Healthcare Conference Book 2012

T H E 24T H A N N UA L

P I P E R J A F F R AY H EALTH CA R E C ON F E RE NC E

November 27–28, 2012 in New York City

T H E 24T H A N N UA L

P I P E R J A F F R AY H EALTH CA R E C ON F E RE NC E November 27–28, 2012 in New York City

Piper Jaffray does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decisions. This report should be read in conjunction with important disclosure information, including an attestation under Regulation Analyst Certification, found at the end of this report or at the following site: http://www.piperjaffray.com/researchdisclosures.

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

CONTENTS • Event Map. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 • Panel Descriptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 • Panelist Biographies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 • Participating Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 • Company Overviews. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 • Piper Jaffray Investment Research Team Biographies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 • Technical Research. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 • Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 • Important Research Disclosures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

THE NEW YORK PALACE Second Floor

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Fourth Floor

Fifth Floor

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2 5

1 and 2

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Track Seven

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1:1 Meetings

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F&B and Informal Networking

louis (mansion)

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Speaker Ready

rutherford (mansion)

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Literature & Internet

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Track One

holmes

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Track Two

garrison (mansion)

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Track Three

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Track Four

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Track Five

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Track Six

hubbard

kennedy

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kennedy

villard ballroom reid salon

adams stanford (mansion)

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

PANEL DESCRIPTIONS Tuesday, November 27 10:00-11:00 a.m.

Clinical Lab and Molecular Diagnostics Reimbursement Panel Since 2011, we have closely followed the drama unfolding regarding Palmetto’s Molecular Diagnostics Program (MolDx). More recently, Medicare published the final rate update for 2013, which slashed one of the primary anatomic pathology codes by 50%. We will have an in-depth discussion on Palmetto’s MolDx program and how industry stakeholders are dealing with the changes. We will examine how the changing reimbursement landscape is affecting the clinical lab industry, where reimbursement is heading and who will be impacted the most.

Tuesday, November 27 11:00 a.m. - 12:00 p.m.

Expert Panel on MS: An Oral Revolution – How the MS Treatment Landscape is Changing This panel discussion will look at how physicians will treat multiple sclerosis patients with the availability of novel oral drugs, starting with Novartis’ Gilenya® and Sanofi’s Aubagio®, followed by a highly anticipated approval and launch of Biogen’s BG-12. Also in the mix will be use of anti-JCV assay to identify more appropriate Tysabri patients and the potential approval of Sanofi’s LEMTRADA™, which has shown the best efficacy ever for an MS drug, but has notable safety concerns. Our two expert panelists are heavily involved in clinical trials, with one who had reshaped MS treatment by being among the first to study interferon beta-1b.

Tuesday, November 27 12:00-1:00 p.m.

Panel on Policy: The Elections are over. What now?

This panel discussion will look at the answer to “What now?” given the U.S. election outcomes. “Is ObamaCare (ACA) on an inevitable track to completion (Obama win)?” Or alternatively, “How much of the ACA will be undone and how quickly” (Romney win)?” And as importantly, now that the election’s winners and losers have been tallied, what needs to happen among payers and providers in order to slow or even reverse the burdensome/destructive costs of healthcare in the U.S.? Our two speakers are experienced, well-connected and best of all, highly opinionated.

Tuesday, November 27 2:00-3:00 p.m.

Home Health and Hospice Trends for the Future The biggest overhang on the home health industry is uncertainty related to the rebasing of the payment system in 2014. Join us for a detailed glimpse into where home health reimbursement has been and what could unfold with rebasing in 2014. We will hear from two of the industry’s top CEOs, as well as the head of the Partnership for Quality Home Healthcare. We intend to discuss industry trends, drivers and challenges, as well as how the changing landscape will impact home health providers and where new opportunities could be derived.

Wednesday, November 28 10:00-11:00 a.m.

Expert Panel on HCV: Is There Room for More Than One or Two? The panel will focus on the implications of the HCV data presented at the AASLD conference in early November. We will discuss physician preference given the range of interferon and ribavirin sparing treatment regimens entering late stage clinical trials by Gilead, Abbott, BMS, JNJ and others. We will also discuss implications of data on cost of cure and pace of treatment. Clinical and commercial strategy for earlier stage competitors will also be touched on. Our panelists have participated in trials across the spectrum of HCV drugs and have no shortage of opinions to share.

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

PANELIST BIOGRAPHIES Eric Berger CEO Partnership for Quality Home Healthcare Eric Berger serves as the CEO of the Partnership for Quality Home Healthcare (“the Partnership”). Representing more than 1,500 skilled home healthcare agencies nationwide, the Partnership is dedicated to securing patient access to clinically and cost-effective skilled home healthcare services and to advancing innovative solutions that strengthen the skilled home healthcare benefit for the nation’s seniors and taxpayers.

Berger’s experience prior to joining the Partnership includes his service as the senior vice president of public policy and communications for DaVita, a Fortune 500 kidney care provider, and as the vice president of government relations and public policy for US Oncology, the nation’s largest network of community-based cancer caregivers and clinical researchers.

Berger’s public sector experience includes services on the professional staff of the commerce committee of the U.S. House of Representatives, where he participated in the development of Medicare, Medicaid, health insurance, FDA and other reform legislation, including the Balanced Budget Acts of 1995 and 1997. Berger also served as Virginia’s legislative and policy director for health and human resources, where he participated in the development in legislation for the commonwealth’s health and social services agencies.

Berger’s earned a master’s degree at the University of Virginia and a bachelor’s degree in political science and economics at the University of Richmond.

Paul Gaglio, M.D., FACP, AGAF Professor of Clinical Medicine Albert Einstein College of Medicine, Montefiore Einstein Liver Center Paul Gaglio Sr. is a professor of clinical medicine at the Albert Einstein College of Medicine and medical director of adult liver transplantation at the Montefiore Medical Center in Bronx, N.Y. Gaglio received his bachelor’s degree in biology and Italian from Rutgers College and his doctorate from UMDNJ-New Jersey Medical School. He completed an internship and residency at the Mount Sinai Medical Center in Manhattan, N.Y., and digestive disease/liver transplantation fellowship at New Jersey Medical School. Gaglio later served as the medical co-director of the liver transplantation program at Tulane University Medical School. Previously, he was the medical director of adult liver transplantation and associate medical director of the Center for Liver Disease and Transplantation at the Columbia University Medical Center. In December 2007, Gaglio joined Albert Einstein College of Medicine to assist in establishing a new liver transplantation program at the Montefiore Medical Center, and was appointed professor of clinical medicine.

Gaglio’s clinical research focuses on viral hepatitis, acute liver failure, nonalcoholic fatty liver disease and liver transplantation, particularly recurrent hepatitis C following transplantation. He has authored multiple manuscripts, book chapters and abstracts on these topics and has participated in numerous research and clinical trials related to the therapy of hepatitis B and C, liver transplantation and treatment of liver failure. Gaglio has lectured nationally and internationally on multiple aspects of liver disease including viral hepatitis and liver transplantation, and has received several teaching awards throughout his career.

Gaglio is active in regional and national committees related to liver transplantation, serving in the past as regional review board chairman and currently as chairman of the clinical policy committee for the New York Center for Liver Transplantation. He is a member of the American Society of Transplantation and AASLD. As a recipient of tissue transplantation in 2000, he has been a passionate advocate for organ and tissue donation, lecturing on his personal experience related to receiving this incredible gift.

C. Steven Guenthner President and Principal Financial Officer Almost Family Inc. Steven Guenthner serves as president and principal financial officer of Almost Family, Inc. Prior to June 2012, Guenthner served as senior vice president and CFO of the company since 1992. From 1983 through 1992 Guenthner was employed as a CPA. with Arthur Andersen LLP. Before joining the company, he served as a senior manager in the firm’s accounting and audit division specializing in mergers and acquisitions, public companies and the healthcare industry.

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

Peter Kim, M.D. Associate Clinical Professor of Clinical Neurology State University of New York at Syracuse Peter Kim is an associate clinical professor of clinical neurology at State University of New York at Syracuse. After earning his medical degree from the State University of New York at Syracuse, Kim completed an internal medicine internship at the University of Rochester and then a neurology residency and research fellowship at Columbia University. Kim’s interests include clinical trials to evaluate new therapies for multiple sclerosis.

Fred D. Lublin, M.D., FAAN Mount Sinai Medical Center, Inc. Director, The Corinne Goldsmith Dickinson Center for Multiple Sclerosis Dr. Fred Lublin is the Saunders family professor of neurology and the director of the Corinne Goldsmith Dickinson Center for Multiple Sclerosis at Mount Sinai Medical Center. He is an internationally renowned authority on the clinical and scientific aspects of MS and one of the foremost experts in experimental therapies.

As a neuroimmunologist, Lublin has a special interest in immune functions and abnormalities affecting the nervous system. He has been involved in both basic science and clinical research. In 2005, Lublin received a $25 million grant from the National Institutes of Health (NIH) to conduct a nationwide multi-center study on the effectiveness of combining two disease-modifying drugs. This grant was renewed in 2008, bringing the total allocated by the NIH to $44 million, one of the largest grants ever given for MS research.

Lublin was chairman of the National Multiple Sclerosis Society (USA) advisory committee on clinical trials of new MS drugs, and he is currently chair of the Clinical Advisory Committee of the New York City Chapter of the National MS Society. Lublin and his colleagues at the National MS Society (USA) have redefined the clinical course definitions of MS. Lublin has published numerous scientific articles and belongs to many professional societies and advisory boards. Lublin has served as a consultant to the NIH, as well as to pharmaceutical and biotech companies in all phases of drug development, and in preparation for drug presentation to the FDA and its advisory panels.

Lublin received his medical degree at Jefferson Medical College, Philadelphia, Pa. He completed his internship in internal medicine at the Bronx Municipal Hospital, Albert Einstein Medical Center, and his residency at the New York Hospital, Cornell Medical Center.

Joseph A. Odin Mount Sinai Medical Center, Inc. Associate Professor of Medicine, Liver Diseases Dr. Joseph Odin is an assistant professor in the division of liver diseases with an interest in patients with autoimmune liver diseases, including primary biliary cirrhosis, primary sclerosing cholangitis and autoimmune hepatitis, and those with hepatitis C infection (HCV). This interest is both clinical and translational research oriented.

Odin’s research program focuses on the importance of clearance of apoptotic or dying cells from the liver in the regulation of chronic inflammatory responses in each of the above diseases. The roles of bile duct epithelial cells, macrophages and dendritic cells in this process are of particular interest. Systems have been developed to analyze these cell types in vitro and in vivo. The overall research aim is to identify environmental, including toxins and vitamin D, and genetic factors, that influence this process in order to identify novel means of decreasing chronic liver inflammation. This research program is a continuation of studies regarding the pathogenesis of primary biliary cirrhosis (PBC) that he began as a postdoctoral fellow at Johns Hopkins School of Medicine. Much of this work is part of the PBC Research Center at Mount Sinai and has been funded at various times by a K08 award from the NIH/NIDDK, the Artzt Family Foundation Trust, the New York City Speaker’s Fund, The American Liver Foundation and the Hirschl/Weill-Caulier Trust. Odin was also the recipient of a Research Excellence in GI and Liver Disease (REGAL) Award presented by the American Gastroenterologic Association. The studies of autoimmune liver disease are performed in collaboration with Nancy Bach, M.D. and the studies of HCV infection are partly in collaboration with Andrea Branch, Ph.D. Current members of the laboratory include Jorge Allina, M.D., Carmen Stanca, M.D. and John Garber, M.D. In his clinical practice, Odin accepts patients with all types of liver disease. Those with HCV infection are treated with pegylated-interferon/ ribavirin combination therapy. Patient support groups are available for those with HCV infection and PBC. Those with end-stage liver disease are referred to RMTI physicians at Mount Sinai for evaluation for liver transplantation. Odin is the principal investigator or co-investigator for several of these clinical trials.

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

Odin completed his postdoctoral fellowship in the division of gastroenterology and hepatology at the Johns Hopkins School of Medicine in 2000. Prior to this, he was an internal medicine resident at Mount Sinai. Following acceptance into the Medical Scientist Training Program at the Mount Sinai School of Medicine in 1986, he was awarded his Ph.D. in 1991 upon completion of his doctoral dissertation under the supervision of Dr. Jay Unkeless. He received his master’s degree in 1993, at which time he was selected for an NIDDK Medical Student of the Year Award and an American Federation for Clinical Research Student Award. Currently, he is a member of the American Association for the Study of Liver Diseases and the American Gastroenterology Association.

Stephen Parente, Ph.D., MPH, MS Minnesota Insurance Industry Chair of Health Finance - Carlson School of Management Director of Medical Industry Leadership Institute - University of Minnesota Stephen Parente is the Minnesota insurance industry chair of health finance in Carlson School of Management and the director of the Medical Industry Leadership Institute at the University of Minnesota.

As a professor in the finance department, he specializes in health economics, information technology and health insurance. Parente has been the principal investigator on large funded studies regarding consumer directed health plans, health information technology and health policy micro-simulation.

Parente is currently on the governing board of the Health Care Cost Institute. He is the founding director of the Medical Valuation Laboratory, a nine-college interdisciplinary effort to accelerate medical innovation from scientists, clinicians and entrepreneurs.

Additionally, he was a health policy advisor for the McCain 2008 presidential campaign and served as legislative fellow in the office of Senator John D. Rockefeller IV (D WV) in 1992-1993.

Parente holds a doctorate from Johns Hopkins University.

Mick Raich President and CEO Vachette Pathology Mick Raich is a nationally recognized consultant in pathology and laboratory reimbursement and practice strategy. He founded Vachette Pathology in April 2002. Since then, Vachette has grown into a nationwide consulting and management firm that specializes in working with independent labs, hospital based pathology practices, hospital and health systems and university pathology groups. Vachette now provides services to more than 1,600 pathologists and 60 clients nationwide.

Raich’s 31-year healthcare career began in direct patient care, bereavement counseling and hospital management, and progressed into pathology billing sales and management, pathology practice sales and marketing, revenue cycle management and strategic consulting.

For the last 10 years, he has served as president and CEO of Vachette Pathology.

Michael Snyder Principal Clinical Lab Business Solutions, LLC Michael Snyder is the principal for Clinical Lab Business Solutions (CLBS), a consulting firm that works with laboratories to deliver collaborative solutions to health plans and employer groups. Snyder has 30 years of experience in the management of clinical laboratories.

This knowledge, combined with work completed for a national health plan, has given Snyder the tools to form CLBS and Laboratory Management Services, a management services company that provides value to the health insurance and laboratory industries.

Prior to forming CLBS, Snyder was vice president of laboratory networks for UnitedHealthcare (UHC). In that capacity, he directed the national strategy for laboratory services and participated in the development of UHC’s national provider network. Additionally, Snyder served as director of business development for Mount Sinai Hospital’s Center for Clinical Laboratories, where he saw outreach revenues triple in the implementation of a business plan focused on billing solutions and demonstrated the value of the medical center’s laboratory to attending faculty. Finally, Snyder served as an executive with LabCorp (1980-2000), one of the largest commercial laboratories in the U.S. Snyder is a frequent speaker on the subject of managed care contracting and the value of managed networks for laboratory services.

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

Tony Strange Chairman and CEO Gentiva Health Services, Inc. Tony Strange has been chief executive officer and chairman of Gentiva Health Services, Inc. since January 2011 and president since November 2007. He also served as chief operating officer from November 2007 through the end of 2008. Strange joined Gentiva in 2006 as executive vice president and president, Gentiva Home Health, following its acquisition of The Healthfield Group, Inc. In that position, he directed the company’s home healthcare, hospice, durable medical equipment, infusion and respiratory therapy operations.

Strange was previously president and chief operating officer of The Healthfield Group since 2001 and held a number of other management positions with that company since 1990, as well as several earlier management positions with Glass Rock Home Healthcare.

Strange holds a bachelor’s degree from the University of South Carolina.

Stephen J. Ubl President and CEO AdvaMed Stephen J. Ubl is president and CEO of AdvaMed, the world’s largest medical technology association. AdvaMed has more than 1,600 member companies, subsidiaries and divisions producing medical devices, diagnostic products and medical information systems.

Ubl is recognized as a top healthcare advocate and policy expert with considerable experience across multiple health policy sectors. His accomplishments include landmark reforms related to the U.S. Food and Drug Administration’s product review process and Medicare’s coverage and reimbursement of medical technologies. Ubl is consistently ranked among Washington D.C.’s top lobbyists by leading Washington political publications.

