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Forward-­‐Looking  Statements  

This  presenta.on  includes  “forward-­‐looking  statements”  within  the  meaning  of  the  Private  Securi.es  Li.ga.on  

Reform  Act  of  1995.  These  statements   include  but  are  not   limited  to  our  plans,  objec.ves,  expecta.ons  and  

inten.ons  and  other  statements  that  contain  words  such  as  “expects,”  “contemplates,”  “an.cipates,”  “plans,”  

“intends,”  “believes”  and  varia.ons  of  such  words  or  similar  expressions  that  predict  or  indicate  future  events  

or   trends,   or   that   do   not   relate   to   historical  maIers.   These   statements   are   based  on  our   current   beliefs   or  

expecta.ons   and   are   inherently   subject   to   significant   uncertain.es   and   changes   in   circumstances,   many   of  

which  are  beyond  our   control.   There   can  be  no  assurance   that  our  beliefs  or  expecta.ons  will   be  achieved.  

Actual  results  may  differ  materially   from  our  beliefs  or  expecta.ons  due  to  economic,  business,  compe..ve,  

market,  regulatory,  and  other  factors.  A  full  discussion  of  our  opera.ons  and  financial  condi.ons,  including  risk  

factors  that  may  affect  our  business  and  future  prospects,  is  contained  in  our  most  recent  regulatory  filings.  For  

a  complete  account  of  our  official  corporate  documents,  you  are  encouraged  to  review  documents  filed  with  

the  securi.es  regulators  in  the  U.S.  and  Canada.    

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TearLab®  Who  We  Are  

We  believe  in  accomplishing  what  has  not  yet  been  done  

We  pioneer  breakthroughs  in  technology  that  help  doctors  do  what  they  do  beIer  

Our  innova.on  has,  for  the  first  .me,  enabled  quan.ta.ve  analysis  of  tear  film  biomarkers  at  the  point-­‐of-­‐care  

Investment  Highlights  

•  1st  and  only  nanoliter  point-­‐of-­‐care  diagnos.c  plaUorm    

•  Only  point  of  care  technology  that  can  measure  Osmolarity    

•  Safe,  easy-­‐to-­‐use,  extremely  accurate  

•  Large  IP  porUolio  

•  FDA  510(k)  approved  and  CLIA  waived,  opening  the  door  to  all  U.S.  optometry  and  ophthalmology  offices  

•  Recurring  revenue  model    

•  Medicare  reimbursed,  code  83861:  $45.08/pa.ent  ($22.54/  eye)  

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The  Technology  

Breakthrough  Accuracy  •  Accuracy  

–  <  1.5%  coefficient  of  variaHon  (“CV”)  @  50  nanoliters  –  Glucose  ≥  5.0%  CV  @  5  microliters  –  Cholesterol  >  4.0%  CV  @  20  microliters  

•  Safe,  simple  collec.on  –  No  reports  of  corneal  or  conjunc.val  trauma  in  468  eyes  TearLab™  FDA  

510(k)  submission  

•  2009  Medical  Design  Excellence  Award  (“MDEA”)  for  in  vitro  diagnos.cs  

20  µL   5  µL   50  nL  

Sources:  Kimberly  MM  et.  al.,  Clinica  Chimica  Acta  364  (2006);  Volles  DF  et.  al.  Pharmacotherapy  18:1  (1998)   6  

 Broad  Intellectual  Property  

•  Large  IP  porUolio  on  tear  collec.on  –  9  patents  issued:  7,017,394;  7,051,569;  7,111,502;  7,129,717;  7,204,122;  

7,574,902;  7,810,380;  7,905,134;  7,987,702;  8,020,433  –  Several  pending  (around  design,  manufacturing  and  other  tests)  

•  Electrochemical  plaUorm  that  has  broken  the  nanoliter  volume  barrier  –  Only  plaUorm  in  the  world  that  works  with  nanoliter  volume  samples  –  Enables  standard  tes.ng  methodologies  on  this  plaUorm  for  many  

different  diagnos.c  tests  for  a  variety  of  markers  –  Patents  pending  on  other  analytes  (proteins,  genes)  and  methods  to  

measure  

•  Core  claims  around  lab-­‐on-­‐a-­‐chip  in  the  U.S.  and  selected  key  countries  

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Our  First  Test  

Tear  Film  ComposiHon  

Tears  are  a  sophis.cated  3-­‐layer  film,  and  are  essen.al  to  the  quality  of  our  vision  

–  The  front  layer,  produced  by  the    meibomian  glands,  is  oil  and  it  keeps    tears  from  evapora.ng  

–  The  middle  (aqueous)  layer,  produced  by                                                                                                                      the  lacrimal  glands,  gives  it  the  thickness    and  uniformity  to  ensure  a  clear  image  

–  The  back  layer  is  a  polish  that  fills  in  any    irregulari.es  in  the  corneal  surface    

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A  Vital  Sign  to  Eye  Health  

