value appreciation via sound asthma management• 40,000 mobile health apps generated $718 million...

Value Appreciation Via Sound Asthma Management

March 2012

© iSonea Ltd. 2011 Confidential & Proprietary 1

Michael J. Thomas, CEO Australian Investor Presentations F

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Disclaimer

• This presentation does not constitute, or form part of, an offer to sell or the solicitation of an offer to subscribe for or buy any securities, nor the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issue or transfer of the securities referred to in this presentation in any jurisdiction in contravention of applicable law. Persons needing advice should consult their stockbroker, bank manager, solicitor, accountant or other independent financial advisor.

• Certain statements made in this presentation are forward-looking statements. These forward looking statements are not historical facts but rather are based on iSonea’s current expectations, estimates and projections about the industry in which iSonea operates, and its beliefs and assumptions. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks,” "estimates,“ “guidance” and similar expressions are intended to identify forward-looking statements. and should be considered an at-risk statement. Such statements are subject to certain risks and uncertainties, particularly those risks or uncertainties inherent in the process of developing technology and in the endeavour of building a business around such products and services. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors, some of which are beyond the control of iSonea, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. iSonea cautions shareholders and prospective shareholders not to place undue reliance on these forward-looking statements, which reflect the view of iSonea only as of the date of this presentation. The forward-looking statements made in this presentation relate only to events as of the date on which the statements are made. iSonea will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date of this presentation except as required by law or by any appropriate regulatory authority.

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What Does iSonea Do?

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Acoustic Respiratory Monitoring (ARM™) Developer, manufacturer and marketer of devices, software & mobile health applications for management of chronic respiratory diseases:

• Asthma • COPD (Chronic obstructive pulmonary disease) • Sleep Disorders

• Regulatory clearance in US, EU, AU • IP strongly protected • Corporate HQ: Annapolis, MD, USA • Manufacturing: Haifa, Israel • Head Office: Melbourne, Australia

• ASX: ISN • US OTCQX: ISOAY • www.iSoneaMed.com

Confidential & Proprietary

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• Asthma & Chronic Obstructive Pulmonary Disease (COPD) affect an estimated 300,000,000 people worldwide. Source: World Health Organization

• 25 million in US have asthma, including 10% of children –

growth to >40 million expected by 2016. Source: CDC

• The cost burden of asthma in the US alone exceeds $56

billion annually. Source: CDC

• Traditional diagnostic tests (spirometry, auscultation) are

appropriate in physician’s office and clinics, but not for remote monitoring.

• CDC National Health Interview Survey underscores a great need for routine asthma monitoring in real life settings: o 40% of patients use peak flow meter o 33% of patients use long-term control medications o 26% report emergency department visits for asthma

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Asthma: A Costly, Global Epidemic

20.324.6

0

5

10

15

20

25

30

2001 2009

US Asthma Patients (mm)

Source: CDC, Data from National Health Interview Survey

Medical Expenses Associated with Asthma

(Direct & Indirect Costs)

~$3,300 Per Person/Year

Source: NIH, NHLBI Data 2007

+21%


Daily Monitoring Improves Asthma Management

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• Disease management devices via traditional market channels

(Business through Physician)

• Disease management through Smartphone Apps

(Business to Consumer)

iSonea Product Family


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Traditional Medical Device Path: Physician Rx

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Physician Strategy

PUSH

Strategic Partners

• Distribution channels

• Physician access

US Clinical Studies

Pursue Coverage

Establish Data Portal

Physician Promotion

• Spirometry equivalence

• Pediatric diagnosis

• Symptom correlation

• Data to build foundation for payers

• Revenue model defined

• Dashboard to track patient data

• Integrate with EMRs e.g. Microsoft, Google, Facebook, etc.

• Target market penetration Major Steps:


The traditional medical device path will leverage strategic partner access and evidence-based WheezeRATE™ data for creating physician demand for ARM™ devices among target segments: pediatricians, pulmonologists, and asthma/allergy specialists.