Ubl first joined AdvaMed in 1998 as executive vice president of federal government relations. He left the organization in 2004 to open his own healthcare consulting firm, serving Fortune 500 healthcare companies and leading investment banks. In 2005, he was chosen to lead AdvaMed as its president and CEO. Prior to AdvaMed, Ubl was vice president of legislation for the Federation of American Hospitals. Ubl began his Washington career on Capitol Hill, where he worked for U.S. Senator Charles E. Grassley (R-IA.).

Ubl holds a degree in political science from St. Cloud State University, St. Cloud, Minn.

Rina Wolf Vice President Commercialization Strategies, Consulting & Industry Affairs XIFIN, Inc. Rina Wolf is a nationally recognized expert in the field of laboratory commercialization and reimbursement, with more than 20 years of experience in the diagnostic laboratory industry, specializing in molecular diagnostic laboratories. She lectures extensively on these topics and has consulted for major laboratories and laboratory associations throughout the U.S. She is a former president and board member of the California Clinical Laboratory Association and is an active participant with the ACLA (American Clinical Laboratory Association) and the Personalized Medicine Coalition.

Most recently, Wolf held the position of vice president of reimbursement and regulatory affairs at Axial Biotech, Inc., where she was responsible for creating and implementing their successful reimbursement strategies. Prior to Axial Biotech, Wolf held executive positions in the area of commercialization and reimbursement at RedPath Integrated Pathology, Inc., Genomic Health, Inc. and Esoterix (now LabCorp).

Wolf holds a bachelor’s degree from UCLA and a master’s degree.

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

William B. Yarmuth Chairman and CEO Almost Family Inc. William Yarmuth is currently chairman and CEO of Almost Family where has been a director since 1991, when the company acquired National Health Industries, where Yarmuth was chairman, president and CEO. After the acquisition, Yarmuth became president and chief operating officer of the company. In 1992, he became chairman and CEO. He was chairman of the board, president and CEO of National Health Industries from 1981 to 1991.

Matthew B. Zubiller Vice President, Decision Management McKesson Matthew Zubiller is vice president for McKesson’s decision management business. He leads the company’s evidence-based decision support and personalized medicine initiatives, areas that promise to change the paradigm for healthcare practice and delivery. Responsible for McKesson’s flagship InterQual product line and its Clear Coverage SaaS-based decision support platform, he drives operations, strategy and product development for the business. He is a frequent speaker and author on topics such as next generation exception-based utilization management, decision support and public policy for molecular and genetic testing.

Previously, Zubiller created and ran McKesson’s advanced diagnostics management business and was part of the corporate strategy team. His background includes diagnostics, healthcare, enterprise software, global strategy consulting and M&A. Recognized for his innovation, Zubiller was voted to Healthspottr’s “The Future of Health 100” list (ranked #49). Zubiller is a leading voice and thinker helping to usher in a new collaborative era of healthcare where stakeholders work together to develop and deploy connected decision management solutions that benefit all stakeholders by optimizing decision-making at all points of care.

Zubiller holds a bachelor’s degree in economics from the Wharton School, University of Pennsylvania, a Master of Business Administration degree from the London Business School, and a certificate in management of technology jointly from the University of California, Berkeley’s HAAS School of Business and the College of Engineering.

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

PARTICIPATING COMPANIES (as of November 12, 2012) Company Name Abaxis Inc. ABIOMED, Inc. Acceleron Pharma, Inc. Accuray Incorporated AcelRx Pharmaceuticals, Inc. Achillion Pharmaceuticals, Inc. Acorda Therapeutics, Inc. Advisory Board Co. Aerocrine AB Affymax, Inc. Affymetrix, Inc. AirStrip Technologies, Inc. Akorn, Inc. Alexion Pharmaceuticals, Inc. Allergan Inc. Almost Family Inc. Alnylam Pharmaceuticals, Inc. Alphatec Holdings, Inc. Amgen Inc. AmSurg Corp.

Anacor Pharmaceuticals, Inc. Angiochem Inc. AngioDynamics Inc. Angioscore, Inc. Anthera Pharmaceuticals, Inc. Apricus Biosciences, Inc. Arena Pharmaceuticals, Inc. Array BioPharma Inc. ArthroCare Corporation Aspire Bariatrics, LLC Athersys, Inc. Avanir Pharmaceuticals Baxter International Inc. Becton, Dickinson and Company Benefitfocus.com, Inc. BG Medicine, Inc. BioDelivery Sciences International, Inc. BioFire Diagnostics, Inc. BioMarin Pharmaceutical Inc. bioMerieux Bioventus LLC Blue Belt Technologies, Inc. Cadence Pharmaceuticals Inc. Cantel Medical Corp.

CardioDx, Inc. CardioFocus, Inc. CardioInsight Technologies, Inc. Cayenne Medical, Inc. Celgene Corporation Cepheid Cerner Corporation Cerus Corporation Chimerix, Inc. Cohera Medical, Inc. Colibri Heart Valve, LLC Collegium Pharmaceutical, Inc. Conceptus, Inc. CONMED Corporation CorMatrix Cardiovascular, Inc. Coronado Biosciences, Inc. Correct Care Solutions, LLC CryoLife, Inc.

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Ticker ABAX ABMD Private ARAY ACRX ACHN ACOR ABCO AEROB SS AFFY AFFX Private AKRX ALXN AGN AFAM ALNY ATEC AMGN AMSG ANAC Private ANGO Private ANTH APRI ARNA ARRY ARTC Private ATHX AVNR BAX BDX Private BGMD BDSI Private BMRN BIM FP Private Private CADX CMN Private Private Private Private CELG CPHD CERN CERS Private Private Private Private CPTS CNMD Private CNDO Private CRY

Company Name Curis Inc. Cutera, Inc. CVRx, Inc. Cyberonics, Inc. Depomed Inc. Derma Sciences Inc. DexCom, Inc. DFINE Inc. Discovery Laboratories Inc. DURECT Corporation Dyax Corp.

DynaVox Inc. Elements Behavioral Health Emergent BioSolutions, Inc. Endocyte, Inc. EndoGastric Solutions Endologix Inc. Endosense SA EndoStim Inc. EnteroMedics, Inc. Epizyme, Inc. Epocrates, Inc. Esperion Therapeutics, Inc. Exactech Inc. Exelixis, Inc. Femasys Inc. FivePrime Therapeutics, Inc. Fluidigm Corporation Fresenius Medical Care AG Galapagos NV Galena Biopharma, Inc. GenMark Diagnostics, Inc. Genomic Health, Inc. Gentiva Health Services, Inc. GetWellNetwork, Inc. Globus Medical, Inc. Greatbatch, Inc. Greenway Medical Technologies Hansen Medical, Inc. Healthland, Inc. Healthways, Inc. HeartWare International Inc. Heat Biologics, Inc. Henry Schein, Inc. Hill-Rom Holdings, Inc. Histogenics Corporation HMS Holdings Corp.

Hyperion Therapeutics, Inc. ICU Medical, Inc. IDEV Technologies, Inc. IDEXX Laboratories Inc. Illumina, Inc. Impax Laboratories, Inc. Imprivata, Inc. IMRIS, Inc. Incyte Corporation Insulet Corporation Integra LifeSciences Holdings Corporation Integrated Diagnostics Inc. IntelliPharmaCeutics International Inc. Intuity Medical, Inc. IPC The Hospitalist Co.

Ticker CRIS CUTR Private CYBX DEPO DSCI DXCM Private DSCO DRRX DYAX DVOX Private EBS ECYT Private ELGX Private Private ETRM Private EPOC Private EXAC EXEL Private Private FLDM FMS GLPYY GALE GNMK GHDX GTIV Private GMED GB GWAY HNSN Private HWAY HTWR Private HSIC HRC Private HMSY HPTX ICUI Private IDXX ILMN IPXL Private IMRS INCY PODD IART Private IPCI Private IPCM

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

Company Name

Ticker

ISIS Pharmaceuticals Inc. ISIS Jazz Pharmaceuticals, Inc. JAZZ K2M, Inc. Private Kips Bay Medical, Inc. KIPS KnowledgePoint360 Group, L.L.C. Private Lanx, LLC Private LDR Medical Private Lexicon Pharmaceuticals Inc. LXRX MAKO Surgical Corp MAKO MannKind Corp.

MNKD Masimo Corporation MASI MedAssets, Inc. MDAS Medicago Inc. MDG CN Medical Action Industries Inc. MDCI Medivation Inc. MDVN MEDNAX, Inc. MD Medtronic, Inc. MDT Merit Medical Systems, Inc. MMSI Metabolon, Inc. Private MethylGene Inc. MYG CN MWI Veterinary Supply, Inc. MWIV Myriad Genetics, Inc. MYGN Nanosphere, Inc. NSPH Natera, Inc. Private National Research Corp.

NRCI Natus Medical Inc. BABY Nektar Therapeutics NKTR NeoStem, Inc. Private Neurocrine Biosciences Inc. NBIX Neuronetics Private Nevro Corp.

Private NewLink Genetics Corporation NLNK Novadaq Technologies Inc. NVDQ Novavax, Inc. NVAX NuVasive, Inc. NUVA Nxstage Medical, Inc. NXTM NxThera, Inc. Private Obagi Medical Products, Inc. OMPI Obalon Therapeutics, Inc. Private Omeros Corporation OMER OMNI life science, Inc. Private Omnicell, Inc. OMCL Oncolytics Biotech Inc. ONC Oncothyreon Inc. ONTY OptiMedica Corporation Private OrbusNeich Co., Ltd. Private Orthofix International NV OFIX Osiris Therapeutics, Inc. OSIR Pacific Biosciences of California, Inc. PACB Pacira Pharmaceuticals, Inc. PCRX Palatin Technologies Inc. PTN Patterson Companies Inc. PDCO PerfectServe, Inc. Private Physicians Endoscopy L.L.C. Private Phytel, Inc. Private POZEN Inc. POZN Pulmonx, Inc. Private Pyramid Healthcare, Inc. Private QIAGEN N.V. QGEN Quality Systems, Inc. QSII Questcor Pharmaceuticals, Inc. (1:1 Meetings only) QCOR Quidel Corp.

QDEL

Company Name

Ticker

Rainbow Medical Private Regeneron Pharmaceuticals Inc. REGN Repligen Corporation RGEN ReShape Medical Private ResMed Inc. RMD REVA Medical, Inc. RVA AU RF Surgical Systems, Inc. Private Rigel Pharmaceuticals RIGL Rochester Medical Corp.

ROCM Sagent Pharmaceuticals, Inc. SGNT Salix Pharmaceuticals, Ltd. SLXP Santarus Inc. SNTS Sarepta Therapeutics, Inc. SRPT SentreHEART, Inc. Private Signature Diagnostics AG Private Sonitus Medical, Inc. Private Sorin SpA SRN St. Jude Medical, Inc. STJ STAAR Surgical Company STAA Sunesis Pharmaceuticals, Inc. SNSS Sunshine Heart Inc. SHC AU Surefire Medical, Inc. Private Svelte Medical Systems, Inc Private Symmetry Medical Inc. SMA Synageva BioPharma Corp.

GEVA Synergy Pharmaceuticals, Inc. SGYP Team Health Holdings, Inc. TMH TearScience Private TEI Biosciences, Inc. Private Teleflex Incorporated TFX The Spectranetics Corporation SPNC Theravance Inc. THRX Thoratec Corporation THOR Titan Medical Inc. TMD CN Tornier N.V. TRNX TranS1 Inc. TSON TransMedics, Inc. Private Tranzyme, Inc. TZYM Tria Beauty, Inc. (1:1 Meetings only) Private Trius Therapeutics, Inc. TSRX TYRX, Inc. Private Ulthera Inc. Private United Therapeutics Corporation UTHR Vascular Solutions Inc. VASC VCA Antech, Inc. WOOF Veran Medical Technologies, Inc. Private Vertex Pharmaceuticals Inc. VRTX ViroPharma Incorporated VPHM Vocera Communications, Inc. VCRA Volcano Corporation VOLC Watson Pharmaceuticals, Inc. WPI Wright Medical Group, Inc. WMGI XenoPort, Inc. XNPT YM BioSciences Inc. YMI Zimmer Holdings, Inc. ZMH ZIOPHARM Oncology, Inc. ZIOP Zogenix, Inc. ZGNX Zyga Technology, Inc. Private

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

C O M P A N Y O V E R V I E W S (Highlighted companies are followed by Piper Jaffray investment research) Abaxis Inc. (ABAX) – $36.61 Rating: Neutral Thesis: Abaxis recently announced two distribution agreements representing potentially significant growth catalysts for each of its business segments. First, Abaxis inked a distribution agreement with MWI Veterinary Supply — with MWI marketing and promoting Abaxis’ vet instrument/consumables portfolio. Next, Abaxis announced the signing of Abbott as the exclusive distributor of its medical products in the United States and China. We view the addition of these strong distribution partners as a positive and are warming to the story, but valuation keeps us on the sidelines for now.

Description: Abaxis Inc. develops and commercializes point-ofcare instruments and consumables for both human and companion animal diagnostics.

12-mo. Price Target: $37 (30x CY13E EPS + CY13E cash/share of $6.54) Market Cap: $802.5M David C. Clair, CFA, Research Analyst, 612 303-6747 William R. Quirk, CFA, Sr. Research Analyst, 612 303-6858 ABIOMED, Inc. (ABMD) – $13.26 Rating: Overweight Thesis: ABIOMED’s Impella® is a novel catheter-based heart pump with the potential to change treatment of high-risk PCI patients. Shares have come under pressure due to recent regulatory challenges and reimbursement concerns. Over the long term, the Impella franchise should continue to drive revenue and earnings outperformance with the recently approved Impella CP and other pipeline products serving as key catalysts.

Description: ABIOMED develops and manufactures a broad range of circulatory support devices with Impella 2.5 and the newly approved Impella CP as key products and primary growth drivers.

12-mo. Price Target: $18 (4.0x EV/CY13E sales, based on 41.7M shares outstanding and $89M of net cash) Market Cap: $512.2M Brooks E. West, Sr. Research Analyst, 612 303-6954 Thomas J. Gunderson, Sr. Research Analyst, 612 303-6467 Acceleron Pharma, Inc. – private Description: Acceleron Pharma is a privately held biopharmaceutical company focused on discovering, developing, manufacturing and commercializing novel protein therapeutics for orphan diseases and cancer. Acceleron utilizes proven biotherapeutic technologies and capitalizes on the company’s internal GMP manufacturing capability to advance its therapeutic programs rapidly and efficiently. The company’s lead candidate, Sotatercept (formerly ACE-011), is partnered with Celgene and is currently in Phase II development for the treatment of anemia caused by betathalassemia, myelodysplastic syndrome, diamond blackfan and chronic kidney disease.

Accuray Incorporated (ARAY) – $6.90 Description: Accuray has developed a robotic radiosurgery system. The CyberKnife® Robotic Radiosurgery System is designed to treat solid tumors and can be used as an alternative to traditional surgery. The CyberKnife system combines continuous

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image-guidance technology with a compact linear accelerator. Its image-guidance technology enables the system to track a tumor’s location and transmit any position corrections to the robotic arm prior to delivery of each dose of radiation. The CyberKnife system autonomously tracks, detects and corrects for tumor and patient movement in real-time during the procedure, enabling delivery of precise, high-dose radiation with sub-millimeter accuracy.

Furthermore, the CyberKnife procedure requires no anesthesia.

Market Cap: $497.8M AcelRx Pharmaceuticals, Inc. (ACRX) – $3.01 Rating: Overweight Thesis: We believe AcelRx’s lead product candidate, ARX-01—the company’s oral sufentanil formulation (known as the NanoTab) as an alternative to patient-controlled analgesia (PCA) for acute postoperative pain—is a relatively low-risk, late-stage opportunity that has significant potential to be a meaningful improvement over conventional, IV-based (usually delivering morphine) PCA. We view the product as a safer and more convenient way to deliver opioid-based treatment in the hospital setting (not to mention the potential for applications outside the hospital). ACRX has initiated three Phase III trials for ARX-01, with the first top-line data expected in late November. With a market cap of $66M and an enterprise value of only $53M, we continue to believe the risk/ reward profile for ACRX is attractive.

Description: AcelRx is focused on more optimal opioid-based treats in the acute care setting.

