NANOSONICS LIMITED — AGM Information 2013

Nov 7, 2013

ANNUAL GENERAL MEETING 8 November 2013

Chairman's Address Mr Maurie Stang

Disclaimer

This presentation is intended to provide a general outline only and is not intended to be a definitive statement on the subject matter. The information in this presentation, whether written or verbal, has been prepared without taking into account the commercial, financial or other needs of any individual or organisation. Certain information may relate to protected intellectual property rights owned by Nanosonics (the "Company"). While Nanosonics has taken due care in compiling the information, neither the Company nor its officers or advisors or any other person warrants the accuracy, reliability, completeness or timeliness of the information or guarantees the commercial or investment performance of the Company. The information does not constitute advice of any kind and should not be relied on as such. Investors must make their own independent assessment of the Company and undertake such additional enquiries as they deem necessary or appropriate for their own investment purposes. Any and all use of the information is at your own risk.

Nanosonics Board and Executive

Maurie Stang Non-Executive Chairman

Richard England Non-Executive Director

Michael Kavanagh CEO and President, Managing Director

Ron Weinberger President Technology Development / Commercialisation

David Fisher Non-Executive Director

McGregor Grant CFO / Company Secretary

Rob Waring Company Secretary

2013/14 financials

Solid revenue growth

Strong cash reserves

NAN share performance

(1 July '12 - 30 Sept '13)

	30 Sep 13	30 Jun 13	30 Jun 12
Total shares issues (million)	262.82	261.99	259.98
Share price	\$0.82	\$0.61	\$0.51
Market capitalisation (million)	\$216	\$159	\$133
Average daily volume (12 mths)	300,000	198,000	145,000

Recognition growing

Nanosonics named healthcare industry's Company of the Year for 2013

Finalist of the M&K Awards 2014. Management & Krankenhaus is the leading newspaper for decision makers in the German health care sector

Active industry profile

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Trophon EPR showcased at:

• Centre d'études et de formations hospitalières CEFH. Marseillais, France (April)
• 14th World Congress of Ultrasound in Medicine and Biology, Sao Paulo, Brazil (May).
• 40th Annual Conference Association for professionals in infection control and Epidemiology, Florida, USA (June).
• Australasian College for Infection Prevention and Control National conference 2013, Gold Coast, Australia (September.)
• 23rd World Congress on Ultrasound in Obstetrics and Gynaecology WFUMB, Sydney, Australia (October)
• Freiburger Hygienekongress, Freiburg, Germany (October)

Updated marketing agreement with GE

• Non-dilutive investment for trophon EPR sales and increased marketing activities
• GE funded dedicated trophon EPR sales team supporting the full North American ultrasound sales force
• Broad luminary site adoption

"GE Healthcare is pleased to be offering this new technology in ultrasound probe reprocessing which is effective, efficient and environmentally friendly. Through our investments in highly innovative technologies and as the exclusive distributor of trophon® EPR in North America, GE Ultrasound is further demonstrating our commitment to providing solutions to our customers in order to improve patient care and clinical workflow."

Anders Wold, President and CEO of GE Ultrasound

"Nanosonics is a great example of our goal at GE Ventures which is to partner with innovative organisations to scale great ideas that drive growth for those partners and GE"

Noah Lewis, Managing Director and Operating Leader, GE Ventures

CEO and President Address Mr Michael Kavanagh

Janssen 2013 Industry Excellence Award – Company of the Year

The Janssen Industry Excellence Awards recognise outstanding commercialisation of innovative healthcare solutions by Australian biotechnology and healthcare companies.

Leadership team

Ron Weinberger President Technology Development/Commercialisation

McGregor Grant Chief Financial Officer & Company Secretary

Gerard Putt Chief Operations Officer

Michael Potas Head of Research and Development

Vincent Wang Head of Global Support & Service

Ruth Cremin Regulatory Affairs Manager

Jianhe Chen Quality Assurance Manager

Kirste Courtney Human Resources Manager

FY13 key highlights

FY13 in numbers

Innovation at the forefront of infection control

Innovation at the forefront of infection control

New trophon® EPR products

trophon® EPR traceability package:

• Complete documentation and traceability system;
• System includes a trophon® EPR printer to record each disinfection cycle; and
• trophon® EPR Connect to retrieve detailed HLD cycle information stored.

In-Field Validation Kit:

• Customised procedure & specialised equipment to independently show the trophon® EPR process is running to specification, performed at a customer site, annually; and
• Requirement in the UK and German Markets.