Create Medical Demand

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Milestone Value Creation – Rx Physician Push

Strategic Partners

US Clinical Studies

Pursue Payer Coverage

Physician Data Portal

Target Physician Launch

• US & global distribution channels • Established access to target physicians • Critical mass for market penetration

Milestone Value Impact

• Establish clinical equivalence to standard • Gain KOL “top/down” advocacy • Create required data for payers/reimbursement

• Obtaining coverage is complex, lengthy process • Data requirements are well-established • Opens door to physician prescribing & usage

• Real-time patient status & trending • Easy management of Asthma Action Plan • Alerts for attacks, medication changes

• Demand creation among pulms, peds, etc. • Establish wheeze monitoring in clinical practice • Ideal choice for remote patient monitoring


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iSonea ‘Business Through Physician’ Mechanism

Effortless Global Disease Management

Acoustic Respiratory Monitoring

Smart Technology

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Proprietary Sensors

IT Systems Connectivity

Clinically Developed Form Factors

Lung Sound Analysis

Proprietary algorithms

IP Coverage

iSonea can set a new gold standard for clinical assessment of symptom assessment in respiratory disease management.

Reduce Enormous Cost Burden

Address 8% Global Prevalence Rate

Meet Global Standards of Asthma Care Confidential & Proprietary

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Mobile Health 2012: 247MM Users, $1.3B Rev1

• 40,000 mobile health apps generated $718 million in revenue in 20111

• # people downloading a health app at least once this year will reach 247 million, up from 124 million in 20111

• 500M smart phones sold globally in 2011 – expected to be >1B phones annually by 2015. • 7.4B mobile subscriptions projected by 2015. • Number of health management apps for smart phones has grown >4X since 2010. • Nearly 1/3 of US adults using apps downloaded health management apps in 2011. •

2993

8924

13110

02000400060008000

100001200014000

2010 Feb 2011 July 2012 July

iPhone Health Apps

# Health Apps

Confidential & Proprietary 9 1. Research2Guidance

2. Source: Pew Research Center 2011

(Projected)

+338%

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Global Mobile Health Revenue Projections

• Global mHealth market revenues are projected to reach $23B by 2017. • Monitoring services for chronic diseases are expected to account for 65% or $15B. • Healthcare apps are expected to generate $2.4B in revenues by 2017.


Source: GSMA 2012

15 3.4

2.3 2.3

2017 mHealth Services Revenue US $ Billions

Monitoring

Diagnosis

Treatment

Ancillary

$ 23 Billion For

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Physicians Advocate Patient Use of mHealth Tools

New market research from Float Learning reveals what physicians want from mHealth platform tools: • 90% want patients to use mobile devices/apps to monitor health indicators

• 40% believe that mHealth apps can reduce patient office visits

• 56% of physicians say their own use of mHealth devices expedites health

decision-making

• 40% say use of mobile devices increases administrative efficiciency

• More than 80% of physicians now use smartphones

• Physicians are 250% more likely to own iPad than the average consumer


Source: Float Learning 2012

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Harnessing the Mobile Trend “Tsunami”

• Shortest path to revenue • Fewer regulatory challenges • Reimbursement not needed • Greater value creation • Greater gross profit margins

OTC Development Rationale iSonea is applying its core DNA – Acoustic Respiratory Monitoring (ARM) technology, proprietary software and analytical algorithms – to the mobile health platform, developing apps and digital hardware to turn smart phones into monitoring devices.

Mobile devices provide a ubiquitous platform for innovative ARM™ technology – making asthma monitoring possible for anyone with a smartphone.

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Remote Monitoring Asthma “Security System”

• Integrating the ISN wheeze sensors with mobile apps will provide the most convenient and effortless method for frequent monitoring to improve asthma management

• Unique algorithm empowers the smartphone for GPS-linked monitoring of symptoms • Auto alerts when environmental factors, triggers & symptoms suggest asthma risk • Encourages adherence to disease management guideline monitoring best practices • Facilitates physician adjustment of individual asthma action plans

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Smartphone Asthma Apps Path: Consumer Demand

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Consumer Strategy

PULL

Develop Asthma Apps

Social Media Campaign

Intro Functional

Apps

Gen 2 Smart Phone Device

Gen3 Smart Phone Device

Major Steps:

• Launch new tracking tools

• Establish customer base

• Educate & create brand preference

• Expand technology platform

• Expand gross profit margins

• Launch smart multi function Apps

• Consumable hardwire sensors

• Launch next device with mobile health App

• Intelligent portal between patient & MD with real time feed back control


Social media-driven awareness and disease management empower the asthma consumer as a principal driver of demand.

