2013 2014 INSERT COMPANY LOGO HERE 2014 North American 2013 North American SSL Certificate Minimally Invasive Spinal Surgical Solutions Product Product Line Leadership Strategy Leadership Award Award
Background and Company Performance Industry Challenges Frost & Sullivan recognizes that within the North American market, the incidence of degenerative disc disease (DDD) is on the rise, largely due to the region s aging population. It is estimated that spinal stenosis, which is a form of DDD, alone affects millions of Americans each year and requires them to undergo various forms of treatment including surgery. While there are a variety of non-surgical options to treat DDD, in many cases, however, surgery is the only option for many patients. Open spinal surgical procedures continue to carry a number of risks for patients. These risks range from post-operative infections, lengthy recovery times, prolonged pain management, and incision scars. These risks can often lead to patient readmissions and follow-on procedures that not only exacerbate patient recovery, but also adversely impact treatment costs. From a healthcare provider s perspective, increased emphasis is being placed on utilizing minimally invasive surgeries (MIS) to treat various spinal degenerative conditions because such procedures offer the potential of faster patient recovery compared to open surgical procedures while also minimizing care delivery costs. Given the trend toward minimally invasive procedures, hospitals and other surgical facilities that perform spinal procedures are likely to seek advanced surgical devices that help them to effectively deliver on the promise of minimally invasive spinal surgical treatment. Moreover, Frost & Sullivan's research reveals that the need to consolidate vendors will drive healthcare providers toward surgical device providers that offer a full line of MIS products. Customer Value Excellence and Product Family Strategy Criterion 1: Comprehensiveness Baxano Surgical has developed a full line of innovative, minimally invasive spinal surgery products to help treat patients who suffer from degenerative conditions of the lumbar spine. Baxano Surgical s products include AxiaLIF, VEO, io-flex, and the AVANCE MIS Pedicle Screw System. The AxiaLIF system provides a minimally invasive alternative to traditional spinal fusion procedures. Frost & Sullivan notes that AxiaLIF carries significant advantages over open surgical procedures. These advantages include minimum blood loss, reduced need for pain medication, shorter hospitalization periods, faster recovery time, and less post-surgery pain. The VEO Lateral Access and Interbody Fusion System helps surgeons to better visualize the surgical area through clear radiographic views while also providing for a nerve monitoring mechanism. Baxano Surgical s io-flex is specifically designed to treat lumbar spinal stenosis that is caused by the overgrowth of bone and tissue in the vertebra. The io-flex System uses a fine wire that allows a surgeon to shave away the overgrown tissue without cutting into healthy tissue. The AVANCE MIS Pedicle Screw System, which provides posterior fixation of the spine, is designed to minimize tissue damage while also eliminating the need for Frost & Sullivan 2 We Accelerate Growth
additional incisions to insert a rod. All of these products help to provide a complete array of surgical solutions for the treatment of various degenerative disc conditions. Criterion 2: Scalability Baxano Surgical s product line offers a range of surgical options to surgeons as well as patients with lumbar spine problems. AxiaLIF provides a minimally invasive alternative to the traditional approaches for fusion procedures. VEO provides an alternative to existing lateral fusion approaches that allows surgeons to rely on their own visualization of the neural anatomy versus relying solely on blind neuromonitoring. The io-flex System allows surgeons to remove excess tissue growth without harming the healthy tissue when completing a decompression surgery. Criterion 3: Industry Coverage Frost & Sullivan's finds that with the expansion of its portfolio to include VEO, io-flex and AVANCE, Baxano s product line covers at least half of the spine surgery device needs of hospitals involved in treating degenerative disc disease. Baxano Surgical recognizes the need for further additions to its portfolio and continues to fund its research and development division. The company continues to focus on developing new products and improving existing offerings in order to provide a full spectrum of solutions for minimally invasive spinal lumbar surgeries. Criterion 4: Clarity Baxano Surgical provides a robust training platform to ensure the effective understanding of product utilization and functionality on the part of the surgeons. The training modalities consist of peer-to-peer learning, which provides surgeons with hands-on experience. New technology training addresses patient selection techniques as well as complication avoidance. Hands-on experience allows for surgeons to develop practical techniques with a focus on lateral and presacral fusion approaches as well as decompression with the io-flex microblade shaver. In addition to peer-to-peer training and hands-on experience, Baxano offers training webinars that further provide surgeons with a detailed overview of the company s various devices, surgical techniques, and other operative procedure-related information that assists them with their work. Criterion 5: Timeliness Currently, Baxano Surgical is investing resources