precision surgery with cellvizio® technologies...2 ©2018 mauna kea technologies disclaimer •...

Precision Surgery with Cellvizio® Technologies

April 2018

©2018 Mauna Kea Technologies 2

Disclaimer• This document has been prepared by Mauna Kea Technologies (the "Company") and is provided for information purposes only. • The information and opinions contained in this document speak only as of the date of this document and may be updated, supplemented, revised, verified

or amended, and such information may be subject to significant changes. Mauna Kea Technologies is not under any obligation to update the information contained herein and any opinion expressed in this document is subject to change without prior notice.

• The information contained in this document has not been independently verified. No representation, warranty or undertaking, express or implied, is made as to the accuracy, completeness or appropriateness of the information and opinions contained in this document. The Company, its subsidiary, its advisors and representatives accept no responsibility for and shall not be held liable for any loss or damage that may arise from the use of this document or the information or opinions contained herein.

• This document contains information on the Company’s markets and competitive position, and more specifically, on the size of its markets. This information has been drawn from various sources or from the Company’s own estimates. Investors should not base their investment decision on this information.

• This document contains certain forward-looking statements. These statements are not guarantees of the Company's future performance. These forward-looking statements relate to the Company's future prospects, developments and marketing strategy and are based on analyses of earnings forecasts and estimates of amounts not yet determinable. Forward-looking statements are subject to a variety of risks and uncertainties as they relate to future events and are dependent on circumstances that may or may not materialize in the future. Mauna Kea Technologies draws your attention to the fact that as forward-looking statements cannot under any circumstance be construed as a guarantee of the Company's future performance and that the Company’s actual financial position, results and cash flow, as well as the trends in the sector in which the Company operate may differ materially from those proposed or reflected in the forward-looking statements contained in this document. Furthermore, even if Mauna Kea Technologies’ financial position, results, cash-flows and developments in the sector in which the Company operates were to conform to the forward-looking statements contained in this document, such results or developments cannot be construed as a reliable indication of the Company's future results or developments. The Company does not undertake any obligation to update or to confirm projections or estimates made by analysts or to make public any correction to any prospective information in order to reflect an event or circumstance that may occur after the date of this presentation. A description of those events that may have a material adverse effect on the business, financial position or results of Mauna Kea Technologies, or on its ability to meet its targets, appears in the "Risk Factors" section of Mauna Kea Technologies Registration Document registered with the Autorité des marches financiers on June 13, 2016 under number R. 16-054.

• Certain figures and numbers appearing in this document have been rounded. Consequently, the total amounts and percentages appearing in the tables are therefore not necessarily equal to the sum of the individually rounded figures, amounts or percentages.

• This document does not constitute or form part of an offer to sell or to purchase securities or the solicitation of an offer to purchase securities in the United States of America or in any other jurisdiction. The securities mentioned in this presentation have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or under any other legislation of any jurisdiction in the United States of America and may not be offered or sold in the United States absent registration or an applicable exemption from registration under the Securities Act.

©2018 Mauna Kea Technologies

Introducing the technology that found a new organ

3

March 27th, 2018


Enabling a paradigm shift in tissue characterization

4

AGA white paper on Barrett’s Esophagus “Why should practice change?”

December 2015

“Patients are better served if biopsies can be better targeted. That’s where in vivo

microscopy comes in”.

90%of biopsies taken are negative

Many detection

procedures are based on

random biopsy

sampling

Even when taken at the right location, biopsies fail to provide key

information on LIVE tissue

Physical biopsies are a hindrance to more optimized one-stop-shop

procedures


EndoscopyProbe-based Confocal Laser

Endomicroscopy (pCLE) provides real time optical

sections of tissues

Biopsies

X 30 Macroscopic analysis

X 1000 Histology ex vivo microscopic analysis

CellvizioReal time Compatible Video rate Functional imaging 1µm resolution

Cellvizio uniquely reveals key invisible information…


… providing Immediate

microscopic information

…proven to help physicians secure their decisions, reduce indetermination and improve

patient outcomes

Cellvizio is a breakthrough imaging platform used routinely in gastroenterology

today

Our mission: eliminate diagnostic and treatment uncertainties

… with real-time digital “optical biopsies”


Smooth user experience with Cellvizio

7

©2018 Mauna Kea Technologies8

• LABpCLE (lap / robotics)

nCLE (needle)

pCLE (probe/catheter)Cellvizio platform

Protected by over 150 issued patents

Single wavelength 2nd generation platform

488 nm / 660 nm / 780 nm

Dual wavelength platform 488 nm - 660 nm 488 nm - 568 nm

…

Wide range of confocal miniprobes

A versatile platform for multiple applications…


Pancreatic cysts

…throughout the bodyGERD/Barrett’s

Esophagus

Biliary strictures

Inflammatory Bowel Disease

Early gastric cancer

EMR margins

Peripheral Nodules

Lung Cancer

Bladder Cancer

Upper Tract Urothelial Cancer

Partial Nephrectomy

Prostatectomy


A unique regulatory foundation for endomicroscopy

10

Esophagus

StomachPancreas

Small Intestine

Colon

Bladder / upper tract

Alveoli

Bile Duct

Bronchi

Rectum

14 510(k) Clearances CE mark

Approved in China, Japan, Russia, Brazil, Turkey, …

+ Interventional Radiology

+ Laparoscopic (standard or robotic-assisted)


