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© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Nerac
Research & Advisory Services
For the Medical Device Industry
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Agenda
Introduction to Nerac, Inc.
Nerac Service Offerings
The Nerac Difference
Engaging Nerac
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Who Is Nerac?
Global research and advisory firm
for companies developing innovative
products and technologies
COMPANY TYPE: PRIVATELY HELD ESOP
Founded 1966
Employees 95 / National & International
Analysts 48 Ph.D.s, Masters, MBAs, Attorneys
Clients ~1500 Worldwide
Areas of Concentration
Energy
Pharmaceutical
Medical Device
Specialty Chemical
Other
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
How We Serve Our Clients
Unique provider
of rapid-response research
for smaller, mission- critical
engagements that require
highly experienced
expert advisors.
R&D Process
Regulatory Process
Business Development
Technical Product &
Service Marketing
Intellectual Property
Management
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
What We Do Expert Research & Advisory Services
Research and Product Development Process
— Perform opportunity vetting to accelerate critical go/no-go decisions
— Expedite regulatory filings and vigilance requirements
Business Development Process
— Identify portfolio and alliance opportunities
Technical Products & Services Marketing Process
— Understand the size and financial potential of market opportunities
Intellectual Property Management Process
— Protect and leverage IP assets through portfolio management
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Research & Development ProcessAccelerate Critical Go/No-Go Decisions
PROCESS STAGE
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OPPORTUNITY & RISK
ASSESSMENT
CONCEPT &
FEASIBILITY
ASSESSMENT
DESIGN,
DEVELOPMENT
& VALIDATION
PRODUCT
COMMERCIALIZATION
RESEARCH &
PRODUCT
DEVELOPMENT
• Opportunity vetting
• Technical due diligence
• New market identification
• Technical literature reviews
• IP review of competitor filings
• Supplier/manufacturing facility identification
REGULATORY
• Regulatory hurdles/risk
identification
• Regulatory strategy development
• Competitive safety and efficacy studies
• Post-marketing safety
surveillance
• Clinical literature reviews
• Meta-analyses for ongoing
regulatory compliance
MARKETING • Market and competitive
assessment
• Monitor
- Competition
- Clinical and cost-effectiveness research
REIMBURSEMENT • Reimbursement strategy • Reimbursement strategy
LEGAL • Early stage clearance
research and risk
assessment
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Research & Development ProcessExamples of Recently Completed Projects
Safety and efficacy studies of contact lens brands
— Identified the key value proposition for various competitor’s products
compared to client’s proposed in-house product
Unmet clinical needs for a specific spinal treatment procedure
— Analysis of clinical literature and clinician opinions enabled the client to
understand the key deficiencies in existing products in the marketplace
Clinical evaluation of an orthopedic device in knee
and hip applications
— Included assessment of failure issues and ease of use by the clinician
— Client to use information to identify areas of improvement for their products
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Issue: The CTO of a European orthopedics company requested
assistance in reviewing the IP and competitive landscape for novel
biomaterial composite scaffolds used in spine repair. The client sought
competitors who were developing new products with new materials in
order to identify competitive threats and to uncover new potential licensing
opportunities.
Analyst Approach: Nerac Analysts identified potential companies and
universities that were developing new biomaterials for the spine repair
market. The team also reviewed IP and literature for biomaterials beyond
the spinal fusion space, in collaboration with client’s IP team.
Client Benefit: Client was able to identify two universities and nonprofit
research institutes in the United States as potential licensing candidates.
In addition, the client gained a better understanding of competitors’
R&D pipelines.
Research and Development ProcessClient Impact Case Study
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Regulatory ProcessExamples of Recently Completed Projects
Clinical literature reviews on Class II endoscopic
medical devices
— The reviews demonstrated safety and efficacy of the devices
— Submitted to EU Notified Bodies in partial compliance with
EU Directive 93/42/EEC
Safety and toxicity of a chemical composition used
in medical devices and implants
— Support for client’s FDA submission and assessment
of possible adverse effects
Recommendations on hemocompatibility testing
to satisfy FDA guidelines
— Support for client’s 510k filing
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Issue: The client, a major cardiovascular stent company,
wanted to ensure proactively that their intra-aortic balloon
pump (IABP) catheters would comply with new EU regulations.
