Slide 1: Innovation
INNOVATION August 2016
Slide 2: Disclaimer and forward-looking statements
This presentation is for information purposes only. By this presentation, Elron does not intend to solicit offers to purchase its securities and the presentation does not constitute an invitation to receive such offers. Elron may make improvements and/or changes in the features or content presented
Slide 3: Dividend and portfolio company highlights
The dividend is payable on Sept. 26, 2016 to BrainsGate introduced a new injectable implant that shareholders of record as of Sept. 12, 2016 is simpler and quicker to implant The FDA agreed to its integration in the current trial To date ~650 patients have been enrolled in the trial Alcide develops
Slide 4: Elron
DISCOVER. ELRON
Slide 5: Years of experience identifying opportunities and building technology leaders
+ WE HAVE YEARS EXPERIENCE IDENTIFYING OPPORTUNITIES, BUILDING TECHNOLOGY LEADERS, AND EXITING HOLDINGS + WE INVEST PRIMARILY IN EARLY STAGE COMPANIES + WE RELY ON A PROVEN STRATEGY OF HANDS-ON INVOLVEMENT IN THE DAY-TO-DAY OPERATIONS OF OUR GROUP COMPANIES + OUR COMPANIES BENEFIT FROM OUR SKILL AT
Slide 6: Performance in 2016
Exit Proceeds, after tax ($m)* Gain ($m) 85.5 66.3 PERFORMANCE IN 2016: 269 17.9 114 -8.4 4.4 2.5 59 20 26 4 2010 2011 2012 2013 2014 2015 $9.2M 2010 2011 2012 2013 2014 2015 * $116M Investments ($m)* Liquid Resources at Year End ($m) 37 36 93.7 * $31.7M 30 76.2 18 16 40.7 13 31 21.1 15.7 2010 2011
Slide 7: Holdings in companies
Holdings in companies 1 Book value at Amount invested June 30, 2016 ($m) ($m) Associates and consolidated companies: Pocared (61%) 18.0 59.9 BrainsGate (30%) (0.4) 24.5 PLYmedia (25%) - 2.5 Others 16.5 28.1 Companies presented at fair value: Notal Vision (21%) 17.0 11.4 Others 4.6 18.6 Total Holding
Slide 8: BrainsGate
DISCOVER. BRAINSGATE
Slide 9: BrainsGate: our investment $29M
2000 OUR INVESTMENT: 2005 $96M $29M Johnson & Johnson, Boston Scientific, Medtronic, Pitango, Cipio Partners To increase the potential number of stroke victims who receive OUR treatment from ~7% to ~80% HOLDING: Electrode used to electrically stimulate a nerve center behind the nasal cavity (the SPG
Slide 10: Interruption of blood flow to the brain
INTERRUPTION OF BLOOD FLOW TO THE BRAIN When blood flow to an area of the brain is cut off When brain cells die, functions controlled by that part of the brain (e.g. memory, muscle control) Blood flow to the brain is blocked by a Blood leaks into the brain from a blood vessel of strokes are ischemic
Slide 11: Stroke survivors left permanently disabled
Average Lifetime Cost Per Stroke Patient OF STROKE $300 K $450 K SURVIVORS ARE LEFT $130 K $60 K PERMANENTLY $10 K $25 K $25 K DISABLED mRS 0 1 2 3 4 5 6 Sources: Samsa et al, Performing Cost-Effectiveness Analysis by Integrating Randomized Trial Data with a Comprehensive Decision Model: Application
Slide 12: Ischemic penumbra at risk
Cells in the affected area die almost immediately, and cannot be salvaged However, surrounding the blockage are regions of viable tissue at risk – the ischemic penumbra – Source: American Heart Association: Temporal Trends in Patient Characteristics and Treatment With Intravenous Thrombolysis Among
Slide 13: Clot-busting drug
CLOT-BUSTING DRUG • The risk of hemorrhage just 3 hours after stroke onset increases 10X • Certain patients are eligible for treatment up to 4.5 CLOT RETRIEVING DEVICES hours after symptoms first start • tPA is not approved for use after 4.5 hours from stroke onset • MOST PATIENTS DO NOT GET TO THE
Slide 14: Clot retrieving devices
