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Executive Intro
Joseph Galatowitsch, President
Ross Meisner, Managing Partner
Copyright 2013. Contents owned by under license from Dymedex Consulting, LLC.
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About Dymedex Consulting
Dymedex reduces market risk for medical companies We 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 has 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’ curve
It is predictable based on understanding the underling dynamics and factors
– If it’s predictable, it can be influenced
Many 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 adoption
Milestone 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 achieve
R, I, and T must be defined for each milestone to make informed strategic decisions
R1
R2
R3
I1
T1
I2
T2
I3
T3
3 R = Revenue ($ mil.) I = Investment ($ mil.) T = Time (years)
M2: Penetration of “easily accessible”
segments
1
2
M1: Completion of infrastructure and Technology barriers
Rate of growth dictated by Indication Attractiveness
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Three major workflows inform the Dymedex CDA Model
Barriers to Adoption
Behavior Change
Pillars of Adoption
Sufficiency Analysis
Timing and Investments
to Reach Milestones
Market Size
Patient Indications Population Dynamics Net Sources of Revenue
Annual Revenue
Potential (ARP)
at each Milestone
Calculus of Penetration
Attractiveness
Accessibility by Segment
Growth Rates and
Inflection 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-growth Scenario
Baseline Scenario 1
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
0
10
20
30
40
50
60
70
80
90
BenchTest
Animal Firstin Man
Safety &Efficacy
LAUNCH! MarketPerformance
Enterprise Value
Value-Enhancing Milestones
Meet or Exceed
Expectations
Mixed Results
Fail to Meet Expectations
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
se
d D
ise
ase
(1
0M
)
Fals
e D
iagnosi
s (1
M)
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
Ind
icat
ion
Act
ion
abil
ity
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 &
economic
benefit
• 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
MARKET
SCORE
Condition Mgmt (Independent of Tech.) 0
Diagnostic Tests For the Technology 0 TODAY
Clinical Evidence 0 43%
Practice Guidelines 0
Reimbursement and Coverage 0 FORECAST
Provider Economics 0 53%
Provider Capacity 0
TECHNOLOGY READINESS1 2 3 Target 5
TECHNOLOGY
SCORE
Operational Disruption 0
Procedure Scalability 0 TODAY
Ease of Use 0 55%
Maintenance 0
Outcomes - Therapy 0 FORECAST
Patient 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 U.S. ICD/CRT market is one of the largest and most lucrative medical technology markets at $4B/year
ICDs took over 10 years to get to 50k implants/year
Between 2001 and 2005 the market more than tripled (36% CAGR)
It may take 20+ years (at current growth rates) to reach M3
Source: Analyst reports, company reports, Dymedex analysis
0
50
100
150
200
250
300
2000 2001 2002 2003 2004 2005 2006 2007 2008
Industry Plan
Dymedex Model Actual
US ICD
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 & 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
12 © Copyright 2013. Contents owned by and under license from Dymedex Consulting, LLC. 1/28/2014
Dymedex Consulting
Joseph Galatowitsch, President & Managing Partner
– 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.
▲ 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 200
St. Paul, MN 55126
(651) 217-5990
www.dymedex.com