Analyst Approach: The Nerac team reviewed over 1,000 publications to
identify pertinent clinical research. A meta-analysis was performed on
260 applicable articles.
Client Benefit: The analysis validated the efficacy of IABP catheters for
certain indications and built a case for IABP catheters as a preferred
treatment approach. In addition, the analysis identified indications where
literature evidence was insufficient and clinical trials would be needed to
comply with future regulations. Finally, the analysis provided material for
publications on the best treatment techniques.
Regulatory ProcessClient Impact Case Study
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Business Development ProcessIdentify Portfolio & Alliance Opportunities
PIPELINE & SCREENING DUE DILIGENCE ANALYSESFINAL DEAL
NEGOTIATION
POST-
ACQUISITION
INTEGRATION
BUSINESS
DEVELOPMENT
• Identify target technologies,
acquisitions, licensees/licensors
• Assess patent landscape
• Provide competitive intelligence
• Support due diligence process
• Support market and
competitive assessment
• Monitor
- Competition
- Changes in market
or regulatory
environment
OPERATIONS • Provide patent protection
opinion/advice
• Support informed investment
decisions with CI
• Develop initial regulatory
strategy
• Competitive safety and
efficacy studies
• Monitor
- Clinical and cost-
effectiveness
research
- Product releases
• Support revised
business
strategies
LEGAL • Provide patent landscaping
services, early-stage clearance
research , risk assessment
• Perform due diligence
analyses to support:
• In-licensing, out-licensing
and acquisition
opportunities
• Negotiation positions
• Monitor patent activity • Support revised
IP portfolio
management
strategies
PROCESS STAGE
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© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Business Development ProcessExamples of Recently Completed Projects
Technical due diligence and value proposition analysis of a new
diagnostic device developed by a potential acquisition candidate
— Analysis of key criteria such as accuracy, turnaround time and
reimbursement aided the client’s assessment of the candidate
Created a target list of companies working on a therapeutic
to treat a bioterrorism induced illness
— Target list was used to identify potential partnership and collaboration
opportunities
Reviewed segment of the IVD market in order to assess the platform
technologies of competitors’ and potential acquisition candidates
— Client used the information to identify smaller companies they may
have overlooked as potential acquisition candidates
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Business Development ProcessClient Impact Case Study
Issue: Nerac was engaged in order to evaluate acquisition opportunities
for a particular type of drug delivery device. The client, a multinational
medical device developer and manufacturer, had a goal of generating an
additional $100MM annual revenue within 5 years.
Analyst Insight: Nerac Analysts determined that the client had a strong IP
position relative to competitors. In addition, the analysis enabled the client
to understand that competitors had few advantages (e.g. manufacturing
capacity, international distribution, etc.) that would be worth acquiring.
Client Benefit: Based on Nerac’s recommendations, the client is
aggressively pursuing an organic growth strategy which utilizes their
strength in low-cost manufacturing and their defendable IP position. Nerac’s
assessment allowed the client to realize that an acquisition would provide
them with minimal advantages.
