investor presentation - pcg advisory grouppcgadvisory.com/.../ocls-investor-ppt-06.26.15-2-2.pdf ·...

Investor Presentation May 2015

(NASDAQ: OCLS & OCLSW)

This presentation includes forward-looking statements that are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. while these statements are made to convey to the public the company’s progress, business opportunities and growth prospects, readers and listeners are cautioned that such forward-looking statements represent management's opinion. Whereas management believes such representation to be true and accurate, based on information and data available to the company at this time, actual results may differ materially from those described. The company's operations and business prospects are always subject to risk and uncertainties. Important factors that may cause actual results to differ are set forth in the company’s periodic filings with the US Securities and Exchange Commission.

Page | 2 Oculus Innovative Sciences, Inc.

Forward Looking Statement

Investment Summary


�  Low valuation of $22 million vs cash & revenue �  Current cash of $6.3 million + cash of $4.5 million from Ruthigen shares

�  Revenue of about $13 million

�  No debt

�  Strong expected revenue growth for next fiscal year �  Mexico – 5% to 15% product unit growth (48% of total)

�  Europe & ROW – 20% to 25% (25% of total)

�  United States – 25%+ - direct sales force in dermatology (27% of total)

�  Sufficient expected cash to reach breakeven

Corporate Overview


�  Oculus is a specialty pharmaceutical company developing and marketing solutions for the treatment of dermatological conditions and advanced tissue care

�  11 510(k)s and 10 CE marks cleared Microcyn-based products, commercially established in over 33 countries ―  Fiscal year 2015 revenue of $12.9 million from sales of Microcyn-based products via direct sales

force in the U.S. and strategic business partnerships in Mexico, Europe, the Middle East and Asia

�  Core Hypochlorous Acid (“HOCI”) based Microcyn® technology has the potential to address a number of dermatological conditions

�  Recently hired dermatology sales team and management with 70+ years of experience in dermatology sales, marketing and business development

�  New management team and Board of Directors; new strategy focused on high growth R&D and a rapidly consolidating dermatology market

�  45 issued patents & 92 pending

�  Ruthigen IPO: Sold 2 million shares of Ruthigen for $5.5 million of non dilutive financing

Management & Board of Directors

Oculus Innovative Sciences, Inc.

Management Team Experience

Jim Schutz Chief Executive Officer, President and Director

•  With Oculus in various positions since 2003; Named CEO February 2013 •  Previous companies acquired by Abbott and Volcano Corporation

Robert Miller Chief Financial Officer

•  With Oculus in various positions since 2004 •  Over 12 years of experience as Chief Financial Officer for companies up to $650 million •  CFO of GAF Corp., Penwest, and Ameron Inc. and Treasurer of Mead Corp. •  Vice President, Investment Banking at Merrill Lynch and Blyth Eastman Dillion, Inc.

Board of Directors Experience

Jerry McLaughlin Director

•  Head of sales & marketing for Eli Lilly •  Founder and CEO of Applied BioCode, Inc •  CEO of DataSteam Medical Imaging Systems •  President of DataFlow Information Systems

Russell Harrison Director

•  Chief Information Officer of McKesson •  CEO of CoolSystems •  Founder of AMR Information Services, Inc.

Sharon Barbari Director

•  CFO of Cytokinetics, Inc. •  CFO of Gilead Sciences, Inc. •  Syntex/Roche Pharmaceuticals

Jay Birnbaum, Ph.D. Director

•  Currently a dermatology consultant •  Co-founder and CMO of Kythera •  VP of Global Project Management at Novartis/Sandoz Pharmaceuticals

Page | 5

�  HOCI - Only compound in the world with unique combination: 1.  SAFE as saline, including in sensitive body cavities 2.  THERAPEUTIC: reduces inflammation, itch, pain & scarring

―  Accelerates tissue healing via increased oxygen delivery

3.  BROAD spectrum antimicrobial ―  Effective against bacteria, certain viruses, fungi & spores via unique mechanism of action ―  No antibiotic resistance observed and kills resistant strains (MRSA, VRE)

�  Significant evidence of safety and efficacy: ―  Efficacy validated in clinical trials: cure/ improvement of infection 93% for Microcyn-alone-

treated patients vs.56% for the oral antibiotic levofloxacin plus saline-treated patients

―  Well established: Improved patient outcomes for more than five million patients globally by reducing: ü  Itch ü  Pain ü  Scarring ü  Odor ü  Harmful inflammatory responses.

