Brief intro to Dymedex Consulting and our med-tech market assessment methodology.

1. Executive Overview
Dymedex Consulting
Joseph Galatowitsch, President, Managing Partner
Ross Meisner, Managing Partner
www.dymedex.com
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2. The value of investing in a Dymedex assessment
A clear, data-driven understanding of the market opportunity:
1. To inform key early and expensive strategic decisions:
• Regulatory, clinical, go-to-market, product development
2. To more effectively set and meet expectations with all stake-holders
3. To support future fund-raising activities
4. To help maintain control over the strategic direction of the business
• Minimize arm-chair quarterbacks pulling leaders in multiple directions
• Drive organizational alignment, enthusiasm and focus
5. To prevent “over-scaling” the business
6. To maximize and sustain early market success
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3. Strategic Market Development is a key business discipline
Market Development is a unique marketing discipline that focuses on understanding
the realizable potential of an opportunity and then strategically applying resources to
fully address the barriers to achieving that potential.
Classic Product Marketing: Market Development:
▲ Focused on establishing superior ▲ Focused on establishing a
customer value vs. competitive technology as a standard of care
products ▲ Concerned with:
▲ Concerned with: – Total market opportunity
– Competitive offerings – Adoption and penetration
– Product positioning vs. competition – Reimbursement & coverage
– Product performance & features – Evidence & benefit (clinical & econ.)
– Product pipeline – Practice guidelines & metrics
– Product mix and ASP – Technology readiness
– Customer relationships – Customer economics
– Customer service – Behavior change
– Branding – Care pathways and networks
▲ Measured by relative price, market ▲ Measured by industry revenue and
share, and company revenue growth growth vs. total industry potential
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4. The scientific method has greatly improved success in
nearly every field. Dymedex applies it to Market Development.
▲ Development of business accounting principles and measures in the early 1900s (balance
sheet and P & L) revolutionized the management of business and facilitated the scaling
of business size and complexity, which in turn revolutionized business productivity
▲ Development of the scientific method in applied science has dramatically accelerated the
rate of discovery in every field of study
▲ Edwards Deming revolutionized manufacturing by the simple application of scientific
method
▲ Every major sports team has leveraged the scientific method to improve their success
▲ The foundations of scientific methods are:
– Standardization of measures and definitions
– Development of tools to measure inputs and results
– Gathering and synthesis of information
– Developing an understanding of the ‘system’ that is targeted for control
– Development of strategies to influence the system in desirable ways
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5. Dymedex’s Constrained Dynamic Adoption (CDA) Model
can help predict non-linearities in 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
R3
R = Revenue ($ mil.) 3
I = Investment ($ mil.) I3
T = Time (years)
I2
R2 2 M2: Penetration of
“easily accessible”
Rate of growth dictated by segments
Indication Attractiveness
I1
R1 1 M1: Completion of infrastructure
and Technology barriers
T1 T2 T3
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6. Dymedex analysis is typically an eye-opening assessment
that brings the business vision to a defensible reality
▲ CDA model factors establish an ▲ Historical and future analysis of over 30
objective and rigorous basis for medical technologies
accurate forecasting – Over 150 indications
– Annual Revenue Potential (“ARP”) is – Over 30 countries
a box that adoption and growth must ▲ Proven forecast accuracy
operate within – Pacing market saturation in 2002
– Early majority is a hard gate – ICD market inflection in 2006
• 50% of people are slower to adopt – Spinal fusion market inflection in 2007
– Patient indications have very different – Diabetes pump market
growth potentials – DBS and stim. for pain, UI, obesity,
• Benefit, motivation & accessibility depression and others
– Calculus of I & P and penetration – Coronary and peripheral stents, valves,
constrains growth potential – Medtronic growth trajectory from 2005-2010
– Broad and rapid adoption is driven by ▲ Broad application
many challenging factors – Diagnostics or therapeutics
– Capital equipment, implantables,
disposables, procedures
– New technologies or mature products
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7. Three major workflows inform the Dymedex CDA Model
Market
Size
Annual Revenue
Potential (ARP) Patient Indications Population Dynamics Net Sources of Revenue
at each Milestone
Penetration offorecast by Scenario
Growth BPH Incidence by Scenario
120.0%
100.0%
2
80.0%
Max-growth
Scenario
Attractiveness 60.0%
40.0%
Baseline
Growth Rates and 20.0%
1 Scenario
Inflection Points 0.0%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Accessibility by Segment Calculus of Penetration
Barriers to
Adoption
Timing and Investments
to Reach Milestones Behavior Change
Sufficiency Analysis
Pillars of Adoption
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8. Our analysis is fact-based, rigorous, and transparent
▲ We simply use scientific method and rigorous, logical analysis and synthesis to:
– Quantify the realizable size of the opportunity
• Defining the ‘box’ and it’s various ‘compartments/segments’ provides valuable insights into
both the possible and likely growth dynamics within the box
– Quantify the barriers to broad adoption
• It’s about human behavior, not the technology itself
• We objectively assess all the factors that influence the likelihood of adoption by the ‘average’
user. The more factors that are favorably addressed the more likely broad adoption will occur
• Informed by our analysis of many successful and unsuccessfully adopted medical technologies
– Quantify how fast adoption can occur (relative and absolute)
• Incremental benefit, ability to definitively diagnose, patient motivation, accessibility of patients
▲ From this foundational analysis and an understanding of the ‘calculus of
penetration’ we can more confidently assess future revenue projections and
strategic revenue milestones:
– Time and investment to broad adoption
– Major inflection points (magnitude and timing)
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9. Broad adoption progresses through 5 distinct stages:
this process can take decades!