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Technical Products Marketing ProcessAccelerate Critical Go/No-Go Decisions
OPPORTUNITY & RISK
ASSESSMENT
CONCEPT & FEASIBILITY
ASSESSMENT
DESIGN,
DEVELOPMENT
& VALIDATION
PRODUCT
COMMERCIALIZATION
MARKETING • Market and competitive
assessment
• Monitor
- Competition
- Clinical and cost-effectiveness research
REIMBURSEMENT • Determine
reimbursement strategy
• Finalize reimbursement
strategy
• Compile dossier and
marketing materials• Determine cost-effectiveness implications of new product
• Understand the current reimbursement environment
• Prepare a pricing strategy
RESEARCH &
PRODUCT
DEVELOPMENT
• Opportunity vetting
• Technical due diligence
• New market identification
• Technical literature reviews
• IP review of competitor filings
• Supplier/manufacturing facility identification
REGULATORY • Regulatory hurdles/risk
identification
• Regulatory strategy development
• Competitive safety and efficacy studies
• Post-marketing
surveillance and ongoing
regulatory compliance
PROCESS STAGE
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© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Technical Products Marketing ProcessExamples of Recently Completed Projects
Created a database of competitor activities
related to time/temperature monitoring devices
— Early monitoring permits proper positioning of client’s product
in the marketplace in response to competitive threats
Comprehensive analysis of the expected clinical and economic
benefits of an improved resolution imaging device
— Analysis was used to support preliminary decisions on pricing,
reimbursement and marketing strategy
Reviewed global market information on hyaluronic acid in order to
identify adjacent applications (e.g. cosmeceuticals)
— Analysis helped the client to identify niche markets where their
technology applies
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Issue: The VP of Marketing at a Cardiotech company engaged Nerac
to monitor competitors in the electrophysiology market.
Analyst Insight: In collaboration with the client, Nerac reviewed recent
competitor activities. The analysis enable the company to identify new
players in the market and potential acquisition candidates. In addition,
the client gained a more comprehensive understanding of how their
competition was evolving in the marketplace and how to better position
their products.
Client Benefit: The report was utilized to help the company understand why
they were losing market share and how to correct the problem. They were
able to assess the competitiveness of their products and to identify areas
of improvement. Nerac continues to provide quarterly updates.
Technical Products Marketing Process Client Impact Case Study
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Reimbursement ProcessExamples of Recently Completed Projects
Created a reimbursement dossier to support
discussions with payers for a new diagnostics panel
— Dossier used by the client’s customers to demonstrate the value
of the newer aspects of the testing panel
Prepared a comprehensive ICD-9 code and DRG landscape for sepsis
in order to understand the susceptible patient population and the
current reimbursement levels
— Research provided background for a preliminary model on the cost-
effectiveness of early detection of sepsis
Developed a comprehensive landscape of existing CPT codes
and reimbursement levels for a particular bone repair procedure
— Client now able to assess if a currently marketed product could gain
acceptance for a new application with existing codes
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Issue: The client, an in vitro diagnostics company, launched a new panel
assay to test multiple targets. After the product was launched, their
customers, clinical laboratories, began having difficulty obtaining
reimbursement from certain payers.
Analyst Insight: Nerac Analysts prepared a dossier that highlighted the
clinical benefit of each component of the assay. In addition, a preliminary
model was developed to quantify the potential savings associated with
early detection.
Client Benefit: The client distributed the dossier and model to their
customer to support reimbursement discussions with payers. As the
company grows, they plan to fill the evidence gaps that were uncovered
during the dossier development process.