Knowing  a  paHents  Osmolarity  is  criHcal  to  the  health  of  their  cornea    

Hyperosmolarity  is  known  to  cause:  

–  damage  to  the  Ocular  surface  and  cell  death  –  unstable  tear  film  and  fluctua.ng  Vision  –  Inflamma.on  

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Osmolarity  TesHng  

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1.  TearLab  is  the  only  way  to  test  for  Osmolarity  at  the  point-­‐of-­‐care  

2.  The  variability  in  Osmolarity  readings  between  the  two  eyes  can  iden.fy  instability  in  the  Tear  film  in  real  .me  

3.  Our  Osmolarity  test  can  be  used  to  both  categorize  disease  severity  and  manage  therapy    

Clinical  Value  ProposiHon  

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General  PracHce    

Properly  diagnose  pa.ents  with  ocular  irrita.ons  and  measure  the  effec.veness  of  DED  therapies  

Cataract  &  RefracHve  Surgery    

Iden.fy  pa.ents  with  hyperosmolarity  and  guide  pre-­‐surgical  planning  and  post-­‐surgical  treatment  to  improve  refrac.ve  outcomes  and  reduce  DED  symptoms  

Contact  Lens  Fi\ng  and  Management  

Approx.  50%  of  contact  lens  users  develop  CLIDE  (Contact  Lens  Induced  Dry  Eye  Disease)  in  5  years  

Hyperosmolarity  undermines  a  doctor’s  ability  to  provide  good  visual  outcomes  

Hyperosmolarity  is  Recognized  as  the  Central  PathogeneHc  Mechanism  of  Dry  Eye  Disease  (DED)  

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*Report  of  the  Diagnosis  and  Classifica.on  SubcommiIee  of  the  Dry  Eye  Workshop  (DEWS).”  The  Ocular  Surface  5(2):  75-­‐92,  2007    

- Systemic auto immune Disease (Inflammation) - Androgen deficiency - Contact lens use - Surgery/ Ocular Damage - Medication side effect - Environmental stress

Dry Eye Disease As defined and characterized by: 1. Meibomian gland dysfunction 2. Lacrimal Gland dysfunction 3. Breakdown of Neuro-pathways 4. Ocular surface dysfunction (Mucin)

RESULTS IN: High Osmolarity and an Unstable Tear-Film*

Causes 1.  Damage to the Ocular surface

(irregular) 2. Inflammation 3. Fluctuating Vision

•  “The  main  test  for  dry  eye  is  the  Schirmer  test  –  Requires  repeated  examina.ons  at  up  to  five  

minutes  per  examina.on  

•  Unfortunately,  this  test  misses  detec.ng  many  pa.ents  with  dry  eyes  

•  Other  tests  should  also  be  done  before  ruling  out  a  diagnosis  of  dry  eyes”  

(hIp://www.uic.edu/com/eye/LearningAboutVision/EyeFacts/DryEyes.shtml)  

Schirmer  Test

1.  Tomlinson  A.,  McCann  L.,  Pearce  E.I.  Comparison  of  OcuSense  and  Cliton  Nanolitre  Osmometers.  IOVS  ARVO  Abstract,  2009  2.  Report  of  the  Diagnosis  and  Classifica.on  SubcommiIee  of  the  Dry  Eye  Workshop  (DEWS).”  The  Ocular  Surface  5(2):  75-­‐92,  2007    

Current  Diagnosis  Paradigm  

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Clinical  Test   PosiHve  PredicHve  Value  

Osmolarity1   87%  

Schirmers2   31%  

Tear  Film  Breakup  Time2   25%  

Staining2   31%  

Meniscus  Height2   33%  

Hyperosmolarity  and  FluctuaHng  Vision  

Stable  Vision  is  CriHcal  in  performing    

–  Cataract  Surgery  –  Refrac.ve  Surgery  –  Contact  Lens  Fiwngs  

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Nochez Y, et al. Evaluation of tear film quality with a double-pass scattering index. ARVO E-Abstract 3754, 2011.

Understanding  Tear  Instability  

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65%-70% of the total refractive power of the eye occurs at the air-tear film interface*

*Nochez Y, et al. Evaluation of tear film quality with a double-pass scattering index. ARVO E-Abstract 3754, 2011.

Effect  of  Hyperosmolarity  on  Cataract  Readings  

Only  hyperosmolar  subjects  showed  large  deviaHons  in  K1  Axis  between  visits  

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Effect  of  Osmolarity  on  RefracHve  Surgery  

Protocol  for  Cataract  and  RefracHve  Surgery  (Sample)  

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TEARLAB  ALL  PaHents  Going  to  Surgery      

NORMAL   MILD   MODERATE   SEVERE  

Proceed  with  Surgery  

Proceed  with  Surgery    Check  and  make  sure  there  is  good  lubrica.on  for  an  extended  period  post-­‐surgery  

