1. Confidential The Device Development Industry December 4, 2010 North American Neuromodulation Society 14 th Annual Meeting Frank Fischer President and CEO NeuroPace, Inc.

2. Confidential DEVICE DEVELOPMENT HAPPENS IN STAGES 1 STAGE : CONCEPT DEVELOPMENTSTAGE : TESTING IN ANIMALS 2 STAGE : CLINICAL EVALUATION IN HUMANS 3

3. Confidential DEVICE DEVELOPMENT HAPPENS IN STAGES 1 STAGE : CONCEPT DEVELOPMENT Test and refine theory – translate to a therapeutic approach Characterize and improve approach in a representative bench system Easy to iterate Bench & In Vitro testing - minimal regulatory issues Cost of failure is minimal

4. Confidential STAGE : TESTING IN ANIMALS DEVICE DEVELOPMENT HAPPENS IN STAGES 2 Iteration possible but at a cost Testing requires compliance to protocols Failure results in greater loss of financial resources and time Learn about the downsides - characterize side effects, adverse reactions, limitations, technical hurdles Glean some insights into efficacy, if possible

5. Confidential STAGE : CLINICAL EVALUATION IN HUMANS DEVICE DEVELOPMENT HAPPENS IN STAGES 3 Iterating the concept can be much more difficult Clinical evaluation requires IRB and/or FDA approval Failure in almost every case is very costly Prove safety and efficacy of your approach If any uncertainty, parse this stage into parts (e.g., feasibility and pivotal)

6. Confidential STAGES ONE AND TWO LAY THE FOUNDATION FOR COMMERCIAL SUCCESS Confirm your product concept is feasible and has no obvious safety issues Develop intellectual property 12 Goals of stages 1 and 2

7. Confidential STAGES ONE AND TWO CAN BE COMPLETED WITH ONLY BASIC RESOURCES AND MINIMAL FUNDING 12 Basic engineering and prototyping skills Internet/ library Intellectual property support Minimal funding Resources required Typically available at your university!

8. Confidential READY TO BLAST OFF? A SPECTRUM OF OPTIONS EXIST FOR HUMAN EVALUATION Use already marketed, FDA approved devices Boldly go where no one has gone before – build fully custom devices or systems Build semi-custom devices via partnership with OEM device firm(s) STAGE : CLINICAL EVALUATION IN HUMANS 3

9. Confidential EXAMPLE: FUNCTIONAL NEUROSCIENCE November 2010 Functional Neuromodulation Inc., a medical technology company, closed a $600,000 seed financing from Genesys Capital October 2010 Used off-the-shelf Medtronic DBS System 6 patients with mild Alz disease; stimulate the fornix/ hypothalamus Surgery and stimulation well tolerated Results were mixed but highly encouraging STAGE : CLINICAL EVALUATION IN HUMANS 3

10. Confidential EXAMPLE: LEPTOS Began human trials using Cyberonics devices Learned that gradual stimulation ramping was important to acclimate patients to stimulation Partner with OEM device manufacturers to build semi-custom neurostimulators and leads Automatic stimulation ramping Custom lead specific for nerve target Stimulation of splanchnic nerve for obesity STAGE : CLINICAL EVALUATION IN HUMANS 3

11. Confidential EXAMPLE: NEUROPACE Responsive stimulation for the treatment of epilepsy Early realization that a fully custom system was necessary Build multi-functional team to develop and test implantable responsive neurostimulator, leads, programmer, remote patient monitor, and patient data management system Develop protocols for clinical evaluation; secure IDE approval from FDA; conduct clinical evaluations STAGE : CLINICAL EVALUATION IN HUMANS 3

12. Confidential EXAMPLE: NEUROPACE 200020102005 Develop- ment Clinical Evaluation Implantable RNS eRNS StudyRNS System Feasibility study 65 patients RNS System Pivotal trial 191 patients Perform basic testing in hospital setting with external system Evaluate implantable system for safety and secondarily, efficacy. Gather data and learn! Evaluate implantable system for efficacy and safety. External RNS

13. Confidential EXAMPLE: NEUROPACE

14. Confidential COMPARISON OF STAGE 3 OPTIONS REVEALS KEY DIFFERENCES RESOURCES AND EXPERTISE REQUIRED In-house engineering ++++++ Device dev expertise ++++++ Financial efficiency ++++++ IP opportunity ++++++

15. Confidential CONCLUSION Dont be afraid to get started Fail quickly! Iterate until your concept is ready for clinical evaluation You cannot over invest in this phase Product development can take many paths, but almost always can be accomplished