Reimbursement Process Client Impact Case Study
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
OPPORTUNITY & RISK
ASSESSMENT
IP PORTFOLIO
MANAGEMENT
PATENT FILING
AND/OR LICENSING
NEGOTIATION
IP RIGHTS
ENFORCEMENT
LEGAL • Provide patent landscaping
services, early-stage
clearance research , risk
assessment
• Create patent portfolio
for case and asset
management
• Patentability research
• Support in-licensing
due diligence
• Analyze out-licensing
opportunities
• Identify enforcement
targets
• Support assertion
positioning
RESEARCH &
PRODUCT
DEVELOPMENT
• Provide patent protection
opinion/advice
• Support informed investment
decisions with CI
• Assess R&D efforts in
other business units or
locations
• Identify patent
protection targets
BUSINESS
DEVELOPMENT
• Assess patent landscape
• Provide competitive
intelligence
• Link portfolio segments
to costs and revenues
• Identify latent
opportunities for IP
commercialization
• Support negotiation
positions
• Identify
commercialization
partners
• Inform decisions to
assert patents
MARKETING • Guide marketing efforts
via commercial scope
of IP
Intellectual Property Process Enable Effective IP Portfolio Management
PROCESS STAGE
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© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Intellectual Property Process Examples of Recently Completed Projects
Due diligence research required for a client’s freedom
to operate assessment of a gynecology device
— Used by client to evaluate the validity of patents issued by their competitors
— Reviewed designated companies’ patents for any potential trend in the
technology of interest
Prior art search for all patents issued by an orthopedic company in
disc replacement technologies
— Confirmatory information ensured that a competitor had not developed
a more advanced, potentially overlapping, technology
— Set up an ongoing alert to monitor future activities
Due diligence research needed for a client’s freedom to operate
assessment of a drug/device combination
Analysis provided confirmation that prior art, which would impair
the client’s ability to sell and market a new product, did not exist
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Issue: The CSO of a small foreign diagnostics company requested assistance
conducting clearance research for a cancer diagnosis platform based on
genetic profiling. This research was necessary to determine the advisability
of licensing the rights to the platform from an academic laboratory.
Analyst Approach: Nerac Analysts skilled in biosequence research advised
the client of the available methodologies with associated costs and
limitations for identifying patents claiming the probe sequences. The team
also reviewed the identified patent claims with the CSO to illustrate the
potential risk associated with developing the platform for commercial use.
Client Benefit: Potential commercialization barriers were identified. Counsel
negotiated licensing conditions that reduced or eliminated certain royalty
payments if any of the risks materialized. In addition, the client was able to
propose claim amendments to the licensor to cover the intended product.
Intellectual Property Due DiligenceClient Impact Case Study
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Case Study Example Evaluation of IVD Product
Client engaged Nerac for an independent, third party assessment
of their In Vitro Diagnostic (IVD) product’s cost-effectiveness. The
assessment is being used in the client’s marketing materials and in
discussions with payers. The project also enabled the client to refine
their pricing strategy.
Nerac was engaged to evaluate the client’s IVD product based on
the following criteria:
a. Clinical effectiveness (life years gained, fatalities avoided)
b. Cost-effectiveness (total health care costs, cost per life
year gained)
c. Profitability of running the test for customers
The cost-effectiveness model enabled the client to communicate the
benefits of the test to patients, payers, and clinical laboratories. In
addition, the pricing model enabled the client to understand how key
variables impacted the customer’s profit margin.
NEGATIVE POSITIVE FAILED
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Clinical and Economic Cost Benefit Modeling
Approach: A user-friendly model was developed,
based on a review of the clinical and cost-effectiveness
literature. The model calculated costs and benefits over
a 10 year period.
Key Results:
The model provided a framework for
discussions with payers.
The user-friendly input allowed payers to
calculate the estimated clinical and economic
impact of the client’s test for their member
population including:
1. Life years gained/quality of life years
2. Cost per life year
3. Avoidance of treatment costs
The model became a central component of
the client’s marketing efforts with both payers
and end users, because it highlighted the
message that the client’s test provided a
better standard of care with lower costs.
-
100
200
300
400
# cancers detected through
screening
Fatalities avoided (10
yrs)
Test A
Test B
Clinical benefitsNumber of patients
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
Economic benefitsCost per life year gained
Test A Test B
Case Study Example (Continued)
Evaluation of IVD Product
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
PR
OF
IT
Patient compliance rate (%)
Potential lab profit versus compliance ratePatient compliance rate vs. Profit / $US (thousands)
Above this
threshold, Test A
is more profitable
to run than Test B
Key Results:
Modeling of reimbursement and
compliance rates enabled the client
to understand the pricing levels that
would result in profitability for
laboratories and payers.
Taken together with health and
economic outcomes data, this
analysis is useful for understanding
the relative value of a diagnostic
test for customers/end users.
This analysis was used by the
client to revise their pricing strategy
to account for the profitability
advantage of their product over
competitive products.
