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2015 Full Year Results
Transatlantic Healthcare Technology GroupFocused on value creation through execution
François R Martelet, M.D.Chief Executive Officer
Mark NanovichInterim CFO
7 April 2016
This presentation is not an offer or solicitation of an offer to buy or sell securities. It is solely for use at this investor meeting and is provided for information only. This presentation does not contain all the information that is or may be material to a prospective investor (such as risk factors). By attending the presentation or by reading the presentation slides you agree to be bound as follows:
This presentation has been prepared by NetScientific plc (the “Company”), is strictly confidential and is not, and should not be construed as, a prospectus or listing particulars relating to the Company. This presentation does not constitute or form part of, and must not be construed as, an offer or invitation to subscribe for, underwrite or otherwise acquire, or a recommendation regarding, any securities of the Company, nor should it or any part of it form the basis of or be relied on in connection with (i) any contract to purchase or subscribe for any securities of the Company, or (ii) any other contract or commitment whatsoever. Nothing in this presentation shall be deemed to be binding against, or to create any obligations or commitment on the part of, any prospective investor or the Company. The contents of this presentation should not be considered to be legal, tax, investment or other advice, and any prospective investor considering the purchase of any securities of the Company should consult with its own counsel and advisers as to all legal, tax, regulatory, financial and related matters concerning an investment in such securities and as to their suitability for such prospective investor.
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Disclaimer
NetScientific Group PLC New Group CEO Francois R. Martelet, M.D – 20 years industry experience Realign focus on healthcare Digital Health, Diagnostics & Therapeutics Portfolio rationalisation Divested non-core investments with significant savings Reorganisation High calibre CEO’s recruited for Wanda, ProAxsis, Vortex, Glycotest Fundraising £18.2m fundraising Finance £23.2m available cash resource, divestment of non-core assets
Portfolio Vortex Critical patent granted. Manufacturing partners selected to support placements Wanda Significant team scale up, new software releases ProAxsis Commercial launch of first lab-based immunoassay in Q3. New data released Glycotest Continued development of HCC panel and added board member Glucosense Development of the alpha prototype PDS Biotechnology Positive preliminary data showing strong T-cell responses in pre-cervical cancer
Full year results: highlights
2015 was a turnaround year for the Group3
NetScientific Group PLC Additional Board member Professor Stephen Smith – distinguished clinician, ex-CEO and entrepreneur New CFO Ian Postlethwaite to join, ex-FD at Allergy Therapeutics. Lean PLC team in London
Portfolio Vortex VTX-1 instrument to be shipped to leading US researches in Q2 for Beta testing Wanda Two new commercial agreements in Q1 – HRS & Dignity Health (Oncology) ProAxsis World class Scientific Advisory Board appointed Glycotest Medical Advisory board appointed PDS Biotechnology Signed a Cooperative Research and Development Agreement with the US National
Cancer Institute to co-develop novel cancer immunotherapies through Phase II clinical trials
Post period-end highlights
4
Vijay Barathan, MDChief Investment Officer
Ian PostlethwaiteCFO (start date TBD)
Francois Martelet, MDCEO
Healthcare Investment Banker Peel Hunt and Piper JaffrayMedical Doctor NHS
Ernest SchneiderCommercial-Legal Director
Partner Reynolds Porter Chamberlain and Mishcon De ReyaFounder Schneider Page
