Investor Presentation

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1 Investor Presentation January 2015 MELA Sciences MELA Sciences 2015

2 Forward Looking Statement Safe Harbor Language: This presentation includes forward-looking statements" within the meaning of the Securities Litigation Reform Act of These statements include but are not limited to our plans, objectives, expectations and intentions and other statements that contain words such as expects, contemplates, anticipates, plans, intends, believes and variations of such words or similar expressions that predict or indicate future events or trends, or that do not relate to historical matters. These statements are based on our current beliefs or expectations and are inherently subject to significant uncertainties and changes in circumstances, many of which are beyond our control. There can be no assurance that our beliefs or expectations will be achieved. Actual results may differ materially from our beliefs or expectations due to economic, business, competitive, market and regulatory factors. 2

3 Corporate Profile NasdaqCM: MELA Shares Outstanding: 6.0 million Market Cap*: $24.6 million Revenue (TTM): $681,000 Cash at September 30, 2014: $14.5 million Headquarters: Irvington, NY # of Employees: 33 * Assumes conversion of debt & preferred stock 3

4 Our Vision To become the standard of care in the early detection of skin cancer (melanoma) by providing physicians with technology that helps them make better clinical decisions. 4

5 Skin Cancer (Melanoma) 5

6 Skin Cancer Statistics Centers for Disease Control (CDC) Statistics Show: Each year in the U.S., at least 5 million people are treated for skin cancer estimated cost of $8.1 billion Of this, approximately $3 billion is attributed to melanoma Drugs on the market to treat metastatic melanoma cost an average of $150,000. Early detection has the potential to substantially reduce the costs. MELA Sciences

7 Melanoma Statistics Melanoma is on the rise About 80% of all skin cancer deaths are from melanoma Estimates suggest a doubling of incidence every 10 to 20 years 1 Number of melanoma cases worldwide is increasing faster than any other cancer 2 Every hour, 16 Americans are diagnosed with melanoma 3 Every hour, 1 American dies of melanoma 1 7

8 Melanoma: Fastest Increasing Incidence Trend Much faster than most other cancers Incidence of melanoma is continuing to increase Source: SEER Program, National Cancer Institute. Incidence data are from the SEER 9 areas ( Data are age-adjusted to the 2000 standard using age groups:<1, 1-4, 5-9, 10-14, 15-19, 20-24, 25-29, 30-34, 35-39, 40-44, 45-49, 50-54, 55-59, 60-64, 65-69, 70-74, 75-79, 80-84, 85+. Analysis uses the 2000 Standard Population (Census P ) as defined by NCI( MELA Sciences 2015 Restricted to cancer sites with 2008 incidence rates of 3 per 100,000 or more. ^ Annual percent change (APC) for final Joinpoint segment is greater than zero (P<=0.05). 8

9 Melanoma: Fastest Increasing Incidence Trend Lifetime Risk of Melanoma (invasive & insitu) 1/24 139,870 total cases (2014) Insitu Invasive MELA Sciences Rigel et al, NYU Melanoma Cooperative Group, 2014

10 Challenges of Detecting Melanoma Dermatologists Dependent on visual examination Biology of a lesion is unknown, so visual examination requires more info 25% of dermatologists use dermoscopy Pathologists 20-40% discordance rate amongst histologists Sampling is limited to ~2 to 5% which may lead to the possibility of being misdiagnosed MELA Sciences

11 Cost of Melanoma Care by Phase of Care in 2010 Dollars, Projections to 2020 Assumptions: Incidence Constant ( average rate) Survival Constant (2005 rate) Cost Increase 0% per year Phases of care: Initial year after diagnosis, Last year of life, and the period between (Continuing). Months of survival are first applied to last year of life, any remaining to initial phase, then to continuing. This site is based on a study that estimates and projects the national cost of cancer care through the year 2020 separately for multiple cancer sites using the most recent available U.S. population projections, cancer incidence, survival, and cost of care data. More information about the methods, data sources and assumptions in: Mariotto AB, Yabroff KR, Shao Y, Feuer EJ, Brown ML. Projections of the Cost of Cancer Care in the U.S.: J Natl Cancer Inst Jan. MELA Sciences

