Inspire Medical Systems, Inc. · NYSE:INSP

Inspire Medical Systems — Investor Presentation (November 2020)

46 slides from Inspire Medical Systems's investor presentation, Nov 9, 2020

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

   Inspire Medical Systems, Inc. November 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: Update on Inspire Operations: Monitoring Future Impact of COVID-19

   Update on Inspire Operations: Monitoring Future Impact of COVID-19 . Q3 2020 revenue of $35.8M (72% increase from Q3 2019); reflects strong restart once the shutdown from the COVID-19 pandemic lessened . Continued to recruit and train new centers . Opened 42 new centers in Q3 2020; 16 in Q2 2020; an

5. Slide 5: Significant Business Progress Since IPO

   Significant Business Progress Since IPO: Strong Foundation in Place to Drive Greater Penetration Broader . Continue to Increase Volume by Training and Opening New Centers Commercial . Drive Increased Utilization at Existing Centers Expansion Phase . Continue to Maintain High quality Patient Outcomes

6. Slide 6: Commercial Execution: Opportunity to Accelerate Interest and Conversions

   Commercial Execution: Opportunity to Accelerate Interest and Conversions Our Direct-to-Patient Strategy Has Proven to Be Successful in Reaching and Educating Patients About Inspire Therapy… 1 Generating Interest 2 Qualifying Interest 3 Driving Conversion Selectively Expanding DTC Matching the Right

7. Slide 7: 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)  First and only FDA-approved neurostimulation Our History & Key Milestones technology for OSA 1990s: Medtronic (MDT) begins early work on the development of Inspire  More than 10,500 patients tr

8. Slide 8: Strong Management Team

   Strong Management Team Tim Herbert Rick Buchholz Randy Ban Phil Ebeling President, CEO & Chief Commercial Chief Financial Officer Chief Operating Officer Founder Officer  30+ Years of Experience  25+ Years of Experience  25+ Years of Experience  20+ Years of Experience 8 © Inspire Medical System

9. Slide 9: 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

10. Slide 10: 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 • Demonstrate

11. Slide 11: 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

12. Slide 12: 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

13. Slide 13: 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

14. Slide 14: 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,

15. Slide 15: Clinical Evidence

    Clinical Evidence 15 © Inspire Medical Systems, Inc. All Rights Reserved

16. Slide 16: Significant Body of Clinical Evidence Evaluating Inspire in more than 2,100 Patients

    Significant Body of Clinical Evidence Evaluating Inspire in more than 2,100 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

17. Slide 17: STAR Trial Met Both Primary Endpoints

    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

18. Slide 18: 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

19. Slide 19: 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

20. Slide 20: 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

21. Slide 21: Product and Indication Expansion

    Product and Indication Expansion 21 © Inspire Medical Systems, Inc. All Rights Reserved

22. Slide 22: 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 the  5th generation neurostimulator is in the development U.S. to patients as young as 13 years of age phase (including Down syndrome)  Ins

23. Slide 23: 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

24. Slide 24: Reimbursement

    Reimbursement 24 © Inspire Medical Systems, Inc. All Rights Reserved

25. Slide 25: AMA Grants Approval for New, Category I Procedure Codes

    AMA Grants Approval for New, Category I Procedure Codes The AAO-HNS physician society applied for a comprehensive, dedicated new CPT Code set for the hypoglossal nerve stimulation implant. These new codes will have payment rates measured only for Inspire and not blended, becoming effective January 1

26. Slide 26: Covered Lives Summary

    Covered Lives Summary Positive BCBS Plans: 82M Total Covered Lives Large Insurance Plans • Wellmark • Florida • Nebraska • Horizon • S. Carolina • Tennessee • N. Carolina • Idaho • HCSC (Illinois, • United Healthcare: 41M • Premera • Health Now NY Texas, etc.) • Aetna: 22M • Regence • Federal Employ

27. Slide 27: Medicare Local Coverage Determination (LCD)

    Medicare Local Coverage Determination (LCD) – All policy criteria consistent between MACs and Medicare coverage in all 50 states Final LCD MAC Publication Date Noridian March 15, 2020 Novitas March 15, 2020 First Coast (Florida) March 15, 2020 National Govt. Services April 1, 2020 (NGS) Palmetto Jun

28. Slide 28: 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 a Prepare/Submit a 1st Prepare/Submit a 2nd appeal Prior Authorization level appe