CLOT-BUSTING DRUG • In the past this treatment was used in an 8-hour treatment window, but was not widely adopted due to lack of proven clinical benefit CLOT RETRIEVING DEVICES • 2015: Several large multicenter trials were published showing that treatment with endovascular treatment in a limited tim
Slide 15: Electrical stimulation
CLOT-BUSTING DRUG • Electrical stimulation of the SPG (a nerve center behind the nasal cavity) using a miniature electrode CLOT RETRIEVING DEVICES • The electrode’s activation induces dilation of cerebral blood vessels, and augments cerebral blood flow; without affecting central blood pressure • THE
Slide 16: BrainsGate ISS system and implantation
5 daily stimulation sessions, of 4 hours each The neurologist performs the implantation (which is brief and simple), with the aid of a navigation system GuideView SPG (sphenopalatine ganglion) = supplies parasympathetic innervation to the anterior cerebral circulation and some of the posterior c
Slide 17: Pivotal trial for U.S. marketing approval
BRAINSGATE IS CONDUCTING AN FOR U.S. MARKETING APPROVAL OF THE ISS, ON 800-1000 PATIENTS: This slide contains forward-looking information as defined in Section 21E of the U.S. Securities Exchange Act of 1934, and in Section 32A of the Israel Securities Law, 5728-1968. See Slide 2 of this presentatio
Slide 18: Pocared
DISCOVER. POCARED
Slide 19: Pocared: our investment $64M
OUR 2004 INVESTMENT: 2007 $64M $107M SCP Vitalife To promote antibiotic stewardship and significantly reduce lab costs OUR by providing a method for rapid infectious diseases diagnostics HOLDING: Rapid and automated microbiology lab system for infectious diseases diagnosis 67% 19
Slide 20: Traditional microbiology testing versus optical fingerprint technology
Since the 19th century, microbiology testing has been done by culturing In the 21st century, developed a technology for automatically bacteria in petri dishes identifying bacteria in body fluids, by identifying their optical “fingerprint” Expensive: Requires reagents and skilled lab technicians Manu
Slide 21: Antibiotic resistance
The use of antibiotics is the single most important factor leading to antibiotic resistance around the world Antibiotics are among the most commonly prescribed drugs Up to 50% of all the antibiotics prescribed are not needed or are not optimally effective as prescribed ILLNESSES EACH YEAR DEATHS EAC
Slide 22: Fewer skilled workers, higher throughput, greater efficiency
FEWER SKILLED WORKERS HIGHER THROUGHPUT GREATER EFFICIENCY The average age of the lab workforce in the Testing volumes are increasing per Economic pressures drive the need to U.S. is about , and increasing year, due to factors such as: contain costs while maintaining high tec
Slide 23: Pocared P-1000 Analyzer and sample processor
+ Micro-organisms are identified based on their unique optical signatures in response to different UV wavelengths + Culture-free, lab assistant operated + Gold standard accuracy + A full batch of 42 samples takes 2 hours to diagnose Filtration using “wet foam” technology to The Analyzer employs A re
Slide 24: Forward-looking information
This slide contains forward-looking information as defined in Section 21E of the U.S. Securities Exchange Act of 1934, and in Section 32A of the Israel Securities Law, 5728-1968. See Slide 2 of this presentation. 24
Slide 25: Pocared application pipeline
(streptococci) (MRSA/MSSA) 41m tests in the U.S. annually 8m tests in the U.S. annually clinical validation, ready for clinical feasibility regulatory studies (sepsis) (rapid AST) 50m tests in the U.S. annually NO rapid solution currently available clinical proof of concept clinical feasibility Sour
Slide 26: CartiHeal
DISCOVER. CARTIHEAL
Slide 27: CartiHeal: our investment $12M
