Cefaly US Market Expansion

Overview Plan

August 2, 2014

Patient Flow of Migraine Therapeutic Class

37 Million Individuals in United States suffer from migraines

17.39 million currently be treated by a

physician

7.77 million have gone in the past but currently

not being treated

11.84 million have never been treated by a

physician

13,519,253 5HT Rx’s

166,426 Movement Disorders Rx’s

93,063 Anti-Migraine, Other

68,216 Ergot Derivatives

Botox347,800

87,705 Family Practitioners who prescribed 4,303,671 Migraine Rx’s

64.682 Internal Medicine who prescribed 2,371,203 Migraine Rx’s

23,295 Pediatricians who prescribed 185,548 Migraine Rx’s

19,700 Ob/Gyn’s who prescribed 296,905 Migraine Rx’s

11,303 Neurologists who prescribed 2,264,749 Migraine Rx’s

7,239 Psychiatrists who prescribed 61,236 Migraine Rx’s

508,201 Anti-Migraine Combo Rx’s

Untapped potential Drive into physicians • Direct Marketing• National Awareness

Campaigns• Coupons (virtual and

traditional)4,932 General Practitioners who

prescribed 112,763 Migraine Rx’s

61,174 all other specialties who prescribed 4,640,562 Migraine Rx’s

National Drug Therapeutic IndexClasses prescribed for diagnostic migraines

ICD-9 Diagnoses• 3460 Classical Migraine• 3461 Common Migraine• 3462 Variants of Migraine• 3467 Chronic Migraine• 3468 Other Migraine• 3469 Unspecified Migraine

Drug Therapeutic Classes Diagnosed under the above ICD-9 Diagnoses• Serotonin 5HT-1• Synthetic Non-Narcotics, Non-Injectable• Synthetic Narcotics, Non-Injectable• Morphine/Opium, Non-Injectable• Codeine and Comb., Non-Injectable• Antiarthritic, Cox-2 Inhibitor• Antinauseant, Comb• Seizure Disorders• HMG-COA Reductase Inhibitors• Tricyclics and Tetracyclics• Barbituates Long Acting• Herbals

213 unique drugs among the 12 drug classes

Primary Market Research on users ofCefaly Products

Interview 30 to 40 Physicians who have prescribed Cefaly • Open-ended questions with passive directional inquiries

• “Tell us about why you selected Cefaly if you already prescribe Imitrex”• “What is the typical patient for Cefaly when compared other prescription migraine patients?”• “Is there a specific diagnostic class or prescription class you see for the successful Cefaly patient?”• “What type of patient is the typical Cefaly patient?”

• 25 to 35 minute interview over the phone• Need this volume to do a Student’s T-Test for statistical viability

Survey 100 to 150 patients who are users of Cefaly• Online survey, done anonymously with reward for participating paid for by third party• Both closed-ended and open-ended questions

• Closed-Ended• “Do you feel Cefaly helps you better than traditional prescriptions?” (Yes/No)• “How many years have you suffered migraines?” (put in numeric amount)• “How long does it take your migraine to go away after you use Cefaly?”

• Open-Ended• “How would you describe how you feel after you use Cefaly?”• “How has Cefaly changed your normal routine at home?”• “Can you describe the difference in using Cefaly and using prescription drug for migraines?”

• Statistically valid for +3 Standard Deviations

Determination of Market Research for Next Steps

• Market Messaging for Branding and Awareness of Cefaly to both physicians and consumers• Develop what market data to purchase for targeting based on physician responses of who Cefaly patients are• Determine true market potential based on both current migraine patients and undiagnosed/prior diagnosed migraine patients

Chronic Patient for Information of their Conditions and Treatment

Where do patients with chronic conditions go for information or support?