29. Slide 29: U.S. Commercial Prior Authorization Submissions

    U.S. Commercial Prior Authorization Submissions • Steady increase in prior authorization submissions fueled by Total Submissions increased capacity, effective patient outreach programs and reduction of fatigue/burden of obtaining insurance approvals 2020 YTD: 2,728 2019: 3,257 • With positive polici

30. Slide 30: U.S. Commercial Prior Authorization Approvals

    U.S. Commercial Prior Authorization Approvals • Continued increase in approvals per week as a result of Total Approvals positive coverage policies 2020 YTD: 2,341 • The median time to approval for 2020 submissions has been 2019: 2,445 reduced to 12 days as compared to 25 days in 2019 and 90 2018: 1,

31. Slide 31: Commercial Development

    Commercial Development 31 © Inspire Medical Systems, Inc. All Rights Reserved

32. Slide 32: 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

33. Slide 33: Education of Sleep MDs and Building Patient Referrals

    Education of Sleep MDs and Building Patient Referrals Opportunity For “Re-calibration” Discussions Regarding Progress Made To Streamline Patient Experience • Invasive • Risk / Reward ???? • Costly • Complex • Value Proposition?? 33 © Inspire Medical Systems, Inc. All Rights Reserved

34. Slide 34: DTC Program: Strategic Pillars

    DTC Program: Strategic Pillars #1: Drive Efficient #2: Educate & #3: Convert to #4: Convert Awareness Segment IS.com Appointment Appointment to Implant Paid Media Customized journeys Advisor Inspire App, Tablet, • Breakthrough Content “Get Started” Care Patient Tracking • Playbook Testing Program (A

35. Slide 35: Advisor Care Program (ACP)

    Advisor Care Program (ACP) Connecting Qualified Patients Directly to our Centers Inspire Advisor Call connected to Patient calls number on MD calls clinic; Inspire Advisor Listing Connects patient with LIVE scheduler Turning Patient Interest into Actionable Steps Toward an Inspire Implant 35 © Inspi

36. Slide 36: Our Sales Strategy Engages All Key Stakeholders

    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  98 Territories in U.S. and 9 in Europe Patients Centers  Managed by 4 Area Vice-Presidents and 18 R

37. Slide 37: 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 4 Area Vice Presidents  Building Regional Manager Team, increased to 18 in Q3 2020 FCRs to Support (added 4 in 2020)  Adding Field Clinical Reps (FCRs) to Atten

38. Slide 38: 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 38 © Inspire Medical Systems, Inc. All Rights Reserved

39. Slide 39: The Inspire Control System

    The Inspire Control System Prevalence Pool 17M people in the U.S. with Incidence Pool OSA, of which 500k new Ensure 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 5:

40. Slide 40: Financials

    Financials 40 © Inspire Medical Systems, Inc. All Rights Reserved

41. Slide 41: Quarterly Revenue

    Quarterly Revenue ($ in Millions) $35.8 $26.9 $20.9 $21.3 $18.0 $16.6 $16.3 $13.1 $12.2 $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 3Q19 4Q19 1Q20 2Q20 3Q20 79% 69% 56% 91% 90% 81% 80% 66% 62% 65% 60% 62% 31% -32% 72% % Y

42. Slide 42: Q3 2020 Performance

    Q3 2020 Performance YoY Revenue ($ in millions) YoY Gross Margin Territories EQ3 2020: 98 YoY Increase: 210bps YoY Increase: 72% EQ3 2019: 66 $35.8 Q3 2020 Revenue Mix 85.5% US OUS 8% 83.4% $20.9 92% Q3 2019 Revenue Mix US OUS 11% 89% Q3 2019 Q3 2020 Q3 2019 Q3 2020 42 © Inspire Medical Systems, Inc

43. Slide 43: Annual Revenue and Gross Margin

    Annual Revenue and Gross Margin ($ in millions) Guidance [$110-112] 2016 – 2019 CAGR: 71.1% $82.1 $50.6 $28.6 $16.4 2016 2017 2018 2019 2020 Annual Gross Margin 76.2% 78.9% 80.1% 83.4% Guidance [84 - 85%] Revised 2020 Guidance on November 2, 2020: • FY2020 revenue range of $110M - $112M, representin

44. Slide 44: 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

45. Slide 45: Our Innovative Inspire Solution has a 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 10,500 patients treated at over 420 medical Compelling Market centers across the U.S. and Europe Opportunity  Significant payor experience . 207 m

46. Slide 46: Inspire Sleep Apnea Innovation

    & Inspire Sleep Apne

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