Moderator and Panelists

Panelists Moderator and Panelists Moderator Dr. Hallett Mathews Executive Vice President Chief Medical Officer Paradigm Spine, LLC Panelist Dr. John Peloza Orthopedic Surgeon The Center for Spine Care Panelist Dr. Glenn Keiper Neurosurgeon KeiperSpine Panelist Dr. Richard Salib Orthopedic Surgeon Institute for Low Back and Neck Care Panelist Dr. Michael Musacchio, Jr. Neurosurgeon The Center for Spine Care 1

Disclosure Statement Disclosure The intent of this webinar is to encourage discussion between healthcare professionals who are familiar with the Ambulatory Surgery Center environment, and discuss how the coflex device s PMA approved indications for use were based on rigorous FDA IDE study parameters. Because of patient variables and surgeon techniques that naturally occur and can deviate from the norm in the care of patients, Paradigm Spine, LLC can not infer of imply a guarantee of performance and results when using the coflex Interlaminar Stabilization device. All Sunshine Laws, where applicable, will apply. All content is for educational and discussion purposes only and is not considered to represent training certification. Please contact Medical Affairs at Paradigm Spine, LLC at 212-583-9700 ext 2195 for questions. Confidential 2

Presentation Overview 1 Introduction 2 Fusion vs. Non-Fusion or Stabilization 3 Spine Market Trends and Use of ASCs 4 Value of ASCs 5 coflex - Approved for Your ASC 6 Summary / Q & A Confidential 3

Introduction Paradigm Spine, LLC: The Facts 1. Disruptive Technology Platform - coflex Interlaminar Family of Products >100,000 implantations w/ > 15 Years Clinical & Commercial History World class clinical results 3 prospective randomized multi-center studies Uniquely differentiated mechanism of action compared to interspinous devices 2. No Me-Too Products Comprehensive portfolio of 1st or 2nd to market degenerative & scoliosis technologies coflex-f recently launched in U.S.! DCI future cervical leader 3. Extensive Spine Non-Fusion Experience Spine IDE studies & IP barrier strategies Successful spine PMAs & reimbursement barrier strategies 4. Proven International Operations Profitable with market leadership in Germany Sold in > 45 different countries 5. Scale-Tested Manufacturing & Strong Compliance Culture All manufacturing validations in place for PMA approval Facility currently manufacturing 2 PMA products Built Minimally Invasive, Differentiated Platform 7 Years Ago Confidential 4

Introduction Why Is Paradigm Spine, LLC Different? Truly Differentiated Product Portfolio & Business Strategy - Number of Products Diversifies Risk - Business Strategy Designed to Effect Macro Industry Change More Level 1 Data on Stenosis Than Anyone Strong Track Record of Success with PMA s 1 st Comparative Effectiveness Differentiation in Spine - Health Economics Favors Adoption of coflex vs. PLF Significant IP Issued & Filed Across Entire Portfolio A One-of-a-Kind Company In A Rapidly Changing Market Confidential 5

Presentation Overview 1 Introduction 2 Fusion vs. Non-Fusion or Stabilization 3 Spine Market Trends and Use of ASCs 4 Value of ASCs 5 coflex - Approved for Your ASC 6 Summary / Q & A Confidential 6

Fusion vs. Non-Fusion or Stabilization Fusion vs. Non- Fusion or Stabiliza9on for Stenosis Fusion versus non-fusion or stabilization-what s been the history of non-fusion stabilization? Is there agreement that stabilization requires a fusion? Please comment on previous use of Dynesys, DIAM, X stop, and lumbar disc replacements. Are these procedures and devices potentially applicable to ASC settings? Have patients with rigid stabilization for fusion procedures been typically ASC patients? If so why and if not why not? Please discuss morbidity, indications, risk factors, point of service trends, and device related attributes which favor inpatient versus outpatient point of service. Confidential 7

Spine Industry Overview A Closer Look At Stenosis Disease State & Pathology: PREVALENT CONDITION LIMITED TREATMENT OPTIONS PAINFUL Narrowing of Lumbar Spinal Canal Conserva9ve ~30M Pa8ents Interven9onal 1.2M Pa8ents Most common indica8on for surgery Degenera8ve Age- Related Congenital Wait and See 600K+ Pa8ents Surgery 600K Pa8ents Fusion Spacers Decompression Confidential 8