12 12 Cost of Treating of Melanoma vs Depth of Invasion Proportion Surviving % Early stage melanoma treatment cost ~$5,000 Later stage melanoma treatment cost ~$160, Melanoma in situ Stage I (n=9175) < 1 mm Stage II (n=5739) Stage III (n=1528) 0.2 Stage IV (n=1158) MELA Sciences 2015 Survival (Years) Source: SEER (Surveillance, Epidemiology, and End Results) 12

13 % of 5 Year Survival Rate 13 Melanoma: US 5 Year Survival by Extent of Disease, % 80% 98% 60% 62% 40% 20% 0% 16% Localized Nodal Distant MELA Sciences 2015 ACS Annual Report,

14 Melanoma: Biopsy Landscape 5.5 million biopsies performed annually across all skin cancers 1.5 million biopsies performed specifically to diagnose melanoma Only 7% of tissue samples are positively identified as melanoma, meaning that 93% are of normal tissue 1.5 Million Biopsies for Melanoma 7% 93% Benign Biopsies Melanoma Biopsies Source: American Cancer Society MELA Sciences

15 The MelaFind Solution 15

16 MelaFind Compliments the Clinical Evaluation Examination & Expertise Dermscope Mapping DERMATOLOGIST: ABOVE Skin-Surface Analysis 70% - 80% of early melanoma detected 1,2,3,4 (biopsy ratios up to 50 : 1) 5,6 Spectral Imaging Proprietary Software MELAFIND: BELOW Skin-Surface Analysis 98% of early melanoma detected (biopsy ratio 7.6 : 1) 1 1 Monheit, G et al. The Performance of MelaFind: A Prospective Multicenter Study. Arch Dermatology Oct 2010: E1-E7; 2 Chen, Suephy. Protocol 20063: Survey Study Comparison of Diagnostic and Biopsy/Referral Sensitivity to Melanoma Between Three Groups of Physicians and MelaFind. Emory University, Atlanta, Georgia. Publication upcoming; Wells R, Gutkowicz-Krusin D, Veledar E, et al. Comparison of diagnostic and management sensitivity to melanoma between dermatologists and MelaFind: a pilot study. Arch Dermatology. 2012;148:1083-4; 4 Friedman et al. The Diagnostic Performance of Expert Dermoscopists vs a Computer-Vision System on Small-Diameter Melanomas. Arch Dermatology 2008; 144(4); ; MELA Sciences Nathansohn et al. Isr Med Assoc J. 2007; 6 Fuller et al. Dermatology Surg. 2007

17 MelaFind: Innovative Software Solution Add *600 melanomas in database: 45% melanoma in situ & 55% average Breslow thickness of 0.36mm (most treatable stage) 17

18 MelaFind: Clinical Validation & MelaFind: Studies, Lesions & Patients Enrolled, Publications & Abstracts/Poster Supporters/Advisors Number of Studies Over 25 Number of Lesions (moles) Over 15,000 Number of Patients Over 8,000 Peer Reviewed/Publish/Accepted to be published Over 10 Abstracts/Posters Over 21 Chief Medical Advisor: Darrell S. Rigel, MD, Clinical Professor of Dermatology at NYU Medical Center Supported by over 25 Key Internationally recognized Hospitals & Academic Institutions 18

19 Impact of MelaFind: Reader Studies Impact on Dermatologists: 179 dermatologists, 24 PSLs (5 melanomas, 19 non-melanomas) Before MelaFind After MelaFind Sensitivity 69% Sensitivity 94% Specificity 54% Specificity 40% % of derms who would biopsy all 5 MMs 13% % of derms who would biopsy all 5 MMs 70% % of MF true negatives biopsied 42% % of MF true negatives biopsied 25% Overal biopsy rates 50% Overal biopsy rates 67% Impact on Dermatologists: 191 dermatologists, 12 PSLs (5 melanomas, 7 non-melanomas) Before MelaFind After MelaFind Sensitivity 68% Sensitivity 89% Specificity 39% Specificity 54% Diagnostic Accuracy 51% Diagnostic Accuracy 69% % Biopsying all 5 Melanomas 17% % Biopsying all 5 Melanomas 65% Total # Bxs 64% Total # Bxs 64% Impact on Residents: 122 resident dermatologists, 12 PSLs (5 melanomas, 7 non-melanomas) Impact on Dermoscopists: 63 participants, 12 PSLs (5 melanoma, 7 non-melanomas) Before MelaFind After MelaFind Clinical Dermoscopy MelaFind Sensitivity 54% Sensitivity 83% Sensitivity 65% Sensitivity 65% Sensitivity 91% Specificity 50% Specificity 67% Specificity 47% Specificity 40% Specificity 58% Diagnostic Accuracy 52% Diagnostic Accuracy 74% Diagnostic Accuracy 55% Diagnostic Accuracy 51% Diagnostic Accuracy 72% % Biopsying all 5 Melanomas 3% % Biopsying all 5 Melanomas 48% % Biopsying all 5 Melanomas 4% % Biopsying all 5 Melanomas 10% % Biopsying all 5 Melanomas 72% Total # Bxs 51% Total # Bxs 54% Total # Bxs 58% Total # Bxs 62% Total # Bxs 62% 19