Create Consumer Demand

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Milestone Value Creation – OTC Consumer Pull

Develop Asthma Apps

Social Media Campaign

Lower COGS & ASP

OTC Wheeze Monitor

Launch Gen2 Device

Milestone Value Impact

• Immediate revenue from OTC App downloads • iSonea brand awareness & consumer demand • Create customer base for OTC & Gen2 devices

• Create educated, motivated asthma consumers • Cost efficient means of launching asthma apps • Brand recognition with support groups & blogs

• Increase profit margins • Improve price for OTC consumer sales • Increase installed customer base

• Quicker revenue than traditional Rx path • Widespread access via pharmacies, internet • Consumer testimonials for promotion

• Easiest system enables frequent monitoring • Automatic reporting to family & physician • Establishes ISN as leader in asthma monitoring


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iSonea ‘Business to Consumer’ Mechanism

Huge Global Market

Opportunity

Enabling Technology

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Web-Based Disease

Management

iSonea’s mobile health platform combines novel ARM™ technology with a universally available hardware platform to address a growing market need with limited cross-border restrictions.

Proprietary Sensors & Software

Fundamental IP Coverage

Innovative ARM™ Sound Analysis

Cloud-Based Data Warehouse

& Portal

Smartphone Embedded

Analysis

Real-Time Physician-Integrated

Action Plan Access $1B Global Asthma Monitoring Market Opportunity

Meet Global Standards of Asthma Care Reduce Global

Disease Cost Burden Confidential & Proprietary

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Product Development Pipeline – Q1 CY 2012

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Research Design & Implementation

Verification & Validation

Regulatory Submission Marketed

AsthmaSense App v1.1



Digital Peak Flow Meter

Digital Snoring Meter


AirSonea Wheeze Monitor

Gen 2 OTC Wheeze Monitor

Asthma Home 2net Hub

OTC Wheezometer

Rx Pulmotrack

Rx WHolter

Rx Wheezometer

Rapid Daytime Test for OSA

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New Product Development Timeline

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Code Project

ISN101 AsthmaSense™ App v1.0

ISN102 AsthmaSense™ App v1.1 Service & Web

ISN103 AsthmaSense ™ App v2.0

ISN104 AsthmaSense™ App v2.1

ISN105 AirSonea™ Monitor

ISN106 OTC WheezoMeter™ (Current EU availability)

ISN107 OTC Gen2 Wheeze Monitor

ISN108 AsthmaHome™ 2net Hub™

ISN109 Digi-Peak Flow Meter

ISN110 Digi-Snoring Monitor

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 CY 2012 CY 2013

Commercial Availability Goal USA EU


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Model Generates Multiple Revenue Sources


Asthma Consumers

Sponsorship Partners

Healthcare Providers

$ App downloads

$ Data subscription

$ App upgrades

$ Disposable Sensors

$ OTC Wheeze Monitor Devices

$ Diagnostic Monitoring Devices

$ Disposable Sensors

$ OTC Wheeze Monitor Devices

$ Data Services

$ Advertisements

Each customer segment represents multiple revenue sources for iSonea.

Recurring Revenue Streams

$ Market Research For

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Significant Progress Since Restructuring

The first half of FY 2012 was a transition period. The new CEO and management team re-assessed the commercial status of products, developed a new business plan, and raised capital to execute that plan.


Milestones Achieved – Half Year FY 2012

New CEO – June 2011

Re-branded company - iSonea Limited

Reduced cash burn rate

Hired new management team

Raised $5.6 million in new capital

New clinical development & launch strategies

Initiated re-engineering to lower COGS

New technology patents filed & issued

Listed ADRs on U.S. OTC QX

Designed protocol for 1st U.S. pediatric wheeze correlation study

Conducted 1st U.S. asthma consumer research on asthma app usage & monitoring practices (n=369)

Announced mHealth technology development collaboration with Qualcomm Life

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Key Milestones – Balance of 2012


Milestone Development Stage Target Date US Pediatric Wheeze Correlation Study (n=95)