Fusion vs. Non-Fusion or Stabilization First, What is Degenerative Spinal Stenosis? Any type of narrowing of the central spinal canal or nerve root canals (intervertebral foramina) resul9ng in compression of neurovascular elements. (a) Bulging Disc (d) Compression of foraminal canal (b) Spinal canal compression (c) Overgrown facet joints (e) Infolding of ligamentum flavum Patient suffering from central, foraminal, & subarticular recess stenosis Confidential 9

Fusion vs. Non-Fusion or Stabilization Facet Joint Degeneration Damaged cartilage Synovitis/synovial cysts Osteophyte formations Subchondral bone cysts Capsule/ligament relaxation Subluxations Is stabilization needed? Rigid vs. non rigid? Stenosis varies with location and intensity Confidential 10

Fusion vs. Non-Fusion or Stabilization Question Focusing On Stenosis Why do we decompress patients? Direct vs. indirect What s the ultimate goal of decompression? Why do we stabilize patients? Is it necessary? Why do we fuse patients? Needed vs. habit? Is fusion the only form of stabilization? Can stabilization maintain motion? Why commit to fusion as the first line of stabilization? History, Reimbursement? Previous use of Dynesys, DIAM, x-stop, Lumbar Disc Replacements Confidential 11

Fusion vs. Non-Fusion or Stabilization Interspinous Not Clear Interlaminar Fusion Blockers Mo9on Preserva9on (No Intended Mo9on) (Par9al Mo9on) (Controlled Mo9on) Technology Wilson, Spire, Aspen, AffiX Benefits Minimally Invasive Intended Clinical Benefit (ICB) Stabiliza9on & Fusion Indicated for DDD however used in most pa9ent popula9ons Risks 510(k) w/ no Evidence Ver9cal Clamping May Lock Pa9ent in Pain Revision for Non- Unions Adjacent Level Disease Technology X- Stop & Diam (Inves9ga9onal) Benefits Minimally Invasive PMA for X- Stop vs. Cons. Care Intended Clinical Benefit (ICB) Distrac9on & Extension Blocking for Stenosis Risks Extension Blocking on Weak Interspinous Bone No Direct Surgical Decompression Subsidence Re- creates Stenosis Technology Coflex Benefits Rests on Strong Interlaminar Bone Maintains Foraminal Height Unloads Facets Intended Clinical Benefit (ICB) Mo9on Preserving Stabiliza9on Post Decompression for Stenosis Risks Pa9ent Selec9on No Deformity / Severe Instabili9es All Are Minimally Invasive Which Creates the Confusion of Patient Population & Intended Clinical Benefit Confidential 12

Fusion vs. Non-Fusion or Stabilization Different Devices & Functions Fusion devices Wilson plate, Spire plate, Aspen, Affix, others in the interspinous space (for DDD) Blocking devices allow partial motion but block or resist extension X Stop, DIAM ( investigational, not approved) (For stenosis, back pain) Motion preserving post decompression coflex interlaminar stabilization controls motion while maintaining foraminal height, facet unloading, and adjacent level kinematics without fusion or access to the pedicle. (For stenosis).ldr, CDR? Confidential 13

Presentation Overview 1 Introduction 2 Fusion vs. Non-Fusion or Stabilization 3 Spine Market Trends and Use of ASCs 4 Value of ASCs 5 coflex Approved for Your ASC 6 Summary / Q & A Confidential 14

Spine Market Trends and Use of ASCs Spine Market Trends and Use of ASCs Spine market discussion-increasing numbers of patients approaching baby boomer age notes and increasing incidence of spinal stenosis and symptomatic pathology. Payer pushback for fusions has limited access to surgical intervention. Limited evidence for efficacy of static or rigid stabilization after decompression was spinal stenosis exists. Physicians seek better control over efficiencies and point of service through ambulatory surgery settings. Favorable comparative effectiveness data exist for ASC point of service versus inpatient hospitalization. The panel will discuss market trends and the use of ASC for improvement in quality and outcomes. Confidential 15