Clearance for the identification of cells and vessels

11

“Cellvizio® 100 Series Systems with Confocal Miniprobes™ are confocal laser systems with fiber optic probes that are intended to allow imaging of the internal microstructure of tissues including, but not limited to, the identification of cells and vessels and their organization or architecture” — FDA clearance December 2017

The above language applies to all previously cleared indications Above images are not FDA cleared and are shown as illustrative examples

From Imaging To Identification


Cellvizio is at the core of key trends in medicine and surgery

12

Real time microscopic imaging &

characterization

Data-driven

digital surgeryEndoluminal

therapies

Minimally invasive interventions

Our technologies are key to the future of image-guided and data-driven interventions

Robotic Surgery


Taking surgical precision to the ultimate level

13

AI assisted tissue characterization

IntegrateImage Guided Surgery

Real-time feature identification

Locate

Identify

Assess

Vascular Network Filter

Raw Image

Multimodal Interventional Platforms


Endomicroscopy + AI : a clear roadmap

14

Diagnostic Accuracy of Cellvizio in Bladder

0 %

20 %

40 %

60 %

80 %

100 %

Accuracy Sensitivity Specificity

Machine Urologists (n=8)

87%90%

79%79%77%

82%

Chang et al. EUS 2017 Szegedy C, et al. Proceedings of the IEEE Conference on Computer Vision and Pattern Recognition, 2015:1-9

Work performed by the Stanford Bioinformatics program on a dataset of 81 subjects (458 Cellvizio videos, 171,000 images, 21 layer CNN)


Seamless integration into robotics systems

15

Lopez et al, “Intraoperative Optical Biopsy during Robotic Assisted Radical Prostatectomy Using Confocal Endomicroscopy”. Journal of Urology, April 2016 * source Intuitive Surgical investor presentation

Cellvizio now FDA cleared and CE marked for use in conjunction with surgical robotics systems. User experience is easy and seamless.

Applications: - Tumor extension - Resection margins - Nerve sparing


Cellvizio is key for interventional pulmonology applications

16

Peripheral mass

On target

Alveoli around the

Target missed

Unique through-the-scope access to the lungs and alveoli

for real time tissue characterisation

Compatible with Electro-Magnetic Navigation systems and

novel flexible robotics systems

Availability of needle-based Confocal Laser Endomicroscopy

for pulmonary applications

Immediate assessment of adequate positioning with real time microscopic visualisation

through scope or needle

0.8 mm Needle probe


A unique body of clinical evidence

17 See appendix for references

Num

ber

of

pub

licat

ions

20042005

20062007

20082009

2010 20112012

20132014

20152016

2017

100

50

150

1,000+ references on PubMed for endomicroscopy across

multiple applications


World leaders in endomicroscopy innovation and products

18

220+ issued patents in optics, optronics, image processing on

Probe-based Confocal Laser Endomicroscopy (CLE)

OptoelectronicsImage ProcessingMachine LearningImage Processing


Endomicroscopy is now a booming fieldCarl Zeiss announced its Convivo Confocal Laser Endomicroscopy system for neurosurgical applications at the latest Neurosurgery shows

Olympus announced the launch of its Endocytoscopy system, integrated in vivo microscopy in a high-end endoscope.

Caliber ID obtained strong reimbursement for skin optical biopsy with Confocal Microscopy.

19

Cellvizio and its future generations are unparalleled products for in vivo optical biopsy applications


Cellvizio is reimbursed in the US for upper GI

Setting 2016 Rate 2017 Rate 2017 Change ($)

2017 Change

(%)2018 Rate

Hospital $1,088.00 $2,509.64 $1,421.64 131% $2743.26

ASC $608.39 $1,134.02 $525.63 86% $1212.19

CPT Code Description

43252

Upper gastrointestinal endoscopy including esophagus, stomach, and either the duodenum and/or jejunum as appropriate; with optical endomicroscopy

CMS Covered Services

Endomicroscopy in upper GI endoscopy procedures, including GERD, Barrett’s Esophagus and pancreatic lesions