Market Environment & Standard of Care

Market environment

The global operating environment is evolving toward a more highly regulated environment for automated re-processing

GEOGRAPHY REGULATIONS ECONOMICS CUSTOMER SEGMENTS COMPETITION

Unifying goal for trophon® EPR

Establish trophon® EPR as the new "Standard of Care"

Defining standard of care:

"A diagnostic and treatment process that a clinician should follow for a certain type of patient, illness or clinical circumstance"

Establishing new standards of care

• Demonstrate something different is required
• Clinical evidence new solution is superior
• Early adoption by luminary sites and key opinion leaders in the field
• Deliver the required value propositions to various stakeholders
• Ideally have new solution supported and /or mandated through guidelines

Current practices are ineffective

1. Hignett and Claman, 1995. J Assist Reprod Genet 12(9): 606-609.

2. 1. Amis et al J Clin Ultrasound, 2000. 28(6): p. 295-8.
3. 1. McNally G, Ngu A, ISUOG world congress, Sydney, 2013
4. 1. Odwin J. Diagnostic Med. Sonography 1990;6:130-5. 5. Casalegno et al, PLoS One, 2012 7(10):e48137.
5. 1. Ma et al, Emerg Med J, 2013 30(6):472-5.
6. 1. Leroy S, 2013 83(2):99-106

7. Up to 65% of barrier sheaths and condoms leak necessitating HLD.1,2

8. Handles are not routinely disinfected with bulk-liquid or wipe methods and can harbour pathogens including MRSA.³
9. Glutaraldehyde reprocessing can shorten transducer life and is toxic.⁴
10. High risk HPV can be found on transvaginal probes after disinfection with wipes.5,6
11. 12.9% of transvaginal probes are still contaminated with bacteria after LLD.⁷

The trophon® EPR solution

Most handles (79.5%) showed contamination after glutaraldehyde HLD.

Post-trophon EPR handles showed lower contamination than the background sampling contamination (7.8%)

***P < 0.0001, ns = not significant Fisher's exact test

• trophon® EPR demonstrates HLD efficacy in "dirty" conditions against 21 species of bacteria, fungi and viruses.¹
• trophon® EPR reduces infection risk by preventing handle contamination.²

• No wipe or spray disinfectant has been FDA-approved for HLD to date.

• Vickery K et al, Manuscript submitted 2. McNally & Ngu, ISUOG world congress, Sydney, 2013

Demonstrating cost-effectiveness

The trophon® EPR saves time:

"The glutaraldehyde-based system took 32 minutes versus 14 minutes for the hydrogen peroxide-based system; the hydrogen peroxide-based system saved on average 7.5 hours per week."¹

Time saved more than offsets additional cost:

"The cost of the hydrogen peroxide-based system and weekly maintenance pays for itself if 1.5 more ultrasound examinations are performed each week." ¹

Customer feedback

"Analysis showed that the savings with trophon® EPR could range from \$50K annually, with current exam volumes, up to as much as \$140K annually, based on anticipated future volumes"

"Here we are, with a new \$150K ultrasound machine and \$15K probes to go with it that we're cleaning with 1960s glutaraldehyde soaking technology – this just didn't compute for us any longer."

"The trophon® EPR solution has helped us better achieve all our occupational health and safety goals and guidelines, and in some ways also helped us with our employee recruitment"

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Evidence continues to build

• Further post-market clinical studies are currently underway in Europe

Regional Update

North America

Sales Manager

Ron Bacskai President & CEO, Nanosonics Inc.

Keith Koby Vice President Sales

John Corbett Program Manager

Lisa Davis Business Development Manager

Tom O'Neill North Central Regional Sales Manager

Sales Manager

Donna Fiorentino Northeast Regional Sales Manager

30 Ray Beams South Central Regional Sales Manager

35 of the top 50 Hospitals are trophon® EPR adopters (as of Oct 2013)

984 USA locations (as of Oct 2013)

United Kingdom

Bryn Tudor-Owen Country Manager

Medicines & Healthcare products Regulatory Agency

Government agency with responsibilities for standards of safety, quality & performance

Medical Device Alert Ref: MDA/2012/037 Issued: 28 June 2012 at 14:00

Device	Problem	Action
• Reusable transoesophageal, echocardiography, transvaginal and transrectal ultrasound probes (transducers). • All models. • All manufacturers	• The MHRA is aware of an incident where the death of a patient from hepatitis B infection may have been associated with a failure to appropriately decontaminate a transoesophageal echocardiography probe between each patient use. • The MHRA is issuing this alert to advise users to appropriately decontaminate all types of reusable ultrasound probes	• Review, and if necessary update, local procedures for all ultrasound probes that are used within body cavities to ensure that they are decontaminated appropriately between each patient use, in accordance with the manufacturer's instructions. • Ensure that staff who decontaminate medical devices are appropriately trained and fully aware of their responsibilities.