FD Allergy TherapeuticsSenior finance positions as AFS, Ericsson, Philips Electronics
CEO TopotargetCEO Avax TechnologiesSenior positions at Merck & CO, Novartis, Schering-Plough and Eli Lilly
PLC Group management team strong and focused
CEO, Chairman of GSK Chairman NHS LondonRector Imperial CollegeFellow Royal Society & Academy of Medical Sciences
President of MedtronicPresident of LederlePresident of BMS Europe
Jonathan PaisnerNED
Barry WilsonNED
Sir Richard Sykes Chairman
Founder LMN CapitalLawyer Mathias Gentle Page HassanBoard Shore Capital
Prof. Stephen SmithNED
CEO Imperial College TrustDean Medicine, Dentistry and health science University of MelbourneFounder Metris Therapeutics and GNI Group
PLC Boardsignificant experience to leverage and build value
Strong and focused management team and Board
5
San Francisco & Philadelphia offices /36 Employees
USA UK
Digital Health Diagnostics Therapeutics Digital Health Diagnostics London HQ/8 employees UK/12 Employees
Listing AIM (NSCI)
Funds raised c.£48m
No. of Shares 51,075,695
Share price (6/4/2016) 72.5p
Market Cap (6/4/2016) £37m
Shareholders (>3%) 45.1% Woodford Investment Management18.1% Invesco Asset Management 9.2% JO Hambro20.4% Azima Family Trusts
NetScientific’s mission is to change the paradigm of care in chronic diseases
6
Commercial stage Development stage
Gene Walther Steve Curd David Ribeiro Larry Cohen
Leadership Deputy Director Gates FoundationChairman GenturaDxPresident diagnostics Novartis and Chiron
CIO United HealthCOO WebMDCOO NANTHEALTHCEO CareinSync
Business Manager EU PharmaxisUnit Director PfizerGlobal product Director Solvay
CEO Exalenz BioscienceCEO SenGenixCEO IVD SolutionsPresident ITCVP J&J
Product Cancer diagnostic instrument for isolation and collection of circulating tumour cells
Advanced chronic disease management platform based on machine learning
Respiratory diagnostic test for monitoring patients with Cystic Fibrosis and COPD
Blood tests for liver diseases
Business modelInstrument and consumable cartridge sales
Clinical research labs
Software as a service
Providers/payors/pharma
Test kits and point of care device sales
Pharma/clinics/home
Lab sales
CLIA labs
Grant funding £1.6m £7.7m £1.0m £5.9m
NetScientificInvestment as at 31 Dec 15
£5.6m (£6.9m as at 31 Mar 16) £5.1m (£6.0m as at 31 Mar 16) £0.1m (£0.6m as at 31 Mar 16) £1.2m (£1.5m as at 31 Mar 16)
NetScientific shareholding 95% 71.3% 56.5% 87.5%
7
Game changing portfolio with new management teams
2016 / 2017 – building value in PLC
Exit
Priority Portfolio
Growth CapitalPipeline
Capital returned to shareholders
Series A financings
IPO / M&A
H2 20162017
Global institutions, technology incubators, deep healthcare network
8
Financials – results for the year
9
2015£’000
2014£’000
Loss from Continuing operations 11,229 6,179
Loss from Discontinued operations 1,517 948
Loss for the year 12,746 7,127
Loss from Continuing operationsR&D 7,256 3,098
G&A 3,182 2,495
Other costs 1,077 717
Tax credit/Income (286) (131)
11,229 6,179
Financials – balance sheet & cash flow
10
2015£’000
2014£’000
Balance Sheet - highlightsCash at bank ** 23,239 16,867
Investment in PDS 1,757 1,757
Net assets 24,583 18,696
** Balance as at 31 March 2016 - £19.5m
Cash flowNet proceeds Capital raising 17,147 -
Funds used in operations (10,714) (6,631)
Other (273) (2,189)
Increase/(decrease) in cash 6,160 (8,820)
PLC has completed its turnaround Re-structured, re-focused, portfolio rationalised – divested non-core assets Highly experienced lean management team in London in place Positive momentum in lead portfolio companies – talented CEOs in place to lead the next phase of
value creation with game-changing assets
PLC is working on building shareholder value Renewed IR/PR effort to broaden the shareholder base in UK and US Goal is to deliver value enhancing news flow in 2016 : commercial traction and external valuation