Validate Launch Foundation SOC
1 Assess 2 Develop 3 Build 4 Drive 5 Manage
Sell
Opportunity Product The Bridge Utilization Maturity
BEHAVIOR
INFRASTRUCTURE TECHNOLOGY SYSTEMS • Cost
• Patient • Proof of CHANGE
indications concept controls
1. Condition 1. Operational 1. Prescribers 1. Screening
• Market • Marketing Management Preparation Tools • Pricing
2. Providers
assessment plan discipline
2. Diagnostic Test 2. Procedure 2. Protocols
3. Primary
• Technology • Design for Scalability Referrers 3. Expert Systems
• Service &
3. Evidence support
assessment manufacture
3. Ease of Use 4. Secondary 4. Core Metrics
4. Published • Iteration
• IP strategy • Regulatory Referrers
Guidelines 4. Maintenance 5. Pay for
• Business • Reimburse 5. Allied Health Performance • Global
5. Reimbursement 5. Outcomes expansion
plan Professionals
• Clinical 6. Legal/Financial
6. Provider 6. Patient • New
• Funding strategy 6. Patients and Incentives
Economics Factors threats
• Launch Patient Groups
7. Professional
7. Provider 7. Vendor
planning 7. Other Sanctions
Capacity Support
Stakeholders
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10. Roger provides well-established science to characterize
physician behavior
Early Majority (34%):
• Comfortable with incremental improvements
• Need references from reputable sources and
peers (Guidelines)
• Need to see the value/evidence
• Don’t want to help fix the product
• Will self-adopt if all their needs are being met
Late Majority (34%):
• No surprises
• Will adopt to stay abreast of the new standard
• Skeptical of what’s new (high bar for change)
Innovators (3%): • Want change to be easy
• Actively seeking to make change • Followers
• Willing to work with technologies that are not perfected
• Experimental, motivated to discover new technology limits Laggards (16%):
• Will only change via threat – legal,
Early Adopters (13%): professional
• Opinion leaders, see the strategic benefit of new
technology Of the physicians who inform
• Looking for solutions to existing compromises your business decisions, which
• Comfortable with change segment do they represent?
• Can live with less than perfect results and tools
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11. Adoption rates vary by patient segments
▲ Perfect Patients….
– That group for whom your
technology/therapy will offer the greatest Disease Population
benefit with the most consistency
Less Clear benefit or evidence
– Beachhead indication for standard of care Fourth Tier Candidates
– Easiest to identify
Third Tier Candidates
▲ Subsequent Indications
Second Tier
– Based on the logical sequencing of how
Candidates
physicians/clinicians would migrate the
therapy/technology
– Typically they have decreasing benefit Perfect
Patients
– May be less easy to identify
– Will be slower adoption
More difficult, more complex, older
▲ Indication decisions drives:
– Clinical & regulatory strategy
If you don’t define them,
– Launch strategy physicians will
– KOL strategies
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12. Integration of
Compelling
R3
PATIENT SEGMENTS
Non-
Opportunity
patient & physician
segments informs
R2
revenue milestones Opportunity
Compelling
and adoption < 50%?