Health Facilities Scotland review underway

News Ultrasound Probe Decontamination - National Survey Launched

4th October 2012

In August HFS launched a national survey of current decontamination practice of reusable transrectal (TRU), transvaginal (TVU) and transoesophageal echocardiography (TOE) ultrasound probes/transducers.

Nanosonics engaged in the review process:

• Evaluation of all HLD options currently taking place
• Trophon® EPR presented to HFS committee
• HFS requested OEM U/S manufacturers to detail probe reprocessing options
• Project continues….

Wales Health Board Project

• Full review of TV and TR reprocessing services in order to establish clear National Recommendations underway
• Detailed evaluation of trophon®EPR suitability by key WHB stakeholders underway

Recent market survey

Survey conducted amongst 70 Superintendent Sonographers:

Are you aware of the need to High Level Disinfect TV and TR probes?

Were you aware of this need 1 year ago?

Are you actively looking at solutions to High Level Disinfect TV and TR probes?

National reviews driving enquiries

Hi, In response to MDA/2012/037 'Reusable transoesophageal echocardiography, trans vaginal and transrectal ultrasound probes(transducers), we are reviewing all of our cleaning processes associated with these probes. Could you please let me have your latest guidance for decontaminating the following probes?

Isle of Wight

We are very interested in obtaining more information on your 'Trophon® EPR', and would be very grateful if you could provide us with the following.

• A copy of the instructions for use.
• Instructions for pre cleaning probes.
• Cleaning and maintenance of the 'Trophon EPR'.
• Data on material compatibility.
• Which probe manufacturers have approved this process for use?
• Any data available on the efficacy of the Trophon i.e. methodology and results for the Log reduction achieved during validation.

Glasgow

Following discussion with our Lead Infection control nurse & Lead for decontamination and Sterile services manager this is something that we are very interested in looking at, and they have asked me to get in touch.

I wonder if you would be possible in the first instance to send a product brochure, data on efficacy and costings to me at the address below and then hopefully we will be able to arrange a meeting / demonstration

Southampton

trophon® EPR evaluated by HIRL

HIRL (Hospital Infection Research Laboratory)

Validation project complete

nanosonics		Trophon EPR On-Site Validation Record	A142364 V0.28
		Validation Report for Trophon® EPR Serial Number: 20863-010
		trophon® EPR Installation Site: Kings Mill Hospital Sherwood Forest Hospitals NHS Trust
		Conducted by: NANOSONICS EUROPE GMBH Falkenried 88, Haus A D-20251 Hamburg
		Validation date: 07.06.2013
	Name & Position	Signature	Date
Authorised Validator	David Nagle	Ela N.	$2\sqrt{c}/3$

Completion of UK validation project 5 months co-operation with UK stakeholders including:

• AED's (Authorised Engineers; decontamination);
• Clinical Scientists;
• Microbiologists; and
• Sonographers.

Toshiba signs agreement

17 April 2013

Company Announcements Office Australian Securities Exchange

Nanosonics signs Toshiba Medical Systems as a UK distributor

Nanosonics Limited (ASX: NAN) has today announced it has signed an agreement with Toshiba Medical Systems (Toshiba) to be a non-exclusive distributor of trophon® EPR in the United Kingdom.

"We are delighted with the initial response received from our customers to the system. Being able to offer this solution to treat probes with a High Level Disinfection process that is safe and offers traceability provides another option for customers."

Stuart Mills – UK Toshiba Ultrasound Sales Director

Kings Mill Hospital

"The cleaning procedure fits in well with our workflow and has not caused any extension in examination times, which is crucial in a busy ultrasound department.

We like this process because it removes user subjectivity, which means sonographers and helpers no longer have the worry of whether they have cleaned each probe thoroughly enough."

Ann Allen – Clinical Lead Sonographer

trophon® EPR approved despite cost pressures

In light of the serious cost pressures facing UK NHS Trust Hospitals there is a recognition of the potential issues which may result from inappropriate U/S probe care - trophon® EPR approved by Whittington Hospital.