• 78% ask their physician or another medical professional with one chronic condition

• 22% of these individuals with one chronic condition to consult online reviews of a new drug or product

• 19% of these internet users look for information on a new drug or product

• 80% of these users start with Bing, Google, or Yahoo

Target Marketing – Phase IDeciling Procedure

First Name Last NameMigraine

NRx % of Total Cumulative % DecileKelly Conright 2,000 8.83% 8.83% 10Myron Fribush 1,700 7.50% 16.33% 9Byron Mata Gonzalez 1,400 6.18% 22.51% 8Akshai Janakiram Vitheswaran 1,150 5.08% 27.59% 8John Hagler 1,050 4.64% 32.23% 7Jyoti Patel 990 4.37% 36.60% 7Nirmala Rozario 950 4.19% 40.79% 6Margaret Taylor 890 3.93% 44.72% 6Joseph Sarnicki 860 3.80% 48.52% 6Benjamin Hall 840 3.71% 52.22% 5Victoria Akins 800 3.53% 55.76% 5Rheta Goatcher 770 3.40% 59.16% 5Pham Liem 740 3.27% 62.42% 4David Brown 720 3.18% 65.60% 4Michael Young 680 3.00% 68.60% 4Curtis Clark 630 2.78% 71.38% 3Sudheer Koyagura 590 2.60% 73.99% 3Khalid Shirif 520 2.30% 76.28% 3Dewall Hildreth 499 2.20% 78.49% 3Nalini Bhalla 499 2.20% 80.69% 2Albert Boyd 450 1.99% 82.68% 2Thomas Cuomo 410 1.81% 84.49% 2Mohammad Khezrian 380 1.68% 86.16% 2Reginald Sutton 350 1.55% 87.71% 2Erum Jadoon-Khamash 310 1.37% 89.08% 2Mila Easapour Cheshani 288 1.27% 90.35% 1Rikesh Desai 270 1.19% 91.54% 1Ahmed Abouzeid 260 1.15% 92.69% 1Arpana Tewari 230 1.02% 93.70% 1Margaret Brown 200 0.88% 94.59% 1Melvin Hector 180 0.79% 95.38% 1Evan Kligman 150 0.66% 96.04% 1Marilyn Halder 130 0.57% 96.62% 1Sheila Raumer 120 0.53% 97.15% 1William Ford 100 0.44% 97.59% 1Donald King 85 0.38% 97.96% 1Monica Mehren 75 0.33% 98.30% 1Mark Pellegrino 65 0.29% 98.58% 1Jennifer Black 50 0.22% 98.80% 1Chandrakala Rudraraju 44 0.19% 99.00% 1Tan Tran 41 0.18% 99.18% 1Mary Dubisz 35 0.15% 99.33% 1Mary Herman 31 0.14% 99.47% 1William Wake 27 0.12% 99.59% 1Richard Brumley 22 0.10% 99.69% 1Stanley Fried 19 0.08% 99.77% 1Rebecca Goldstein 18 0.08% 99.85% 1Safwan Kazmouz 16 0.07% 99.92% 1Natasa Petrac 12 0.05% 99.97% 1Michael Griffis 5 0.02% 100.00% 1Vernon White 1 0.00% 100.00% 1

Sum of NRx's 22,652

Target Marketing – Phase IIVolume of Physicians Per Decile

• The 991 Decile 10 physicians do the same total amount of Migraine Prescribing as the 12,585 Decile 5 physicians or the 182,365 Decile 1 Physicians

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0

020,00040,00060,00080,000

100,000120,000140,000160,000180,000200,000 182,365

35,31921,823 16,694 12,585 10,119 7,905 5,856 3,276 991

Actual Number of Migraine Physicians by Decile

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f P

hys

icia

ns

in e

ach

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Target Marketing - Phase IIIAve. Number of Prescriptions/Physician by Decile

• This is the average number of Migraine prescriptions written annually by a physician that resides in that Decile

• Each Decile in total does 10% of the total prescribing

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ile 1

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5 26 45 64 85 109 142199

354

1,107

Actual Average Number of Migraine Prescriptions per Physician by Decile

Ave

rage

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igra

ine

Rx’

s p

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Concentration Curve of Migraine Prescribing by PhysicianTotal Number of Migraine Prescribers: 296,933

