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Executive Intro

Joseph Galatowitsch, PresidentRoss Meisner, Managing Partner

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About Dymedex Consulting

Dymedex reduces market risk for medical companiesWe deliver systematic, proprietary market assessments that help you understand critical market nuances, identify and address pitfalls in commercialization, and maximize revenue growth

We apply the scientific method to the discipline of medical Market Development

Scientific methods have greatly improved success rates in nearly every field, e.g.,• Business accounting principles (P & L, balance sheet) in the early 1900s• Manufacturing (e.g., Edwards Deming)• Product development, engineering, and quality control systems• Major sports teams• Traffic management

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Effectively assessing market risk is a widely misunderstood and under-valued endeavor

Misunderstanding #1: I only need to know the size of the market– Market size is not a single number, it’s a response surface based on many factors and features of

the market, patients, business model, clinical strategy, investments, and more

Misunderstanding #2: I need a really big market size in case I can only get a small piece– You don’t need a massive market to ensure a significant ROI for investors – but you do need to

know the time, investment, and revenue potential associated with key adoption inflection points

Misunderstanding #3: A basic working knowledge of the market is all we need– A detailed understanding of the nuances of your market landscape is critical for making good

decisions relative to nearly every other aspect of your business (development, clinical, regulatory)

Misunderstanding #4: Once we launch we will be able to quickly drive growth– Frequently at launch less than 5% of the realizable market is actually accessible – potentially for

several years – until structural barriers to adoption are addressed

Misunderstanding #5: Our KOL advisors are key to our market development strategy– Physician input is important, but they can’t help you understand everything necessary to access

the total market

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Technology adoption rates vary wildly, some taking decades to reach full potential

Technology adoption follows the classic ‘S-shaped’ curveIt is predictable based on understanding the underling dynamics and factors– If it’s predictable, it can be influencedMany technologies (not on this chart) failed to achieve broad adoption

Source: NY Times, 2008

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Dymedex’s Constrained Dynamic Adoption (CDA) Model helps predict medical technology adoption

Milestone 1 is the gateway to broad market adoptionMilestone 2 is a strategic inflection point that can happen soon after Milestone 1– Can be a significant decline in revenue based on how small incidence is in relation to prevalence

Milestone 3 is the fully realized market – which can take many years to achieveR, I, and T must be defined for each milestone to make informed strategic decisions

R1

R2

R3

I1

T1

I2

T2

I3

T3

3R = Revenue ($ mil.)I = Investment ($ mil.)T = Time (years)

M2: Penetration of “easily accessible”

segments

1

2

M1: Completion of nfrastructure and Technology barriers

Rate of growth dictated by Indication Attractiveness

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Three major workflows inform the Dymedex CDA Model

Barriers toAdoption

Behavior Change

Pillars of AdoptionSufficiency Analysis

Timing and Investments to Reach Milestones

MarketSize

Patient Indications Population Dynamics Net Sources of Revenue

Annual Revenue Potential (ARP) at each Milestone

Calculus of Penetration

Attractiveness

Accessibility by Segment

Growth Rates andInflection Points 0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Penetration of BPH Incidence by Scenario

Max-growthScenario

BaselineScenario1

2

Growth forecast by Scenario

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Dymedex provides a rigorous analysis of the market landscape and defensible roadmap for the business vision

Data matters (garbage in = garbage out)– We utilize peer-reviewed published data to

inform our analysis• And we stratify data by level of quality

– We use well established tools and methods to extract the most reliable data we can from the organization (fully documented)

Analysis and synthesis of data is a combination of:– Logic and statistics– Understanding and application of key

relationships and dynamics

Drivers and modeling is:– Statistically sound and validated by experts in

both statistics and epidemiology– Well proven, with dramatic examples of the

predictive power of the tools

We’ve analyzed over 35 medical products– Over 150 patient indications– U.S. Europe, Japan, Emerging Markets

Broad application– Diagnostics or therapeutics– Capital equip., implantables, disposables– New technologies or mature products

Proven Forecast Accuracy

Pacing market saturation in 2002 ICD market slow-down in 2006 Spinal fusion market inflection in 2007 Diabetes pump market growth profile Neurostim for pain, movement, incontinence, obesity, depression Coronary stents and heart valves

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After launch, a firm’s value is based on meeting expectations

Theoretical market size plays a secondary role in valuation

Having a trusted understanding of the market is a prerequisite to meeting expectations

Bench Test

Animal First in Man

Safety & Efficacy

LAUNCH! Market Performance0

10

20

30

40

50

60

70

80

90

EnterpriseValue

Value-Enhancing Milestones

Meet or Exceed

Expectations

MixedResults

Fail to MeetExpectations

Rigorous, credible, and defendable opportunity

definition can increase early valuation

Post-launch valuation depends on meeting expectations set

in the commercialization strategy

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Dymedex delivers an in-depth understanding of the market, segments, barriers, and investments translated into a validated growth forecast

Market Landscape Attractiveness and Revenue Potential

Accurate Forecasts Driven by Investments, Attractiveness, and Segments

Gaps, Strategies, Investments required to drive broad adoption

Pre-Disease

(23M)

