Inspire Medical Systems, Inc. · NYSE:INSP

Inspire Medical Systems — Investor Presentation (February 2020)

40 slides from Inspire Medical Systems's investor presentation, Feb 26, 2020

1. Slide 1: Inspire Medical Systems, Inc. February 2020

   Inspire Medical Systems, Inc. February 2020 NYSE: INSP 1

2. Slide 2: Disclaimer

   Disclaimer This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts are forward-looking statements. In some cases, you can identify forward-looking statements by terms su

3. Slide 3: 3 © Inspire Medical Systems, Inc. All Rights Reserved

   3 © Inspire Medical Systems, Inc. All Rights Reserved

4. Slide 4: Inspire is an Innovative Neurostimulation Solution for Moderate to Severe OSA

   Inspire is an Innovative Neurostimulation Solution for Moderate to Severe Obstructive Sleep Apnea (OSA) Our History & Key Milestones  First and only FDA-approved neurostimulation 1990s: Medtronic (MDT) begins early work on technology for OSA the development of Inspire  More than 7,800 patients tre

5. Slide 5: Strong Management Team

   Strong Management Team Other Key Management Steve Jandrich Chief Compliance Officer & VP, Human Resources Ivan Lubogo SVP, U.S. Sales Kathy Sherwood SVP, Global Market Access Andreas Henke SVP, European Operations Martin Abrams VP, Marketing & Customer Experience Quan Ni, PhD VP, Research & Clinical

6. Slide 6: OSA is a Serious and Chronic Disease

   OSA is a Serious and Chronic Disease OSA is Caused by a Blocked or Partially Blocked Airway • Blockage prevents airflow to the lungs • Results in repeated arousals and oxygen de-saturations • Severity of sleep apnea is measured by frequency of apnea or hypopnea events per hour, which is referred to

7. Slide 7: Current Treatment Options such as CPAP and Invasive Surgery have Significant Limitations

   Current Treatment Options such as CPAP and Invasive Surgery have Significant Limitations Continuous Positive Airway Pressure (CPAP) is the Leading Therapy for OSA • Delivered through a mask that connects through a Drivers of Non-Compliance hose to a bedside air pump  Mask Discomfort • Demonstrated

8. Slide 8: A Strong Market Opportunity Exists for an Alternative to CPAP

   A Strong Market Opportunity Exists for an Alternative to CPAP that is Effective and Minimally Invasive Prevalence & Economic Costs Adults with Moderate to Severe OSA • Less: 65% CPAP Published literature  Sleep apnea affects +100 million people Prescribed CPAP2 = Compliant estimates CPAP 1 worldwid

9. Slide 9: Inspire Therapy is a Proven Solution for Patients with OSA

   Inspire Therapy is a Proven Solution for Patients with OSA Inspire System Inspire Procedure 3 Stimulation Lead 1 Pressure Sensing Lead Hypoglossal Nerve 2 Neurostimulator Remote control and three implantable components:  Approximately a two-hour outpatient procedure Pressure sensing lead: detects w

10. Slide 10: Inspire Therapy is a Safe and Effective Solution

    Inspire Therapy is a Safe and Effective Solution Mild Stimulation is a Clear Mechanism of Action Inspire Therapy Offers Significant Benefits  Strong safety profile  Effective and durable treatment  Closed-loop system  Strong patient compliance  High patient satisfaction  Minimally invasive out

11. Slide 11: Objective Measures Show the Impact of Inspire Therapy on OSA

    Objective Measures Show the Impact of Inspire Therapy on OSA Polysomnogram Before and After Activation of Inspire System Inspire system turned on Airflow Breathing Oxygen Saturation OSA events No OSA events After activating the Inspire system, the patient exhibited a more regular breathing pattern,

12. Slide 12: Clinical Evidence

    Clinical Evidence 12 © Inspire Medical Systems, Inc. All Rights Reserved

13. Slide 13: Significant Body of Clinical Evidence Evaluating Inspire in more than 2,000 Patients

    Significant Body of Clinical Evidence Evaluating Inspire in more than 2,000 Patients, in 100+ papers Patients Clinical Studies Evaluated Stimulation Therapy for Apnea Reduction (STAR) 126 German Post-Market Study 60 ADHERE Patient Registry 1,017 Company Company Sponsored Pediatric / Down Syndrome 26

