okay good morning and thank you for joining us for our 38th annual roth conference my name is kyle bowser and i'm a senior research analyst with roth covering the medical device sector today we have capsule vision here for a fireside chat and we are joined by johnny wang co-founder president and ceo david garcia a senior vice president of finance and doug atkinson senior vice president of global sales so we're excited to have you here thank you for joining us I'm so for anyone listening in that's new to the capsule vision story Johnny can you please walk through the history of the company and how it came

to be publicly traded as CV yes thank you for the opportunity my background is in semiconductor including IC design. The last company I founded was a chip company designing and marketing imaging video processing integrated circuits which was acquired in 2003. I left the company near the end of 2004 at the time I was planning my next move in earnest. Since Taiwan and China are catching up to the U.S. for IC design, I sought the vision to leverage my strengths to create the most value and contributions to the market, especially at the intersection of high-tech and healthcare. The U.S. has ready infrastructure for me to go into the business. Capsule endoscopy was relatively new at the time, presenting an opportunity for innovation to provide differentiated value. With my co-founders, Golden Wilson and David Lee, and a few engineers, we developed a processor integrated circuits, a CMOS imagery sensor, Parama optics, entire electronic system with onboard storage, lighting system, magnetic power system, and all elements and the wiring had to fit together like a tiny 3D jigsaw puzzle and operate for 15 hours with two watch batteries, complete with application software. Later, with customers best interest in mind, we developed a cloud-based system to enable doctors to read the video anytime anywhere, not limited to the workstation at the provider's site during office is our, make it ubiquitous anytime. Around the 2018, when semiconductor technology process evolved to a point to enable deep convolutional neural network, learning, training and learning, we started to develop in-house AI models. The cloud storage system allows us to have the largest image data trough in capsule industry for AI training, validation and testing, which is an enormous advantage. We have a healthy organic growth in our current small bowel business. Our IPO was predicated on the accelerated small bowel growth powered by AI and the exponential growth trajectories of colon and pancreas cancer detections we envision this system this system would ultimately provide the panenteric imaging of the entire gut enabling the detection and screening of multiple cancers including esophagus, liver, stomach, pancreas, colon with the existence of AI in one single non-invasive procedure. Thank you.

I appreciate that. And can you or Doug describe the flagship CapsuCam Plus technology and its indication for small bowel visualization?

The CapsuCam Plus is the size of it with four cameras inside looking north, south, east, and west. and what that does is it captures a 360 degree view of the inner mucosal lining of the gi tract from the esophagus all the way down absolute cell having those four cameras also has onboard storage so there's no need to like our competitors on the market right now that have all this external equipment sensor array a sensor belt with a data recorder everything's built inside the capsule and it can store all those images, and then once the capsule's captured, it can then be sent to our download center in San Jose. The benefit to that is it's a single patient visit, so when they're going, or even at home, because we are approved, sent it to the download center, but it's a single patient visit versus our competitors twice. The capsule itself is very well received by the patients, very easy for them to follow the procedure. But most importantly, from a clinical operational financial perspective, the triple AIM approach, this is a product that really addresses a superiority clinically to anything else out there operationally, saving the staff time, the patient time. And also, financially, there's no external equipment. And like I said, it's brilliantly designed.

And what about the target patient populations for CapsuleKana Plus?

Yeah, so capsule endoscopy, before they had capsule endoscopy on the market, it used to be a very invasive approach. You either had a CT anoroscopy, a small bowel follow-through, which had a very low sensitivity rate. And then capsule endoscopy came on the market back in the early 2000s. And the primary focus of capsule endoscopy being used is for those patients that are bleeding in the stool, they have abdominal pain, diarrhea, extensive diarrhea, and we're focusing on blood in the stool to define where that bleeding source is occurring. Crohn's patients, right? So Crohn's can either be in the colon, the small bowel, or just in the GI esophageal, and also cancer and celiac disease. So that's the primary patient population we're going after and diagnosing. If you were to break it down, probably 55% to 60% is bleeding, some obscure bleeding going on within the GI tract.

Got it. I appreciate that. And how much does the capsule cost, and what's the total addressable market?