Spine Market Trends and Use of ASCs U.S. Market For Spinal Stenosis Patients (2012-2020) 3.0 2.4M Patients (1) CAGR = 9% 2.0 1.2M Patients (1) 1.0 2012 2020 Stenosis Is Largest Single-Growing Patient Demographic In Spine! (1) (1) Nick Shamie, MD, orthopedic spine surgeon at UCLA Medical Center of Los Angeles and a spokesman for the American Academy of Orthopedic Surgeons cited in: The Wall Street Journal (Business), Feb 15, 2011. Confidential 16

Spine Market Trends and Use of ASCs Trends Supporting Spine Surgery Shift To ASC: Ø Estimated Spine Surgery Shift To ASC Approx. 45% By 2015 Ø Driven By MIS Technology, Physician Mindset & Payor Acceptance Ø Formation of The Society of Ambulatory Spine Surgery (SASS) Launched by NASS in 2011 with the goal of moving 50% of cases to ASC Confidential 17

Spine Market Trends and Use of ASCs ASC Instrumented Spine Procedure Expansion Opportunity 600,000 500,000 600,000 500,000 400,000 300,000 200,000 ASC Spine Procedure Expansion = 12x 50,000 100,000 0 Without coflex Current ASC Spine Market With coflex Potential Instrumented Growth w/coflex & coflex-f Confidential 18

Spine Market Trends and Use of ASCs Laminectomy coflex Non-Fusion Stabilization Post Decompression Fusion Ø Provides new pa8ent popula8on that is not currently being addressed Ø Similar opera8ng profile as MIS lumbar laminectomy (i.e. decompression) Ø Low cost procedure that can be performed in outpa8ent semng Ø High levels of pa8ent sa8sfac8on Ø FDA approved on- label for trea8ng moderate to severe spinal stenosis Ø Upgraded coding for hospital (increased reimbursement) Confidential 19

Spine Market Trends and Use of ASCs The Spinal Stenosis Disease State: Significant Patient Population w/limited Options coflex coflex ~600,000 Pa)ents ~250,000 Pa)ents ASC OPPORTUNITIES ~250,000 Pa)ents ~100,000 Pa)ents ACUTE CARE SETTINGS Confidential 20

Spine Market Trends and Use of ASCs Spinal Procedural Opportunity In The ASC Setting Treatment Segment Attractiveness Artificial Disc MIS Pedicle Screw Fusion coflex Interlaminar Stabilization Decompression Alone Micro- Discectomy Pain Management Alignment With ASC Capability Confidential 21

Value of ASCs Value of ASCs Patient and physician opportunity-asc s provide a venue for less and better stated appropriately invasive surgical intervention for the best possible quality and outcomes for any given cost. Surgeons will discuss the value of ASC s and the use of evidence-based medicine to drive decisions and behavior to improved point of service. Cost savings, improved efficiency, and better outcomes are the emerging standard for ACO s and fee-for-service markets. Confidential 23

Macro Trends In Treatment of Spinal Stenosis Ø Hospital Costs At An All Time High Top 3 surgical procedures by cost*: ü # 1 - Spinal Fusion ($11.3B) Increasing Cost of Hospital Care ü # 2 - Balloon Angioplasty ($11.0B) ü # 3 - Total Knee Replacement ($10.4B) Indications for Fusion Ø Payors Are Pushing Back On Fusion! Payors routinely require pre-authorizations for fusion Surgeon increasingly engaged in justification of procedure ü Burden of evidence needed to support rationale for surgery Ø Fusion Procedure Outcomes Under Close Scrutiny The readmission rate for spine fusion is 24.3% at 2 yrs* Reoperation rate for spine fusion is 15.5% at 2 yrs* Still no real consensus as to best way to treat these patients (no data) * U.S. Centers for Disease Control and Prevention (CDC) 2011 data. Confidential 24

Spine Industry Overview Cost-Based vs. Value-Based Healthcare Reform To achieve sustainability of current U.S. healthcare system, Value-based purchasing is being adopted by most stakeholders in medicine Value = Effectiveness Cost Confidential 25