✪ Cost Effective Solution for Large Addressable Markets with High Unmet Needs

Microcyn Competitive Advantages


Total Q4 Revenue up 37% vs. Same Period Last Year


•  Total product revenue up $1.5 million or 85% •  Licensing sales down $416,000 or 48% – mostly Animal Health

Three Months

Ended March 31, Product related revenues 2015 2014 $ Change % Change United States $ 623 $ 287 $ 336

117 %

Mexico 1,713 876 837 96 % Europe and Rest of the World 932 603 329 55 %

3,268

1,766

1,502 85 % Product license fees and royalties 455 871 (416 ) (48) % Total product related revenues $ 3,723 $ 2,637 $ 1,086 41 %

Year Ended March 31, Product related revenues 2015 2014 $ Change % Change United States $ 1,988 $ 1,406 $ 582

41 %

Mexico 5,053 3,758 1,295 34 % Europe and Rest of the World 2,908 2,046 862 42 %

9,939

7,210

2,739 38 % Product license fees and royalties 3,056 5,513 (2,467 ) (45) % Total product related revenues $ 12,995 $ 12,723 $ 272 2 %

Product Revenue Growth: 41% 4th QTR & 38% FY 2015

�  Mexico Partner: Sanfer (52% of total product revenue) ―  1,000 person sales force in Mexico & 200+ in other Latin American countries ―  40% market share in pharmacy antiseptic market –100k units/ month ―  Standard of care in Mexico as anti-infective in wound care & surgical ―  Product revenue growth only: 96% QTR & 34% YTD

�  U.S.: Advanced Tissue Care, Derm Partner & Animal Health (19% of total product revenue) ―  Direct sales force of 20 outside and 9 inside people – derms & plastics ―  Launched into animal health care with the SLA group. ―  Derm partner – Quinnova/Chemo Group (non-exclusive) ―  Product revenue growth only: 117% QTR & 41% YTD

�  Europe, Middle East and Asia (29% of total product revenue) ―  Network of international distributors ―  Broad portfolio of derm CE Mark approvals ―  High growth EU market with many new approvals and products ―  Product revenue growth: 55% QTR & 42% YTD

Oculus Innovative Sciences, Inc.Page | 8

Microcyn

Atopic Dermatitis

“Alevicyn Gel”

Scar Management

“Celacyn”

Acne Vulgaris

(Only CE Mark)

Seborrheic Dermatitis New product

Tinea Pedis New product

Post-Laser New product

Dermatologic Surgical

Procedures “Alevicyn

Liquid”

Microcyn: A Dermatology Platform Technology


Dermatology Market Opportunity


Breakdown of Surgical Skin Procedures in the U.S.

Source: Mattson Jack Group Survey, “US Anti-Scarring Market” by the Nemetz Group December 2009, LifeSci Advisors

Reconstructive 3.9MM

Elective (Hospitals) 10.4MM Elective (Office)

9.6MM

Trauma 9.0MM

Cosmetic 6.0MM

Moles 3.4MM

Potential dermatology indications and annual topical Total Prescriptions (TRx)

Seborrheic dermatitis

35.2MM

Acne vulgaris 15.9MM

Tinea pedis, corporis, cruris &

versicolor 14.9MM

Impetigo 8.7MM

Atopic Dermatitis 13.5MM

Why Dermatology?

�  Proven effectiveness of our Microcyn technology in dermatology ―  145,000+ TRx since 2011

―  4 clinical studies confirm effectiveness

―  Strong product portfolio

�  Large addressable markets ―  U.S. atopic dermatitis: $500 - $600M per year alone

�  Concentrated market could be adequately covered by relatively small sales force

�  Dermatologists are active prescription writers and respond positively to unique and differentiated products and technologies such as Microcyn

�  Strong product pricing strategy, producing strong margins ―  Products reimbursed by insurance for devices

―  Quick sales ramp – wholesale distribution structure

�  High valuation for dermatology revenue – 3x+ of revenue


�  Fall 2014: hired experienced management team; sales, marketing, product and business development

�  Fall 2014: hired sales reps expanding to 20+ as revenues grow (provides access to 75% of Derm targets) ―  Located in high volume regions based on IMS data

�  Unique High Access/ Low Cost pricing strategy

�  Launched Alevicyn and Celacyn products

�  Robust new product pipeline – 6 products in 1st six months ―  Licensing new patented skin repair and delivery technologies

�  Analyzed 6 to 9 month sales ramp for HOCI products

Steps Taken to Implement Our Strategy


Example: Atrapro & Aurstat - $200+Wholesale Acquisition Cost (WAC), confusing rebate program, and expensive co-pay