20 Biopsy/referral sensitivity Impact of MelaFind: Reader Studies Adjunct Reader Study: Decision to Biopsy κ = 0.29 Fair Agreement All Dermatologists (n = 110) MelaFind Top 4 Dermatologists before MelaFind biopsy/referral specificity Dermatologist MelaFind All Dermatologists before MelaFind Lesion data (received: 19OCT2009), Survey data (received: 26FEB2010) E:\Proj\EOS\Programs\f_scatter_new.sas v.001 (last run: 08/16/2010, 11:19) DERMS.cgm 20

21 The MelaFind Solution MelaFind compliments clinical evaluation (above skin + below skin) MelaFind User Interface Dermatologist gets results of MelaFind analysis and uses to augment his/her visual analysis and determine the likelihood that the lesion should be biopsied 21

22 Dermatologist + MelaFind = Comprehensive View of Lesion Doctor Sees: Clinical Visual Image MelaFind Sees: 3-D morphological Disorganization 100% of lesion in clusters of 3 melanocytes (20 micron resolution) Down to 2.5 mm beneath the skin s surface By using multi-spectral light technology Spectral Texture Asymmetry Structure MELA Sciences 2015 MelaFind generates 10 tiers of data for each feature Trained on 5000 features 75 features are analyzed to generate MelaFind result (i.e., texture, asymmetry, structure) MelaFind is FDA approved to provide dermatologists with additional information when making a decision to biopsy clinically atypical lesions. Labeling information is available in the MelaFind Package Insert. 22

23 MelaFind User Interface MELA Sciences

24 Outcomes of MelaFind Dermatologists makes better decisions Sensitivity increases dramatically (ability to detect disease when its truly present) Specificity improves (ability to rule out disease when it is not present) Biopsies o Less biopsies of non-cancerous lesions o Overall about same number of biopsies o Therefore, more of the right biopsies 24

25 Demonstrated Clinical Support I Protocol # Title Alt titles Purpose Duration (US, AU, EU) (US) RCP (with L Oreal, EU) A (US) B (US) PRE-PIVOTAL STUDIES TOTAL (US) Patient examination with MelaFind system developed by Electro-Optical Sciences, Inc. (EOS) Non-invasive Breslow Thickness Measurement for Cutaneous Melanoma with MelaMeter TM Benign Pigmented Skin Lesions: Melanin Localization and Quantification with MelaFind Evaluation of Pigmented Skin Lesions with MelaFind System Pilot Roll-in Study for Protocol 20061: Evaluation of Pigmented Skin Lesions with MelaFind System Evaluation of Pigmented Skin Lesions with MelaFind System Imaging of Pigmented Skin Lesions with the MelaFind System Data Collection Breslow study L'Oreal study First pivotal study Pivotal study Collect data to develop MelaFind algorithms Develop and test MelaMeter, a software to non-invasively measure Breslow thickness Investigate the feasibility of melanin localization and quantification from MelaFind images of benign lesions Demonstrate that MelaFind is safe and effective (first pivotal study was stopped and MelaFind was redesigned to decrease user errors) Allow users to gain experience with MelaFind in study methodology prior to start of Protoolcol Develop data test set for final MelaFind algorithm Apr 2001 Jul 2008 Nov 2001 Jul 2004 Sep 2007 Apr 2008 Nov 2004 Jul 2005 Apr 2001 Jul 2008 Jan 2007 Jul 2008 # Lesions Enrolled # Patients Enrolled Dec 2006 Roll-in study Jul 2008 Pre-PMA beta study Use MelaFind in clinical setting and validate usability ; 1632 E&E 1383 Jan Results Data used to test and train MelaFind Data used to test and train MelaFind; MelaMeter project on hold Data used to test and train MelaFind Data used to test and train MelaFind Data used to test and train MelaFind; Final development of MelaFind algorithms Final test of MelaFind algorithms; safety and effectiveness established Validated PMA version of commercial system Status Published in Archives of Dermatology, 2010: The Performance of MelaFind Survey Study Comparison of Diagnostic and Biopsy/Referral Sensitivity to Melanoma Between Three Groups of Physicians and MelaFind Big reader study, definitive reader study, adjunctive reader study, corrollary reader study Determine sensitivity of physicians and compare to MelaFind 25 Oct Feb lesions reviewed online (65 melanomas and 65 nonmelanomas) 155 physicians participated (46 general dermatologist s, 64 PSL experts, 45 PCP's) Dermatologists have a sensitivity of 72% to melanoma vs. MelaFind 97% (p < ) Publication pending