12-mo. Price Target: $8 (9x 2016E EPS of $1.47, discounted at 25%) Market Cap: $58.9M David Amsellem, Sr. Research Analyst, 212 284-9455 Achillion Pharmaceuticals, Inc. (ACHN) – $9.01 Rating: Overweight Thesis: Achillion retains full ownership of its pipeline of promising early-stage hepatitis C virus (HCV) drugs with proof-of-efficacy data on potential best-in-class NS5A inhibitor ACH-3102 and protease inhibitors sovaprevir (ACH-1625). With recent setbacks with HCV nucs at Bristol-Myers and Idenix, we continue to see Achillion as a likely acquisition target.

Description: Achillion Pharmaceuticals is developing drugs for the treatment of hepatitis C virus.

12-mo. Price Target: $16 (projected EV of $1.38B + YE:13E cash) Market Cap: $635.8M Edward A. Tenthoff, Sr. Research Analyst, 212 284-9403 Acorda Therapeutics, Inc. (ACOR) – $24.08 Rating: Neutral Thesis: Though sales of AMPYRA®, a treatment to improve ambulation in multiple sclerosis (MS) patients with walking difficulties, are annualizing near $300M and have demonstrated modest quarterly sequential growth, we believe that visibility on robust longer-term growth for the product remains murky. Significant continued adoption in our view will have to come from AMPYRA® gaining traction in patients with less severe ambulation difficulties, a tough challenge for Acorda given that treatment results in a meaningful (though not necessarily dramatic) benefit in a minority of patients. Further, though expansion opportunities for

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

AMPYRA® (ACOR is running proof-of-concept studies in cerebral palsy and chronic stroke patients) as well as other product opportunities (such as AC105 for spinal cord injury patients) offer the potential for longer-term growth, we noted that these are earlystage opportunities that will take years to bear fruit.

Description: Acorda is focused on therapies that can restore neurological function in patients with diseases of or injury to the central nervous system (CNS).

12-mo. Price Target: $25 (15x 2014E non-GAAP EPS of $1.73, discounted at 11%) Market Cap: $950.3M David Amsellem, Sr. Research Analyst, 212 284-9455 Advisory Board Co. (ABCO) – $45.46 Rating: Overweight Thesis: Advisory Board has become the go-to research and solutions provider for most hospitals in the United States as they navigate the changes in the healthcare system. The company’s reputation continues to grow as the top best practices research and analytical tools provider, and as hospitals move toward value-based models, demand for these services are likely to grow further. Services to the education segment, which shares many dysfunctional characteristics with healthcare, is ramping up well and we expect that to eventually provide significant growth opportunities. The recent ActiveStrategy acquisition should add more growth opportunities.

Description: Advisory Board is a provider of advisory services including best practices research, analysis, executive education and leadership development, business intelligence tools and support to healthcare providers.

12-mo. Price Target: $57 (30x CY14E PF EPS of $1.89) Market Cap: $1.58B Sean W. Wieland, Sr. Research Analyst, 415 616-1710 Aerocrine AB (AEROB SS) – 14.65 SEK Description: Aerocrine AB is a medical technology company focused on improving the treatment of patients with inflamed airways. Measuring inflammation helps doctors to diagnose, monitor and optimize therapy for people with inflammatory airway diseases.

Market Cap: 1.93B SEK Affymax, Inc. (AFFY) – $23.00 Rating: Overweight Thesis: We believe Omontys is well-positioned to capture significant market share among small- and mid-sized dialysis organizations—a $600M+ market. We believe additional upside could come from long term supply agreements with the larger dialysis organizations—particularly Fresenius Medical Care, which is testing Omontys in ~100 centers and 10,000 patients. We believe additional upside may be possible from greater use in the 10% of home dialysis patients in the United States, a $200M opportunity, and in Europe where Amgen does not have exclusive supply agreements.

Description: Affymax is focused on treatment of anemia in the dialysis setting.

12-mo. Price Target: $36 price target (32.5x 2015E non-GAAP EPS of $1.88, discounted 30%) Market Cap: $836.0M M. Ian Somaiya, Sr. Research Analyst, 212 284-9305

Affymetrix, Inc. (AFFX) – $3.13 Rating: Neutral Thesis: Affymetrix continues to face pressures in its core array business, with tight academic budgets, challenging European markets and competition impacting its gene expression business partially offset by growth in both cytogenetics and genotyping products. Affymetrix recently completed the purchase of life science reagent company, eBioscience, diversifying its business into higher growth markets although 3Q12 results suggest macro pressures are also impacting this segment. We believe Affymetrix needs to deliver consistent in-line/better-than-expected quarterly results to increase investor confidence and drive share price appreciation, which could prove challenging given current macro conditions. This keeps us Neutral on AFFX shares.

Description: Affymetrix, Inc. is a provider of gene expression and genotyping technology.

12-mo. Price Target: $4.50 (1x 2013E EV/Revenue) Market Cap: $221.3M William R. Quirk, CFA, Sr. Research Analyst, 612 303-6858 AirStrip Technologies, Inc. – private Description: AirStrip Technologies develops mobile medical software applications on a technology platform that enables physicians and nurses to access patient information. The company’s AppPoint™ software development platform securely delivers critical patient information directly from hospital monitoring systems, bedside devices, and electronic health records to a clinician’s mobile device. AppPoint™ also solves core challenges in mobile software development, such as developing native applications that deliver a rich user experience, while at the same time, being able to scale and adapt to an ever-changing world of mobile operating systems and devices. The company was founded in 2004 and is based in San Antonio, Texas.

Akorn, Inc. (AKRX) – $12.62 Rating: Overweight Thesis: We believe Akorn is an attractive emerging player in the generic pharmaceuticals space. Visibility on a long-term EPS CAGR north of 25% through at least 2015 is strong, in our view, pointing to an attractive risk/reward for AKRX shares in the context of a 2013 P/E of 19x. With the maturation of a deep abbreviated NDA (aNDA) pipeline (the pace of new product approvals is likely to accelerate starting in 2013), the dramatic expansion of the injectibles portfolio in 2012, and additional manufacturing capacity coming on-line (near-term at AKRX’s Somerset, N.J. facility dedicated to ophthalmic products and longer-term with recently acquired injectibles facilities in India), AKRX in our view is one of the most attractive emerging growth stories in broader specialty pharma.

Description: Akorn manufactures and markets a range of diagnostic and therapeutic ophthalmic pharmaceuticals as well as niche hospital drugs and injectible pharmaceuticals.

12-mo. Price Target: $21 PT is 22x 2014E EPS of $0.96, discounted at 12% Market Cap: $1.20B David Amsellem, Sr. Research Analyst, 212 284-9455

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

Alexion Pharmaceuticals, Inc. (ALXN) – $90.80 Rating: Overweight Thesis: Our Overweight rating is based on the premise that Street models underestimate PNH outside of the United States and the pace of adoption in aHUS. Though Street numbers have increased, they remain below our estimates for 2013-16, as we assume rapid uptake in aHUS patients and higher international PNH sales. We expect additional upside to be driven by continued expansion of Soliris label for STEC-HUS, NMO and transplant as well as the launch of asfotase alfa.

Description: Alexion is focused on the treatment of rare orphan diseases.

12-mo. Price Target: $126 price target (40x 2015E EPS of $4.52, discounted 20%) Market Cap: $17.64B M. Ian Somaiya, Sr. Research Analyst, 212 284-9305 Allergan Inc. (AGN) – $90.44 Rating: Neutral Thesis: Allergan has a diversified product portfolio that leaves the company well-positioned for sustained annual double-digit earnings growth. Though Botox® Cosmetic will likely see competitive headwinds in the United States with the re-entry of Xeomin in January 2013, this will be somewhat offset by the continued therapeutic expansion in chronic migraine (with strong initial uptake in the U.S.), overactive bladder (OAB) and upper limb spasticity.

Further, the ophthalmic business continues to see solid volume growth (particularly in overseas markets) and has limited generic exposure in the U.S., in our view. Despite these dynamics, we believe that AGN shares are fully valued with a 2013 P/E of 19x in the context of a low-to-mid teens five-year EPS CAGR. Further, with continued high levels of SG&A and R&D spend (with pipeline opportunities largely several years away from bearing fruit) and difficult macroeconomic conditions (particularly in the U.S. and Europe) possibly limiting the growth potential of the overall aesthetics business, we believe that further P/E expansion is unlikely.

Description: Allergan is focused on a range of therapeutic and aesthetic treatments.

12-mo. Price Target: $85 (17x 2014E EPS of $5.26, discounted at 10%) Market Cap: $27.18B David Amsellem, Sr. Research Analyst, 212 284-9455 Almost Family Inc. (AFAM) – $19.20 Rating: Neutral Thesis: While the recent conclusion of the SEC investigation is an incremental positive, we maintain our Neutral rating on Almost Family until we see further evidence of improving Medicare admissions growth and benefits from the organizational changes in the Florida market (42% of VN revenues). Additionally, rebasing in FY14 remains an overhang on the industry and could keep shares range-bound.

Description: Almost Family is one of the leading providers of home nursing and personal care services.

12-mo. Price Target: $22 (12x FY13E EPS) Market Cap: $179.2M Kevin K. Ellich, Sr. Research Analyst, 612 303-5666

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Alnylam Pharmaceuticals, Inc. (ALNY) – $15.42 Rating: Neutral Thesis: Alnylam is the leading developer of RNA-interference (RNAi) therapeutics with the industry-dominant patent estate, a promising clinical pipeline and a strong balance sheet. The company is focusing clinical development on orphan genetic diseases with its “5x15” program aimed at having five clinical candidates in development by 2015.

Description: Alnylam Pharmaceuticals is pioneering the development of RNAi as a new therapeutic modality.

12-mo. Price Target: $20 (projected EV of $833M + mid’13E cash) Market Cap: $808.2M Edward A. Tenthoff, Sr. Research Analyst, 212 284-9403 Alphatec Holdings, Inc. (ATEC) – $1.64 Rating: Overweight Thesis: Alphatec is an underappreciated spine turnaround story in a recovering market. As a part of the company’s effort to target structural and operational improvements, Les Cross assumed the role of CEO earlier this year, in addition to being a board member since March 2011. The company is now making operating improvements and rolling out new products, and we are seeing stable and improving dynamics in the broader spine market. We view the company’s fundamentals to be at the early stages of a recovery cycle, driven by internal operating improvements, new product cycles and improving market trends.

Description: Alphatec is focused on the development and marketing of products used in spine surgery.

12-mo. Price Target: $3 (1.25x EV/2014E Sales, assuming $17M net cash and 92M shares out) Market Cap: $146.8M Matt Miksic, Sr. Research Analyst, 212 284-9335 Amgen Inc. (AMGN) – $85.17 Rating: Overweight Thesis: We believe continued stabilization of Amgen’s base business, increased visibility into a pipeline that includes multiple potential blockbusters, and renewed fiscal discipline and improving earnings quality should allow AMGN shares to outperform. We believe Amgen is also taking steps to reduce pipeline risk by partnering higher-risk opportunities and commercial risk through the potential partnering of primary care drugs (e.g. AMG145) which would reduce post-approval R&D and marketing commitments.

Description: Amgen has developed treatments for anemia, cancer and other diseases 12-mo. Price Target: $104 (13x FY14E non-GAAP EPS of $7.97) Market Cap: $65.76B M. Ian Somaiya, Sr. Research Analyst, 212 284-9305 AmSurg Corp. (AMSG) – $27.33 Rating: Neutral Thesis: We believe AMSG’s outpatient surgery centers are wellpositioned in the long-term due to the elimination of co-pays and deductibles for preventative screening procedures, such as colonoscopies, as well as efforts to shift care to lower cost providers. We maintain our Neutral rating as the company faces a few near-term challenges including California workers’ compensation, potential 2% cut from sequestration in 2013, and other potential Medicare reimbursement headwinds which could create noise before year end.

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

Description: AmSurg is the leading ambulatory surgery center operator in the United States.

12-mo. Price Target: $30 (13.5x FY13E EPS) Market Cap: $865.8m Kevin K. Ellich, Sr. Research Analyst, 612 303-5666

ments that score plaque circumferentially, providing precise and predictable dilatation across a wide range of lesion types. The company sells its products through a dedicated direct sales force in the United States and through distributors in more than 10 EU countries as well as several countries in the Asia Pacific region.

Anacor Pharmaceuticals, Inc. (ANAC) – $5.01 Description: Anacor Pharmaceuticals is a biopharmaceutical company focused on discovering, developing and commercializing small-molecule therapeutics derived from its boron chemistry platform. The company has discovered, synthesized and developed seven molecules that are in development. Its lead product candidates include two topically administered dermatologic compounds tavaborole and AN2728. In addition, Anacor has discovered three compounds that it has out-licensed for further development: GSK2251052 (GSK ‘052), AN8194 and AN5568. The company’s clinical pipeline also includes two additional product candidates: AN2718, its second topical antifungal product candidate, has the potential to treat onychomycosis and fungal infections of the skin; and AN2898, the company’s second topical antiinflammatory product candidate, has the potential to treat atopic dermatitis and psoriasis.

Market Cap: $157.9M

Anthera Pharmaceuticals, Inc. (ANTH) – $0.69 Rating: Overweight Thesis: Anthera is developing blisibimod for the treatment of system lupus erythematosus (SLE). The company is preparing to initiate the pivotal CHABLIS-SC1 trial comparing 200mg weekly subcutaneous blisibimod to placebo for 52 weeks with SRI-8 as the primary endpoint in 1Q13.

Description: Anthera Pharmaceuticals is a biopharmaceutical company developing blisibimod.

12-mo. Price Target: $2 (projected EV of $151M less mid’13E net debt) Market Cap: $54.2M Edward A. Tenthoff, Sr. Research Analyst, 212 284-9403

Angiochem Inc. – private Description: Angiochem is a clinical-stage biotechnology company discovering and developing treatments based on its proprietary Engineered Peptide Compound (EPiC) Technology to cross the blood-brain barrier to treat neurological diseases. The company is developing a focused product pipeline, including small molecules and biologics for the potential treatment of a wide range of CNS diseases, including brain cancer, neurodegenerative and lysosomal storage diseases, pain and others. The company’s lead product, GRN1005, is a spindle inhibitor in Phase II of development with Geron Corporation for the treatment of brain cancer.

AngioDynamics Inc. (ANGO) – $10.43 Rating: Neutral Thesis: 2012 has been a transitio nal year for AngioDynamics, with a return to revenue growth targeted under the leadership of new (September 2011) CEO Joseph DeVivo. Key areas of focus include the ongoing integration of the Navilyst acquisition, which closed in May of this year, renewed emphasis on quality control and a change in clinical/regulatory strategy on the promising NanoKnife technology.

Description: AngioDynamics, Inc. designs, manufactures, and sells medical, surgical and diagnostic devices.

12-mo. Price Target: $13.00 (8.8x EV/FY14E EBITDA based on $116M net debt, 34.7M shares outstanding) Market Cap: $363.0M Brooks E. West, Sr. Research Analyst, 612 303-6954 Thomas J. Gunderson, Sr. Research Analyst, 612 303-6467 Angioscore, Inc. – private Description: Angioscore, founded in 2003, is an endovascular company that develops, manufactures and markets coronary products for the treatment of lesions (including in-stent restenosis and type C lesions) and peripheral products for the treatment of peripheral artery diseases. The company offers the Angiosculpt scoring balloon catheter, which has innovative nitinol scoring ele-

Apricus Biosciences, Inc. (APRI) – $2.16 Description: Apricus Biosciences, formerly NexMed, Inc., is a pharmaceutical company that develops and markets innovative treatments that help large patient populations across numerous, high-demand therapeutic classes. The company has four approved products and has developed a strong pipeline of multiple late-stage product opportunities. With commercial operations in both the U.S. and Europe (France), Apricus Bio generates revenues and growth from sales of its commercial products and by out-licensing, in certain territories, its pipeline products and NexACT® technology. Apricus Bio’s growth strategy is to acquire, develop and commercialize new products through strategic partnerships. The company currently has commercial partnerships with multiple large pharmaceutical companies including Novartis, Abbott Laboratories, Sandoz, Warner Chilcott and Bracco, and copromotes multiple products in France.

Market Cap: $64.6M Arena Pharmaceuticals, Inc. (ARNA) – $8.36 Rating: Overweight Thesis: Arena’s BELVIQ® (lorcaserin) was the first new obesity drug approved in 13 years. The company and partner Eisai are now going through the DEA scheduling process and we anticipate U.S. launch in early 2013.