14. Slide 14: STAR Trial Met Both Primary Endpoints & Showed Significant Reductions in AHI & ODI

    STAR Trial Met Both Primary Endpoints & Showed Statistically Significant Reductions in AHI & ODI Significant Reduction in Severity of OSA Meaningful Levels of Compliance Post-Implantation Apnea-Hypopnea Index (Median) Oxygen Desaturation Index (ODI) (Median) 29.3 25.4 9.0 9.7 7.4 8.6 6.0 6.2 4.8 4.6

15. Slide 15: Additional STAR Findings Showed Meaningful Improvement in Quality of Life Metrics

    Additional STAR Findings Showed Meaningful Improvement in Quality of Life Metrics Functional Outcomes of Sleep Questionnaire (Median) Epworth Sleepiness Scale (Median) Normalized daytime functioning = 17.9 11.0 Normalized daytime sleepiness = 10.0 18.2 18.4 18.8 18.7 14.6 6.0 6.0 6.0 6.0 Baseline 12

16. Slide 16: Summary of Inspire Clinical Studies

    Summary of Inspire Clinical Studies German Post- ADHERE Patient TJUH and UPMC STAR Trial Market Study1 Registry1 Evaluation2 # of Inspire Patients 124 97 56 1,017 48 / 49 Time Following 12 5 Years 12 Months 12 Months 3 Months Implantation Months AHI – Baseline 29.3 29.3 28.6 32.8 35.9 / 35.3 AHI – T

17. Slide 17: Building Clinical Data Depth with the ADHERE Patient Registry

    We Intend to Continue to Build the Depth of Our Clinical Data with Our ADHERE Patient Registry ADHERE Patient Registry Our post-implantation study with the goal of collecting data on a group in excess of 5,000 patients Registry Results from 1,017 Patients  Registry study designed to Apnea Hypopnea

18. Slide 18: Product and Indication Expansion

    Product and Indication Expansion 18 © Inspire Medical Systems, Inc. All Rights Reserved

19. Slide 19: Committed to Continuous Product Development & Indication Expansion

    We are Committed to Continuous Product Development & Indication Expansion Indication Expansion Product Pipeline  Working with the FDA to expand indication in  5th generation neurostimulator is in the development the U.S. to patients as young as 13 years of phase age (including Down syndrome)  Ins

20. Slide 20: Inspire Cloud: Longitudinal Care

    Inspire Cloud: Longitudinal Care Longitudinal Care Care Team Inspire cloud Referral Network Inspire Cloud was launched at the AASM (American Academy of Sleep Medicine) annual meeting June 2018 ____________________ Not actual data; for illustrative purposes only.  Monitors Adherence  Strengthens th

21. Slide 21: Reimbursement

    Reimbursement 21 © Inspire Medical Systems, Inc. All Rights Reserved

22. Slide 22: Reimbursement: Coding, Payment and Coverage

    Our Team is Focused on All Aspects of Reimbursement, which Include Coding, Payment and Coverage Coding Payment Coverage • Physician • Physician • Medicare • Facility • Facility • Commercial • Neurostimulator and stimulation • 2019 National Medicare average • Over 430 commercial payors in the lead: C

23. Slide 23: Covered Lives Summary

    Covered Lives Summary Positive BCBS Plans: 73M Total Covered Lives Large Insurance Plans • Wellmark • S. Carolina • Nebraska • Horizon • Idaho • Tennessee • United Healthcare: 41M • N. Carolina • Health Now NY • HCSC (Illinois, • Aetna: 22M • Premera • Federal Employee Plan Texas, etc.) • Regence •

24. Slide 24: Medicare Local Coverage Determination (LCD) Progress

    Medicare Local Coverage Determination (LCD) Progress – All policy criteria consistent between MACs LCD Final LCD MAC Status Publication Noridian Final March 15, 2020 Novitas Final March 15, 2020 First Coast Final March 15, 2020 (Florida) National Govt. Services Final April 1, 2020 (NGS) • BMI criter

25. Slide 25: Prior Authorization Metrics are Steadfastly Improving

    The Prior Authorization Metrics are Steadfastly Improving with Every New Positive Coverage Policy Case-by-Case Submissions, Reviews & Approvals Process If denied If denied If denied Prepare/Submit an EMR Prepare/Submit an Prepare/Submit a 1st Prepare/Submit a 2nd appeal Prior Authorization level app

26. Slide 26: U.S. Commercial Prior Authorization Submissions

    U.S. Commercial Prior Authorization Submissions • Steady increase in prior authorization submissions fueled by increased capacity, effective patient outreach Total Submissions programs and reduction of fatigue/burden of obtaining 2019: 3,257 insurance approvals 2018: 2,477 • With positive policies i