26 Demonstrated Clinical Support II Protocol # Title Alt titles Purpose Duration # Lesions Enrolled # Patients Enrolled Results Status Survey Study Comparison of Diagnostic and Biopsy/Referral Sensitivity to Melanoma Between Three Groups of Physicians and MelaFind Big reader study, definitive reader study, adjunctive reader study, corrollary reader study Determine sensitivity of physicians and compare to MelaFind Oct Feb lesions reviewed online (65 melanomas and 65 nonmelanomas) 155 physicians participated (46 general dermatologist s, 64 PSL experts, 45 PCP's) Dermatologists have a sensitivity of 72% to melanoma vs. MelaFind 97% (p < ) Publication pending , Phase I 20092, Phase II Comparison of diagnostic and management sensitivity to melanoma between dermatologists and the Multi- Spectral Computer Vision System: a pilot study Qualitative Assessment of MelaFind in the Clinical Setting Qualitative Assessment of MelaFind in the Clinical Setting MELA Sciences pilot reader study, pre- PMA reader study US beta study US beta study To Excise or Not?: Comparing Clinical Management Decisions for Melanoma Between German Reader Study Dermatologists with and without the Aid of MelaFind Post Approval Study of MelaFind Qualitative Assessment of MelaFind in the Clinical Setting Assessing the Usability of MelaFind System Upgrades in the Clinical Setting post marketing study German usability study German usability study II Determine sensitivity of physicians and compare to MelaFind - pilot study included in PMA Assess MelaFind use qualitatively in clinics in US Assess MelaFind use qualitatively in clinics in US Determine impact of MelaFind on dermatologists decisions to biopsy melanomas Determine the real world safety and effectiveness of MelaFind; study mandated by FDA Assess MelaFind use qualitatively in clinics in Germany Assess MelaFind use qualitatively in clinics in Germany Nov Feb 2009 Aug Dec 2010 Jan Mar 2012 Sep Apr 2012 Nov present Feb Mar lesions reviewed on paper (25 melanomas and 25 nonmelanomas) lesions reviewed online (65 melanomas and 65 nonmelanomas) Study ongoing 39 Dermatologists have a sensitivity dermatologist of 80% to melanoma s participated 202 German dermatologist s participated (101 in each Arm plus 9 PSL experts) Up to 6 US clinical sites Jul Feedback used to validate and improve MelaFind Feedback used to validate and improve MelaFind Dermatologists with MelaFind elected to biopsy more melanomas than those without MelaFind (70% vs. 78%) Study ongoing Feedback used to validate and improve MelaFind Feedback used to validate and improve MelaFind Included in The Performance of MelaFind; Published in Archives of Dermatology 2012: Comparison of diagnostic and management sensitivity to melanoma between dermatologists and MelaFind: a pilot study No publication planned No publication planned Published JDD July 2014 Study ongoing No publication planned No publication planned