into research and development in order to be competitive in the spinal surgery industry. It's Frost & Sullivan's opinion that the addition of new products such as the AVANCE MIS Pedicle Screw System, will enhance its product line. Baxano recognizes that in order for it to continue to improve outcomes for spinal medical conditions and gain increased acceptance among the surgeon community, it must continue to invest in product development and enhancement process. Criterion 6: Product/Service Value Frost & Sullivan's research finds that Baxano Surgical s products benefit patients, surgeons, and public and private healthcare insurance providers through the provision of an effective, minimally invasive spinal surgery mechanism. Patients benefit from minimally invasive surgery because such a procedure minimizes blood loss and involves less post- Frost & Sullivan 3 We Accelerate Growth
operative pain, an improved recovery time, a shorter hospital stay, and less pain medication. Prior to minimally invasive spinal lumbar surgical approaches, patients experienced a longer recovery period, longer length of hospital stay, and extensive recuperation time away from work on other daily activities. Minimally invasive spinal surgeries also benefit care providers through the effective utilization of hospital resources, such as OR facilities (including recovery rooms), surgical staff, and supplies. Moreover, minimally invasive spinal procedures inherently offer a reduced risk of post-operative complications. Furthermore, the cost-efficient nature of the minimally invasive surgery creates value for the payers in the form of a lower overall cost of treatment. The cost reductions occur as a result of less recovery time and a shorter hospital stay, as well as a reduced need for excessive pain medicine. Hospitals also benefit from these products because they are able to use their resources more efficiently. With fewer patients remaining in the hospital after spinal surgery, the hospital is able to use to those beds to better serve the greatest need. Conclusion Frost & Sullivan's independent analysis of the Spinal Surgical Solutions market clearly shows that Baxano Surgical provides superior products that allow for minimally invasive and cost efficient spinal surgery. Minimally invasive spinal surgeries benefit patients, surgeons, payers, and hospitals. From a patient s perspective, minimally invasive surgeries minimize blood loss, reduce post-operation pain, improve recovery time, reduce lengthy hospital stays, and require less long-term reliance on pain medication. Baxano Surgical recognizes the need for continual improvement in its minimally invasive spinal surgery product line and, therefore, extensively invests in research and development and product marketing. The company s focus is to provide quality, reliable, and easy-to-use products that improve outcomes for medical conditions that affect the lumbar region of the spine. Based on the results of our research, Frost & Sullivan is proud to present the 2014 Product Line Strategy Leadership Award in Minimally Invasive Spinal Surgical Solutions to Baxano Surgical, Inc. Frost & Sullivan 4 We Accelerate Growth
Product Line Strategy Leadership Ultimately, growth in any organization depends upon customers purchasing from your company, and then making the decision to return time and again. A full, comprehensive product line that addresses numerous customer needs and preferences is therefore a critical ingredient to any company s long-term retention efforts. To achieve these dual goals (customer engagement and product line superiority), an organization must be bestin-class in three key areas: (1) take into account what your competitors are, and are not, doing; (2) meet customer demand with a comprehensive, value-driven product or service portfolio; and (3) establish a brand that resonates deeply with customers and stands apart from other providers. To achieve best-practice levels in brand, demand, and positioning is a rare and significant accomplishment, and that is why Frost & Sullivan celebrates it with the Product Line Strategy Leadership Award. Recipients of this award represent the top ten percent of their industry: the other ninety percent can t keep up. Key Benchmarking Criteria For the Product Line Strategy Leadership Award, Frost & Sullivan evaluated the total client experience and strategy implementation excellence according to the criteria detailed below. Customer Value Excellence Criterion 1: Total Customer Experience Criterion 2: Product/Service Value Criterion 3: Purchase Experience Criterion 4: Ownership Experience Criterion 5: Service Experience Product Family Strategy Criterion 1: Comprehensiveness Criterion 2: Scalability Criterion 3: Industry Coverage Criterion 4: Clarity Criterion 5: Timeliness The Intersection between 360-Degree Research and Best Practices Awards 360-DEGREE RESEARCH: SEEING ORDER IN THE CHAOS Research Methodology Frost & Sullivan s 360-degree research methodology represents the analytical rigor of our research process. It offers a 360-degree-view of industry challenges, trends, and issues by integrating all 7 of Frost & Sullivan's research methodologies. Frost & Sullivan 5 We Accelerate Growth
