Craig Hallum Conference Investor Presentation Improving cancer outcomes with groundbreaking precision in molecular testing Paul Kinnon President and CEO Sept 2015 1
Forward-Looking Statements Certain statements in this presentation constitute forward-looking statements of Transgenomic within the meaning of the Private Securities Litigation Reform Act of 1995, which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. Forward-looking statements include, but are not limited to, those with respect to management's current views and estimates of future economic circumstances, industry conditions, company performance, financial results, including the ability of the Company to grow its involvement in the diagnostic products and services markets, and regulatory matters. The known risks, uncertainties and other factors affecting these forward-looking statements are described from time to time in Transgenomic's filings with the Securities and Exchange Commission, including the Company s most recent Annual Report on Form 10-K. Any change in such factors, risks and uncertainties may cause the actual results, events and performance to differ materially from those referred to in such statements. Accordingly, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 with respect to all statements contained in this presentation. All information in this presentation is as of the date set forth on the front page of this presentation, and Transgenomic does not undertake any duty to update this information, including any forward-looking statements, unless required by law. 2
MISSION Develop and provide the tools and services that will contribute significantly to improvements in the outcomes of patient treatment and enable Precision Medicine. Overall to be the Liquid Biopsy Enabler for the whole diagnostic market 3
Three Business Units with One Mission Taking personalized medicine from concept to practice: precise, simple, convenient and affordable tests Biomarker Identification Genetic Assays & Platforms Patient Testing Pharmaceuticals & Biotech All Genetic Testing Labs Providing Genetic Testing to Patients via Doctors 4
Opportunity to be the Liquid Biopsy Enabler Sequencing platforms have become fast, inexpensive, and widely adopted. However, they lack the sensitivity to enable the promise of precision medicine. Multiplexed ICE-COLD PCR (MX ICP) brings unparalleled sensitivity (100 400x increase) to all sequencing platforms. We estimate that the Oncology market opportunity alone is worth $2.5 billion* in annual test revenue. Transgenomic is commercializing its Multiplexed ICE COLD PCR (MX ICP) technology through licensing and royalty deals with pharma, biotech, laboratories and sequencing companies * Internally generated Market estimate from numerous Global Market Research Reports and data. 5
The Oncology Treatment Problem Inability to detect mutations routinely, rapidly and simply, is limiting improvements to patient outcome in the short term Challenge Current technology insufficient to manage cancer effectively What s Needed Faster & more sensitive, accurate diagnostics Tissue biopsies ~20% fail & aren t accurate; plasma or blood cannot be used for testing Sample source independent testing Mutation change appear during course disease Non-invasive diagnostics 6
The MX ICP Solution MX ICP enables clinically relevant known & unknown mutations rapidly without major costs or impact to current processes Solution Enables detection of mutations at significantly improved level early Allows ~100% of tissues samples to be used and monitoring using Blood/Plasma Enables detection of known & unknown mutations in all samples Benefit Enables more accurate Diagnosis & Patient outcome Sample independent: Improves Effectiveness, treatment & Patient outcome everywhere Non-Invasive & monitoring Solution: Significantly improves patient monitoring & overall outcomes 7
So Why is MX ICP Different A set of proprietary reagents (chemicals) which significantly enhances sensitivity (100 400 fold) for identification of all mutations regardless of sequencing platform. MX ICP can be incorporated easily into any laboratory work flow: improving diagnosis, treatment and monitoring of oncology patients. By allowing for better detection of all mutations, any sample type can be used: tissue, blood, saliva or urine Commercialization will be by Licensing, partnerships to enable everyone be it platform companies or CLIA labs 8
MX ICP is Fully Compatible with All Diagnostic Platforms Easily integrates on any platform now or in development; Replaces or supplements traditional PCR And others 9
MX ICP Uniquely Enables Detection of All Mutations Down to 0.01% Unique Technology allows samples to be preferentially enriched for the mutant DNA through selective amplification Traditional PCR MX ICP 10
MX ICP Enables Detection of More EGFR Mutations in Plasma than NGS Alone: Better Diagnosis EGFR is one of the most common mutations present in up to 15-20% of all lung cancer patients* % MT (sensitivity) refers to the concentration of mutant DNA in the total DNA sample Next Gen Without MX-ICP Next Gen With MX-ICP % MT 0% 20% 5% 1% Fail 0.5% Fail 0.1% Fail 0.05% Fail 0.01% Fail 0.005% Fail % MT 0% 20% 5% 1% 0.5% 0.1% 0.05% 0.01% 0.005% Fail EGFR * Present is 14-20% of lung cancer in Caucasians & 40-50% in Asian 11
