Company Overview Sidoti Emerging Growth Conference September 2, - PowerPoint PPT Presentation

Company Overview Sidoti Emerging Growth Conference September 2, 2015 1 CONFIDENTIAL

Disclosure This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act, as amended (the “Exchange Act”). The se forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which we operate and management’s current beliefs and assumptions. Any statements contained herein (including, without limita tion, statements to the effect that we “believe”, “expect”, “anticipate”, “plan” and similar expressions) that are not statements o f historical fact should be considered forward-looking statements. These statements relate to future events or our financial performance and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievement to differ materially from those expressed or implied by these forward looking statements. There are a number of important factors that could cause actual results to differ materially from those indicated by such forward-looking statements. Such factors include those set forth in the company’s filings with the Securities and Exchange Commission. We expressly disclaim any obligation to update any forward-looking statements, except as may be required by law. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the date of this presentation and, except as required by law, we undertake no obligation to update or review publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this presentation. 2 CONFIDENTIAL

Our Company  Pure Play In Applied Market Diagnostics  Initial Focus: $2 Billion Food Safety Testing Market  Atlas Delivers Accurate, Rapid, Fully-Automated Test Results For Foodborne Pathogens Founded in 2009 via  Early Adoption By High Priority Strategic Customers acquisition of the industrial testing assets of Gen-Probe,  Scalable Business Model With Significant Operating a global leader in molecular diagnostics Leverage Potential  Applied Market Growth Opportunities Beyond Food Safety Testing Market  IPO completed in July 2014 3 CONFIDENTIAL

Our Food Safety Strategy  Commercialization of Atlas Detection Assays for foodborne pathogens – Conversion of high priority strategic accounts in North America – Selective globalization via strategic partnerships  Drive continued innovation in foodborne pathogen testing – Next generation of molecular tests – Launch of low volume instrument  Development of innovative food safety testing solutions for chemical contaminants and non-pathogenic indicator organisms 4 CONFIDENTIAL

Our Commercial Success to Date DoD Food Analysis & Diagnostics Laboratory 5 CONFIDENTIAL

Food Safety Is a Public Health Imperative Overview of Food Safety  The World Health Organization estimates one in three people in industrialized countries may be affected by a foodborne disease each year  The Center for Disease Control estimates 128,000 hospitalizations and 3,000 deaths from foodborne disease in the U.S. each year  The FDA and USDA reported 916 food recalls in the first nine months of 2013, including 356 Class I recalls for dangerous or defective products that could cause serious health problems or death – Pathogens and allergens account for the vast majority of food recalls 6 CONFIDENTIAL

The Risk of Foodborne Disease Is Increasing Overview of Food Safety Risk Factors  Food production and distribution is more centralized which increases the magnitude of outbreaks  Food imports have increased dramatically which requires a growing standard of quality and vigilance  Consumer populations most susceptible to foodborne illness continue to grow 7 CONFIDENTIAL

Food Recalls Are on the Rise Overview of Food Safety  The number and magnitude of food recalls have increased significantly – On average, 30 recalls a week in the U.S. (FDA and USDA) – On average, 20 recalls a week in Europe (EU Rapid Alert System) Source: Center for Disease Control and Prevention 8 CONFIDENTIAL

Food Recalls Are Expensive Overview of Food Safety  Product recalls are frequent and expensive for food processors – 58% of respondents affected by a recall in prior 5 years – 52% experienced recalls with financial impact > $10 million – 81% deemed financial risk as significant to catastrophic No balance sheet has a line for Salmonella Source: 2011 Grocery Manufacturers Association 9 CONFIDENTIAL