All US Adults(232M) “Identified

Disease”(12M)

Controlled on 1-3 Rx(or being titrated)

“Controlled Disease” (2M)

Resistant Disease(8M)U

nd

iag

no

sed

Dis

ea

se (1

0M

)

Fal

se D

iagn

osis

(1M

)

Hyper-reactive patients (20%)

0%

100%

CRT-DARP = $3.1B

3. 140-160, any drugs, no CCM

ARP = $3.1B

ICD - PPARP = $3.0B

1. >160, no BAT muting, no CCM

ARP = $2.5B

ICD - SPARP = $2.0B

2. >160, BAT muting, no CCMARP = $1.3B

4. All >140, any drugs, with CCM

ARP = $0.7B

Patient Accessability

Indi

catio

nAc

tiona

bilit

y

0% 100%

KEY:Circle size = total ARPGreen = untapped market potentialPurple = Industry revenue

INDICATION ATTRACTIVENESS BY MARKET SEGMENT

Key:Circle size = market opportunity

• Indication clarity

• Clinical & economicbenefit

• Patient aggregation• Referral network

Segment 2 ($1.3B)Segment 1

($2.5B)

Segment 3 ($3.1B)

Segment 4 ($0.7B)

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Total Revenue by Market Segment

1.>160,no-mute 2.>160 muted 3.140-159, no CCM 4.All >140 w/CCM

$ Mil.

“Perfect Patients”

Segment 1 Segment 2 Segment 3 Segment 4

STAGE 3 BAT (today), and BAT (launch)

MARKET INFRASTRUCTURE1 2 3 Target 5

MARKETSCORE

Condition Mgmt (Independent of Tech.) 0

Diagnostic Tests For the Technology 0 TODAYClinical Evidence 0 43%Practice Guidelines 0Reimbursement and Coverage 0 FORECASTProvider Economics 0 53%Provider Capacity 0

TECHNOLOGY READINESS1 2 3 Target 5

TECHNOLOGYSCORE

Operational Disruption 0

Procedure Scalability 0 TODAYEase of Use 0 55%Maintenance 0Outcomes - Therapy 0 FORECASTPatient Factors 0 62%Vendor Support 0

On a 1-5 scale a score of 4 signals sufficiency for the early majority to

adopt

Pillar sufficiency at launch is well below

what is needed (75%) for broad adoption

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Example: The 2004 U.S. ICD/CRT market was one of the largest and most lucrative med-tech markets

ICDs took over 10 years to get to 50k implants/yearBetween 2001 and 2005 the market more than tripled (36% CAGR)Then what happened?

It may take 20+ years (at current growth rates) to reach M3Source: Analyst reports, company reports, Dymedex analysis

2000 2001 2002 2003 2004 2005 2006 2007 20080

50

100

150

200

250

300 Industry Plan

DymedexModelActual

USICD

Implants(thousands)

M1

Guidant sold just prior to Milestone 2 M2

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The benefit of investing in a Dymedex assessment: Increased credibility and confidence in the road ahead

A clear, data-driven understanding of the market landscape:

1. To inform critical and expensive strategic decisions: • Regulatory, clinical, go-to-market, product development, market development

2. To more effectively set and meet expectations with all stake-holders• Minimize the risk of “over-scaling” the business• Maintain credibility, confidence, and momentum

3. To support funding/fund-raising activities• Clear quantification of the opportunity and road-map to broad utilization

4. To help maintain control over the strategic direction of the business• Drive and sustain organizational alignment, enthusiasm, and focus• Limit second guessing and the use of ‘one-off’ or selective information

5. To maximize and sustain market success and enterprise value• Strategies to drive rapid and sustainable market adoption

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Joseph Galatowitsch, President– Joe has 26 years in the global medical

technology industry at 3M’s medical supplies business and at Medtronic. Joe pioneered the discipline and implementation of market development at Medtronic.

Ross Meisner, Managing Partner– Ross has 20 years experience building

high-tech and med-tech companies. He has co-founded four start-up companies, managed two international joint ventures, and directed international market development at Medtronic.

Dymedex Consulting

▲ Established 2007▲ Founders have analyzed over 150

medical technologies, markets, and indications

▲ “I firmly believed we understood our market and our path for growth, but Dymedex provided such new insights into the market opportunity and the barriers to adoption that their analysis has become a foundation for our business strategy.”

– CEO, therapeutic system company

▲ “Your market assessment caused us to recast our go-to-market strategy, and now helps me present the true potential of our company to investors with complete confidence.”

– CEO, pre-launch diagnostic company

▲ “Joe pioneered elegant new market and portfolio assessment methodologies at Medtronic. His new strategic insights dramatically improved our ability to objectively value and effectively manage Medtronic's extensive therapy portfolio.”

– Executive Vice President, Medtronic

▲ “It would have taken us a year to do this ourselves, and it would not have been nearly as actionable.”

– Director, large med tech company

▲ “I only wish we had hired Dymedex 3 years ago! Their analysis has made an incredible difference in our approach and understanding of the market”

– CEO, public med tech company

4570 Churchill Street, Suite 200St. Paul, MN 55126(651) 217-5990www.dymedex.com