• Protocol approved • Sites selected

Enroll: Q4 FY2012 End: Q1 FY2013

FDA Submission – OTC WheezoMeter™

Regulatory Review Q1 FY 2013

AsthmaSense™ v1.0 Asthma App Launch

Design & Implementation Q4 FY 2012

AsthmaSense™ v1.1 Asthma App Launch

Research Q2 FY 2013

FDA Submission – Gen 2 Wheeze Monitor

Design & Implementation Q2 FY 2013

AsthmaHome™ 2net™ Hub Design & Implementation Q2 FY 2013 SoundAsthma.com - Internet Consumer Educational & Promotional Initiatives

• Social media channels launched

• Website in development

Q3 FY 2012

Development of a fundamental data set in the US, launch of initial mHealth asthma management tools, and regulatory submission of non-Rx products will be the most significant accomplishments for the rest of 2012.

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Michael J. Thomas Chief Executive Officer

Steve Tunnell SVP of Operations

David Model SVP of Finance

Jonathan Freudman, MD Medical Director

Michael Cheney VP, Marketing

Jan P. Barker VP, Business Development

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Experienced Management Team


• Michael J. Thomas - new CEO with successful track record and in-depth knowledge of breathing disorder technologies & markets:

• 3 VC start ups, 1 IPO (NASDAQ: PATI), 1 M&A (NYSE: GE) • ~$100MM in growth equity raised • Former CEO roles: Appian Partners; Sleep Solutions, Inc. • Former AdvaMed BOD member

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Influential & Successful Board

Ross Haghighat Executive Chairman

• 25+ years of new venture creation and venture financing • 8 start ups, 3 M&As, $1.9 B in shareholder value created • Member of 4 for-profit and 1 non-profit Board of Directors • Founder and CEO of Triton Systems – an full service business venturing company

Paul Hopper Managing Director Cappello Group

• 20+ years experience in international public companies focusing on biotechnology, nutraceuticals, and medical & healthcare services.

• Currently focused on start-up and rapid growth companies in US and Australia. • Experience in IPOs, public company mergers and extensive capital market equity raisings.

Fabio Pannuti CEO, Consegna Ltd

• 20+ years experience in international public companies in agriculture, property development, mining/oil & gas, telecommunications, and biotechnology • Formerly Chairman of Mobi Ltd – ASX telecommunications company • Managing Director and CEO of Consegna Ltd – ASX drug delivery technology company

Jerry Korten GM, Business Development GE Healthcare

• 25 Years of private and public company executive, director • CEO Versamed Inc. (acquired by GE HC) • President Vitaltrends Technology, Inc. • Director Product Development, Spacelabs Medical

David Dantzker, MD General Partner Wheatley Partners, LP

• 10+ years of medical technology portfolio management for venture capital fund and corporate board experience

• Past President of North Shore- Long Island Jewish Health System • Former Vice Chairman, Dept. of Internal Medicine, University of Texas Health Science Center • Former Director of Pulmonary & Critical Care Medicine, University of Texas • Former Chairman, American Board of Internal Medicine, Pulmonary Disease Sub-specialty

Board


Senior Scientific Advisor: Lynn M. Taussig, MD – renowned authority on asthma • Special Advisor to the Provost for Life Sciences at University of Denver • Retired President & CEO of National Jewish Medical & Research Center • Former Chair of the Steering Committee for NIH Childhood Asthma Research & Education Network • Author of >180 scientific publications

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Why Invest Now?

The iSonea opportunity will create shareholder value appreciation over the next 12 -24 months with substantive milestone achievements and increasing US investment.

• First mover advantage – the 1st convenient, effortless asthma monitoring system

– Makes frequent asthma monitoring possible for any patient, anytime, anywhere – Better monitoring improves disease management

• Innovative & Unique ARM Technology – assets to leverage and monetize • Asthma Prevalence & Mobile Health Proliferation

– 300 million people worldwide affected by asthma & COPD – 25 million in the US have asthma – Mobile health app trends are skyrocketing – Monitoring services for chronic diseases are expected to account for $15B globally in 2017

• Low Valuation – Company has substantial value creation potential • Delivery of Milestones in 2012 – 2013 will drive significant shareholder value • New Management Team – seasoned, successful team is in place, with experience

commercializing medical devices and software • Company trades on ASX: ISN and ADRs trade on US OTCQX: ISOAY


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value appreciation via sound asthma management• 40,000 mobile health apps generated $718 million...

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