27 Demonstrated Clinical Support III Protocol # Title Alt titles Purpose Duration , Amended Assessing the Usability of MelaFind System Upgrades in the Clinical Setting MelaFind Evaluations for Patients with Multiple Nevi MelaFind Evaluations for Patients with Multiple Nevi German usability study II dysplastic nevi study repeatability MelaFind Experience Trials MET-1 Studies Evaluation of change in clinical, dermoscopic and MelaFind values for atypical lesions selected for short-term follow-up Evaluation of Optical Spectral Imaging ( OSI ) for atypical pigmented skin lesions Mole Management OSI-Germany Assess MelaFind use qualitatively in clinics in Germany Investigate whether MelaFind can be used to identify "typical" lesions on patients with many moles Investigate what factors contribute to variability of MelaFind score Access before and after MelaFind decision Determine if additional MelaFind features, including the qabcd's are useful in tracking lesion evolution (includes data collection for pathology) Imaging device for pathologists # Lesions Enrolled # Patients Enrolled Jul Jan Jul July 2014 Jan present Results Feedback used to validate and improve MelaFind MelaFind may be used to identify outlier "ugly duckling" lesions on a given patient Status No publication planned Data in analysis Lesion variance = 2.12 No publication planned Less than 1 yr IRB Review IRB Review IRB Review IRB Review On Hold on-hold On Hold 27

28 MELA Sciences Luminaries, Advisors & Supporting Institutions Institution Position KOL Name Brigham and Women s Harvard University Director of Melanoma, Dermatology Department Martin Mihm, MD [SAC, Chairman] Brown University Professor and Chair of Dermatology Abrar Qureshi, MD, MPH Brown University Brown University Cleveland Clinic Dartmouth Hitchcock Medical Center Florida State University and of Florida School of Medicine Gold Skin Care Center Immediate past Chairman of the Department of Dermatology Section Chief, Dermatology, Assistant Professor of Medicine Professor of Dermatology Founder and medical director of Gold Skin Care Center William Higgins, MD Martin Weinstock, MD Phillip Bailin, MD Shane Chapman, MD Armand Cognetta, MD [SAC] Michael Gold, MD Mount Sinai Medical Center, Chairman of Dermatology Mark Lebwohl, MD Mount Sinai Medical Center New York University Medical Director of the Dermatology Faculty Practice and Assistant Professor of Dermatology and Pathology Clinical Professor of Dermatology Gary Goldenberg, MD Darrel Rigel, MD, MS [Scientific Advisory Committee - SAC] [Chief Medical Director, MELA Sciences] New York University Langone Medical Center Clinical Associate Professor of Dermatology Doris Day, MD University of Miami School of Medicine University of Miami, Miller School of Medicine Clinical Professor of Dermatology Voluntary Associate Professor of the Department of Dermatology and Cutaneous Surgery Harold Rabinovitz, MD [SAC] Mark Nestor, MD, PhD

29 MELA Sciences Luminaries, Advisors & Supporting Institutions Institution Position KOL Name State University of New York at Downstate School of Medicine University of Colorado Denver AboutSkin Dermatology and DermSurgery Clinical Professor of Dermatology Associate Professor of Dermatology Director of Dermatopathology Laboratory Director of AboutSkin Dermatology and DermSurgery in Englewood and Lone Tree, Colorado Dr. Cohen has been named a US News and World Report Top Dermatologist Dan Siegel, MD Whitney High, MD Joel Cohen, MD University of Texas Southwestern Medical Center Former president of the American Academy of Dermatology Clinical Professor of Dermatology and Director of the Division of Dermatopathology Clay Cockerell, MD Northeast Ohio Medical University (NEOMED) Case Western University Department of Dermatology Georgetown, University Department of Dermatology, Medical Center George Washington University Hospital Head of the Dermatology Section and on the clinical faculty Founded the Center for Dermatology and Dermatologic Surgery in Washington, DC and currently serves as President of the practice. Assistant Clinical Professor at the Georgetown, University Department of Dermatology Eliot Mostow, MD Cheryl Burgess, MD

30 MelaFind: Marketing Initiatives High use medical dermatologists (KOLs) Podium presenters US Market Reimbursement CPT Code process underway Integrated health systems International Markets Germany Target Markets: o Other countries in Europe o Australia o Canada o Latin America Design & manufacturing efficiencies 30

31 Investment Highlights Recap Large, global optical imaging market that is projected to grow to $1.9 billion by 2018: Unmet need in skin cancer (melanoma) detection High ($2.46 billion, in 2010, ~$4.6 by 2020) cost to healthcare system from melanoma treatment alone Clinically proven, industry-first innovative technology Proven management with relevant experience Attractive valuation relative to long term potential MELA Sciences