Results in::

High Prices •  Expensive co-

pays and confusing rebate programs

Limited Access •  Pharmacy

substitution

Problems

Problem: High Derm Product Prices & Limited Access


�  Pharmacy switching to low cost or generic alternatives �  Dermatologists lose 60-70% of branded scripts written �  Insurance companies: eliminating coverage, increase deductible �  Increasing Tier III copay to about $50+ �  Battle between payors & pharma companies on pricing �  Frustrated dermatologists and patients in between

Solution: High Access + Low Cost Rx Products

�  As low cost provider, increase sales growth with smaller sales force

�  Increase the overall size of the market ―  Eliminate pharmacy switching (60%+ of Rx written not filled)

―  Available to all patients at affordable prices with or without insurance

�  Strengthen relationships with dermatologist and minimize lost Rx’s ―  Attractive pricing structure will make Derms more comfortable writing scripts

Oculus pricing: $40 per unit WAC with up to $10 rebate

✪ After market share is established, increase prices to middle ground


Sales Ramp and Direct Sales Cost per Quarter


•  Quick sales ramp: 4 to 9 months •  Cover direct field sales costs ($40k per qtr) in less than 12 months •  Cover direct field sales costs per person with $53k revenue per qtr

0

500

1,000

1,500

2,000

2,500

Sep-‐14 Oct-‐14 Nov-‐14 Dec-‐14 Jan-‐15 Feb-‐15 Mar-‐15 Apr-‐15 May-‐15

Total D

ispe

nsed

Prescrip

tions

Intraderm Total Prescription VolumePeriod Ending May 2015

Alevicyn Gel® Alevicyn Spray® Celacyn® Total

Source: Symphony Health PHAST

�  Gel and dermal spray for relief of itch and pain from dermatoses ―  Reduce/ replace use of steroids and TIMs

―  Addressable U.S. market of $500 - $600 million

�  Only proven pure HOCI liquid on the market used for dermatoses and surgical procedures ―  Skin cancer removal and skin related wounds

―  Alleviate organisms to eliminate itch

�  Current HOCI derm market ―  Gel: Alevicyn (6oz), Aurstat (8 oz), and Atrapro (4 oz)

―  Liquid: Alevicyn (8oz) and Atrapro (8oz)

�  Pricing of HOCI derm products: ―  Alevicyn - $40 WAC with up to $10 rebate

―  Aurstat & Atrapro - $200+ WAC with $200+ rebate

Alevicyn™ Antipruritic Gel & Dermal Spray


(“TIMs”) Topical Immunomodulators

Topical Corticosteroids

Alevicyn (Microcyn)

Reduces Itch --- ++ +++

Safety + --- +++

Side effects b+ --- +++

Anti-microbial & time of kill

Improves broken skin

Reduces inflammation

Microcyn Product Comparison – Atopic Dermatitis


Very Poor Poor Neutral

Good Very Good

�  Approved by FDA for management of old and new keloid and hypertrophic scarring.

�  No other prescription scar products & large addressable market for scars in U.S.

Celacyn vs. Kelo-Cote Double Blind, Randomized Clinical Study End Points

% o

f Im

prov

emen

t Ove

r B

asel

ine

at 1

2 w

eeks

Celacyn™ Scar Management Gel


�  45 issued patents ―  7 issued in U.S.

―  38 issued internationally

�  Pending applications ―  92 U.S. and foreign

�  Claims covers: ―  Chemical composition

―  Apparatus

―  Method of manufacturing

―  Therapeutic uses

�  IP ruled enforceable by U.S. Federal Court in 2009

Intellectual Property


2014 Alevicyn™ Antipruritic Gel (Rx) – launched mid October 2014

Alevicyn™ Dermal Spray (Rx) – launched mid October 2014

Celacyn™ Scar Management Gel (Rx)

– December 2014

Alevicyn™ Spray Gel (Rx) – Spring 2015

3 DTP Foam based products (OTC) Spring 2015 – Unique patented delivery technology

Barrier Repair Products (Rx) Fall 2015 (needs FDA approval) – Cream, Lotion, Foam

Robust Dermatology Product Pipeline

2015


Catalysts in Next 12 Months

Oculus Innovative Sciences, Inc.