Presentation Overview 1 Introduction 2 Fusion vs. Non-Fusion or Stabilization 3 Spine Market Trends and Use of ASCs 4 Value of ASCs 5 coflex Approved for Your ASC 6 Q & A Confidential 26

coflex Approved For Your ASC coflex Approved for Your ASC The coflex Pre-Market Approval Study was approved October 12, 2012 and represents the best level I evidence available for spinal stenosis decompression and non-fusion stabilization. Many cases were performed as an outpatient procedure in an ASC setting even though this was a new procedure under strict FDA scrutiny for complications and outcomes. Please discuss the PMA data which reflects shorter operative times, less blood loss, less hospitalization, and quicker return to activity. Please also discuss why coflex represents a new category of products that allow for open surgical decompression, maintenance of foraminal height, and unaffected adjacent level kinematics as an improved option for patients that require facet joint stabilization after decompression for moderate to severe spinal stenosis. Confidential 27

coflex Approved For Your ASC What is coflex? Controls Rota9on - Aids in preven8ng Expulsion, controls Rota8on Single- Piece Implant - Excellent Fa8gue Strength, No Wear Debris Biocompa9ble - Titanium Alloy Contact Surface - to minimize Expulsion 2 Part Func9onal Design Interlaminar Stabiliza8on Unique coflex design allows for deep inser8on post surgical decompression Apex of "U" permanently maintains foraminal height and volume Offloads facets and posterior annulus Mo8on Preserva8on coflex is compressible in extension Axial force shock absorp8on Mantains sagisal balance and lordosis Maintains physiological adjacent segment kinema8cs Confidential 28

coflex Approved For Your ASC A Closer Look: coflex Mechanism Of Action Functionally Dynamic Compressible in extension, allowing flexion Increased rotational stability Center of rotation close to the spinal canal Protection of Posterior Elements Stress reduction on facet joints Maintenance of foraminal height Ease of Use Less invasive, tissue-sparing procedure Easy and precise application Confidential 29

coflex Approved For Your ASC Adjacent Segment Disease Key Observations: Progressive loss of disc height Development of anterior osteophytes Increase in endplate sclerosis Confidential 30

coflex Approved For Your ASC The coflex Study: Direct Decompression and Interlaminar Stabilization Compared to Decompression and Posterior Spinal Fusion with Pedicle Screw Instrumentation for Spinal Stenosis with Back Pain or Degenerative Spondylolisthesis Confidential 31

coflex Approved For Your ASC Popula9on #1: Spinal Stenosis with Low Back Pain (without spondylolisthesis) Popula9on #2: Degenera8ve Spondylolisthesis ( Grade 1, or 25%) Confidential 32

coflex Approved For Your ASC Grade 2 Spondy! Include Exclude Confidential 33

coflex Approved For Your ASC coflex IDE Clinical Trial Overview Multi-Center, Randomized, Prospective, Controlled Study - Investigational Device: Decompression + Stabilization w/ coflex - Control: Laminectomy w/ Pedicle Screw Fixation Medtronic CD Horizon or DePuy Expedium & Autologous Posterolateral Fusion 2 Patient Populations: - Spinal Stenosis with Low Back Pain (without Spondylolisthesis) - Degenerative Spondylolisthesis (up to Grade 1) Enrollment - 384 patients, 40 roll in, 344 randomized 2:1 investigational to control - 21 Investigational Sites Throughout US coflex Clinical PMA Submitted To FDA In March 2011-1st Module (Mechanical Testing), 2nd Module (QSR/GMP), & 3rd Module (Clinical) PMA Approval October 17, 2012 - Extensive Labeling Claims Can be Made - Mechanism of Action Can be Demonstrated - Economic Data for CMS Landmark 1 st Of A Kind Study! Confidential 34

coflex Approved For Your ASC Accomplishments 384 Study Surgeries More than 55,000 CRF pages Greater than 375,000 Clinical Data Points 12,188 Radiographs 463 Monitoring Visits 11 FDA Inspections (9 Sites, 1 CRO, and 1 Sponsor Audit) Pa9ent Follow- up at Two Years coflex 95.3% Fusion 97.2% Confidential 35

coflex Approved For Your ASC Confidential 36

coflex Approved For Your ASC coflex Patients Do Better, Faster Confidential 37

coflex Approved For Your ASC ROM at Level of Implant (Degrees) ROM Pre-Op P-Value = 0.286 Month 24 P-Value = 0.000 * * coflex maintains Index Level Mo9on at 24 Months *Not evaluated for Fusion Confidential 38

