Implantable Cardiac Pressure Sensor

1. Teeba Alkhudairi, Adam Flake, Alex Herzlinger, Natasha Khouri, Mike McGlade, and Mary Zarkhina

2. Product Intro, How Device Works Key Benefit I: Addresses Unmet Clinical Need Key Benefit II: Attractive Market Opportunity Key Benefit III: Strong IP Position Key Benefit IV: Cost Effective Product Key Risk I: Competition Key Risk II: Regulatory Approval and Broad Physician Adoption Conclusion

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4. Key Benefit I: Addressing Unmet Clinical Need Who Benefits From Device? Moderate (Class III) and Severe (Class IV) Heart Failure Patients How Are Class III and Class IV Patients Currently Treated? Cardiologists prescribe a variety of therapeutics: “more art than science” Cardiologists monitor patients via patient-reported data (body weight and symptoms) What Is Wrong With Current Monitoring Of Heart Failure Patients? High Hospitalization Rate: 1.1m heart-failure related hospitalizations annually Hospitalizations cost over $15B High Re-Admission Rate: 30% heart failure patients re-admitted within 6 months Low Patient Compliance with Therapeutics: 45-50% heart failure patients not compliant with prescriptions

5. Key Benefit II:Attractive Financial Opportunity

6. Key Benefit IV:Easy To Demonstrate Cost Effectiveness

7. IP Position Currently have a provisional patent FTO Analysis – some examples US 2007/0151348 A1 Method for measuring cardiac pressure in an implantable device Uses leads and power supply voltage US 2007/0210786 A1 Patent by CardioMEMS on communicating with an implanted wireless sensor. Conclusion Sensor is novel and non-obvious because it is Wireless Battery-less Control Button Housed in stent Method of collecting data and communicating with sensor might be infringing – more thorough analysis is required

8. Key Risk I:Competition 5 Major Competing Devices Medtronic Chronicle “Last generation” technology w/ leads Failed 2005 clinical trial Boston Scientific / Remon Medical Non-invasive Low frequency ultrasound to measure pulmonary pressure St. Jude / Savacor More Invasive, implanted in heart’s left atrium CardioMEMS Inc. Similar product In clinical trials ISSYS, Inc. (OEM) Similar product More Invasive, implanted in heart’s left atrium Our Product: Technological Advantages Embedded in stent for superior anchoring Control Button (On / Off) Advanced Telemetry: can be read and recharged from 20 meters No Leads Into Heart

9. Key Risk II:Approval and Broad Adoption Barrier I: Is Device Safe? Safety equivalence to Swan-Ganz catheterizations (<2% complications) and coronary stent (3%) Barrier II: Is Device Effective and Accurate? Must demonstrate that sensor-reported pressure approximates left atrial pressure Primary Clinical Endpoint: At least 25% reduction in heart failure hospitalizations PMA Process is Expensive and Lengthy PMA Process is Expensive and Lengthy

10. Benefits Addresses Unmet Clinical Need Reducing hospitalization of Heart Failure Patients Attractive Market Opportunity Low Breakeven Several strategic acquirers Cost Effectiveness Can Be Demonstrated Reduction in hospitalizations means low payor breakeven

12. Current market conditions have lowered valuations Increased risks = You now have to be further along in the process to exit You have to have strong patents for novel technology Bigger & better funded companies (J&J / Boston Scientific) are likely buyers Deals are typically based on unique technologies that could yield significant market rewards when combined with the marketing strengths of the strategic acquirer

13. Appendix: Physician Interview Summary Dr. St. Goar, Interventional Cardiologist Wireless Pressure Sensor measures pulmonary artery pressure, good proxy for left ventricular filling pressure Empower cardiologists to monitor heart failure patients’ activity remotely and adjust therapeutics appropriately Is invasiveness of procedure worth extra data? Most likely “no,” should only implant sensor if implanting pacemaker / ICD

14. Appendix: Physician Interview Summary Dr. Jim Muller, Cardiologist and Medical Device Entrepreneur Key Question 1: Does pressure sensor accurately approximate left ventricular pressure? Sensor measures pulmonary pressure, which approximates pulmonary wedge pressure, which approximates left atrial pressure . . . How accurate is it? Key Question 2: Does this pressure fulfill a useful clinical need? Cardiologists normally use office visits and body weight to monitor heart failure patients . . . Does pulmonary diastolic pressure add any clinical value? Key Question 3: What is the clinical end-point? Decreased hospitalizations?