TREAT  to  Stabilize    

Proceed  with  Surgery    

Manage  Disease  

 SUBTYPE  

-­‐  Exam  -­‐  Stain  -­‐  Schirmers  -­‐  TBUT  -­‐  MMP9  -­‐  LipiView    

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The  Opportunity  

Understanding  Market  Metrics  

Ophthalmologists:  •  On  average  an  Ophthalmologist  sees  35  pa.ents/day    •  They  spend  approximately  153  days  in  their  clinic    •  Assuming  they  only  test  pa.ents  that  complain  of  DED  symptoms  (42%),  they  will  

perform  3,374  tests  annually  •  On  average  they  will  use  3  examina.on  lanes  and,  if  they  have  a  device  in  each  

lane,  are  expected  to  do  1,125  tests  per  device    

•  Above  translates  into  annual  revenue  of  approximately  $11,000  per  device  

Optometrists:  •  On  average  an  Ophthalmologist  sees  18  pa.ents/day  •  They  spend  approximately  205  days  in  their  clinic  •  Assuming  they  only  test  pa.ents  that  complain  of  dry  eye  symptoms  (42%),  they  

will  perform  2,790  tests  annually  •  On  average  they  will  use  2  examina.on  lanes  and,  if  they  have  a  device  in  each  

lane,  are  expected  to  do  1,395  tests  per  device    •  Above  translates  into  annual  revenue  of  approximately  $14,000  per  device  

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Market  Opportunity  

•  There  are  17,000  Ophthalmologists  in  the  U.S.,  of  which  15,000  are  ac.vely  engaged  in  prac.ce  

•  There  are  38,000  Optometrists  in  the  U.S.,  of  which  34,000  are  ac.vely  engaged  in  prac.ce  

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Market  PotenHal  Based  on  using  TearLab  in  a  clinic  (U.S.  Only)    15,000  X  $33,740  =  $506  Million  in  poten.al  revenue  from  MDs  34,000  X  $27,900  =  $949  Million  in  poten.al  revenue  from  ODs  

Total  Revenue  PotenHal  =  $1.5  Billion  

Market  PenetraHon  –  Doctor  Analysis  

Have  access  to  device    3,552  

Current  Target  28,000  

Total  Market            49,000  

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100%

57%

13%

Market  PenetraHon  –  Dollar  Analysis  

Revenue,  running  4  quarters  $18.8M  

Have  access  to  device                        $113M  

TearLab  Target  $847M  

Total  Market                                                        $1.5B  

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100%

56%

13%

17%

Commercial  Team  

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President  and  COO  Seph  Jensen  

(November  2013)  (ALCON)  

Marke.ng  Julie  Speed  

(November  2014)  (ALCON)  

Sales  Duane  Morrison  

(2009)  (TLCVISION)  

Interna.onal  Paul  Smith  (June  2014)  (ALCON)  

IT/Customer  Service  Delano  Ligu  (January  2014)  (TLCVISION)  

Medical  Affairs  Manoj  V.  

(October  2014)  (ALCON)  

Sales  Reps  41  reps,    

6  Managers  11  Implementa.on  

Corporate  Training  Scoj  Aho  

(September  2014)    

Sales  Analy.cs  David  Morrison  

(July  2014)  

Reimbursement  Support  

Mike  Berg  (December  2013)  

3  Managers  (ALCON)  

Go  to  Market  Strategy  1.  Purchase  Purchase  the  System  for  $9,500  with  no  minimum  card  commitment  

2.  USE  Agreements  Free  use  of  the  system  with  a  minimum  3  year  commitment  to  purchase  cards  

1,500  cards  per  year  at  $12.50  per  card  2,400  cards  per  year  at  $10  per  card  

3.  MASTERS  MulH  Unit  Program  Designed  to  accommodate  large  prac.ces  (more  than  5  units)    

No  minimum  card  guarantees,  but  specific  volume  expecta.ons  in  line  with  our  revenue  expecta.ons  

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In  Q3-­‐2014,  introduced  a  new  Use  Agreement  that  consolidates  all  of  the  above,  simplifying  the  program  while  maintaining  all  exisHng  business  aspects  

New  Flex  Agreement  

Installed  Base  

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06/30/2014   09/30/2014  

Ac.ve  Purchased  Devices   254   256  

Ac.ve  Devices  Under  Use  Contracts   774   810  

Ac.ve  Devices  Under  Masters  Contracts   1,718(1)   1,763(2)  

Total  AcHve  Devices   2,746   2,829  

Devices  Not  Yet  Ac.vated   92   82  

Total  Devices     2,838   2,911  

Devices  Sold  Outside  the  U.S.   518   558  

(1)  206  Masters  Accounts  (2)  252  Masters  Accounts  

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Revenue  Growth  Post  CLIA-­‐Waiver  

$0    

$1,000    

$2,000    

$3,000    

$4,000    

$5,000    

$6,000    

Q1   Q2   Q3   Q4   Q1   Q2   Q3   Q4   Q1   Q2   Q3   Q4  

2012   2013   2014  

Total  Reven

ue  (‘000s)