(growth) rates R1
Opportunity
< 5%?
Faster adopting Slower adopting
PHYSICIAN SEGMENTS
Perfect Patients
with Early Adopters
Adoption
Incidence Rate
time
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13. Quantify the market potential based on the
“dynamic calculus” of incidence and prevalence
Diabetes Common Cold
Inc.
D = 50 yrs
Annual
Inc.
Prev.
D = 1 week
Prev.
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14. Calculating revenue at R1, R2 and R3 may reveal a net
market potential far different than one might initially think
Total Gross Prevalence = 1 million
Incidence = 200k Traditional
Exclusions = 250k Prev. ASP = $1,000
(Medical & Economic) view?
$1 billion market
Perfect Patients = 50k Secondary Patients = 300k “All the rest”
Incidence = 10k Incidence = 60k Inc. = 80k
At R3 = $10 million At R3 = $60 mil. R3 = $80 mil.
Early Majority = R2 = $5 mil. Early Majority (R2) = $27 mil. R2 = ~$0
Early Adopters = R1 = $1.5 mil. Early Adopters = R1 = $9 mil. R1 = ~$0
R1 = $10.5 mil. R2 = $32 mil. R3 = $150 mil.
(7%) (21%) (100%)
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15. ABOUT DYMEDEX CONSULTING
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16. Good decisions based on unreliable market information
are not good decisions.
Only 12% of med-tech ventures return significant returns to investors,
and over 50% fail despite seasoned leadership and funding.(1)
Dymedex synthesizes established science with proven proprietary tools
to deliver unique market insights that inform critical decisions.
Dymedex helps you: By providing unique insights:
1 Make a In-depth, research-based analysis of the market,
compelling case perfect patients, target physicians, prioritized segments,
for investment Annual Revenue Potential (ARP), and growth forecast
2 Accelerate Proven methods to identify critical strategic and
or revive tactical barriers to full adoption, and investments
revenue growth required to reach standard-of-care (maximum) volumes
3 Optimize Standard, objective, transparent framework that
portfolio enables comparison, revenue forecasting, and
performance strategic prioritization of a portfolio of investments
(1) Patient Capital, National Venture Capital Association’s Medical Industry Group, at www.nvca.org
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17. DMX Analytical Process
1 2 Client and physician 3
Gathering of relevant Distillation and
input into current
peer-reviewed published organization of data points
treatment practices,
papers from papers, client and
indications and patient
physicians
stratification methods
4 5 6
Synthesis of data into Evaluation and
Estimates for
a quantified model of the quantification of trends in
clinical and economic
disease, condition and underlying incidence,
exclusions
relevant segments duration and prevalence
7 8 Integration of disease 9
Evaluation of outlier
model and historical unit Sensitivity analysis
data and an assessment
volumes into a dynamic and integration into final
of the overall confidence
market model track and conclusions
of the analysis
project penetration
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17

18. About Dymedex Consulting
▲ Established 2007 Sample Clients
▲ Based in Shoreview, MN AMS Medtronic
CHF Solutions Piper Jaffray
▲ Founders have analyzed over 150
medical technologies, markets, Intricon SetPoint Med.
and indications Mayo Clinic St. Jude Medical
▲ Joseph Galatowitsch,
President & Managing Partner ▲ “I firmly believed we understood our market and our path for
– Joe has 26 years in the global growth, but Dymedex provided such new insights into the
medical technology industry at 3M’s market opportunity and the barriers to adoption that their
medical supplies business and at analysis has become a foundation for our business strategy.”
Medtronic. Joe pioneered the – CEO, CHF Solutions
discipline and implementation of
market development at Medtronic. ▲ “Your market assessment caused us to recast our go-to-
market strategy, and now helps me present the true potential
▲ Ross Meisner, of our company to investors with complete confidence.”
Managing Partner – CEO, Harbinger Medical
– Ross has 20 years experience ▲ “Joe pioneered elegant new market and portfolio assessment
building high-tech and med-tech methodologies at Medtronic. His new strategic insights
companies. He has co-founded four dramatically improved our ability to objectively value and
start-up companies, managed two effectively manage Medtronic's extensive therapy portfolio.”
international joint ventures, and
– Executive Vice President, Medtronic
directed international market
development at Medtronic. ▲ “It would have taken us a year to do this ourselves, and it
would not have been nearly as actionable.”
– Director of Market Research, St. Jude Medical
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