Clinical Utility for MX ICP ICE COLD-PCR: A Valid Assay for Patient Monitoring and Surveillance Tissue Surrogate Response Monitoring Patient # Disease Tissue Mutation 5 6 Erdheim- Chester Papillary Thyroid Cancer Treatment Prior to Baseline cfdna Baseline cfdna Mutations Follow-up cfdna Mutation Treatment Response BRAF V600E No BRAFV600E Wild Type SD BRAF V600E No BRAF V600E Wild Type SD 2 Melanoma BRAF V600E No BRAF V600E Wild Type SD 3 Melanoma BRAF V600E No BRAF V600E Wild Type SD 4 Melanoma BRAF V600E No BRAF V600E Wild Type SD Monitoring & Surveillance 1 Melanoma BRAF V600E Yes Wild Type BRAF V600E PD 7 8 Appendiceal Carcinoma Colorectal Carcinoma KRAS G13D Yes Wild Type KRAS G13D PD KRAS G12D Yes Wild Type KRAS G12D PD 12
MX ICP Broadest Commercial Path Licensing & royalty opportunities for instantaneous scale and reach Biomarker Services for Pharma and Biotech R&D Reagents & Kits Licensing agreements 13
Products Release Updates Ahead of Schedule for MX ICP Commercialization Biomarker Services: Launched new MX ICP services at AACR gaining traction and customer interest, additional pilots with 4 global pharma/biotech CLIA Testing: First 2 Test launched covering EGFR T790M &18-20 Mutations, 5 more targeted tests/panels this year for NSCLC, CRC & Melanoma Kits Research Use Only: multiplex and customizable kit launched end of Q2 globally and China and Japan distributors appointed Licensing Discussions: First CLIA lab license signed University of Melbourne Validating And Accelerating Adoption 14
Enabling Expansion of Precision Medicine MX ICP enables better and more frequent testing which results in the generation of more revenue for the entire MDx industry & better Patient treatment/outcomes = $ Blood, not biopsies Enhanced sensitivity Better & more frequent testing Allows for routine monitoring in bloodimpossible with tissue Low-cost Safe and convenient 100+ fold improvement across ALL platforms- Next Gen, Digital PCR, etc. Detects mutations at low concentrations enabling early cancer detection More sequencingbased testing leads to increased and improve treatment with better decision making and less invasive testing 15
Key Updates We announced we have signed up 4 more global Pharma clients for ICP pilot studies Q2 Revenues continue to grow with significant growth in PT, improved margins, while keeping costs under control We continue to build our commercial product releases globally We announced the completion of the divestiture of the San Jose Columns Business to EdgeBio for $2.1m non dilutive cash Today we announced we won our ICP patent defense and actually strengthened the IP with 6 additional claims Today we announced our first commercial ICE COLD-PCR license for liquid biopsies testing for EGFR Mutations We continue to work on opportunities to refine and focus TBIO to become the leading enabler for Liquid Biopsies in the diagnostic market 16
Summary of MX-ICP Advantages Enables use of liquid for treatment & monitoring Works on any current platform Easily & rapidly implementable into any Laboratory Works on any sample Significantly improves sensitivity Enables more accurate diagnosis & patient outcomes IP Protection 17
Q & A 18
(As of July 31, 2015) Fully-Diluted Shares Outstanding Financial Summary Shares Common Stock Outstanding 13,872,510 Convertible Preferred Stock (As-if converted basis) Convertible Promissory Note (As-if converted basis) Warrants (Exercise price ranges from $1.42 to $9.00) Options (Weighted Avg. Strike Price $3.89) Stock Appreciation Rights (Weighted Avg. Strike Price $4.14) (1) 2,305,354 413,015 6,351,827 1,256,183 98,333 Fully Diluted Shares Outstanding 24,297,222 (1) Preferred stock is a participating preferred. (2) Based on stock price as of 9/15/15 (2) ($ in 000 s) LTM Income Statement as of 6/30/15 Revenue $27,621 Gross Profit $10,680 Gross Margin 38.7% Adj. EBITDA ($10,258) ($ in 000 s) Balance Sheet as of 6/30/15 Cash & Equivalents $2,309 Current Assets $15,473 Net PP&E $1,320 Total Assets $31,409 Short-Term Debt $2,825 Total Current Liabilities $13,313 Long-Term Debt (excluding current maturities) $4,850 Total Liabilities $20,485 Stockholder s Equity $10,924 Series A and B Preferred Liquidation Value (1) and Accrued Dividend $16,792 (2) Convertible Promissory Note $675 19
Some of the Important Benefits of ICP Overall to be the Liquid Biopsy Enabler for the whole diagnostic market Works on any sequencing platform and any source of DNA Enables detection down to as low as 0.01% (between 100 and 400 fold improvement on any current and future platforms & improvements) Enables the routine use of Plasma for detection, diagnosis and monitoring Can be used in any lab easily, rapidly and without major investment, is simply another/replacement PCR reaction, works in all work flows Is non allele specific (not targeting just one exon/mutation) i.e. detects all mutations present not just what you are looking for Can impact/improve drug development and approval by mutation identification, patient stratification, improved accuracy of detection and overall better FDA submission Enables better diagnosis of cancer in tissue, allows continuous monitoring of patients 20