DEFINING THE LANDSCAPE FOR NEUROMODULATION

2020or

20/20

Dana Mead12/6/2012

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Over 350,000 jobsMore than US $650 billion market cap

Company and Market Building Since 1972

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Innovation Markets

Information Technology• Smartphones + tablets à PCs + laptops

• Third Wave of Innovation

Health Care & Life Sciences• Targeted therapeutics • “Digital” Health • Medical Devices

New Energy Technology• Science of small à enormous markets

• Speed and scale

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Life Sciences PortfolioDIAGNOSTICS THERAPEUTICS TOOLS/SERVICESDEVICES

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Presentation Pathway: 2012 2020

Therapies/IndicationsTechnologyCare ContinuumHealthcare EconomicsMarketsA Healthy Ecosystem ?

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Neuromodulation Therapies 2012 2020

• Foundation of therapies across pain, spasticity, movement disorders, incontinence, epilepsy, sensory deficits

• Therapy efficacy is mixed despite trial step (SCS)

Expanding therapies to more complex neurodegenerative diseases

2020

• Expanded indications• Enhanced efficacy• Less invasive implant procedures• Improved efficacy, eliminate trial (SCS)2012

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Traditional SCS: Trial Success Rates*

*Success defined as >50% VAS score improvementSource: Leerink Swann, Physician survey (n=50) and SMI prospective/retrospective data

Pelvic/Groin (37%)

Foot (59%)

Arms (49%)

Chest (31%)

Leg (75%)

Back (50%)

Hand (44%)

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Neuromodulation Therapies: Current & Future

Parkinson’s Disease

Hearing Disorders

Vision Disorders

Urinary & Fecal Incontinence

Spasticity

Malignant Pain

Gastroparesis

Chronic Pain

Obsessive Compulsive Disorder

Dystonia

Essential Tremor

Depression

Pelvic Floor Disorders

Bowel Disorders

Heart Failure

Neurodegenerative Diseases Alzheimer’s Parkinson’s Huntington’s ALS

Migraine/Headache

Epilepsy

Sleep Apnea

COPD/Asthma

Dry Eye

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Neuromodulation Technology2012 2020

• Complex programming• Intense patient involvement, subpar UI’s• Poor connectivity (EHR & provider)• High patient burden (size, stimulation, no MRI)

• Closed loop (sensing & therapy)• Therapy less intrusive for patient (stim perception,

passive recharging, no MRI restrictions)• Device data flow provides for remote Dx, EHR, etc.• MEMS/NANO/Next Gen Power Supplies/Wireless

Approaching next phase of technology innovation

2020

2012

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Neuromodulation Care Continuum 2012 2020

• Disjointed care• Best practices undefined or concentrated with leaders• Role/sequence of therapy; devices, medication, & other

pain therapies remains unclear• Neuromodulation often a last-resort therapy

• Standard protocols for managing pain & other neuro conditions emerge

• Treatment paths well-defined and adopted• Quality outcomes defined, enforced & measured• Neuromodulational moving up the care

continuum

Moving from modest adoption to standard of care 2020

2012

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Neuromodulation Healthcare Economics (US)2012 2020

• Primarily fee for service• Rewards treatment vs. outcome• Incentives don’t support ACO model• $20-25K ASP with mixed outcomes

• Expanded patient coverage WW• Value= quality outcomes/costs• Comparative effectiveness filter for de novo therapies • ASP pressure for legacy therapies• Accountable, at risk care

Industry must quantifiably demonstrate therapy value

2012

2020

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Worldwide Neuromodulation Market2012 2020

2012

2020

New therapies, new indications and market penetration drive WW growth

• $2.87B WW• $1.41B SCS• 80% U.S./14% EU• 10% CAGR

• $6.2B WW• $3B SCS• 70-80% US; Asia?• 10% CAGR

Source: Analyst reports. Includes SCS, OBS, SNM, VNS, TDD

Optogenetics: What does it do?

Optogenetics: Potential for Therapeutic and Cellular Specificity

• Target specific phenotypes• Induce suppression or activation• Affect specific neuroanatomies• Combined genetic and device therapy

Brain-Machine Interfacing

• Progress in tissue-machine interfacing and coupling can provide advanced methodologies to develop neural-based therapies

• Nanoscafolding and other microfabrication techniques may contribute to providing the ability to control specific neural networks

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A Healthy Neuromodulation Ecosystem - 2020

• Invest in the clinical trials to support efficacy/safety, indication expansion and cost-effectiveness

• Design “product” for emerging markets• Develop closed-loop devices (sensing & therapy)• Reduce programming requirements and need for follow-

up visits• Enhance connectivity (e.g., remote Dx, EHR interface)• Make the therapy non-invasive (e.g., reduce size, volume,

weight, subcutaneous, etc.)• Demonstrate clear value to the system