Description: Arena Pharmaceuticals is developing drugs that target GPCRs (G protein-coupled receptors) including BELVIQ® for obesity.

12-mo. Price Target: $11 (projected EV of $2.1 billion plus mid’13E net cash) Market Cap: $1.82B Edward A. Tenthoff, Sr. Research Analyst, 212 284-9403 Array BioPharma Inc. (ARRY) – $3.50 Rating: Neutral Thesis: Array has a rich wholly owned cancer pipeline. Array has significant MEK cancer partnerships with Novartis and AstraZeneca, as well as collaborations with Amgen, Celgene, Genentech and Intermune. We look for a busy American Society of Hematology (ASH) meeting in December with data on ARRY-520 in multiple myeloma and ARRY-614 in MDS.

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

Description: Array BioPharma is a biopharmaceutical company focused on oncology and inflammation.

12-mo. Price Target: $5 (projected EV of $495M less FY:13E net debt) Market Cap: $333.9M Edward A. Tenthoff, Sr. Research Analyst, 212 284-9403 ArthroCare Corporation (ARTC) – $31.99 Rating: Overweight Thesis: ArthroCare is an innovative medical device growth story in the field of sports medicine and ear nose and throat (ENT) surgery with a steady stream of new products serving end markets in the early stages of recovery. The company is also in the final stages of unwinding a series of well-documented contingencies and liabilities, which have been an overhang for the stock over the past few years. We believe ArthroCare is well-positioned on the margin relative to healthcare reform, given the addition of newly covered lives in the U.S., many of whom we expect to be younger and in need of sports medicine and related surgeries.

Description: ArthroCare sells minimally-invasive surgical devices for tissue repair and resection.

12-mo. Price Target: $38 (2.5x EV/2014E sales, assuming $289M in net cash, and 33.7M shares out) Market Cap: $891.8M Matt Miksic, Sr. Research Analyst, 212 284-9335 Aspire Bariatrics, LLC – private Description: Aspire Bariatrics, founded in 2004, has developed the AspireAssist™ Aspiration Therapy System, a minimally invasive and completely reversible weight loss solution for people with obesity. The AspireAssist System received CE Mark approval in December 2011 and is expected to be commercially available in selected regions in Europe and the Middle East in early 2012.

The AspireAssist System gives patients control over their weight loss by a method known as Aspiration Therapy. With Aspiration Therapy, patients “aspirate” (drain) a portion of their stomach contents after each meal through an endoscopically implanted tube, reducing the number of calories absorbed by the body. The tube is implanted in the stomach and leads to a small, low-profile port at the surface of the skin. Aspiration performed about 20 minutes after a meal will remove about half of the calories consumed. The AspireAssist is used in conjunction with a lifestyle modification program, and requires careful and comprehensive medical monitoring.

Athersys, Inc. (ATHX) – $0.98 Rating: Overweight Thesis: Athersys is a regenerative medicine company developing MultiStem®, an “off-the-shelf” stem cell therapy product.

Partner Pfizer will report Phase II ulcerative colitis data in 1H13, and Athersys will report Phase II ischemic stroke data in 2H13.

Athersys is also developing 5-HT2c receptor agonists and is exploring partnering opportunities for obesity and even schizophrenia.

Description: Athersys is a regenerative medicine company developing MultiStem®.

12-mo. Price Target: $3 (projected EV of $148M + YE:13E net cash) Market Cap: $29.1M Edward A. Tenthoff, Sr. Research Analyst, 212 284-9403

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Avanir Pharmaceuticals (AVNR) – $2.66 Description: Avanir Pharmaceuticals is a pharmaceutical company focused on developing and commercializing therapeutic products for the treatment of central nervous system disorders. The company also has a number of partnered programs in other therapeutic areas. Its docosanol 10% cream, sold in the United States and Canada as Abreva® by its marketing partner GlaxoSmithKline Consumer Healthcare, is the only OTC treatment for cold sores that has been approved by the FDA. In October 2010, the FDA approved NUEDEXTA®, a combination of dextromethorphan/ quinidine, for the treatment of pseudobulbar affect (PBA).

Market Cap: $362.2M Baxter International Inc. (BAX) – $64.27 Rating: Overweight Thesis: Baxter is one of our favorite large cap names, and we continue to expect the stock to significantly outperform our universe on stable and improving plasma trends and the unwinding of the overhang related to competitive programs in hemophilia.

Management presented a revised long-run plan in October which we believe is at least doable, if not beatable if we factor in the prospective impact of acquisitions and new products not included in the company’s projections. With a dividend now in the 3% range, solid momentum and potential upside drivers to revenues and EPS, we view BAX as attractive at current levels.

Description: Baxter International is a leading worldwide supplier of critical care medical supplies, devices and injectables.

12-mo. Price Target: $73 (13.5x 2014E EPS of $5.38) Market Cap: $35.31B Matt Miksic, Sr. Research Analyst, 212 284-9335 Becton, Dickinson and Company (BDX) – $75.23 Rating: Neutral Thesis: Becton, Dickinson has multiple new diagnostic products in its pipeline, including BD MAX C. diff (est FY1Q13), BD Viper Trich (est FY4Q12 EU, FY4Q13 U.S.) and BD Viper LT HPV-GT (est FY4Q13 OUS). We believe exposure to challenging European markets, tight academic funding, constrained healthcare utilization trends and increasing diagnostics competition all represent headwinds for BD, keeping us Neutral on BDX shares.

Description: Becton, Dickinson and Company is a dominant player in needle-based medical devices and in vitro diagnostics.

12-mo. Price Target: $77 (12.9x CY13E EPS of $5.98) Market Cap: $15.01B William R. Quirk, CFA, Sr. Research Analyst, 612 303-6858 Benefitfocus.com, Inc. – private Description: Benefitfocus.com provides employers, carriers and consumers a single cloud-based platform for benefit shopping, enrollment and managing and exchanging benefit information.

The company’s platform currently supports 18 million members and more than 300,000 employer clients. Benefitfocus.com is headquartered in Charleston, S.C. and has offices in Greenville, S.C. and Jenks, Okla.

BG Medicine, Inc. (BGMD) – $1.48 Description: BG Medicine is a life sciences company focused on the discovery, development and commercialization of cardiovascular diagnostics to address unmet medical needs.

Market Cap: $29.8M

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

BioDelivery Sciences International, Inc. (BDSI) – $4.45 Description: BioDelivery Sciences International (BDSI) is a specialty pharmaceutical company developing and commercializing, either on its own or in partnerships with third parties, applications of therapeutics to address medical needs. The company has developed and is continuing to develop pharmaceutical products aimed principally in the areas of pain management and oncology supportive care. In formulating its products and product candidates, BDSI utilizes the BioErodible MucoAdhesive (BEMA™) drugs delivery technology—a small, erodible polymer film for application to the buccal mucosa. The company’s FDA-approved product, ONSOLIS® (fentanyl buccal soluble film), as well as its pipeline of product candidates, utilize its BEMA™ technology.

Market Cap: $136.6M BioFire Diagnostics, Inc. – private Description: BioFire Diagnostics, formerly known as Idaho Technology, develops, manufactures and sells systems for pathogen identification and DNA analysis. The company’s lead product, FilmArray, tests for 20 different respiratory pathogens which cause upper respiratory tract infections, and is the only FDAcleared multiplex PCR detection system capable of distinguishing between certain bacterial and viral respiratory infections. The company has used its extensive patent portfolio to successfully market nearly 200 products to the clinical, research and military markets.

BioMarin Pharmaceutical Inc. (BMRN) – $48.09 Rating: Overweight Thesis: Our Overweight rating is based on the combination of an increasingly predictable earnings stream and our analysis of the GALNS market opportunity, which suggested a potential doubling of BioMarin’s current revenue base. Our $750M peak sales estimate could prove conservative given the lack of available treatment options and that >33% of MPS IVA patients are enrolled in BioMarin’s MorCAP registry. We expect continued upside to come in 1Q13 from positive Phase II data from BMN-701 (Pompe’s disease) and BMN-673 (hematological malignancies), each of which could achieve peak sales $1B+.

Description: BioMarin develops drugs to address genetic disorders of high unmet medical need.

12-mo. Price Target: $58 (DCF valuation of projected free cash flows for 2013-2031) Market Cap: $5.95B M. Ian Somaiya, Sr. Research Analyst, 212 284-9305 bioMérieux (BIM FP) – €70.30 Rating: Neutral Thesis: bioMérieux has multiple pipeline products scheduled to launch in 2013 including a next-generation VIDAS® instrument (immunoanalyzer, 1Q13/early 2Q13), an automated blood culture system (SIMON) and an incubation system (SIS). The American Society for Microbiology suggests strong interest in bioMérieux’ SIMON and SIS instruments. We expect these products to accelerate FY14 growth, but believe spending in front of these launches will continue to weigh on EBIT. Description: bioMérieux develops, manufactures and distributes instruments and assays for the worldwide microbiology, immunoassay and molecular diagnostics markets.

12-mo. Price Target: €64 (~14x FY13E EPS of €4.66) Market Cap: €2.78B William R. Quirk, CFA, Sr. Research Analyst, 612 303-6858

Bioventus LLC – private Description: Bioventus, founded in 1994, develops and markets orthopedic diagnostics and therapies that help patients regain active lifestyles. The company’s products include ultrasound bone growth stimulators/bone healing systems, osteoarthritis pain treatments/joint fluid therapies and hyaluronic acid injections.

It serves customers in the United States and internationally. The company was spun off from the biologics and clinical therapies division of Smith & Nephew in 2011.

Blue Belt Technologies, Inc. – private Description: Blue Belt Technologies, founded in 2003, is developing the next generation of “smart” surgical instruments with precision robotics for use initially in orthopedic procedures and then for other surgical specialties, including neurosurgery, spinal and otolaryngology (ENT). The company’s NavioPFS™ system incorporates patented technology to provide precise robotic control to surgeons via an intelligent, handheld, computer-assisted bone-cutting tool. The NavioPFS™ system provides surgeons with a layer of safety and enhanced accuracy while performing boneshaping tasks through minimally invasive incisions.

Cadence Pharmaceuticals Inc. (CADX) – $3.19 Description: Cadence Pharmaceuticals is a biopharmaceutical company focused on acquiring, in-licensing, developing and commercializing products principally for use in the hospital setting. The company has rights to one product, OFIRMEV (acetaminophen) injection, an intravenous (IV), formulation of acetaminophen. Cadence in-licensed the U.S. and Canadian rights to OFIRMEV from Bristol-Myers Squibb, which sells intravenous acetaminophen in Europe and other markets for the treatment of acute pain and fever under the brand name Perfalgan. In January 2011, Cadence launched commercial sales of OFIRMEV in the United States.

Market Cap: $272.M Cantel Medical Corp. (CMN) – $25.64 Description: Cantel Medical is a leading provider of infection prevention and control products in the healthcare market. The company’s products include water purification equipment, sterilants, disinfectants and cleaners, specialized medical device reprocessing systems for endoscopy and renal dialysis, disposable infection control products primarily for dental and GI endoscopy markets, dialysate concentrates and other dialysis supplies, hollow fiber membrane filtration and separation products for medical and non-medical applications, and specialty packaging for infectious and biological specimens. Cantel Medical also provides technical maintenance for its products and offers compliance training services for the transport of infectious and biological specimens.

Market Cap: $682.7M CardioDx, Inc. – private Description: CardioDx Inc. is a diagnostics company focused on the development of genomic tests for the diagnosis of cardiovascular diseases, including coronary artery disease (CAD), cardiac arrhythmia and heart failure. Its lead product, Corus CAD, is a gene expression test that integrates the expression levels of 23 genes involved in the development of and/or response to atherosclerosis. It is designed to enable physicians to rule out CAD as the cause of chest pain without the risks associated with radiation and elective cardiac catheterization.

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

CardioFocus, Inc. – private Description: CardioFocus, founded in 1990, has developed the HeartLight® endoscopically guided ablation system for the treatment of atrial fibrillation. The proprietary HeartLight ablation system is comprised of a single catheter that integrates an endoscope, light-based energy, and a compliant balloon, and provides real time visualization of tissue and lesion formation. The HeartLight has shown improved first-procedure isolation of the pulmonary veins, reduced fluoroscopy time and faster overall procedure time when compared to standard techniques utilizing radiofrequency (RF) or cryo ablation. The HeartLight system is in early commercialization in Europe and is under IDE status in the United States.

CardioInsight Technologies, Inc. – private Description: CardioInsight, founded in 2006, is commercializing a revolutionary technology that non-invasively generates 3D images of the electrical activity of the heart. The images help physicians map certain heart ailments such as arrhythmias and congestive heart failure. The company’s ECVUE system non-invasively generates real-time, whole heart images of the electrical activity on the surface of the heart by combining body surface electrical data with 3D anatomical data obtained from imaging scans. It then reconstructs and displays 3D images and other useful measures of cardiac electrical activity as if the measurements were taken directly from the surface of the heart. The company has received its CE Mark and markets the ECVUE system in Europe.

Cayenne Medical, Inc. – private Description: Cayenne Medical, founded in 2005, develops and sells products used in knee ligament, shoulder and muscle repair for orthopedic surgeons. It offers AperFix® II, a system for soft tissue multi-ligament reconstruction of knees. The company also provides CrossFix® II, a meniscal repair device for open suturing and arthroscopic meniscal repair; and Quattro™ shoulder system, a line of knotless and pre-loaded PEEK high-strength suture anchors and tailored instrumentation for rotator cuff and labral repair. In addition, it offers iFix, an interference screw system for anterior cruciate ligament reconstruction procedures using the bone-patellar tendon-bone and other bone-tendon-bone grafts.

Celgene Corporation (CELG) – $71.50 Rating: Neutral Thesis: We believe near-term focus will shift from earnings to clinical data readouts and visibility into Revlimid EU frontline/ maintenance approval. We believe shares will remain volatile until 1Q13, when data from the MM-020 trial and more mature data from the MM-015 trial provide investors comfort on the potential for Revlimid® label expansion in Europe. We believe this singular focus on Revlimid could prevent CELG shares from benefiting from a rapidly maturing pipeline.

Description: Celgene develops drugs for hematology, oncology and autoimmune diseases.

12-mo. Price Target: $86 (12.5x FY14E diluted EPS of $6.89) Market Cap: $30.24B M. Ian Somaiya, Sr. Research Analyst, 212 284-9305

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Cepheid (CPHD) – $29.45 Rating: Overweight Thesis: Cepheid remains the leader in the rapidly growing molecular hospital acquired infection (HAI) diagnostics market.

Cepheid’s rapid growth created manufacturing issues in FY12, impacting results in 1Q12 and 3Q12, although management believes these issues are largely behind the company at this point. Our survey work suggests continued robust market growth and ongoing market leadership for Cepheid as hospitals transition from non-molecular testing methods to molecular C. diff and MRSA methods, keeping us Overweight on CPHD shares, although we believe management will need to deliver consecutive in-line/ better-than-expected quarterly results for CPHD shares to return to previous highs.

Description: Cepheid focuses on high value molecular diagnostic infectious disease testing.

12-mo. Price Target: $42 (7.6x Clinical Revenue + 1.5x Base Revenue + $1.72 in 4Q13E net cash/share) Market Cap: $1.95B William R. Quirk, CFA, Sr. Research Analyst, 612 303-6858 Cerner Corporation (CERN) – $78.59 Rating: Overweight Thesis: We strongly believe Cerner is the biggest beneficiary of the ongoing replacement cycle in the hospital segment. Several hospital systems are evaluating their core clinicals and financials provider as they head into Stage 2 and choices are narrowing down to Cerner and Epic (private player). Disruption in the McKesson and Meditech base is adding fuel to this replacement cycle. Further, we estimate huge opportunities ($20B bookings) within the company’s existing base as it expands into more departments.

Outsourcing contracts (ITWorks and RevWorks) continue to grow strong; we believe they can deliver $1B in bookings for Q4 and will be a catalyst. Over the long term, we believe Cerner is wellpositioned to play in the analytics space with BigData models that are becoming essential in the provider setting.

Description: Cerner Corporation is a market-leading supplier of IT systems to both the hospital and ambulatory health care marketplaces.

12-mo. Price Target: $84 (30x CY13E EPS of $2.80) Market Cap: $13.48B Sean W. Wieland, Sr. Research Analyst, 415 616-1710 Cerus Corporation (CERS) – $3.09 Description: Cerus Corporation is a biomedical products company focused on commercializing the INTERCEPT blood system to enhance blood safety.