The Cost of Food Safety Overview of Food Safety Each year, more than 8.9 Million 53,245 2,377 will Americans will suffer LOSE THEIR of those will be from Hospitalized LIVES Foodborne Illness Salmonella Listeria E. Coli O157:H7 STEC Cases $3,666,000,000 $2,834,000,000 $299,000,000 Cases Cases 1,027,561 1591 180,905 Saw physician Hospitalizations Saw physician 73,984 1,173 32,692 Hospitalizations Severe Illnesses Hospitalizations 19,336 697 2,077 Fatalities Fatalities Fatalities 378 247 10 These 3 Pathogens are responsible for Source: USDA 2014 44% of all foodborne illness cost in the US $6.8 Billion 10 CONFIDENTIAL

Food Safety Testing: $2 Billion Global Market Food Safety Testing Market Source: Capella Advisors, Company Estimates 11 CONFIDENTIAL

North American Pathogen Testing Food Safety Testing Market Source: Capella Advisors, Company Estimates 12 CONFIDENTIAL

Heightened Global Regulatory Environment Pathogen Testing Growth Drivers  The recent passage of the Food Safety Modernization Act (FSMA) is expected to drive an increase in pathogen testing by mandating comprehensive, prevention-based controls by food processors – Environmental monitoring – Finished product – Water testing for produce – Foreign supplier verification  The European Food Safety Authority and the People’s Republic of China FDA have also strengthened food safety regulations 13 CONFIDENTIAL

Manufacturer-led Food Safety Initiatives Pathogen Testing Growth Drivers  The early and accurate detection of contaminants is a key component of HACCP food safety plans designed to improve food safety by identifying, analyzing and controlling microbiologic and chemical hazards in food production 14 CONFIDENTIAL

Challenges of Pathogen Testing Pathogen Testing Methods  Food safety testing poses unique diagnostic challenges: – the complexity and wide variety of food sample types – the heterogeneous distribution of low levels of pathogens – the stressed or injured state of pathogenic cells in a sample – the complexity of sample preparation/enrichment and pathogen testing workflows  Hence food safety labs perform extensive method comparison and validation studies on their specific food matrices prior to adoption of any new method 15 CONFIDENTIAL

Current Pathogen Testing Methods Pathogen Testing Methods  Food safety labs are forced to make tradeoffs between accuracy, time to results and the complexity/labor intensity of pathogen testing workflows 16 CONFIDENTIAL

Typical PCR-based Testing Methods are Complex Pathogen Testing Methods 17 CONFIDENTIAL

Performance Gaps of Current Pathogen Testing Pathogen Testing Methods  Accuracy: Require more accurate test results, regardless of sample type, to reduce operational costs of false positive or negative results  Time to Results: Require faster test results in order to reduce the delay in operational response to pathogen control, to potentially reduce working capital needs and support a longer shelf life for perishable products  Automation: Require higher test volume throughput with reduced labor costs and improved accuracy through reduction of operator error 18 CONFIDENTIAL

The ROKA Solution 19 CONFIDENTIAL

Roka Pathogen Testing Solution Atlas Instrument Atlas Detection Assays Full Commercial Menu  Listeria  Salmonella  E. coli 0157:H7  Listeria Monocytogenes  Shiga toxin-producing E. coli (STEC) Current AOAC Certified Menu covers >98% of Pathogen testing volume Roka Value Proposition Accurate, Rapid, Fully-Automated Test Results 20 CONFIDENTIAL

Roka Automates Pathogen Testing  The Atlas System delivers fully-automated molecular pathogen detection 21 CONFIDENTIAL

Atlas Delivers Accurate, Rapid Test Results The study involved 580 samples and was performed on 15 different sample types. Our Atlas Detection Assays for Salmonella and Listeria were compared to commonly used PCR-based methods. Representative sample types for each target organism based on AOAC PTM certifications. 1. This table includes the time to results for samples from the environmental sponge matrix. 2. This table includes the time to results for 25 gram samples from the macaroni/dried oats food matrix. 3. This table includes the time to results for 375 gram samples from the beef food matrix. 22 CONFIDENTIAL

Atlas Delivers Fully Automated Test Results  “Sample – in – result – out” instrument – Reduces direct labor cost – Minimizes potential for operator error – Automated process controls – Reduces training requirements – Electronic data traceability 23 CONFIDENTIAL