from portfolio company financings Actively managing current portfolio to value realization including Series A for Wanda, ProAxsis and
Glycotest
Summary and outlook
11
Vortex & Wanda
Executive summary• Research tools and diagnostics company developing a novel liquid biopsy
technology that could revolutionize cancer research, drug development, diagnosis, monitoring and treatment
• $22B market opportunity*
• Patented microfluidic technology yields intact circulating tumor cells (CTCs)
• Outperforms competitors in key fields – purity (specificity) and collection efficiency (sensitivity)
• Significant growth opportunities as the product pipeline expands from research to also providing clinical information from CTCs
* J.P. Morgan Liquid Biopsy Report – May 27, 2015 14
The Company
• Formed in 2012 based on research done by PECASE (Presidential Early Career Award for Science and Engineering) winner Dino Di Carlo at UCLA
• Late stage development phase – placing Beta & KOL units in 2016
• Exciting R&D presents near-term growth opportunities in the rapidly growing liquid biopsy market
• Placement of VTX-1 with key opinion leaders (KOLs), onboarding of sales and marketing staff and critical publications will drive demand
• New CEO appointed – Gene Walther experienced leader in diagnostics and medical devices
15
Leadership team
Elodie Sollier-Christen, Ph.D
CSO & VP R&D
MichaelKocherspergerCTO & VP Engineering
• President Chiron/Novartis Diagnostics
• CEO Gentura Dx• Deputy Director Bill & Melinda
Gates Foundation
• Ph.D Microfluidics• UCLA, Stanford• Expertise in microdevices
for blood sample prep.
• Director Orchid Biosciences• VP New Brunswick Scientific • VP BioNanomatrix• J&J
Gene Walther, MBA
CEO
Steven Crouse, MBA
CCO
• SVP FreeSlate• Director BioRad• Invitrogen• Biosource
Bob Englert, MBAVP Manufacturing
• Abbott Laboratories• Biomedtrics• Pelikan Technologies
16
Circulating tumor cells (CTCs) detach from a solid tumor and enter the blood stream playing a crucial role in cancer metastasis.
Challenges to CTC isolation
• Extremely rare: 1-100 CTCs per mL of blood
• Other cells: millions of WBCs and billions of RBCs per mL of blood
Vortex liquid biopsy captures circulating tumor cells…
17
Technology
Cells enter the device and are ‘focused’ into an equilibrium position
CTCs selectively enter the ‘Vortex’
Red and white blood cells flow out of the system
Intact CTCs released for further analysis in cytopathology,propagation, drug development, treatment selection/effectivity and next generation sequencing
• 12 patents, 3 granted, 6 licensed – starting internal IP
• 10 publications
18
VTX-1 Workflow
19
CTC Analysis (Viability, Purity, Automation)
• Cancer Research
• Patient Prognosis
• Personalized Therapy
• Drug Development & Testing
CTC Enumeration (Efficiency, Cost)
• Early Stage Diagnosis
• Patient Prognosis
• Treatment Outcome Monitoring
• Residual Disease* JP Morgan liquid biopsy report – May 27, 2015
CTC potential$22B market by 2020*
Cancer Research Personalized Medicine
Drug Development Cancer Diagnostic Cancer Monitoring
20
Opportunities – focused growth
CTCsctDNA
• Enabling key applications beyond cancer research
• Combining CTC isolation with new platforms
21
Cell affinity Filtration Active forces Inertial microfluidics
Marker independent
Most cancers
No pre-processing Depends
High-purity
Rapid processing Depends
Large input volume
Live cells
Flexible collection
Other body fluids
Companies J&J CellSearch,
Biocept,Cynvenio
Rarecell, Creatv Microtech
Angle,Apocell
Clearbridge, J&J/MGH
VTX-1 is potentially best in class technology…
22
Product overview
Name Vortex VTX-1 Liquid Biopsy System
Key Dates Soft Research Market Launch, April 2016Global Commercial Launch, Q1 2017
Instrument price ASP ~ $120,000 (TBC – pricing study)
Cartridge priceTarget GP %
ASP ~ $200 (TBC – pricing study)80+%
Key Partnerships
Accel to manufacture first 5 unitsGener8 selected as contract manufacturer for VTX-1 Symbient/Z-Microsystems for cartridge