Market Cap: $169.6M Chimerix, Inc. – private Description: Chimerix is a biotechnology company that is developing novel oral antiviral therapeutics to treat multiple therapeutic areas, including transplant, oncology, acute care and global health. Chimerix has two clinical-stage lipid acyclic nucleoside phosphonates based on its proprietary lipid technology. The company’s lead compound, CMX001, is currently being developed to treat dsDNA viruses, potentially deadly diseases for immunocompromised patients.

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

Cohera Medical, Inc. – private Description: Cohera Medical, founded in 2003, is a developer of absorbable surgical adhesives and sealants. The company’s TissuGlu® Surgical Adhesive, is an internal surgical adhesive for large flap surgeries, such as abdominoplasty (tummy tuck), that eliminates or reduces fluid accumulation and the need for post surgical drains. TissuGlu’s chemical composition is resorbable, non-toxic, forms a strong bond between tissue layers and allows for natural healing, which ultimately may enable faster recovery.

TissuGlu has received CE Marking approval to be sold in the European Union. Cohera Medical is also developing a unique and proprietary bowel sealant, and a strong adhesive for mesh fixation.

Colibri Heart Valve, LLC – private Description: Colibri, founded in 2005, is a medical device company committed to the research and development of novel heart valve technologies. Colibri has developed the Colibri TAVI system, which is a pre-mounted, pre-crimped and pre-packaged, readyfor-use transcatheter aortic valve implantation. Colibri’s advanced technology is a culmination of more than 10 years of research and development by Colibri’s founders, Dr. David Paniagua and Dr. R. David Fish, into the tissue, valve design, frame and delivery catheter. The company’s unique tissue processing method produces extremely strong, durable and biocompatible tissue. The proprietary tissue enables loading, crimping and packaging of the Colibri valve at manufacture, making in-procedure valve rinsing and loading at the time of use unnecessary. The Colibri TAVI system is designed to be shipped ready-for-use.

Collegium Pharmaceutical, Inc. – private Description: Collegium Pharmaceutical is a specialty pharmaceutical company focused on the development of its proprietary, late-stage products for chronic pain that address non-medical use and abuse through formulation-based improvements. The company’s novel DETERx™ formulation platform technology provides extended release drug delivery and tamper-resistance without the use of antagonists or aversive agents, minimizing risk to legitimate patients. Collegium’s two clinical products, COL-003 and COL-172, have both received Fast Track designation by the FDA. Conceptus, Inc. (CPTS) – $19.83 Rating: Neutral Thesis: Conceptus has benefited from the Q212 market departure of competitor Adiana (a business line that had been operating within Hologic). We remain somewhat cautious on the upside to fiscal year guidance, which implies YoY revenue growth of 14−20%, given an uncertain economic backdrop, particularly outside of the United States, and the continued timing of Adiana market share capture. More importantly, a recommendation for use of the procedure by an expert panel in OBG Management is likely to provide additional momentum, as will conversion of healthcare plans under the Affordable Care Act (ACA). While we realize that the longevity of the ACA remains an open question, regardless of its final status, we expect some provisions such as those covering permanent birth control to remain in force.

Description: Conceptus develops and promotes the permanent birth control solution Essure®, a form of hysteroscopic sterilization.

12-mo. Price Target: $21 (4.4x EV / 2013E Sales) Market Cap: $626.2M Thomas J. Gunderson, Sr. Research Analyst, 612 303-6467 Brooks E. West, Sr. Research Analyst, 612 303-6954

CONMED Corporation (CNMD) – $26.86 Rating: Neutral Thesis: CONMED has benefited from management’s efforts to improve efficiencies and drive leverage across the P&L, although revenue growth remains a moving target due to the macroeconomic pressures across certain business lines. While new product launches have partially offset this impact, we remain on the sidelines until we see support for stabilizing and improving top-line trends.

Description: CONMED Corporation manufactures and markets instruments and devices for minimally invasive procedures and monitoring for the arthroscopy, sports medicine, powered surgical instruments, electrosurgery, cardiac monitoring, endosurgery and endoscopic technology markets.

12-mo. Price Target: $33 (6.5x 2014E EV/EBITDA of $156M, $70M in net debt, and 28.9M shares out) Market Cap: $765.2M Matt Miksic, Sr. Research Analyst, 212 284-9335 CorMatrix Cardiovascular, Inc. – private Description: CorMatrix, founded in 2001, is researching, developing, manufacturing and marketing extracellular matrix (ECM) biomaterial devices that harness the body’s innate ability to repair damaged cardiovascular tissue. The company’s ECM for pericardial closure is available for the reconstruction and repair of the pericardium during cardiac surgery; ECM for cardiac tissue repair is available for suture line reinforcing, buttressing for soft tissue reapproximation, pledgets, aortic cannulation sites, cardioplegia cannulation sites, right atrium cannulation sites, aortotomy reinforcement, ventricular reinforcement and septal defect repair; and ECM for carotid repair. Its devices are used in hospitals across the United States.

Coronado Biosciences, Inc. (CNDO) – $4.99 Description: Coronado Biosciences is a biopharmaceutical company focused on the development of novel immunotherapy biologic agents for the treatment of autoimmune diseases and cancer. The company has two principal pharmaceutical product candidates in clinical development: 1) Trichuris suis ova or CNDO201 (TSO), a biologic comprising of the microscopic eggs of the porcine whipworm for the treatment of autoimmune diseases such as Crohn’s disease, ulcerative colitis and multiple sclerosis; and 2) CNDO-109, a compound that activates natural killer (NK) cells of the immune system to seek and destroy cancer cells for the treatment of acute myeloid leukemia (AML).

Market Cap: $121.6M Correct Care Solutions, LLC – private Description: Correct Care Solutions is based in Nashville, Tenn. and provides correctional healthcare services across the United States. The company offers comprehensive medical, dental and behavioral health services for inmates in addition to offering the individual service of adjudicating and paying medical bills for some clients. Correct Care Solutions employs more than 3,000 employees and cares for approximately 64,000 lives in 19 states.

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

CryoLife, Inc. (CRY) – $5.81 Rating: Neutral Thesis: CryoLife historically had been focused on providing replacement tissue for surgical procedures. The company has begun diversifying away from its legacy tissue preservation business (which currently accounts for approximately 49% of revenues and remains the largest portion of earnings). Newer products, including the HeRo® graft for kidney dialysis patients, BioGlue®/ BioFoam and PerClot®, offer promise for the future. Catalysts include ongoing revenue growth related to new products and expanded sales force, increased visibility of HeRo from a company sponsored “ESRD Summit” training session next spring, and starting and filing a PMA for PerClot in 2013.CryoLife develops and commercializes preserved human tissue and surgical adhesive products for use in cardiac, vascular, general and reconstructive surgery.

Description: CryoLife is involved in the processing and preservation of human cadaver tissues used in heart and blood vessel reconstructive surgery and has recently added dialysis, HF treatment and surgical products to its revenue mix.

12-mo. Price Target: $6 (16x CY13E EPS of $0.37) Market Cap: $159.4M Brooks E. West, Sr. Research Analyst, 612 303-6954 Thomas J. Gunderson, Sr. Research Analyst, 612 303-6467 Curis Inc. (CRIS) – $3.28 Rating: Overweight Thesis: Partner Roche/Genentech launched Erivedge for the treatment of metastatic basal cell carcinoma (BCC) earlier this year.

The focus for Curis has now shifted to its proprietary cancer platform, which offers multiple partnering opportunities.

Description: Curis is a cancer drug discovery company.

12-mo. Price Target: $7 (projected EV of $587M + mid:13E net cash) Market Cap: $262.3M Edward A. Tenthoff, Sr. Research Analyst, 212 284-9403 Cutera, Inc. (CUTR) – $8.00 Rating: Overweight Thesis: Cutera continues to gain momentum with a diverse aesthetic product offering that includes the Excel V laser for vascular conditions, the GenesisPlus console aimed at podiatrists, the versatile Xeo platform, and the recently launched truSculpt™ body contouring technology. Collectively, the products provide a strong product driven revenue growth outlook at an attractive current valuation.

Description: Cutera engages in the research, design, development, manufacture, marketing, sales and service of laser and light-based systems for aesthetic and podiatric applications worldwide.

12-mo. Price Target: $11 (1.0x EV/CY13E revenue of $75.8M, assuming $81.4M of net cash and 14.1M shares outstanding) Market Cap: $113.0M Thomas J. Gunderson, Sr. Research Analyst, 612 303-6467 Brooks E. West, Sr. Research Analyst, 612 303-6954 CVRx, Inc. – private Description: CVRx, founded in 2001, developed the Barostim “neo” System for treating patients with resistant hypertension and heart failure. Hypertension affects more than 76 million people in the United States and is a major risk factor for cardiovascular disease, morbidity and mortality. Approximately 25% of 20

people with hypertension are resistant to medication and lifestyle modifications. The company’s neo™ system works by electrically stimulating the body’s baroreceptors in the carotid artery and in the carotid sinus which triggers the brain to lower blood pressure and reduce workload on the heart. This provides a physiologically rational method to reduce blood pressure by using the body’s natural blood pressure regulation system (baroflex) to control blood pressure. The neo™ system is under clinical investigation in the United States and Canada for the treatment of high blood pressure and heart failure and is CE Marked and approved for sale for hypertension patients in Europe.

Cyberonics, Inc. (CYBX) – $44.50 Rating: Overweight Thesis: Cyberonics has been a successful turnaround story in medtech over the last five years. A strategic re-focus on epilepsy and strict attention to revenue growth and cash flow have resulted in a strong balance sheet and a rebound in valuation. Japan is a new opportunity for growth, and reimbursement for the additional indication of severe depression is being sought.

Description: Cyberonics develops and markets medical devices for the treatment of epilepsy and other debilitating neurological disorders.

12-mo. Price Target: $52 (28x CY13E EPS of $1.84) Market Cap: $1.23B Thomas J. Gunderson, Sr. Research Analyst, 612 303-6467 Brooks E. West, Sr. Research Analyst, 612 303-6954 Depomed Inc. (DEPO) – $5.71 Description: Depomed is a specialty pharmaceutical company initially focused on neurology, pain and other diseases of the central nervous system. In January 2011, the FDA approved GRALISE® (gabapentin) once-daily tablets for the management of postherpetic neuralgia. The company is developing and commercializing a number of pharmaceutical products for neurology, pain and other central nervous system conditions and diseases.

Depomed’s products include GRALISE®, Glumetza®, Serada™ and DM-1992. Glumetza is the company’s once-daily treatment for adults with type 2 diabetes that is commercialized in the United States by Santarus, Inc. In June 2012, Depomed acquired all rights to Zipsor® (diclofenac potassium) liquid filled capsules from Xanodyne Pharmaceuticals, Inc. Market Cap: $320.4M

Derma Sciences Inc. (DSCI) – $10.98 Rating: Overweight Thesis: Derma Sciences has a base wound care business that provides a foundation for sustained cash flow generation, as well as potential for transformative value creation with pharmacologic product DSC127. DSC127 is set to enter Phase III trials for diabetic foot ulcers in late 2012. We continue to believe that DSCI, at an enterprise value of near $130M, barely reflects the potential for DSC127 given that the company’s core wound care business is a consistent double-digit grower that is cash flow positive.

Description: Derma Sciences provides a range of products in the wound care setting.

12-mo. Price Target: $16 PT is 13x 2016E EPS of $2.08, discounted at 25% Market Cap: $142.3M David Amsellem, Sr. Research Analyst, 212 284-9455

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

DexCom, Inc. (DXCM) – $12.77 Rating: Overweight Thesis: With less than 10% penetration currently, the continuous glucose monitoring (CGM) market and DXCM in particular are well-positioned for continued growth. DexCom’s recently approved Platinum® product (aka Gen 4) consists of a small sensor/ transmitter that is placed on the skin and a handheld receiver; the sensor is replaced every 7 to 14 days. DexCom competes mostly with leader Medtronic in the category. DXCM has licensing or partnership agreements with EW, J&J/Animas, Roche and Tandem. The focus for 2013 is market development of the still emerging technology and maneuvering both its standalone and partnership products through the new regulatory pathways. We estimate ~40% revenue growth in 2013 to $126M in product sales with an inflection point in 2H13 as we expect pediatric label and JNJ combo product FDA approvals mid-year.

Description: DexCom is the only pure-play in the new product category of continuous glucose monitoring (CGM) for the management of diabetes.

12-mo. Price Target: $17 (8.2x EV/2013E revenues, assuming $56M in net cash and 71.4M shares outstanding) Market Cap: $884.8M Thomas J. Gunderson, Sr. Research Analyst, 612 303-6467 Brooks E. West, Sr. Research Analyst, 612 303-6954 DFINE Inc. – private Description: DFINE, founded in 2004, is the developer of Radiofrequency-Targeted Vertebral Augmentation™ (RF-TVA™), a novel approach to stabilizing vertebral compression fractures, relieving pain, and improving patient mobility. Performed with the company’s flagship StabiliT® Vertebral Augmentation System, RF-TVA™ provides physicians greater control in the treatment of vertebral compression fractures through site- and size-specific cavity creation, ultra-high viscosity bone cement with extended working time, and a unique, remotely controlled cement delivery system. The company recently received 510(k) clearance for the STAR™ Tumor Ablation System, a new product line designed for the palliative treatment of cancer patients. The product provides minimally invasive, localized tumor ablation for symptomatic spinal metastases, offering patients the potential for significant and immediate pain relief.

Discovery Laboratories Inc. (DSCO) – $2.03 Description: Discovery Laboratories is a biotechnology company focused on creating life-saving products for critical care patients with respiratory disease. The company produces a synthetic, peptide-containing surfactant (KL4 surfactant) that is structurally similar to pulmonary surfactant, a substance produced naturally in the lung and essential for normal respiratory function and survival. In addition, its capillary aerosol-generating technology produces a dense aerosol with a defined particle size to deliver its aerosolized KL4 surfactant to the lung. It is developing its products, Surfaxin (lucinactant), Surfaxin LS and Aerosurf, to address the respiratory conditions affecting neonatal populations. It has filed a New Drug Application (NDA) for its product based on its KL4 surfactant technology, Surfaxin for the prevention of respiratory distress syndrome (RDS) in premature infants. Discovery Labs focuses on manufacturing three additional Surfaxin batches for use in the preclinical program.

Market Cap: $88.2M

DURECT Corporation (DRRX) – $1.01 Rating: Overweight Thesis: We believe DURECT, with multiple shots on goal, is valued attractively. Though visibility on the timeline to the Remoxy NDA resubmission remains unclear, Pfizer continues to work toward a response to the FDA (confirmatory bioavailability studies are underway) and anticipates a meeting with the FDA in late March 2013 to discuss the path forward. With the potential for more visibility on a filing timeline for Remoxy in 1Q13, DRRX shares are valued attractively in the context of a market cap of around $90M and limited cash burn.

Description: DURECT is focused on leveraging its drug delivery technologies to develop long-acting and abuse-resistant pharmaceuticals.

12-mo. Price Target: $1.25 (10x 2014E EPS of $0.15, discounted at 15%) Market Cap: $88.6M David Amsellem, Sr. Research Analyst, 212 284-9455 Dyax Corp. (DYAX) – $3.05 Description: Dyax is a biopharmaceutical company focused on developing and commercializing novel biotherapeutics. The company’s key value drivers are KALBITOR (ecallantide) for the treatment of hereditary angioedema (HAE), as well as the Licensing and Funded Research Program (LFRP).

Market Cap: $302.5M DynaVox Inc. (DVOX) – $0.43 Rating: Neutral Thesis: DynaVox continues to navigate a difficult U.S. macroeconomic environment under the leadership of new (June 2012) CEO Michelle Heying Wilver with an eye on cash management and related financial covenants. Aside from more visibility on an economic and state budget recovery, a change in measuring student progress at U.S. public schools could provide an eventual opportunity for the company’s special education software.

Description: DynaVox Inc. develops and markets software, devices, and contents to assist people in overcoming their speech, language, or learning disabilities.

12-mo. Price Target: $1.00 (10x P/E on CY13E EPS of $0.10) Market Cap: $4.7M Thomas J. Gunderson, Sr. Research Analyst, 612 303-6467 Brooks E. West, Sr. Research Analyst, 612 303-6954 Elements Behavioral Health – private Description: Elements Behavioral Health is a private company offering inpatient and outpatient psychiatric treatment programs focused on drug and alcohol rehab, mood and personality disorders, trauma and PTSD treatment, sexual addiction and eating disorders. Elements acquired its first residential rehabilitation program, Promises Treatment Centers, in February 2008.

