Support in Medical Technologies

© 2010 All Rights Reserved. Nerac Inc. | 1 Technology Drive, Tolland, CT 06084

Nerac

Research & Advisory Services

For the Medical Device Industry


Agenda

Introduction to Nerac, Inc.

Nerac Service Offerings

The Nerac Difference

Engaging Nerac


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


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


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


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


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


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


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


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


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

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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


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.


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

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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


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


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


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


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

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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


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


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


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


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.


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.


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.



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


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


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.


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


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


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

Support in Medical Technologies

Education

Transcript of Support in Medical Technologies