Yeah, within the small bowel market as a whole, the upper GI, so this would also include esophageal, gastric, pancreatic, and small bowel. it's projected to be a 300 million dollar market by 2030 within the the colon now we're taking looking just at the colon market where we're developing a colon capsule for this is a 17.8 billion dollar market our goal is to go after the contraindicated market initially building a registry as well which we believe will continue to gain access to the to the screening market to but 300 million for the upper GI almost 18 billion about 20 million Americans a year okay and you talked a little bit about about how does the technology compare to the competition out there yeah so when you look at the way the capsule was designed and I go back to to our CEO Johnny Johnny and dr. Gordon Wilson who designed the capsule having those four cameras when For example, with a colonoscopy, the gold standard right now is an optical colonoscopy where they will insert a scope, an optical scope in the rectum up to the colon of the And when a gastroenterologist or general surgeon is doing that, they're actually moving that scope at a 90-degree angle. So they have control over that scope. With our capsule having the four cameras placed laterally, looking at that 360-degree view, We're basically mimicking that same control of a scope. And the reason for that is you can't control a capsule. Once that patient swallows the capsule that's going down the GI tract, you'll have tumbling. You'll have all kinds of things going on. We believe our capsule mimics that scope just like a scope in a gastroenterologist's hands. And that's a huge benefit. it. Also not having that external equipment gives us the, we're not contraindicated for a patient that may have a defibrillator, some type of implantable medical device. Also some of the patients with a BMI higher than 40 are contraindicated for capsule endoscopy in some occurrences because the signal cannot reach the DAP for those competitors that utilize a DAP recorder. So we encompass and cover the entire patient population. And then lastly, I think when you look at our cloud-based system where a physician, the benefit is the physician doesn't have to go to his office or he doesn't have to go to the hospital to read the study. Having this download center and a cloud-based software solution gives the gastroenterologist the ability to read this study from anywhere in the world, provided they have internet access.

Great.

You submitted your application in december for the addition of an ai assisted reading module and capsule cam plus maybe you could talk about the enhancements that this will provide and timing on expected fda decision uh thank you okay thank you doc i will take this one uh so uh ai of course they save time okay so we target them to save most of the reading time which is about 20 or 30 minutes for small bowel so doctor is motivated by procedure volume because that's how they are paid so this will have the substantial economic benefit to the to the customers and also doctor concentrator have to concentrate in grading uh concentrate every pixel on the imaging when reading this video They have good intention, but the continuous concentration is difficult. So during the rating of 20-30 minutes, they enter into an area where they have awareness fatigue. So their rating sensitivity continues to drop during the rating and after first rating. the second rating will be about 40% lower, which is very significant. So using AI, you can avoid this kind of awareness fatigue. So not only more efficient, the most captivating part of the AI is accurate, make it even more accurate.

Thank you. great and the sales are currently on a call it 14 million dollar annual run rate maybe you can talk a little bit about the commercial organization how this looks and any anticipated changes to headcount so what we have right now is we have a direct sales force here in the u.s.

26 direct sales reps so we back we are expanding within the u.s. adding territories where it makes sense from a geographical standpoint and then we are direct as well in outside the United States in Germany outside of Germany in the US we are direct or distributors using a distributorship model in 69 countries we will add territories in the United States as I mentioned where it makes sense we believe with colon coming to market we don't have once colon is approved we won't need to add another sales force to the company it will be the same existing sales force selling the product so that you know the costs in hiring sales force it's almost like hiring an army right very expensive so having that sales force already in hand and in place and then this this huge opportunity coming on board with capsule camp colon is just gonna add additional revenue without adding additional operational costs great and that flows nicely into the next question so talking about your pipeline very robust and it is addressing kind of your vision to deliver endoscopy solutions for imaging the esophagus all the way to the colon can you walk through the other capsule technologies

that you're working on and timelines associated with those okay thank you for the opportunity.

So our plan is to have colon submission in third quarter 2026 and the PANQIA study started in first half this year. That's the second quarter this year. The good news is KOL including leadership in leading societies in pancreas field are joining. So this is multiple of them. The leadership in leading society in pancreas. So this is a huge endorsement. And following that, esophagus will start after colon submission and regarding the esophagus various will start after colon submission and buried esophagus for esophagus and you know carcinoma because you need a lot of biopsy and the pathological analysis and AI analysis which will be done in 2027, 2028 and in parallel the stomach will be done in the similar timeframe and because the stomach cancer is more prevalent in Taiwan, Japan, so we will enroll a lot of patients also from those two area and then so including colon so we have a device which can screen multiple cancers that's about our time frame great thank you great thank you and can you talk a bit about the partnership with Canon and how this fits into the pipeline I think you just upgrade updated that agreement to include an additional 1 million for the increased features in the specification additional costs associated by Canon to develop that sensor technology so any update there yeah this is a very exciting partnership is a Canon is a number one professional camera company in the world they one of their key technologies they're the top tier sensor technology, number one tier, top tier. So their sensor we can imagine much higher frame rate, not only that, higher dynamic range and higher resolution. So about this one million dollars actually this is increase the feature to implement some of our patent, capsule-reaching patented technology. So that gives us a substantial benefit in our technology. Thank you.

Great.

And then you just announced preliminary results for the last quarter and did a $14 million dollar pipe maybe you can talk a little bit about kind of the burn rate cash position and run ray etc yeah uh thanks kyle um so as of december 31 we had 10.1 million of cash and equivalents and as you mentioned we just closed a 14 million uh placement of equity private placement of equity so that gives a strong runway for 2026 but you know we are making investments in the colon study that's a key study for us that we're investing in in 2026 and in other r&d projects like canon that johnny just mentioned so you know with these investments that we are going to continue to make you know we're always evaluating financing options and making sure that our balance sheet is nice and strong as we go into 2026 and throughout the year.

Okay. Well, great. I think we're at time here. Really appreciate you all taking the time to walk through the CapsuleVision story.

Thank you.