Promises has campuses in Malibu and West Los Angeles, Calif.

Elements has additional facilities located in Florida, New Mexico, Tennessee and Texas.

Emergent BioSolutions, Inc. (EBS) – $14.23 Rating: Overweight Thesis: We believe Emergent is on the cusp of a profound change in its profile, evolving from a biodefense story into a diversified biotech company with a pipeline to support long term growth.

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

We believe positive Phase I/II data for TRU-016 in NHL and CLL at ASH (Dec. 8-12) could reignite partnering interest in the drug.

Additionally, we look for Phase IIb data from MVA85A (TB vaccine booster) in 1Q13 which we believe could generate peak sales of ~$800M. In the meantime, we look for continued progress on Building 55 to confirm expansion potential of the company’s core Anthrax franchise.

Description: Emergent BioSolutions develops and manufactures vaccines and therapeutics for the treatment and prevention of disease.

12-mo. Price Target: $21 (20x FT 2015E non-GAAP EPS of $1.54, discounted 20%) Market Cap: $510.2M M. Ian Somaiya, Sr. Research Analyst, 212 284-9305 Endocyte, Inc. (ECYT) – $7.98 Description: Dyax is a biopharmaceutical company focused on developing and commercializing novel biotherapeutics. The company’s key value drivers are KALBITOR (ecallantide) for the treatment of hereditary angioedema (HAE), as well as the Licensing and Funded Research Program (LFRP).

Market Cap: $286.3M EndoGastric Solutions – private Description: EndoGastric Solutions, founded in 2002, develops natural orifice procedures and products in order to advance the treatment of gastrointestinal diseases. The company offers the single use EsophyX device to perform a Transoral Incisionless Fundoplication (TIF) procedure to treat anatomic deficiencies at the gastroesophageal junction, which is the root cause of GERD. The procedure reconstructs the anti-reflux barrier at the gastroesophageal junction, restoring the patient’s natural anatomical geometry. EsophyX is cleared for use in the U.S. and internationally and has been used to treat more than 10,000 patients worldwide.

Endologix Inc. (ELGX) – $12.89 Rating: Overweight Thesis: We continue to view ELGX as a share gainer in the endovascular aortic repair (EVAR) market. Both the Ventana device for juxtarenal aneurysms and the potentially transformative Nellix device are making strong clinical headway, and approvals for the devices in Europe are expected within the next year. Contrary to other medtech markets, EVAR is, in our view, more insulated from economic headwinds hampering results given the emergent nature of the procedure. We expect 7-9% overall market growth with ELGX revenue growing at 2x or more that rate for the foreseeable future.

Description: Endologix is a manufacturer of endovascular stent grafts.

12-mo. Price Target: $16 (7.0x EV/CY13E sales, assuming net cash of $47.7M and 61.3M shares outstanding) Market Cap: $798.6M Brooks E. West, Sr. Research Analyst, 612 303-6954 Thomas J. Gunderson, Sr. Research Analyst, 612 303-6467 Endosense SA – private Description: Endosense, founded in 2003, is focused on improving the efficacy, safety and reproducibility of catheter ablation for the treatment of cardiac arrhythmias. The company’s flagship

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product is the TactiCath, the first and only force-sensing ablation catheter to give physicians a real-time, objective measure of contact force during the catheter ablation procedure. The company has been grated a CE Mark for TactiCath and has a strategic relationship with BIOTRONIK to distribute the product in Europe, Latin America, Canada, the Middle East and Africa.

EndoStim Inc. – private Description: EndoStim, founded in 2009, is focused on treating gastro-esophageal reflux disease (GERD), commonly known as acid reflux, through electrical stimulation. EndoStim’s innovative technology addresses the root pathological cause of acid reflux, namely a weak or dysfunctional lower esophageal sphincter that allows for reflux of stomach contents into the esophagus. The EndoStim System consists of the following components: implantable pulse generator, implantable bipolar lead and programmer.

EnteroMedics Inc. (ETRM) – $2.79 Description: EnteroMedics is a development-stage medical device company focused on the design and development of devices that use neuroblocking technology to treat obesity, its associated comorbidities and other gastrointestinal disorders. The company’s neuroblocking technology, which it refers to as VBLOC therapy, is designed to intermittently block the vagus nerve using highfrequency, low-energy, electrical impulses. EnteroMedics’s initial product under development is the Maestro System, which uses VBLOC therapy to limit the expansion of the stomach, help control hunger sensations between meals, reduces the frequency and intensity of stomach contractions, and produces a feeling of early and prolonged fullness.

Market Cap: $114.4M Epizyme, Inc. – private Description: Epizyme is a privately held regenerative medicine company focused on developing personalized therapeutics for genetically defined cancers to better match the right treatment to individual patients. Based on the field of epigenetics, the company’s therapies involve the creation of small molecule histone methyltransferase (HMT) inhibitors, which play a role in gene expression. The two most advanced programs targeting the HMTs DOT1L (for leukemia) and EZH2 (for lymphoma and breast cancer) are in preclinical development. Founded by Nobel Laureate Professor Robert Horvitz and Professor Yi Zhang, Epizyme has partnerships with Celgene, GSK and Eisai.

Epocrates, Inc. (EPOC) – $9.15 Rating: Overweight Thesis: With new management in place, we are starting to see stability and a clear strategy for growth at the company. We believe in Epocrates’s three-pronged strategy focusing on growing the network, deepening the user engagement and expanding into other commercial verticals for growth. We continue to assert that the company’s biggest asset is its active user base, which covers more than half of U.S. physicians, and believe this will be of great value to ambulatory EHR vendors who are struggling to capture market in low and medium practices, as it has become prohibitively expensive.

Description: Epocrates is a provider of drug reference tools to healthcare professionals and services to Pharma.

12-mo. Price Target: $12 (2x EV/FY13E revenue)

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

Market Cap: $227.0M Sean W. Wieland, Sr. Research Analyst, 415 616-1710 Esperion Therapeutics, Inc. – private Description: Esperion Therapeutics is a clinical-stage biotechnology company engaged in the discovery and development of treatments for cardiovascular and metabolic diseases. The company’s product candidates are intended to enhance the ability of the body to regulate abnormal lipid and carbohydrate metabolism and to reduce inflammation that contributes to the risk of cardiovascular and metabolic diseases. Its lead product candidate, ETC-1002, is in Phase II clinical trials for cardio-metabolic risk factors including dyslipidemia.

Exactech Inc. (EXAC) – $16.14 Description: Exactech develops, manufactures, markets, distributes and sells orthopaedic implant devices, related surgical instrumentation and biologic services to hospitals and physicians in the U.S. and internationally. The company’s large joint reconstruction products compete with products provided by the larger orthopaedic manufacturers including Zimmer, JNJ/DePuy, Stryker, Biomet, Smith & Nephew and Wright Medical in a market where Exactech holds slightly more than 1% in the U.S. Upper extremities reconstruction and arthroplasty systems, most notably for the shoulder, compete with the top players in that arena, including JNJ/DePuy, Tornier, Biomet and Zimmer, among others. The company also increased its presence in the market for implants and instruments for use in spine surgery with the acquisition of VertiFlex in 2010 and competes in that market with other spine manufacturers such as Medtronic, JNJ/DePuy, NuVasive, Globus Medical, Stryker and others. The company reported $205M in revenues in 2011, up 8%, and $0.67 in EPS, and expects to deliver $221-$223M in sales in 2012, up 8%-9%, and $0.93-$0.95 in EPS. Market Cap: $214.8M Exelixis, Inc. (EXEL) – $4.88 Rating: Neutral Thesis: Exelixis is focused on the development of Cabozantinib for cancer. Cabozantinib has a Nov. 29 PDUFA date for metastatic thyroid cancer (MTC). The more significant indication is metastatic castrate-resistant prostate cancer (CRPC) with pivotal data likely in 1H14.

Description: Exelixis is a cancer drug discovery company.

12-mo. Price Target: $4.50 (projected EV of $824M + mid:13E net cash) Market Cap: $724.3M Edward A. Tenthoff, Sr. Research Analyst, 212 284-9403 Femasys Inc. – private Description: Femasys, founded in 2004, is committed to advancing women’s healthcare with innovative medical devices.

The company offers the FemVue Saline-Air Device for infertility diagnosis of the fallopian tubes using ultrasound. FemVue is 510k cleared and CE Marked. The company’s product pipeline includes FemBloc, a permanent, non-surgical contraception system, FemCerv, an endocervical sampling device for pathology evaluation and FemaSeed, an insemination catheter. The company has also developed FemChec, a device used to confirm blockage of fallopian tubes following a permanent contraception procedure.

FemChec is also 510k cleared and CE Marked.

FivePrime Therapeutics, Inc. – private Description: FivePrime Therapeutics is a biotechnology company that is focused on the discovery and development of a range of protein and antibody focused therapeutics in oncology and immunology. FivePrime is currently developing an FGF inhibitor in Phase I development in collaboration with Human Genome Sciences for the treatment of multiple solid tumor types and is also pursuing the development of a number of preclinical product candidates. The company also has collaborations with Dyax, GlaxoSmithKline, Pfizer and Centocor.

Fluidigm Corporation (FLDM) – $14.37 Rating: Overweight Thesis: Our recent life science tools survey suggests modest adoption of single cell gene expression technology to date, with only 17% of respondents currently utilizing the technology in their labs, although 54% described plans to begin within one year.

Additionally, the National Institute of Health’s recent announcement to invest at least $90M in single cell research over the next five years will drive awareness and penetration of single cell technologies in our opinion. We view both of these data points as supportive of our expectations for rapid single cell market growth as well as our Fluidigm estimates.

Description: Fluidigm Corporation develops, markets and manufactures microfluidic systems.

12-mo. Price Target: $19 (5.8x FY13E EV/Revenue) Market Cap: $324.0M William R. Quirk, CFA, Sr. Research Analyst, 612 303-6858 Fresenius Medical Care AG (FMS) – $66.66 Rating: Neutral Thesis: Fresenius is the leader in the attractive and defensive dialysis industry with stable long-term business fundamentals. We believe the company has a number of competitive advantages, including size, scale, vertical-integration, and geographic diversification. We maintain our Neutral rating due to valuation and a lack of near-term catalysts, as upside from bundling has largely played out. Additionally, with the leadership transition from longtime CEO and industry icon Ben Lipps, Ph.D. to Rice Powell, we believe employee morale and corporate culture could be affected in the near term.

Description: Fresenius Medical Care is the world’s largest, vertically-integrated provider of dialysis and renal products.

12-mo. Price Target: $74 (19x FY13E EPS) Market Cap: $20.41B Kevin K. Ellich, Sr. Research Analyst, 612 303-5666 Galapagos Biopharma, Inc. (GLPYY) – $21.85 Description: Galapagos Biopharma is a mid-sized clinical stage biotechnology company specialized in the discovery and development of small molecule and antibody therapies with novel modes-of-action. The company is progressing its JAK1 inhibitor GLPG0634, as well as one of the largest pipelines in biotech, with four programs in development and more than 30 discovery programs.

Market Cap: $580.7M

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

Galena Biopharma, Inc. (GALE) – $2.03 Description: Galena is a biopharmaceutical company that is developing innovative, targeted oncology therapies. The company’s lead vaccine is NeuVax (nelipepimut-S) in a pivotal trial for HER2Negative (not eligible for Herceptin) breast cancer. Galena is also developing a Folate Binding Protein-E39 (FBP) vaccine to prevent recurrent ovarian, endometrial and breast cancers.

Market Cap: $136.4M Genmark Diagnostics, Inc. (GNMK) – $8.65 Rating: Overweight Thesis: GenMark’s current pipeline includes an HCVg assay and a next-generation, sample-in/answer out molecular diagnostics system (late 2013). GenMark unveiled its next-gen system at the recent AMP (Association for Molecular Pathology) conference, featuring a user-friendly interface and small footprint. GenMark will be one of a handful of companies with sample-in/answer out molecular diagnostic technology upon commercialization of its next gen system, benefitting potential adoption rates, in our opinion.

Description: GenMark Diagnostics, Inc. is a molecular diagnostics company focused on delivering high value assays for disease diagnosis and therapy selection/dosing on a user friendly platform.

12-mo. Price Target: $7.50 (5.1x FY14E EV/Revenue, discounted at 30% to FY13) Market Cap: $282.6M William R. Quirk, CFA, Sr. Research Analyst, 612 303-6858 Genomic Health, Inc. (GHDX) – $27.97 Rating: Overweight Thesis: Genomic Health recently announced achievement of its primary end-point, with the multi-gene Oncotype DX (ODx) Prostate Score prospectively validated as a predictor of adverse pathology in early-stage prostate cancer patients. We see multiple potential catalysts for GHDX shares in coming months including the release of the complete ODx prostate cancer data at the 2013 ASCO Genitourinary Cancers Symposium in February 2013 followed by the ODx prostate cancer launch in 1H13.

Description: Genomic Health, Inc. performs the Oncotype DX test at its CLIA-certified lab to determine risk of breast cancer recurrence and chemotherapy benefit as well as predicting risk of recurrence in stage II colon cancer patients.

12-mo. Price Target: $34 (3.6x 2013E EV/Revenue) Market Cap: $855.3M William R. Quirk, CFA, Sr. Research Analyst, 612 303-6858 Gentiva Health Services, Inc. (GTIV) – $9.86 Rating: Overweight Thesis: We believe Gentiva is well-positioned to deliver above industry average growth over the next several years and the stock could approach the mid-teens over the next 12 months driven by continued improvements in home health and hospice operations and better visibility on reimbursement changes. The rebasing of the home health payment system in 2014 remains an overhang on the industry creating incremental uncertainty after years of reimbursement cuts from Medicare. Lastly, strong free cash flow generation could act as a catalyst for the stock and ease investor concerns about the company’s ability to delever and maintain compliance with financial covenants.

Description: Gentiva is a leading provider of home health and

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hospice services.

12-mo. Price Target: $16 (6.5x FY13E EV/EBITDA) Market Cap: $302.0M Kevin K. Ellich, Sr. Research Analyst, 612 303-5666 GetWellNetwork, Inc. – private Description: GetWellNetwork provides interactive patient care solutions for hospitals in the United States. The company entertains, educates and empowers patients using a bedside television in the hospital, and mobile devices, web or cable television at home. The company also provides Patient Pathways, a workflow engine that streamlines and automates hospitals’ day-to-day patient care processes and guides patients through various aspects of their stay.

The company was founded in 1999 and is based in Bethesda, Md. Globus Medical, Inc. (GMED) – $13.86 Rating: Overweight Thesis: Globus is a high growth, high margin innovative sharegainer in spine with a core competency in rapid iterative innovation and commercialization. We view the platform investments that management has made in bandwidth and speed in the area of rapid innovation and prototyping as a sustainable competitive advantage and downstream opportunity for operating leverage.

We expect the company to continue to deliver low- to mid-teens top-line growth, mid-thirties adjusted EBITDA margins and robust cash flows for the next several years, driven by share gains, new products and further penetration of market segments like MIS, interventional spine and cervical total disc arthroplasty.

Description: Globus is focused on the development and marketing of products used in spine surgery.

12-mo. Price Target: $21 (10x 2014E EV/EBITDA of $176.5M, $272M net cash, and 95M shares out) Market Cap: $1.26B Matt Miksic, Sr. Research Analyst, 212 284-9335 Greatbatch, Inc. (GB) – $22.20 Rating: Neutral Thesis: Greatbatch has benefited from stronger-than-expected CRM/Neuromodulation revenues, as growth in long-term customer contracts provide some revenue stability. However, the Orthopedics business remains a challenge with manufacturing facility consolidations potentially hampering near-term growth.

GB remains in a transitional phase with the Ortho business consolidating operations and QiG lacking sufficient visibility to allow valuation by investors. Recent moves by the company to focus on core business units such as Electrochem, with the potential for a refocus on business development in the area, could provide investors with more comfort relative to internal R&D efforts on new products.

Description: Greatbatch is an OEM supplier of medical devices and components.

