consummables business
– Estimated recurring revenues on low temperature gas sterilizers:
• $ 250M /year
Worldwide Installed Base
A Winning Channel Partner
• Innovative • Customer respected • Leading competitor in space
• Globally established
3M™ Global Reach
32
2011 Milestones
• 3M Optreoz™ 125-Z – Scale assembly operations Q1/Q2 – Regulatory Affairs
• Health Canada Authorization ACHIEVED • CE Mark for European Union ACHIEVED • American FDA clearance Filed June 30, 2011
– Ship units / CANADA, EUROPE INITIATED Q2 End LATIN AMERICA, PACIFIC ASIA
• Next product : OR – Finalize prototype Q4
3M™ Optreoz™ Roll-Out
3M™ 2011 Launch Plan
• Phased global roll-out based on regulatory clearances
– CEE / ME / WE Europe: CE Mark registration and translation complete
– Canada: June
• APAC: Beginning Q3 in Wave A
• LA: Beginning Q3 in Wave A
Wave A 2011 15 countries
Wave B 2012 22 countries
Wave C 2013 3 countries
Slide content courtesy of 3M™.
3M™ Key Messages on Optreoz™ Sterilizer
“Ingenious solution to low temperature sterilization challenges”
– Can sterilize rigid multi-channel endoscopes
– Has better lumen penetration and can process multiple flexible endoscopes in a single load
– Has a larger capacity and provides better daily throughput compared to any other low temperature sterilizer
– Has a lower cost to run per volume processed
– Incorporates the only dual-sterilant technology available and is designed to better meet today’s sterile processing challenges
– Three cycles provide greater flexibility in processing
Slide content courtesy of 3M™.
3M™ Optreoz™ Communications Plan
Slide content courtesy of 3M™.
3M™ Optreoz™ Communications Plan
3M™ Optreoz™ Compatibility App provides device compatibility endorsements for Optreoz™ process, designates correct cycle and allows customers to request further data.
Slide content courtesy of 3M™.
Paving New Runway
Opportunity Medical Sterile Reprocessing
3M™ to Commercialize Next Product (OR)
• Location : OR Sub-Sterile Area • Inventory limitations, flexibility in schedule, shorter turn-around
time • Potential placements (NA): 7,500 units
50% of customers surveyed want the product Estimated design freeze : December 2011
New Positioning
Growth Strategy
• Regulatory activities
• Support 3M™ in commercial execution
• Increase portfolio
– New developments
– Acquisitions /Joint ventures
• Maintain focus in current space
– Medical sterile reprocessing
Financial Situation – As of September 30
Q3 2011 (000’s)
Sales & License Revenues 1,153
Cash, Cash Equivalents & Temporary Investments 12,853
Inventories 1,496
Total Assets 20,808
Shareholder’s Equity 17,074
Monthly Burn Rate *803
Shares Outstanding 58,779
Options Outstanding 3,668
*After adjustment to eliminate effect of past-due receivables
44
Strong global channel partner
Superior technology meets customer needs
Large and growing market
Pursuing new applications and opportunities
Financially sound
Investment Highlights
© TSO3 Inc., 2011. All rights reserved. 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.
- OZO-TEST® - STERIZONE® are Reg. U.S. Pat. & Tm. Off. TSO3 STERIZONE® Sterilizer U.S. Pat. No. 7,128,872 / 7,582,257 / 7,588,720 / 7,608,217
TSO3 STERIZONE® Chemical Indicator U.S. Pat. No. 6,589,479
Licensed under U.S. Pat. No. 6,387,241 by Lynntech. Other patents pending