0 50,000 100,000 150,000 200,000 250,000 300,000 350,0000%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Total Number of Physicians Prescribing Migraine Products

50% of all Prescriptions are done by the top 28,147 Physicians

90% of all Prescriptions are done by the top 114,568 Physi-cians

% o

f Tot

al M

igra

ine

Pres

crip

tions

Correlation Analysis/Statistical Process ControlRelationship of Migraine Prescribing to adoption of Cefaly

• Current prescribers of Cefaly will be analyzed to predict likelihood based on other patient behavior under their care

– Market Research interview– Co-usage of other migraine and other prescription products– Demographics and other findings

• Statistical Process Control to determine over time of prescribing behavior with usage of Cefaly

Frequency Analysis for Sales and Advertising

Number of Exposures

Recognition of Product

Message Recall

Purchase Likelihood

0 0.00% 0.00% 0.00%1 24.95% 20.55% 2.94%2 43.11% 35.50% 5.07%3 56.32% 46.38% 6.63%4 65.94% 54.30% 7.76%5 72.94% 60.07% 8.58%6 78.04% 64.27% 9.18%7 81.74% 67.32% 9.62%8 84.44% 69.54% 9.93%9 86.40% 71.15% 10.16%

10 87.83% 72.33% 10.33%

Forecasting Based on 10.33% Market ShareAve. Number of Prescriptions/Physician by Decile

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ile 1

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5 26 45 64 85 109 142199

354

1,107

0 3 5 6 9 11 14 20 35111

Actual Average Number of Migraine Prescriptions per Physician by Decile

Ave

rage

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f R

esta

sis

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x’s

per

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ian

Projection of First Year’s Cefaly Device basedon Frequency Market Share

Actual Results of Frequency vs. Market Shareby Decile for TearLab

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ile 1

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0%

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100%

01 to 3

4 to 67 to 9

10+

Mar

ket

Shar

e

Number of

Exposures

Comparisons of Direct Contact and eDetail Sales Forces

Direct Contact Sales Force

• Average Call Time in front of physician: 1.9 minutes• Average Number of Calls Per Day: 8• Average Number of Calls annually: 2,000• Cost of Direct Contact Sales Representative: $150,000

eDetail Sales Force

• Average Call Time in front of physician: 9.3 minutes• Average Number of Calls Per Day: 20• Average Number of Calls annually: 6,000• Cost of Direct Contact Sales Representative: $75,000

Medical Journals; 4% Traditional Advertising (Direct Mail, Print Ads, television, radio) ; 14%

Sales Representatives (Direct contact and eDetail); 48%

Trade Shows and Events; 36%

Online Advertising; 1%

Medical Marketing Share of Voice

Cost for Traditional Direct Contact Sales Force eDetail Sales Force

Traditional and Online Advertising ChannelsCosts and % to Purchase

Decile10.33% Market Share Average

Number of PatientsNumber of Physicians

Per DecileTotal Number of

Patients First YearTotal $ at $400 Per

Cefaly Device Net Sales from Print AdNet Sales from 10 exposures of SEM

Net Sales from 10 exposures of Direct

MailNet Sales from 10

Telemarketing Calls

Decile 1 0 182,365 0 $0 $0 $0 $0 $0Decile 2 3 35,319 105,957 $42,382,800 $42,383 $16,953 $1,864,843 $2,542,968Decile 3 5 21,823 109,115 $43,646,000 $43,646 $17,458 $1,920,424 $2,618,760Decile 4 6 16,694 100,164 $40,065,600 $40,066 $16,026 $1,762,886 $2,403,936Decile 5 9 12,585 113,265 $45,306,000 $45,306 $18,122 $1,993,464 $2,718,360Decile 6 11 10,119 111,309 $44,523,600 $44,524 $17,809 $1,959,038 $2,671,416Decile 7 14 7,905 110,670 $44,268,000 $44,268 $17,707 $1,947,792 $2,656,080Decile 8 20 5,856 117,120 $46,848,000 $46,848 $18,739 $2,061,312 $2,810,880Decile 9 35 3,276 114,660 $45,864,000 $45,864 $18,346 $2,018,016 $2,751,840Decile 10 111 991 110,001 $44,000,400 $44,000 $17,600 $1,936,018 $2,640,024