Sales Strategy Direct to user (US), academic and industryInternationally (TBD) Cartridge bottom
Gasket material
Cartridge top with deep pocket
23
Commercial Milestones
2016 2017
Q1 Q2 Q3 Q4 Q1 Q2-4
Beta placements
AACR soft launch(Research market)
KOL placements
Full commercial launch
VTX-1 contract manufacturing
Cartridge contract manufacturing
Gener8
Z Microsystems
24
Executive summary
26
Chronic condition management company that aims to reduce hospitalization costs and improve patient quality of life
New CEO hired – Steve Curd proven digital health leader
$2B initial market opportunity – exponential growth*
Patented systems developed from over 12 years of clinical research at UCLA
Commercialisation underway – 2 new customers
*Investec analyst note
Leadership Team
27
SteveCurd, MBA
CEO
MarkHeinemeyer
CCO
FoadDabiri, Ph.D
CTO
Opportunity: healthcare's trillion $ problem
28
75% of the $3.0 trillion fighting chronic conditions
50% of patients treated for heart failureare re-hospitalized within 6 months
These readmissions cost theU.S. $17 billion/year
Even worse are the human costs. Patients suffering from chronic conditions experience disabling and long-term symptoms. In addition, 7 out of every 10 deaths are a result of these costly and often preventable diseases
Value proposition
29
WANDA aims to reduce this trillion $ burden by preventing hospital admissions and reducing readmissions through a bifurcated consumer and clinical strategy
Predict
CliniciansIntervene based onactionable insights
Reducereadmission
s
Inform & Guide
Reduceadmissions
Engage
Collect data
How we are different
30
Science and research driven• Technology developed from multiple clinical trials - including 1,500 patient clinical
study• Strong IP position
True predictive analytics and machine learning
Contextual data and real-time vitals
Mobile application• Not typically used by analytics or RMS companies
Patient engagement/adherence driven by the worlds largest, most validated personality database
Revenue generating
Uniquely positioned against competition
31
Analytics RMS
Engagement
MD RevolutionAccoladeTacticoMDLive
SoteraVitalConnect
HealthCatalystMedeAnalyticsCloud-MedXSyTrue
SentrianViterion
VivifyHealthZypherLIFEOmada
Business model – B2B
Enables ubiquitous care
Engage, monitor and prioritize patients with chronic conditions, to improve efficiency& workflow
Reduce hospitalizations and cost
Delegate more care to the patient
Provide clinicians with actionable insight
Patient Engagement – Mobile App
32
Home Health system
Large hospital groups
Payers
Skilled nursing facilities
Target customers:
Sales update - HRS
33
HRSOne call hi-tech nursing & rehab
Health Resource Solutions, Chicago-based home health agency
Works with more than 1,000 patients/month, will be using an app to keep tabs on its patients with CHF and COPD
HRS is among a number of home health agencies turning to digital health to improve the post-discharge process for patients with chronic conditions
$60/month/patient with an upfront $225/patient kit
In production now; estimated ramp up to > 50 patients/month
Business model: growth strategy
34
Targeting customers earlier in the value curve to have more impact
Access pay-for-performance market through growth into population health
Stage A(early onset)
Stage B Stage C
Currently engage patients after they have experienced a hospitalization
D2C
CHF PopulationMax impact
Stage D(late stage)
Econ
omic
impa
ct
Milestones
35
2016 Goals Drivers
Participants registered 4,000 • B2B sales ex. HRS• D2C early platform adopters
Revenue $800K • Oncoverse and HRS
Commercial agreements 4• Large hospital groups• Payers• Home health systems• Skilled nursing facilities
Wanda Health Management Releases 4 • In-house R&D• Market research
Predictive Modules 3 • In-house R&D
Oncoverse Releases 3 • In-house R&D
Android & Apple iOS Mobile Releases 4 • In-house R&D
NetScientific.net