OUR 2009 INVESTMENT: 2012 $12M $30M Johnson & Johnson, Accelmed To treat joint surface lesions, and to halt the progression of knee OUR osteoarthritis and delay or prevent knee replacement HOLDING: Implant for cartilage and bone repair in the joint 35% 27
Slide 28: Cartilage lacks healing potential
Cartilage does not possess spontaneous healing There are no treatments that halt the progression potential of osteoarthritis (OA) During 2004-2011 people underwent a In 2010 total knee replacements were surgical procedure addressing a cartilage defect in performed the knee Persons with knee OA spend
Slide 29: Agili-C post-op results
3 weeks post-op 6 weeks post-op 12 weeks post-op The Agili-C is investigational in the U.S., and CE-marked in the EU. 29
Slide 30: Agili-C implanted throughout Europe; FDA next steps
CARTIHEAL’S AGILI-C HAS BEEN IMPLANTED IN THROUGHOUT EUROPE, MOSTLY TO TREAT TRAUMATIC AND DEGENERATIVE KNEE LESIONS THE COMPANY HELD A WITH THE FDA Implant an additional 50 patients for various indications such as knee OA, great toe & ankle Product freeze of Agili-C & high manufacturing capacity bu
Slide 31: Cloudyn
DISCOVER. CLOUDYN
Slide 32: Cloudyn: our investment $6M
2011 OUR INVESTMENT: 2011 $18M $6M InfoSys, Carmel Ventures, Titanium Investments To enable enterprises to fully realize their cloud potential OUR SaaS tools for monitoring and optimizing hybrid cloud costs and HOLDING: usage 40% 32
Slide 33: Hybrid cloud managers lack visibility
OF HYBRID CLOUD MANAGERS HAVE LITTLE VISIBILITY DON’T HAVE A WAY TO DETERMINE WHAT THEY ARE PAYING FOR DON’T HAVE A WAY TO CONTROL THEIR CLOUD SPRAWL Migrating the proper Enterprises are struggling to Cost and performance workloads and building the build a single, accurate inefficiencies reduce clou
Slide 34: Visibility, accountability, optimization
VISIBILITY Cloudyn’s solutions enable enterprises to gain granular, real-time visibility into consumption, cost & performance of multi-platform hybrid clouds ACCOUNTABILITY Cloudyn empowers enterprise-wide cloud accountability through accurate and reliable cost allocation and chargeback OPTIMIZATION
Slide 35: Cloudyn raises $4M from Infosys
CLOUDYN RAISES $4M FROM INFOSYS rasa raises S4mitrom india’ ANTIN'OOI NWT) YT EEN 4 NOVIN TNT? nfosys Jayn nnw7 EEN oon peg nw 200497 |r o}|Ga mova nnwhinw | (25) EE EET) F yy] DNNT NY Cloudyn 01/27 NN NTN Infosys NUAD IT-A Ni / aya java nirvana Tw AINA WOT Ty AAW VA AWNN NINN ane AMaAL OVA ann rg m
Slide 36: OpenLegacy
DISCOVER. OPENLEGACY
Slide 37: OpenLegacy: our investment $3.1M
OUR 2013 INVESTMENT: 2014 $3.1M $4.3M Entrepreneurs To deliver any core application as a digital service OUR Tools that rapidly extract the services and information from legacy HOLDING: systems, and automatically transform them into mobile, web, & cloud applications 37% 37
Slide 38: Legacy systems challenges
Legacy systems preserve In both the public and private sectors Replacing/upgrading IT systems involves significant in the U.S. (e.g. federal agencies & and (security, compatibility, data loss) banks), maintaining legacy systems consumes three-quarters of IT budgets While replacing/upgrading le
Slide 39: OpenLegacy revolutionizes legacy modernization
OPENLEGACY REVOLUTIONIZES LEGACY MODERNIZATION, OFFERING INDEPENDENCE FROM EXPENSIVE VENDORS, AND ELIMINATING HIGH COSTS AND HIGH RISK Reduced time to A fraction of the Ensures success of market cost digital (TTM) (TCO) transformation 39
Slide 40: IronScales: protecting enterprises from phishing attacks
PROTECTING ENTERPRISES FROM CYBER PHISHING ATTACKS 2014 IronScales addresses one of the most common cyber attacks against corporations, by protecting employees 2015 from spear-phishing attempts $0.75M Based on a training program, IronScales increases employee awareness and responsiveness OUR OUR Whe
Slide 41: Opportunity. Thank you.
ELRON. OPPORTUNITY Thank you.