Case Study Example (Continued)
Evaluation of IVD Product
$(10,000)
$(5,000)
$-
$5,000
$10,000
$15,000
Pricing Assessment
Approach: An analytical model was developed to calculate
the profit margin of laboratories running the test.
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Case Study Example Opportunity Identification in the Tissue Engineering Market
• Client wanted to explore entering the tissue engineering market
through a combination of internal development, partnerships,
acquisitions, and/or licensing.
• Nerac was engaged to evaluate various market
segments based on the following criteria:
a. Indications for Use/Unmet Medical Needs
b. Competitive Landscape
c. Expected Market Growth
d. Strategic Fit
e. Development Time/Cost
f. Reimbursement/ Regulatory Environment
• Nerac developed a framework for evaluating the opportunities in various
segments. Client utilized the recommendations to make a go/no-go
decision that matched their business goals and risk tolerance.
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Case Study Example (Continued)
Opportunity Identification in the Tissue Engineering Market
Approach: Nerac researched various aspects
of the tissue engineering market through
both primary research (e.g. interviews with
key opinion leaders in industry and clinicians)
and secondary research (e.g. literature
reviews, evaluation of key business and
financial disclosures)
— An assessment of key criteria guided the
client’s decision making process.
Result: Client has decided to forgo this market
entirely:
— Established market segments are highly
fragmented and have low profit margins
— Emerging market segments do not fit with
client’s risk tolerance
RISK
Reward (WW market potential for break-through technology)
Low High
High
Low
WW Research Investment
Low
High
Tissue Engineering Market - Risk v Reward
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Case Study Examples Nerac Analyst Bios
Roz Sweeney, Ph.D.Postdoctoral Fellow, Chemical Engineering,
California Institute of Technology
Ph.D., Cellular and Molecular Biology,
University of Texas at Austin
Marco Bafan, M.S.M.S., Biomedical Engineering,
California Polytechnic University
Huidong Yuan, Ph.D.Ph.D., Biochemistry,
Chinese Academy of Sciences
M.B.A., Fuqua School of Business,
Duke University
Ron SillsM.S., Biological Sciences,
Southern Connecticut State University
B.S., Biological Sciences,
University of Connecticut
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
The Nerac Experience
In Just Days
Nerac can move from
scoping client need to
project execution
A Turn-Key Research Operation
Confidential Collaboration
with highly skilled research
staff as an extension
of your team
High Impact Results
tailored to client scope,
timing and budget
Seamless
Partnership.
Rapid
Progress.
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
The Nerac DifferenceRapid Response, Highly-Skilled Expert Advisors
• Seamless teaming with client staff to form a trusted partnership
• Flexible engagements which offer rapid, impactful results
• Custom research services tailored to client scope, timing and budget
• Unique blend of Nerac Analysts’ keen insights and industry experience
• Unwavering integrity and relentless protection of client information
• Nerac researchers, analysts and IP advisors bring four decades experience
serving thousands of medical device companies
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Engaging Nerac Simple & Flexible Agreements
EXPERT RESEARCH
REQUEST SERVICES
Source and synthesize relevant information
from many sources
Administer and manage alerts
Research key resources, including
scientific, technical, medical and patent
sources
Contact industry, commercial, academic, or
government facilities
Discuss research or business challenges
and needs
Designed for individuals who prefer to
conduct their own synthesis and
analysis
RESEARCH & ADVISORY
SERVICES
Expert analysis of business and
technical information to produce
actionable insights
Data-driven evaluation of technical,
business and intellectual property
trends
Designed for individuals who
want expert analysis and opinion
in addition to sourcing and
synthesis
SPECIAL PROJECT SERVICES
Scope of work to be defined under a
specific agreement
Designed for large engagements
executed for a fixed price
© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084
Next Steps
Define Need
Assign and Introduce Analyst or Team of Analysts
Schedule Scoping Meeting
Distribute Agreement for Review and Sign-off
Project Launch Meeting/Discussion