27. Slide 27: U.S. Commercial Prior Authorization Approvals

    U.S. Commercial Prior Authorization Approvals • Continued increase in approvals per week as a result of positive coverage policies Total Approvals • The median time to approval for 2019 submissions was 2019: 2,445 reduced to 25 days as compared to 90 days in 2018 2018: 1,230 • Majority of cases appr

28. Slide 28: Commercial Development

    Commercial Development 28 © Inspire Medical Systems, Inc. All Rights Reserved

29. Slide 29: Targeted Approach to Market Development and Patient Outreach

    We have a Targeted Approach to Market Development and Patient Outreach Market Development Direct-to-Patient Outreach Machine  Inspire has built a referral network with physicians across the treatment continuum Company Sponsored Public Relations  Differentiated marketing engine capable of generatin

30. Slide 30: Sales Strategy Engages All Key Stakeholders Across the OSA Treatment Paradigm

    Our Sales Strategy Engages All Key Stakeholders Across the OSA Treatment Paradigm Holistic Approach to Engagement Across Key Stakeholders in the OSA Treatment Paradigm U.S. Sales Organization Sleep  73 Territories in U.S. and 8 in Europe Patients Centers  Managed by 4 Area Vice-Presidents and 14 R

31. Slide 31: Keys To Driving a Strong Territory

    Keys To Driving a Strong Territory Territory Manager Strategy  New Centers and Territory Framing How TMs Spend their Time  Leading with four Area Vice-Presidents  Building Regional Manager Team, increased to 14 in Q4 2019 FCRs to Support  Adding Field Clinical Reps (FCRs) to support implants Att

32. Slide 32: The Great Balancing Act

    The Great Balancing Act KEEPING CONTROL WHILE GROWING FAST Focus on the rapid scaling of commercialization while ensuring proper training to maintain control of high-quality therapy outcomes 32 © Inspire Medical Systems, Inc. All Rights Reserved

33. Slide 33: The Inspire Control System

    The Inspire Control System Prevalence Pool 17M people in the U.S. with Incidence Pool OSA, of which 500k new End Goal: Strong ≈25% could be cases per year treated with who could be Patient Outcomes Inspire treated using Inspire Question 3: How Question 1: How Question 2: How Question 4: How Question

34. Slide 34: Financials

    Financials 34 © Inspire Medical Systems, Inc. All Rights Reserved

35. Slide 35: Annual Revenue Growth

    Annual Revenue Growth ($ in millions) $82.1 2016 – 2019 CAGR: 71.1% $50.6 $28.6 $16.4 2016 2017 2018 2019 Annual Gross Margin 76.2% 78.9% 80.1% 83.4% 2020 Guidance • FY2020 revenue range of $115M - $119M, representing 40% - 45% growth from FY2019 • FY2020 gross margin between 82% - 84% 35 © Inspire

36. Slide 36: Quarterly Revenue

    Quarterly Revenue ($ in Millions) 2020 Guidance: FY2020 revenue of $115M - $119M, representing 40% - 45% $26.9 growth from FY2019 revenue of $82.1M $20.9 $18.0 $16.6 $16.3 $13.1 $10.9 $10.0 $10.0 $7.3 $6.0 $4.7 $5.2 $5.3 $3.0 $3.6 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19

37. Slide 37: In Q4 2019, Inspire Experienced Strong YoY Growth

    In Q4 2019, Inspire Experienced Strong YoY Growth YoY Revenue ($ in millions) YoY Gross Margin YoY Growth: 62% YoY Increase: 350bps Territories $26.9 EQ4 2019: 73 EQ4 2018: 46 Q4 2019 Revenue Mix 84.2% US OUS 7% $16.6 80.7% 93% Q4 2018 Revenue Mix US OUS 11% 89% Q4 2018 Q4 2019 Q4 2018 Q4 2019 37 ©

38. Slide 38: Our Growth Strategies

    Our Growth Strategies  Ensure strong and consistent patient outcomes globally through planned and controlled expansion and robust physician training  Promote awareness among patients, ENT physicians, sleep centers, and referring physicians  Expand U.S. sales and marketing organization to drive ad

39. Slide 39: Significant First Mover Advantage

    Our Innovative Inspire Solution has a Significant First Mover Advantage Inspire Therapy is Strongly Positioned  FDA PMA approval since 2014 . More than 7,800 patients treated at over 350 medical Compelling Market centers across the U.S. and Europe Opportunity  Significant payor experience . 165 mi

40. Slide 40: Inspire Sleep Apnea Innovation

    & Inspire Sleep Apne

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