Too often, companies make important growth decisions based on a narrow understanding of their environment, leading to errors of both omission and commission. Successful growth strategies are founded on a thorough understanding of market, technical, economic, financial, customer, best practices, and demographic analyses. The integration of these research disciplines into the 360-degree research methodology provides an evaluation platform for benchmarking industry players and for identifying those performing at best-in-class levels. Decision Support Scorecard To support its evaluation of best practices across multiple business performance categories, Frost & Sullivan employs a customized Decision Support Scorecard. This analytical tool compares companies performance relative to each other. It features criteria unique to each award category and ranks importance by assigning weights to each criterion. The relative weighting reflects current market conditions and illustrates the associated importance of each criterion according to Frost & Sullivan. This tool allows our research and consulting teams to objectively analyze performance, according to each criterion, and to assign ratings on that basis. The tool follows a 10-point scale that allows for nuances in performance evaluation; ratings guidelines are illustrated below. Best Practice Award Analysis for Baxano Surgical, Inc. Decision Support Scorecards: Product Line Strategy Leadership The Decision Support Scorecards, shown below, include all performance criteria listed and illustrate the relative importance of each criterion and the ratings for each company under evaluation for the Product Line Strategy Leadership Award. The research team confirms the veracity of the model by ensuring that small changes to the ratings for a specific criterion do not lead to a significant change in the overall relative rankings of the companies. Finally, to remain unbiased and to protect the interests of all organizations reviewed, Frost & Sullivan has chosen to refer to the other key players in as Company 2 and Company 3. Frost & Sullivan 6 We Accelerate Growth
Total Customer Experience Product/Service Value Purchase Experience Ownership Experience Service Experience Weighted Rating BEST PRACTICES RESEARCH Decision Support Scorecard: Customer Value Excellence Measurement of 1 10 (1 = poor; 10 = excellent) Award Criteria Customer Value Excellence Relative Weight (%) 20% 20% 20% 20% 20% 100% Baxano Surgical, Inc. 9.3 9.5 9.3 9.4 9.6 9.4 Company 2 9.0 9.0 9.0 8.7 9.0 8.9 Company 3 9.0 8.8 8.9 8.6 8.9 8.8 Criterion 1: Total Customer Experience Requirement: Customers receive exceptional impression at every stage of the purchase cycle Criterion 2: Product/Service Value Requirement: Products or services offer the best value for the price, compared to similar offerings in the market Criterion 3: Purchase Experience Requirement: It is as simple for salespeople to sell the product or service as it is for the customer to buy the product or service Criterion 4: Ownership Experience Requirement: Customers are proud to own and use the company s product or service Criterion 5: Service Experience Requirement: Customer service is accessible, fast, and stress-free Frost & Sullivan 7 We Accelerate Growth
Comprehensiveness Scalability Industry Coverage Clarity Timeliness Weighted Rating BEST PRACTICES RESEARCH Decision Support Scorecard: Product Family Strategy Measurement of 1 10 (1 = poor; 10 = excellent) Award Criteria Product Family Strategy Relative Weight (%) 20% 20% 20% 20% 20% 100% Baxano Surgical, Inc. 9.5 9.5 9.4 9.5 9.5 9.5 Company 2 9.1 9.0 9.1 8.9 9.0 9.0 Company 3 9.0 8.9 8.7 8.6 8.9 8.8 Criterion 1: Comprehensiveness Requirement: Product line addresses all known customer needs and applications Criterion 2: Scalability Requirement: Product line offers at a variety of price points and functionality levels Criterion 3: Industry Coverage Requirement: Product line s revenue potential can be expanded through the identification of new applications in adjacent markets Criterion 4: Clarity Requirement: The product line makes sense to customers (i.e., products are easy to use and it is easy to distinguish between offerings across the product line) Criterion 5: Timeliness Requirement: The product line is continually updated to reflect customers changing needs and behaviors; the product line retains a reputation for continuing relevance Frost & Sullivan 8 We Accelerate Growth
About Baxano Surgical, Inc. Baxano Surgical, Inc. is a medical device company focused on designing, developing, and marketing minimally invasive products to treat degenerative conditions of the spine affecting the lumbar region. Baxano Surgical currently markets the AxiaLIF(R) family of products for single and two level lower lumbar fusion, the VEO(R) lateral access and interbody fusion system, the io-flex(r) system, a proprietary set of flexible instruments used by surgeons during spinal decompression procedures, the io-tome(r) instrument, which rapidly and precisely removes bone, specifically the facet joints, which is commonly performed in spinal fusion procedures and Avance(TM), an MIS pedicle screw system used in lumbar fusion procedures. Baxano Surgical was founded in May 2000 and is headquartered in Raleigh, North Carolina. For more information, visit www.baxanosurgical.com. AxiaLIF, VEO, io-tome and io-flex are all registered trademarks of Baxano Surgical. About Frost & Sullivan Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best in class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best practice models to drive the generation, evaluation and implementation of powerful growth strategies. Frost & Sullivan leverages more than 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from 40 offices on six continents. To join our Growth Partnership, please visit http://www.frost.com. Frost & Sullivan 9 We Accelerate Growth