coflex Approved For Your ASC ROM Above Level of Implant (Degrees) ROM Pre-Op P-Value = 0.222 Month 24 P-Value = 0.002 * * coflex protects adjacent Segments from excessive Mo8on at 24 Months *Not evaluated for Fusion Confidential 39

coflex Approved For Your ASC Translation Above Level of Implant (mm) 1.40 1.20 Pre-Op P-Value = 0.290 Month 24 P-Value = 0.087 1.00 0.80 0.60 0.40 0.20 0.00 * * Pre- Op *Not evaluated Week 6 for Fusion Month 3 Month 6 Month 12 Month 18 Month 24 coflex Fusion coflex protects adjacent Segments from excessive Mo8on at 24 Months Confidential 40

coflex Approved For Your ASC Foraminal Height X-Ray Analysis (mm) coflex maintaints foraminal Height at 24 Months Confidential 41

coflex Approved For Your ASC One Level Implantation Two Level Implantation By deeply inserting the coflex implant at the level of the facet joints the implant counteracts the majority of posterior column forces (interlaminar positioning). If a two level decompression is mandated the implants must be sequentially placed to the appropriate depth avoiding an overlap (contact) of one pair of wings upon the other. Confidential 42

coflex Approved For Your ASC AP View 3D CT reconstruction images show the laminotomy through which decompression was performed. On either side of the coflex, it is possible to see through the opening in the lamina into the disc space. Confidential 43

coflex Approved For Your ASC Postoperative Imaging Contiguous sagittal CT slices through the implant at L4-L5. Confidential 44

coflex Approved For Your ASC coflex Study Major Takeaways 1 st Prospective Randomized Study Addressing Moderate To Severe Stenosis (Up To Grade 1 Spondy), With Significant Back Pain 1 st Prospective Randomized Study To Use Pedicle Screw Fusion As A Control, Post-Surgical Decompression, For Moderate To Severe Stenosis 1 st PMA To Prospectively Collect Cost, Charge & Healthcare Economics Data For Spinal Stenosis With Stabilization, Using A Pedicle Screw Fusion Control 1 st PMA To Analyze Adjacent-Level Changes post-coflex & Pedicle Screw Fusion Cases To Determine The Effect Of Stabilization In The Lumbar Spine 1 st PMA To Challenge The 20-Yr History Of Pedicle Screw Stabilization As The Gold Standard To Stabilize 1 & 2 Level Surgically Decompressed Patients For Moderate To Severe Spinal Stenosis Confidential 45

Summary / Q&A In Summary First non-fusion device to be used after decompression Supports quicker surgery, outpatient treatment, less trauma Pedicle screws - Take more time to perform surgery - Take more time to follow-up and to fuse - Sometimes don t fuse - requiring more surgery or broken screws both bad - Have been shown to promote ASD Confidential 47

Summary / Q&A Facility Earlier discharge Outpa8ent op8on Payor Fewer reopera8ons; back to work quicker Pa8ent Faster recovery back to work quicker You Reduced OR 8me Reduced risk, simple and elegant treatment op8on Confidential 48

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Q&A QUESTIONS? Question 1) Please explain your past experience with minimally invasive technology and the learning curve to become safe and proficient. Confidential 51

Q&A QUESTIONS? Question 2) Please look back 20 years and describe successful and unsuccessful attempts to stabilize a motion segment.and now do that specifically for spinal stenosis. Discuss the need for decompression and can stabilization occur after decompression for lumbar stenosis? What are the tradeoffs? Is motion or static stabilization preferable or possible? Confidential 52

Q&A QUESTIONS? Question 3) Please discuss how evidence based medicine is changing your practice and the relevance of coflex s level one study and 3 PMAs on the topic of lumbar spinal stenosis. Confidential 53

Contact CONTACT/MORE INFORMATION EVP, Chief Medical Officer: Dr. Mathews hal.mathews@paradigmspine.com Sales Opera8ons: Hector Torres, JD, MBA hector.torres@paradigmspine.com ASC and Non- Acute Care: Jeremy Laynor jeremy.laynor@paradigmspine.com Training and Educa8on: Karen Johnston karen.johnston@paradigmspine.com www.paradigmspine.com www.coflexsolu8on.com Confidential 54