Division / Service	Description	2013/14 Cost Pressure £000's	2014/15 Cost Pressure £000's
Corporate - E&F	Purchase of Trophon Decontamination Units	15
Corporate - E&F	THE REPORT OF THE REPORT OF THE REPORT OF THE REPORT OF THE REPORT OF THE REPORT OF THE REPORT OF THE REPORT OF
Corporate - E&F

Germany

Ralf Schmaehling Country Manager

Validation study

German Medical Devices Operator Ordinance (§4 MPBetreibVO):

Required to guarantee successful result by using a consistent, reproducible, validated process

SMP GmbH:

Independent, internationally accredited test lab specialised in validation of sterilisers, washers/ disinfectors conducted study

Result:

trophon® EPR meets all acceptance criteria even under worst case process parameter conditions

Further post-market clinical studies underway

University Hospital Münster

Examining the efficacy of trophon® EPR compared to current standard practice

Publication planned for a leading peer reviewed journal

Awareness: Freiburg Infection and Hygiene Congress

• 900 attendants out of hygiene sector from Germany/Austria/Switzerland
• Opening speech by German Minister of Health Daniel Bahr
• trophon® EPR Symposium conducted with local key opinion speaker panel

KOL interview, published in M&K newspaper

Management & Krankenhaus (M&K)

• Leading newspaper for decision makers in German health care market with over 32,000 subscribers
• Article with leading KOL profiling trophon® EPR benefits for disinfection of probes used for ultrasoundguided diagnostics and interventional therapies
• Numerous other publications in planning

trophon® EPR a Finalist for M&K Award 2014

Management & Krankenhaus (M&K)

• the leading newspaper for decisionmakers in German health care market
• trophon® EPR a finalist in Hygine Sector

France

Regis Alison Country Manager

"A real risk of transmission"¹

Poor infection control practices in France may cause up to 30,000 people to develop an infection from intracavity ultrasound procedures.

Of the four million yearly intracavity examinations the following transmissions could occur: 1

• 63 HIV cases
• 1,624 hepatitis B cases
• 239 hepatitis C cases
• 14,840 HPV cases
• 14,920 herpes cases.

1 Dr Sandrine Leroy (CHU Nîmes and Montpellier, service Biostatistics, Clinical Epidemiology, Public Health), in press study.

European Parliament votes in favour of optimum decontamination

4 October 2013

European Parliament votes to address patient safety, including the prevention and control of healthcare-associated infections.

Motion calls on Member States to foster optimum decontamination of medical instruments and devices both inside and outside hospital.

Awareness generation

1) Medical Congresses

• CEFH Congress in Marseille (Infection Control)
• SF2H Congress in Paris (Hygienists):
• AFIB Congress in Deauville (Biomedical Engineers)
• JFR Congress in October in Paris(Gynecologists)

2) Targeted Advertising

Australian Installed Base Growing

NSW / ACT	VIC / TAS	QLD / NT	WA / SA
St Vincent's Hospital	Royal Women's Hosp	QLD Diagnostic Imaging	King Edward Memorial
Royal North Shore	Mercy Hospital	Rockhampton Hospital	WA Regional Health
SW Area Health Service	Royal Hobart Hospital	Gold Coast Imaging	Perth Radiology Clinic
Sydney IVF / Genea	Radar Med Imaging	Brisbane, Robina, Emerald, Mackay, Cairns	Fertility Specialists of WA
Southern Radiology	Marie Stopes	Darwin, Gove & Katherine Hospitals NT	SA: Flinders, RAH, QE, Lyell McEwin Hosp's

Strategic Growth Agenda

Growth agenda

A Focus on Five Core Themes for the business

Customer Experience

Generate awareness and adoption of our solutions by demonstrating and delivering the necessary evidence for the acceptance of a new standard of care then deliver a consistent positive customer experience

Product Innovation

Bring to market a portfolio of innovative and quality products that meet unmet needs and establish new standards of care for infection control .

Operational Excellence

Grow an agile operation with scalable, compliant and performance focussed processes, designed to deliver a positive experience for our customers.

People Engagement

Foster an organisation that attracts and retains the best people and engages and empowers them to take initiative and be accountable to deliver a positive experience for our customers.

Value Creation

Drive sustainable shareholder value, delivering high growth and strong returns into the future, while making a significant contribution to social good.

Strong business fundamentals

• Infection control fundamental to Healthcare delivery
• Growing regulatory requirements for High Level Disinfection (HLD)
• Current toxic HLD solutions progressively being rejected by customers and regulators
• Increasing opportunity exists to establish the new Standard of Care
• Awareness and adoption is growing as we implement global expansion strategy
• High margin annuity revenue business model, now being realised

Strong IP and maturing R&D pipeline