Effective January 1, 2017

! Catalyst for Cellvizio adoption and utilization

! Enhances economical model for Cellvizio customers

! Positive tailwind for commercial coverage

20

Very positive payment trends in the past 2 years


Core commercial focus: A significant Cellvizio U.S. gastroenterology

market opportunity

Society recom-

mendations and increased CMS reimbursement

rates

Key Market Drivers

U.S. Procedure volume

U.S. market opportunity

3.6 million*

annual upper GI procedures

$2.8 billion* annual

recurring revenue

U.S. Target Hospitals

3,000+* with large GI volume

* Millenium research group : Custom Urology report 2014 and 2012; 2013 U.S. laparoscopic proceduresMedtech Insight : U.S. Procedure Volume 2010iData : 2015 EUS Market; U.S. Procedure volume 2012; 2015 ERCP report, M&A acquisition figures : Covidien; Medtronic Advamed presentations : 2013 Advamed presentation; E&Y; Presentations citing other sources


Enhanced detection of Barrett’s Esophagus

22

1. Sharma P. et al. Real-time Increased Detection of Neoplastic Tissue in Barrett’s Esophagus with probe- based Confocal Laser Endomicroscopy: Final Results of a Multi-center Prospective International Randomized Controlled Trial. GIE 2011.

2. Xiong Y-Q, et al. Comparison of narrow-band imaging and confocal laser endomicroscopy for the detection of neoplasia in Barrett’s esophagus: A meta-analysis. Clin Res Hepatol Gastroenterol (2017), https://doi.org/10.1016/j.clinre.2017.05.005

0

25

50

75

100

Incidence of BE Sensitivity NPV Yield

40

9992

2816

81

40

12

Tissue Sampling pCLE

98%90%

(108 Consecutive patients; 2 months; Included Learning Curve)

Utility of Probe-based Confocal Laser Endomicroscopy in screening work-up for

Barrett’s esophagus and detection of intestinal metaplasia

Joseph J. Burnette, MD, Alexandra M Roch, MD, V. John Bagnato, MD Coliseum Northside Hospital, Macon, GA, Indiana University, Bloomington, IN

DONT BIOPCE trial1 (2011)

Meta analysis of detection of

neoplasia in BE with NBI vs CLE 2


In vivo microscopic molecular imaging roadmap

23 * Not cleared by FDA for human use

Molecular markers +

wide-field fluorescence +

in vivo microscopy =

precision surgery

Mauna Kea is the unique provider

of in vivo molecular

microscopic dual-band imaging*

Fluorescence-guided surgery (open, laparoscopic, robotic) is now the

norm with wide-field imaging systems from a dozen players

(Stryker+Novadaq, Olympus, Intuitive Surgical, Bracco, Fluoptics,

SurgVision…)


A growing installed base worldwide

Preclinical 30+ units

Clinical 100+ units

Clinical 130+ units

Approx. 600 systems installed worldwide

Clinical 160+ units



24


Global Partnership Strategy

�25

Pulmonary endoscopy Digestive Surgery

Partnership research ongoing regarding US: 80,000 new cases of primary brains tumours (US Brain tumour assoc.)

Neurosurgery Robotics

Interventional RadiologyNumber of potential partners with 3.6 million* US upper GI procedures

Gastroenterology

December 2015: Global exclusive partner for urologic endomicroscopy applications with a private label Cellvizio product

Urology Global urology surgical instruments market expected to reach $11.48 billion by 2021 (8.2% yoy growth) 2.5 million endo-urological procedures / yr U.S./EU

* Millenium research group : Custom Urology report 2014 and 2012; 2013 U.S. laparoscopic procedures Medtech Insight : U.S. Procedure Volume 2010iData : 2015

EUS Market; U.S. Procedure volume 2012; 2015 ERCP report, M&A acquisition figures : Covidien; Medtronic Advamed presentations : 2013 Advamed presentation;

E&Y; Presentations citing other sources

Future potential partnerships

Demonstrated value of Cellvizio + Da Vinci 2,500+ U.S. installed base 100,000 US prostatectomies /yr

Ongoing clinical trials 650,000 US interventions /yr


“Cellvizio inside” : key for any interventional platform

GI Endoscopy PulmonologyAnti-Reflux SurgeryInterventional Radiology Neurosurgery

MIS EndourologyRobotic Surgery

26 R&D Clinical Validation

Early Commercial Efforts Prime Time2000 20102005 2017

Corporate information and performance


Despite a significant decrease in sales, 2017 Ebitda is stable thanks to a strict control of operating expenses

Compared to previous year

• Stable gross margin @ 68%

• Operating expenses (excluding COGS) significantly reduced thanks to a tight monitoring:

▪ R&D expenses slightly below last year despite significant investments in Gen3

▪ Marketing and sales expenses decreased mainly driven by the US Sales force where it has been difficult to retain people

▪ G&A expenses decreased by c. €0,5m due mainly deriving from some non recurring costs in 2016 such as Ryan Kay (€0,2m) and 2016 legal fees for IPF (€0,1m). Other fees have also been reduced.