12-mo. Price Target: $25 (14x CY13E EPS) Market Cap: $526.0M Brooks E. West, Sr. Research Analyst, 612 303-6954 Thomas J. Gunderson, Sr. Research Analyst, 612 303-6467 Greenway Medical Technologies (GWAY) – $16.39 Rating: Neutral Thesis: Greenway Medical is one of the few ambulatory electronic medical record (EMR) vendors who are ahead of the curve

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

in thinking about the various ways to monetize their network of users in our opinion. The company’s PrimeResearch platform, which helps with clinical trial recruiting, is very disruptive and could be a strong growth driver. The recent announcement about the Epic integration definitely turned heads, as it might help the company gain share in the physician practices (better yet, replace Epic ambulatory EHR in some) but near term, the company is likely to see a headwind to their numbers as the core EMR related bookings mix shift toward SaaS. More and more physicians are preferring SaaS models to traditional license models and could put the company’s expanding margins guidance at risk.

Description: Greenway Medical Technologies is a leading provider of revenue cycle and EMR solutions to physicians in the United States.

12-mo. Price Target: $15 (17x CY13E EV/EBITDA) Market Cap: $480.2M Sean W. Wieland, Sr. Research Analyst, 415 616-1710 Hansen Medical, Inc. (HNSN) – $2.23 Rating: Overweight Thesis: With a recent cash injection of $30M from Intuitive Surgical ($20M for a license fee and $10M for the purchase of ~5.3M shares of common stock), the immediate future of Hansen is less in doubt. However, the hospital capital equipment market remains challenging, and investors will appropriately focus on whether Hansen has been able to sell the Magellan both domestically and abroad, or what commercial sales progress has been made. The company’s long-term strategy, given the difficult macro economic environment, will also be in focus.

Description: Hansen Medical is a global leader in intravascular robotics. The Sensei and new Magellan robots enable precise control of catheters for intravascular procedures.

12-mo. Price Target: $3 (5.5x EV/CY13E sales, assuming ($1.8M) net cash and 61.2M shares outstanding) Market Cap: $137.1M Brooks E. West, Sr. Research Analyst, 612 303-6954 Thomas J. Gunderson, Sr. Research Analyst, 612 303-6467 Healthland, Inc. – private Description: Healthland, formerly Dairyland Healthcare Solutions, is a leading nationwide provider of comprehensive healthcare information systems for rural and critical access hospitals. The company’s inpatient EHR solution meets all the requirements necessary to achieve Stage 1 Meaningful Use compliance and offers rural community and critical access hospitals the opportunity to receive incentive payments. Healthland has offices in Glenwood and Minneapolis, Minn.; Louisville, Ky.; and Waco, Texas. Healthland was acquired by Francisco Partners in 2007.

Healthways, Inc. (HWAY) – $9.14 Rating: Neutral Thesis: Healthways is going through the shift from payor/employer based disease management programs to provider based services. In addition to CIGNA, the company lost another payor contract in the September quarter, which will impact 2013 growth.

But the company continues to sign new deals and the attached implementation costs are likely to severely impact 2013 profitability. We believe demand for disease management services will grow in the provider segment as they shift to value-based purchasing models pushing risk toward providers. Further, we believe that

HWAY stands to gain if the company can successfully transition to provider based services and digest payor contract losses.

Description: Healthways, Inc. is the market-leading provider of disease management solutions.

12-mo. Price Target: $12 (1x CY13E EV/revenue) Market Cap: $310.0M Sean W. Wieland, Sr. Research Analyst, 415 616-1710 HeartWare International Inc. (HTWR) – $82.52 Rating: Neutral Thesis: HeartWare is one of two leaders in the Left Ventricular Assist Device (LVAD) space. HeartWare remains in wait mode for FDA approval of its HVAD™ Left Ventricular Assist Device for Bridge to Transplant (BTT) use for advanced heart failure patients.

While the FDA approval process has been compounded by device changes and thrombus concerns, we believe the post-panel process with FDA is likely nearing an end; however, specific timing remains uncertain. The HVAD device is approved and widely used internationally and should establish a meaningful market share within the U.S. BTT LVAD market over time.

Description: HeartWare is an early stage company developing next generation left ventricular assist devices for late stage congestive heart failure.

12-mo. Price Target: $93 (6.7x EV/CY13E revenue of $204.9 assuming 16.1M diluted shares and net cash of $131M) Market Cap: $1.18B Thomas J. Gunderson, Sr. Research Analyst, 612 303-6467 Brooks E. West, Sr. Research Analyst, 612 303-6954 Heat Biologics, Inc. – private Description: Heat Biologics is a clinical-stage company focused on developing its proprietary ImPACT (Immune Pan-Antigen Cytotoxic Therapy) technology to provide off-the-shelf therapies to combat a wide range of diseases. Heat’s ImPACT therapy effectively reprograms tumor cells to “pump out” an important immuno-protein that robustly stimulates the immune system against the targeted disease. ImPACT is applicable to a wide range of cancers as well as viral infections such as HIV, HCV, influenza and other areas of high unmet need. The company’s lead product candidate is in clinical development for the treatment of non small cell lung cancer and heat is preparing to pursue additional clinical trials with the company’s ovarian, pancreatic and bladder cancer therapeutic products.

Henry Schein, Inc. (HSIC) – $77.10 Rating: Neutral Thesis: Henry Schein is one of the leading distributors to the dental, veterinary and physician office markets. While HSIC’s experienced management team and diverse distribution model has minor exposure to Medicare reimbursement, we are Neutral rated on the stock due to valuation and our belief that macro economic headwinds will continue to weigh on dental consumable growth, while growth in the physician office market could be affected by lower utilization.

Description: Henry Schein is a leading global distributor to the dental, vet and physician office markets.

12-mo. Price Target: $82 (17x FY13E EPS) Market Cap: $6.78B Kevin K. Ellich, Sr. Research Analyst, 612 303-5666

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

Hill-Rom Holdings, Inc. (HRC) – $27.31 Rating: Neutral Thesis: Hill-Rom remains a long term margin expansion story; however, we remain concerned over the lack of near term visibility in the hospital capital spending environment. We expect macro headwinds and sluggish capital spending in the U.S. and Europe to represent continued risks to performance, and we remain on the sidelines until we see signs of stabilization and improved visibility.

Description: Hill-Rom is the worldwide market leader in patient handling for the acute care and post-acute care markets.

12-mo. Price Target: $31 (6.25x 2014E EBITDA of $332.3M, $194M net debt, and 61M shares out) Market Cap: $1.70B Matt Miksic, Sr. Research Analyst, 212 284-9335 Histogenics Corporation – private Description: Histogenics is a privately held regenerative medicine company focused on developing products for tissue repair and regeneration. The company uses cell therapy and tissue engineering technologies to treat active patients with painful, damaged articular cartilage due to athletic activity, traumatic injury or daily wear and tear. Histogenics is seeking European regulatory clearance for VeriCart, a ready-to-use collagen scaffold implanted into cartilage defects to stimulate regeneration. Phase III enrollment has begun for the NeoCart implant, grown outside the body from a patient’s own cartilage cells, to treat diseased knee cartilage.

HMS Holdings Corp. (HMSY) – $24.29 Description: HMS Holdings, incorporated on Oct. 2, 2002, provides cost containment services to government and private healthcare payers and sponsors. The company’s services ensure that healthcare claims are paid correctly, through its program integrity services, and by the responsible party, through its coordination of benefits services. Its clients are state Medicaid agencies, the Centers for Medicare & Medicaid Services, Medicaid and Medicare managed care plans, Government and private employers, Pharmacy Benefit Managers, or PBMs, child support agencies, the Veterans Health Administration, commercial plans and other healthcare payers. In December 2011, HMS Holdings acquired HDI Holdings, Inc. and its operating subsidiary, HealthDataInsights, Inc. Market Cap: $2.11B Hyperion Therapeutics, Inc. (HPTX) – $10.70 Description: Hyperion Therapeutics is a development-stage biopharmaceutical company focused on the development and commercialization of novel therapeutics to treat disorders in the areas of orphan diseases and hepatology. The company develops Ravicti (glycerol phenylbutyrate) to treat the prevalent urea cycle disorders (UCD) and hepatic encephalopathy (HE). Hyperion has completed two Phase II trials and one pivotal Phase III trial of Ravicti. The company’s HE clinical program consists of two trials, which have enrolled patients with cirrhosis. On Dec. 23, 2011, the company submitted a new drug application (NDA) for Ravicti for the chronic management of UCD in patients aged six years and older based on data from its pivotal Phase III trial in adult patients and the results of two Phase II trials, one in adults and one in pediatric patients aged six through 17 years. In June 2011, Hyperion completed a 24-month carcinogenicity study of Ravicti in rats.

Market Cap: $177.5M 26

ICU Medical, Inc. (ICUI) – $58.42 Description: ICU Medical is engaged in the development, manufacture and sale of medical devices used in infusion therapy, oncology and critical care applications. The company’s product line includes custom infusion systems, closed delivery systems for hazardous drugs, needle-free infusion connectors, catheters and cardiac monitoring systems. Its products are used in hospitals and alternate medical sites in more than 50 countries worldwide.

The company categorizes its products into three main product lines: infusion therapy, critical care and oncology. The company sells all of its products to medical product manufacturers, independent distributors and directly to the end user.

Market Cap: $852.1M Idera Pharmaceuticals, Inc. (IDRA) – $0.69 Description: Idera is applying its proprietary Toll-like receptor (TLR) platform to develop immunomodulatory drugs including IMO-3100 for psoriasis and IMO-8400 for lupus. Idera is partnered with Merck & Co. to use TLR candidates as vaccine adjuvants. The company is also developing gene-silencing oligonucleotide (GSO) technology in order to inhibit the expression of disease genes.

Market Cap: $19.1M IDEV Technologies, Inc. – private Description: IDEV Technologies, founded in 2006, develops and markets medical devices for use in interventional radiology, vascular surgery and cardiology device markets. Its products include the SUPERA Stent System, the SUPERA VERITAS stent delivery system and the SurePath guidewire. The SUPERA is indicated for palliative treatment of biliary strictures in U.S. and international markets and for peripheral vascular use in international markets. IDEV has obtained highly compelling one-year data in the SUPERB pivotal IDE trial, which evaluated the SUPERA device for treatment of obstructive superficial femoral artery disease, and plans to submit a PMA application in the fourth quarter of 2012.

IDEXX Laboratories Inc. (IDXX) – $89.55 Rating: Neutral Thesis: Despite a challenging macro environment, IDEXX continues to deliver consistent organic growth with its Companion Animal Group (CAG) leading the charge. That said, FY13 guidance targets organic revenue growth of 8%-9% (+50-150 bpts yoy), which could prove challenging given decelerating clinic patient volume growth and the anticipated shift of MWIV to a non-exclusive IDEXX distributor beginning Jan. 1, 2013. Uncertainty on the impact of distribution changes, a challenging economic environment combined with a rich valuation keep us Neutral on IDXX shares.

Description: IDEXX Laboratories, Inc. develops and commercializes technology-based products and services for veterinary, food and water applications.

12-mo. Price Target: $94 (24x FY14E EPS of $3.90) Market Cap: $4.90B David C. Clair, CFA, Research Analyst, 612 303-6747 William R. Quirk, CFA, Sr. Research Analyst, 612 303-6858

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

Illumina, Inc. (ILMN) – $48.83 Rating: Neutral Thesis: Illumina continues to deliver impressive placement rates with its benchtop sequencing system, MiSeq, and holds the market leading position in the high throughput sequencing market with its HiSeq instrument. We remain Neutral on ILMN shares due to risks of a spending slowdown in front of uncertain FY13 National Institute of Health research budgets and the potential for additional sequencing competition in coming quarters.

Description: Illumina, Inc. is a leading provider of genetic research technology.

12-mo. Price Target: $47 (25x FY13E Ongoing EPS of $1.69 + FY13E net cash/share of $4.88) Market Cap: $6.02B William R. Quirk, CFA, Sr. Research Analyst, 612 303-6858 Impax Laboratories, Inc. (IPXL) – $20.22 Rating: Overweight Thesis: We continue to believe Impax is one of the most com¬pelling long-term growth stories in specialty pharma.

Though sentiment surrounding IPXL shares remains cautious as man¬agement continues to work to resolve manufacturing issues at the Hayward, Calif. facility near-term, we continue to believe that IPXL’s EPS growth profile longer-term is compelling with abbrevi¬ated NDA (aNDA) approvals resuming (with the resolution of the manufacturing issues), muted expectations for the Adderall XR (AXR) authorized generic (AG), a deep under-appreciated gener¬ics pipeline (the most notable opportunity being for $1B+ ADHD drug Concerta®), and most importantly, the potential early 2013 launch of Parkinson’s disease (PD) brand Rytary™ (a.k.a. IPX066), a product we believe can be transformative for IPXL with peak sales potentially near $400M and brand margins (bearing in mind corporate gross margins are near 60%).

Description: Impax uses formulation expertise to develop generic and brand pharmaceuticals.

12-mo. Price Target: $30 (14x 2014E EPS of $2.20, discounted at 12%) Market Cap: $1.34B David Amsellem, Sr. Research Analyst, 212 284-9455 IMRIS, Inc. (IMRS) – $3.95 Description: IMRIS designs, manufactures and markets the VISIUS Surgical Theatre, a multifunctional surgical environment that provides intra-operative vision to clinicians. Designed to enable hospitals’ clinical application needs, the VISIUS Surgical Theatre can incorporate magnetic resonance (MR) imaging, computed tomography (CT) imaging and x-ray angiography in a number of configurations to provide intra-operative images of diagnostic quality. IMRIS sells the VISIUS Surgical Theatres globally to hospitals that deliver clinical services to patients in the neurosurgical, cerebrovascular and cardiovascular markets. The VISIUS Surgical Theatre incorporates magnetic resonance imaging, CT and fluoroscopy into multi-purpose surgical suites to provide truly intra-operative imaging for specific medical applications.

Market Cap: $181.8M Imprivata, Inc. – private Description: Imprivata develops authentication and access management solutions to healthcare, financial services, federal governments, state and local governments, and biotech and medical device companies in the United States and internationally. The

company launched its Global Healthcare Division in 2010 which works with more than 1,300 hospitals in 20 countries, has two million healthcare users and has strategic relationships with leading HIS vendors. Imprivata is headquartered in Lexington, Mass.

Incyte Corporation (INCY) – $16.85 Rating: Overweight Thesis: We believe the drop-out rate for Jakafi is stabilizing and the overall survival benefit in COMFORT-1 and COMFORT-2 Phase III trials addresses lingering concerns over Jakafi’s growth potential in myelofibrosis. We expect confirmation of an OS benefit not only to expand the number of prescribers but also to drive usage in less severe patients. The remaining pipeline, baracitinib and NCB039110 (JAK1 inhibitor) remain potential sources of significant upside.

Description: Incyte is developing oral drugs for oncology and inflammation.

12-mo. Price Target: $22 (32.5x FY15E FT EPS of $1.07, disc @ 25%) Market Cap: $2.21B M. Ian Somaiya, Sr. Research Analyst, 212 284-9305 Insulet Corporation (PODD) – $20.31 Rating: Neutral Thesis: As of this writing, Insulet awaits FDA clearance for its second generation Eros® insulin pump. Eros is the key for PODD profitability as the GM is expected to rise 10-15 percentage points owing to the lower cost of goods. The OmniPod Insulin Management System (OmniPod System) consists of its OmniPod disposable insulin infusion device and its handheld, wireless Personal Diabetes Manager. The OmniPod System features only two discreet devices that eliminate the need for a bulky pump, tubing and separate blood glucose meter.

Description: Insulet is a medical device company that develops, manufactures and markets an insulin infusion system for people with insulin-dependent diabetes.

12-mo. Price Target: $21 (4.0x EV/CY13E revenue, assuming 51.2M shares and net debt of $29.2M) Market Cap: $977.2M Thomas J. Gunderson, Sr. Research Analyst, 612 303-6467 Brooks E. West, Sr. Research Analyst, 612 303-6954 Integra LifeSciences Holdings Corporation (IART) – $37.43 Rating: Neutral Thesis: Integra has set its five-year goals of 5-7% top-line growth and 23-24% adjusted EBITDA margins, up from ~20% currently.

We expect investors to view the company’s long-term plan as a positive and potentially investable growth profile; however, the near- and intermediate-term outlook remains more muted as the company absorbed a series of near-term headwinds and loading costs pertaining to its long-term improvement programs. We also remain cautious on the hospital capital environment and have seen the impact reflected in recent quarterly results.

Description: Integra LifeSciences develops, manufactures and markets surgical implants and medical instruments for use in neurosurgery, orthopaedics and general surgery.