�  Sale of Ruthigen shares for $5.5 million - completed

�  U.S.: launch six dermatology products via direct sales force ― Alevicyn, Celacyn, Skin barrier repair product, 3 OTC products

�  EU: launch five dermatology products via country specific distributors ― Atopic dermatitis, scar, acne, dermatological procedures, post-laser

�  Add acute care products in U.S. via direct salesforce ― Regenacyn, Reju-V, HydroCleanse & Lasercyn

�  Approval and launch of oral products in EU – Spring 2015

�  Launch animal health products via two new partners – March 2015

Page | 21

January 2015

Investment Summary


�  Low valuation of $22 million vs cash & revenue �  Current cash of $6.3 million + cash of $4.5 million from Ruthigen shares

�  Revenue of about $13 million

�  No debt

�  Strong expected revenue growth for next fiscal year �  Mexico – 5% to 15% product unit growth (48% of total)

�  Europe & ROW – 20% to 25% (25% of total)

�  United States – 25%+ - direct sales force in dermatology (27% of total)

�  Sufficient expected cash to reach breakeven

Thank You Questions and Answers



OCULUS INNOVATIVE SCIENCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

December 31, March 31, 2014 2014

(Unaudited) ASSETS

Current assets: Cash and cash equivalents $ 2,240 $ 5,480 Accounts receivable, net 1,416 1,790 Due from affiliate – 537 Inventories, net 1,351 1,088 Prepaid expenses and other current assets 190 647

Total current assets 5,197 9,542 Property and equipment, net 807 971 Deferred offering cost 250 – Long-term investment 5,500 10,150 Other assets 80 128

Total assets $ 11,834 $ 20,791

LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:

Accounts payable $ 942 $ 736 Accrued expenses and other current liabilities 833 889 Deferred revenue 1,561 2,629 Current portion of long-term debt 6 143 Derivative liabilities 177 3,175

Total current liabilities 3,519 7,572 Deferred revenue 487 1,152 Long-term debt, less current portion – 4

Total liabilities 4,006 8,728 Commitments and Contingencies Stockholders’ Equity

Convertible preferred stock, $0.0001 par value; 714,286 shares authorized, none issued and outstanding at December 31, 2014 (unaudited) and March 31, 2014, respectively – –

Common stock, $0.0001 par value; 30,000,000 shares authorized, 8,660,580 and 8,160,145 shares issued and outstanding at December 31, 2014 (unaudited) and March 31, 2014, respectively 1 1

Additional paid-in capital 151,912 149, 141 Accumulated other comprehensive loss (3,373 ) (3,069 ) Accumulated deficit (140,712 ) (134,010 )

Total stockholders’ equity 7,828 12,063 Total liabilities and stockholders’ equity $ 11,834 $ 20,791


OCULUS INNOVATIVE SCIENCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands, except per share amounts) (Unaudited)

Three Months Ended

December 31, Nine Months Ended

December 31, 2014 2013 2014 2013 Revenues

Product $ 2,651 $ 2,450 $ 8,142 $ 8,627 Product licensing fees 378 629 1,130 1,459 Service 189 214 602 668

Total revenues 3,218 3,293 9,874 10,754 Cost of revenues

Product 1,417 1,023 4,107 3,247 Service 145 161 473 493

Total cost of revenues 1,562 1,184 4,580 3,740 Gross profit 1,656 2,109 5,294 7,014 Operating expenses

Research and development 367 775 1,159 2,165 Selling, general and

administrative 3,238 2,880 9,142 8,792 Total operating expenses 3,605 3,655 10,301 10,957

Loss from operations (1,949 ) (1,546 ) (5,007 ) (3,943 ) Interest expense (618 ) (4 ) (1,056 ) Interest income 1 – 1 1 Gain due to change in fair value

of common stock – 1,567 – 1,357 Gain due to change in fair value

of derivative liabilities 679 – 2,998 – Loss on impairment of investment held at cost (4,650) – (4,650 ) – Other income (expense), net 5 (14 ) (40 ) (81 ) Net loss $ (5,914 ) $ (611 ) $ (6,702 ) (3,722 )

Topical Antibiotics

Antiseptics Microcyn

Bacterial Resistance: --- ++ +++

Safety/ Toxicity: + --- +++

Side effects: + --- +++

Spectrum: Varies

narrower wide wider

Speed of Activity: Slow- Kills in Days Moderate- Kills in minutes to hours

Rapid - Kills in seconds to minutes

Wound healing: o --- +++

Very Poor Poor Neutral

Good Very Good

Microcyn Advantage as Anti-Infective

Oculus Innovative Sciences, Inc.Page | 26

investor presentation - pcg advisory grouppcgadvisory.com/.../ocls-investor-ppt-06.26.15-2-2.pdf ·...

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