15. Appendix: Physician Interview Summary Dr. Thomas Fogarty, Cardiac Surgeon and world-famous entrepreneur Implantable pressure sensor is a useful product that enables cardiologists to monitor heart failure patients more accurately Product must have strong safety data to mitigate risk of implantation Implanting sensor in coronary stent makes no sense

16. Appendix: Physician Interview Summary Dr. David Israeli, former Medtronic manager and medical device entrepreneur Implantable pressure sensor is a useful product that enables cardiologists to monitor heart failure patients more accurately Sensor can be inserted into pulmonary artery stent and implanted appropriately Product has a risk – more safety problems than current standard of care (bathroom scale); must demonstrate effectiveness, i.e. will sensor result in decreased hospitalizations for heart failure patients? Particular challenge if sensor = standalone product, as implantation requires hospitalization Heart Failure accounts for ~ 1m hospitalizations annually; will this sensor decrease that with statistical significance? Pacemakers and ICDs smaller market, ~25% of heart failure Crowded marketplace, Cardiomems, Remon, Savacor, ISSYS Key reimbursement question: Will cardiologists be reimbursed for checking heart failure patients’ remote data? Electrophysiologists will be reimbursed for checking Pacemaker / ICD remotely starting in 1/09. Can we integrate pressure sensor data into Pacemaker / ICD data?

17. Appendix: Physician Interview Summary Dr. Gilbert Tang, Cardiac Surgeon and medical device entrepreneur Cardiac surgeons notoriously slow adopters Big barrier to prove to AHA that this diagnostic will lead to improve outcomes Left atrial pressure gives better data than PA, will PA placement really have fewer complications? Data will be valuable to cardiologists, but how will they improve outcomes? Better tailoring of therapeutics? More in-office visits? Ensure patient compliance with meds? 20% reductions in hospitalizations seems reasonable to justify invasive procedure and permanent stent

18. Appendix: Physician Interview Summary Dr. Maduekwe, Ugwuji, Cardio-Thoracic Surgeon Resident Skepticism if PA pressure is good proxy for wedge pressure as read by swan-ganz If the device gives accurate pressure readings, many application to improve patient monitoring in a variety of cardiac and thoracic disorders If device reduces hospitalizations, worthy of procedure which is relatively “simple”

19. Product Advantages Data is valuable and would greatly assist in “micromanaging heart failure patients” Risk of invasive procedure can be mitigated by coupling with another device Barriers to Adoption Invasive procedure for diagnostic device – must demonstrate 25% reduction in hospitalizations Some dissenters believe that pulmonary pressure does not accurately reflect left atrial pressure

21. Sell of Cardiac Pressure Sensor Analyst projected price of $X Physician is decision maker, hospital purchases device, supported by reimbursement Subscription Model for Clinics Per month fee to cover data transmission and leasing of equipment Subscription Model for Patients Per month fee to allow patients to monitor their own data Access data via Internet Offer support and content as well as advertisements for services to help patients make decisions and choices to lead a healthier lifestyle

22. Breakeven in three years requires sale of approximately 42,000 devices— a realistic estimate at 7% market penetration per year

24. Achieving regulatory approval is a major hurdle to commercialization FDA approval will depend on our ability to demonstrate that: Pulmonary artery pressure is a useful surrogate for decompensation Having this diagnostic information will improve the management of the disease and/or improve clinical outcomes We will have several advantages entering the clinical trial process: We can learn from the failures of earlier devices in designing our trials The scientific and medical communities want this kind of data (and may concurrently fund the research necessary to demonstrate its value) By coupling with a therapeutic device, we reduce the number of invasive operations and which will could lower the bar for efficacy

25. Key Risk III:Broad Physician Adoption Barrier I: Does pulmonary artery pressure approximate left atrial pressure? Bench tests must demonstrate that sensor-reported pressure approximates left atrial pressure with 95% confidence Barrier II: How risky is the procedure? Trials must demonstrate safety equivalence to Swan-Ganz catheterizations (1.7% complications) and coronary stent (3% complications) Barrier III: Is sensor worthy of implant? Clinical trial must demonstrate at least 25% reduction in heart-failure hospitalizations for patient population with implanted sensor