• The fact that Ebitda is very close from last year despite the strong decrease in revenue illustrates the tight expenses monitoring of the company

28

1


Balance sheet

• PPE increased mainly due to a transfer from inventory to tangible assets and to the roll-out of the PPU model

• Other current assets include R&D tax credit for 2016 and 2017. In February 2018, the company cashed in €0,8m corresponding to 2016 R&D Tax Credit

29

ASSETS (in €k) 31/12/2016 31/12/2017

Intangible assets 2 565 2 100Property, plant, and equipment 898 1 466Non-current financial assets 162 138Total of non-current assets 3 625 3 704Inventories & Work in progress 2 331 1 969

Trade receivables 2 116 2 034Other current assets 2 756 2 462Current financial assets 94 125Cash and cash equivalents 9 053 17 453Total of current asets 16 349 24 043TOTAL OF ASSETS 19 974 27 747

L IABIL IT IES (in €k) 31/12/2016 31/12/2017

Equity 11 157 16 744

Long-term loans and borrowings 2 640 6 799Non-current provisions 261 283Total of non-current liabilities 2 900 7 082Short-term loans and borrowings 404 154

Trade payables 3 131 1 663Other current liabilities 2 382 2 104Total of current liabilities 5 917 3 921TOTAL OF EQUITY AND LIABIL IT IES 19 974 27 747

• Increase in Long term debt fully derives from IPF debt for €4m. Decrease in short term loan corresponds to Coface repayment of the last instalment.

• Other current liabilities mainly comprise social debt

1


Cash Flow statement

• Apart from EBITDA main flows impacting the change in cash derive from:

▪ A negative change in working capital mainly resulting from: - An increase in inventories due to the sizing of the purchases adjusted to

reforecast done in September. Since the actual sales level has been significantly lower, inventories could not be adjusted as quickly.

- The unfavorable change in trade payables corresponds to the offset of previous year non recurring change and the impact of the very significant slow down of purchases during Q4 to adapt inventories as much as possible.

- Changes in other payables and other receivables is relatively stable while it was impacted in 2016 by the absence of R&D Tax credit cash-in

▪ Capex mainly comprise: - Systems placed in pay-per-use in the US for €232k

- Other capex include among others the new web sites, PLM software development and general renovation works

▪ Cash flow from financing comprise: - Paceo 1, 2 and 3 capital raise for respectively 2,7m€, 7,8m€ and

4,9m€

- IPF debt drawdown net of related expenses and Coface repayment

30

Cash!Flow!Statement€k 2016 2017Ebitda!(* ) (8!635) (8!607)Δ in inventories 232 (255)Δ in trade receivables 1 378 (25)Δ in trade payables 673 (1 176)Δ in other receivables and payables (1 484) 320

Δ in working capital 799 (1 136)

Operating!cash!flows (7!836) (9!742)Capex (incl. Loans and grants) (573) (735)

Free!cash!Flows (8!409) (10!477)Capital increase 6 466 15 496Δ in financial debt 315 3 662Net financial interest paid 11 (276)Other 34 31

Cash flow from financing activies 6 827 18 913

Net FX differences 15 (35)

Net!cash!flows (1!567) 8!401

Cash"BoP 10"620 9"053Cash"EoP 9"053 17"453

(*) difference with Ebitda in P&L due to non cash provision for warranty

1

9,1 9,6

7,0

13,1

02468101214161820

Dec16 June17 Sept17 Nov17 Dec17 Jan-18

Liquidityposition


A very strong liquidity position

Implementation of two equity lines over Q4 which were successfully rolled out thanks to the strong rally of the stock price and high volumes (1,8% volume of total shares exchanged per day / 3,9% over the last quarter)

Our strong cash position affords us the means to create significant value for the company in the next 24 months with important expected milestones

31

Equity line #1 : 7,7m€

Equity line #2 : 4,9m€ (not yet

finished) 1,2m shares @ 4,18 (avg stock 4,48)

Equity line #2 : 1,05m shares

remaining

€m

17.6

20.6

2018 1st Quarter Sales

T1 2017 T1 2018

1.042

1.599

By product

Turnover (M€) By activity Variation T1 2018 versus T1 2017

Clinical -39%

Lab and Pre clinical -33%

Cellvizio systems -46%

Probes -17%

Services -41%

27 %

73 %

21 %

43 %

36 %

Variation T1 2018 versus T1 2017

•U.S. commercial restart: new team places five Cellvizio® units under pay-per-use program •New partnership in China drives 20% Asia-Pacific sales growth •Overall sales decreased 35% driven mainly by reduced system sales due to transition to pay-per-use model in U.S

precision surgery with cellvizio® technologies...2 ©2018 mauna kea technologies disclaimer •...

Documents