Total 296,933 992,261 $396,904,400 $396,904 $158,762 $17,463,794 $23,814,264Cost for 10 Print Ads Cost for 10 SEM exposures Cost for 10 Direct Mails Cost for 10 Telemarketing Calls$500,000 $17,580 $1,603,952 $2,291,360

Setting up Sales Forces – Contract Organizations

Direct Contact Sales Force

• PDI• Quintiles• Vanguard Pharma• Baxter BioPharma

eDetail Sales Force

• PDI• Quintiles• Detail-Direct• OnCall LLC

Telemarketing Sales Force

• WRB Communications• Pharma Kinnex, Inc.• TMS Health• Alliance Healthcare Information

Regression Analysis• After determining the mathematical relationship between various current migraine

treatments and Cefaly through correlation analysis will utilize Regression Analysis:– Determine at what level that relationship as based on each of the individual physician’s usage of both

products, and determine what the relationship is mathematically through the Least Squares Method.– Least Squares Method is used to determine with 99.7% (+ 3 standard deviations) the likelihood where all

the resulting TearLab usage would be based on past TearLab usage would be with each Restasis prescription and each Cataract Surgery

• As a result, a mathematical formula will be determined for predicting for both:– For each actual Cefaly prescription, how many future Cefaly usages can be predicted with 99.7% accuracy?– For each actual Non-Cefaly users who are migraine prescribers, how many Cefaly usages can be predicted

with 99.7% accuracy?

• Can also seasonalize as well as use prior forecast based on exposures• Additional forecast based on other migraine launches for first 72 months (below)

MAT Jun 2009

MAT Jun 2010

MAT June 2011

MAT Jun 2012

MAT Jun 2013

MAT Jun 2014

02,000,0004,000,0006,000,0008,000,000

10,000,00012,000,00014,000,00016,000,000

Ergot 5HTAnti-Migraine ComboAnti-Migraine, OtherMovement Disorders

Facility and Key Startup positions

Facility Development

• ATDC (on Georgia Tech Campus) - 10 miles directly from Hartsfield-Jackson• Galleria/Kennesaw – 25 miles directly from Hartsfield-Jackson

Universities nearby: Georgia State, Georgia Tech, Kennesaw State, Southern Polytechnic State University, Reinhardt College, West Georgia University, Emory University

Income level: $65,180 for Cobb County/$49,604 for State of Georgia Bachelor’s degree: 43.8% for Cobb County/27.8% for State of Georgia

Key Positions

• Regulatory/Legal• Marketing

Sales Trainer > Director of Sales Branding and creative (initially managed by Country Manager) Market Analyst (initially managed by Country Manager)

• Manufacturing Operations (Distributors – McKesson/UPS?)• Human Resources/HR (ADP/Randstad)• IT Manager – Initial requirements

CRM setup Databases setup Territory development and alignment Distribution Operations

Key Initial ExpensesExpenses-Year 1

• Office Rental $ 50,000• Data

• IMS–Migraine Rx $ 50,000• CPT $ 20,000• NDTI $ 6,000• Past Forecast $ 5,000

• Payroll/ADP $ 1,400,000• Market Research

• Physician $ 60,000• Consumer $ 40,000

• Sales training $ 50,000• Creative/Development $ 400,000• Sales forces

• Direct Contact $ 74,295,938• eDetail Contact $ 55,674,936• Direct Mail $ 1,603,952• Telemarketing $ 2,291,360

• CRM $ 100,000• Tradeshows (10) $ 50,000Total $136,097,186

Cefaly Sales (based on 10.33% of 14.4 million $396,904,400patients currently using prescriptions)

Net Revenue $260,807,214

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