12-mo. Price Target: $43 (8.5x EV / 2014E EBITDA of $186M, $335M net debt, and 28.8M shares out) Market Cap: $1.01B Matt Miksic, Sr. Research Analyst, 212 284-9335

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

Integrated Diagnostics Inc. – private Description: Integrated Diagnostics is a molecular diagnostics company that develops diagnostic products which enable physicians and patients to manage cancer, diabetes and Alzheimer’s through blood tests. The company, in collaboration with the California Institute of Technology, has created a synthetic class of diagnostic and therapeutic agents with antibody-like properties called protein-catalyzed capture (PCC) agents. PCCs offer the promise of superior stability, lower cost and faster creation compared to monoclonal antibodies, the current standard for identifying biomarkers in most diagnostics platforms. The company was incorporated in 1999 and is based in Seattle.

IntelliPharmaCeutics International Inc. (IPCI) – $2.87 Description: Intellipharmaceutics International Inc. (IPC) is a pharmaceutical company specializing in the research, development and manufacture of generic controlled-release and targetedrelease oral solid dosage drugs. The company earns revenues from development contracts, which provide upfront fees, milestone payments, reimbursement of certain expenditures and royalty income upon commercialization of its products. IPC’s Hypermatrix technology is a controlled-release drug delivery platform, which can be applied for the development of a range of existing and new pharmaceuticals. IPC has a pipeline of products in various stages of development, including six abbreviated new drug applications (ANDAs) under review by the FDA in therapeutic areas, which include neurology, cardiovascular, gastrointestinal tract, pain and infection.

Market Cap: $51.1M Intuity Medical, Inc. – private Description: Intuity Medical, founded in 2002, develops blood glucose monitoring systems for diabetes management. The company’s POGOTM Blood Glucose Monitoring System is in development and aims to reduce the complexity of blood glucose testing.

The technology is designed to integrate test strips, lancets and lancing device into a compact meter and cartridge system. The meter is designed to give patients greater discretion and flexibility to test anytime, anywhere. The company, formerly known as Rosedale Medical, was spun out of the Sarnoff Corporation.

IPC The Hospitalist Co. (IPCM) – $35.69 Rating: Overweight Thesis: We believe IPCM’s long-term fundamentals remain intact as the company should benefit from hospital outsourcing trends.

IPCM’s hospital penetration rate remains relatively low at approximately 20%, which gives us confidence in the company’s ability to generate same-market revenue growth in the 10-15% range over the long-term. Additionally, IPCM has a very active and robust pipeline that could provide upside to 2013 estimates.

Description: IPC is a national physician group practice focused on the full-time management and operation of hospitalist medicine and related post-acute services.

12-mo. Price Target: $46 (21x FY13E EPS) Market Cap: $595.4M Kevin K. Ellich, Sr. Research Analyst, 612 303-5666 ISIS Pharmaceuticals Inc. (ISIS) – $8.78 Rating: Neutral Thesis: KYNAMRO (mipomersen) gained a positive FDA AdComm vote for the treatment of Homozygous Familial 28

Hypercholesterolemia (HoFH) with a Jan. 29 PDUFA date. We await a decision by the European Medicines Agency (EMA).

Beyond KYNAMRO, ISIS has a rich antisense drug pipeline with some two dozen wholly owned or partnered clinical programs.

Description: ISIS Pharmaceuticals is a biotechnology company pioneering the development of antisense drugs.

12-mo. Price Target: $10 (projected EV of $1.1 billion + YE:13E net cash) Market Cap: $888.6M Edward A. Tenthoff, Sr. Research Analyst, 212 284-9403 Jazz Pharmaceuticals, Inc. (JAZZ) – $52.97 Rating: Overweight Thesis: : Jazz is a compelling cash flow story driven by continued growth of top seller Xyrem®. Drivers of growth include strong volume growth (consistently in the 10-20% range) and pricing power. Further, we continue to view the barriers to generic entry as being high for the product (particularly in light of the favorable Markman hearing in September 2012). Another key growth driver is recently acquired Erwinaze, an orphan biologic for pediatric leukemia, with sales now annualizing near $127M. With sustainable operating cash flows near $400M on an enterprise value of around $3.3B, we believe JAZZ shares are attractively valued at a 2013 P/E of only 9x.

Description: Jazz is focused on pharmaceuticals for niche therapeutic settings.

12-mo. Price Target: $65 (10x 2014E EPS of $6.96, discounted at 13%) Market Cap: $3.06B David Amsellem, Sr. Research Analyst, 212 284-9455 K2M, Inc. – private Description: K2M, founded in 2004, engages in the development, manufacture and distribution of solutions for the treatment of complex spinal pathologies and procedures in the United States and internationally. It offers spinal systems, stabilization systems, minimally invasive retractor systems, motion preservation systems, spacer systems, OCT spinal systems, cervical plate systems, transverse connectors, corpectomy cage systems, lowprofile plate systems, minimally invasive spine-based access systems, biologics and disposable kits. The company also provides products for lateral and far lateral transpsoas access approaches.

Kips Bay Medical, Inc. (KIPS) – $1.45 Description: Kips Bay Medical is a medical device company focused on developing, manufacturing and commercializing its external saphenous vein support technology (eSVS MESH) for use in coronary artery bypass grafting (CABG) surgery. The company’s eSVS MESH is a nitinol mesh sleeve that, when placed over a saphenous vein graft during CABG surgery, is designed to improve the structural characteristics and performance of the vein graft.

The eSVS MESH is a kink-resistant extravascular tubular prosthesis made of knitted nickel/titanium, or nitinol, wire mesh.

Market Cap: $23.7M KnowledgePoint360 Group, L.L.C. – private Description: KnowledgePoint360 offers healthcare information and medical communications solutions for healthcare professionals, physicians, and the pharmaceuticals and biotech industries around the world. The company offers a broad range of services including support for data-driven clinical publications and stra-

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

tegic consulting. KnowledgePoint360 is a former subsidiary of Thomson Reuters Corporation and is based in Lyndhurst, N.J., with additional offices in the United States and Europe.

Lanx, LLC – private Description: Lanx, founded in 2003, engages in developing and commercializing spinal surgery products for surgeons in the United States. It offers spinous process fixation systems; biologics products; interbody/VBR fusion systems, facet screw systems, stand-alone ALIF systems, anterior thoracolumbar plates, allograft interbody spacers, spinal fixation systems, deformity systems, anterior cervical plates, anterior cervical plates, MIS spinal fixation systems, lateral fusion systems and thoracic spinal fixation systems. The company provides its products for use in various spinal procedures.

LDR Medical – private Description: LDR Medical, founded in 2004, develops and markets unique implantable spine devices and instrumentation designed to support the clinical goals of surgery while making procedures easier to perform. The company’s VerteBRIDGE platform serves as a minimally invasive, screw-less, direct lateral and oblique lumbar system for surgical applications. LDR Medical’s spine surgical systems include the Mobi-C cervical and Mobidisc lumbar artificial disc systems, Easyspine pedicle screw systems, ROI-A ALIF and ROI-C cervical cages, synthetic bone substitutes, and other ALIF and TLIF devices.

Lexicon Pharmaceuticals Inc. (LXRX) – $1.73 Description: Lexicon Pharmaceuticals is a biopharmaceutical company focused on the discovery and development of breakthrough treatments for human disease. The company uses its gene knockout technologies and an integrated platform of medical technologies to study the physiological and behavioral functions of almost 5,000 genes in mice and assess the utility of the proteins encoded by the corresponding human genes as drug targets. It has five drug programs in various stages of clinical development and has advanced small molecule compounds from a number of additional drug programs into various stages of preclinical development and research. Its drug program includes LX4211, LX1032, LX1033, LX2931 and LX7101.

Market Cap: $855.2M Mako Surgical Corp. (MAKO) – $14.36 Rating: Overweight Thesis: We view Mako’s proprietary robotic arm technology as one of the most compelling innovations in orthopaedics in recent years. The first three quarters of the year have been inconsistent, to say the least, which accounts for the recent stock performance.

However, we see a significant long-term opportunity for the company, driven by new implant systems, new applications and an increasing demand for greater precision, fewer adverse events and better outcomes across a wide range of orthopaedic surgery segments. In the near term, we view the company’s revised 2012 and de facto 4Q12 outlook as very achievable, making the stock significantly easier to own heading into Q4 that it was heading into Q3, when many more questions hovered over the management team regarding robot sales execution.

Description: MAKO Surgical is an Advanced Surgical Technology growth story that markets an advanced robotic arm solution and orthopaedic implants for minimally-invasive orthopaedic proce-

dures. The company’s RIO Robotic Arm Interactive Orthopaedic system utilizes tactile guided robotic technology and patient-specific visualization to treat osteoarthritis of the knee.

12-mo. Price Target: $28 (7x 2013E EV/Sales of $170M, $30M in net cash and 43M shares out) Market Cap: $607.5M Matt Miksic, Sr. Research Analyst, 212 284-9335 MannKind Corporation (MNKD) – $1.99 Rating: Overweight Thesis: We believe recent discussions with the FDA have provided a path forward for Afrezza’s approval, which may help lift the regulatory overhang that has settled on MNKD shares following two complete response letters. We believe release of Phase III data represents an inflection point for shares, with positive data allowing MannKind to complete partnership negotiations and potentially begin trading at a premium above our $4 price target. We continue to believe Afrezza’s faster onset, weight neutral profile and lower rate of hypoglycemia could enable it to capture 20% of the rapid-acting insulin market, generating peak global sales >$1.5B. Description: MannKind Corporation is developing inhaled insulin.

12-mo. Price Target: $4 (35x 2020 fully taxed diluted EPS discounted at 25%) Market Cap: $377.3M M. Ian Somaiya, Sr. Research Analyst, 212 284-9305 Masimo Corporation (MASI) – $21.08 Rating: Overweight Thesis: Masimo reported mixed 3Q12 results, with both revenue and EPS falling short of consensus expectations. Importantly, Rainbow delivered slight upside to our estimates and management described increasing utilization trends (i.e. higher consumables) as well as strong interest in its BTR-CARE total hemoglobin trialing program (50 hospitals currently signed up). Our 4Q12/2013 thesis remains unchanged: we continue to expect accelerating Rainbow results as the impact of recent initiatives (lower sensor pricing, BTR-CARE) as well as Rainbow enabled monitors from GE and Philips (2H13) gain traction.

Description: Masimo Corporation develops, manufactures and markets non-invasive vital sign monitoring devices and consumables.

12-mo. Price Target: $30 (3.2x FY13E EV/Revenue) Market Cap: $1.21B William R. Quirk, CFA, Sr. Research Analyst, 612 303-6858 MedAssets, Inc. (MDAS) – $16.71 Rating: Underweight Thesis: MedAssets delivered two consecutive quarters of better than expected performance in both RCM and GPO business. But we differ from the consensus on the trajectory of these businesses.

We strongly believe that demand for RCM services will decline as more and more hospitals upgrade their core patient accounting systems. Some of the tools/solutions that MDAS RCM provides are likely to be redundant with the newer patient accounting systems. On the GPO side, we believe the pressure to cut healthcare costs is likely to impact GPO EBITDA margins as focus turns to various players in the healthcare supply chain.

Description: MedAssets is a leading provider of spend management and revenue cycle management to hospitals. Its solutions are in use by 2,500 hospitals in the U.S. 29

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

12-mo. Price Target: $12 (sum of the parts: SCM $8.76/sh; RCM $3.28/sh) Market Cap: $982.1M Sean W. Wieland, Sr. Research Analyst, 415 616-1710 Medicago Inc. (MDG CN) – 0.45 CAD Description: Medicago is a biopharmaceutical company developing novel vaccines and therapeutic proteins to address a broad range of infectious diseases. Medicago is developing virus-like particle (VLP) vaccines using a transient expression system that produces recombinant vaccine antigens in plants.

Market Cap: 110.4M CAD Medical Action Industries Inc. (MDCI) – $2.76 Description: Medical Action Industries develops, manufactures, markets and supplies a range of disposable medical products.

The company’s products are marketed primarily to acute care facilities in domestic and certain international markets. It also offers OEM products under private label programs to supply chain partners and medical suppliers. Medical Action’s products are divided into seven categories: custom procedure trays, patient bedside products, minor procedure kits and trays, containment systems for medical waste, operating room disposables and sterilization products, dressings and surgical sponges, and laboratory products.

Market Cap: $45.2M Medivation Inc. (MDVN) – $45.70 Description: Medivation is a biopharmaceutical company focused on the rapid development of small molecule drugs to treat serious diseases for which there are limited treatment options. Together with its collaboration partner Astellas Pharma Inc., Medivation is developing MDV3100 for multiple stages of advanced prostate cancer. As of Dec. 31, 2011, it completed a Phase III trial in the latest stage. The company’s three subsidiaries include Medivation Prostate Therapeutics, Inc., Medivation Neurology, Inc. and Medivation Technologies, Inc. Market Cap: $3.48B MEDNAX, Inc. (MD) – $76.11 Rating: Overweight Thesis: MEDNAX has an accelerating growth story driven by acquisitions and expansion into anesthesia services, which could drive upside to estimates as deal activity in 2013 is expected to outpace the company’s strong 2012 M&A pace. MEDNAX will also benefit from an economic recovery as the U.S. birth rate begins to improve after a few consecutive years of pressure. We believe there is an upward bias to FY13 estimates due to the final Medicaid-to-Medicare rate parity rule, which we estimate could add $0.24-$0.38 to FY13 EPS. Description: MEDNAX is the nation’s leading provider of physician services for neonatologists, other newborn subspecialties, and anesthesia services.

12-mo. Price Target: $80 (15x FY13E EPS) Market Cap: $3.71B Kevin K. Ellich, Sr. Research Analyst, 612 303-5666 Medtronic, Inc. (MDT) – $41.16 Rating: Overweight Thesis: Medtronic is a global leader in a diversified universe of

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medtech markets. Among the company’s larger business units, cardiac rhythm management (CRM) has been a recent source of concern as utilization worldwide has fallen off due to budget constraints by patients and payors. We believe this core business has likely stabilized. The recently launched Resolute DES is gaining share in the United States in a flat market. We believe negative news in the spinal market has cooled down, and we anticipate continued growth in spinal products. CEO Omar Ishrak is having a positive impact on the company, particularly in advancing products into China and other emerging markets. We expect longerterm upside from Ardian (renal denervation for hypertension) and on CoreValve (percutaneous valve replacement) platforms outside of the United States.

Description: Medtronic is a diversified medical technology company offering products for cardiovascular, vascular, neurological, spinal, diabetic and other chronic disorders 12-mo. Price Target: $45 (12.5x CY12E EPS of $3.61) Market Cap: $41.98B Brooks E. West, Sr. Research Analyst, 612 303-6954 Thomas J. Gunderson, Sr. Research Analyst, 612 303-6467 Merit Medical Systems, Inc. (MMSI) – $13.26 Rating: Overweight Thesis: Merit Medical is one of the leading providers of ancillary medical devices for interventional procedures, and we believe the company is well-positioned to deliver solid revenue and earnings growth driven by tuck-in acquisitions, geographic expansion and market share gains. We believe Merit’s strategy to shift toward higher margin, more differentiated products will provide for increased earnings power in the long term.

Description: Merit designs and manufactures single-use devices for interventional procedures.

12-mo. Price Target: $16 (20x CY13E EPS of $0.81) Market Cap: $563.8M Brooks E. West, Sr. Research Analyst, 612 303-6954 Thomas J. Gunderson, Sr. Research Analyst, 612 303-6467 Metabolon, Inc. – private Description: Metabolon is a diagnostics and services company that offers a proprietary biochemical profiling platform for discovery of markers and pathways associated with drug action, toxicology and bioprocess optimization. Its biomarkers are incorporated into diagnostic tests for various diseases, such as diabetes, cancer and amyotrphic lateral sclerosis. In addition, the company offers mView, a service that provides metabolomics-driven biochemical profiling for scientists in academic and government institutions; and mVision, a service that provides insight into the biochemical and physiological state of the organism for consumer products and pharma/biotech companies. The company was founded in 2000 and is based in Durham, N.C. MethylGene Inc. (MYG CN) – 0.17 CAD Description: MethylGene is a drug development company that is advancing novel drugs for cancer and infectious diseases.

The company’s lead product candidates are MGCD290, an oral antifungal, in Phase II trials for vulvovaginal candidiasis and MGCD265, an oral Met/VEGF receptor kinase inhibitor, in Phase I/II cancer trials.

Market Cap: 52.5M CAD

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

MWI Veterinary Supply, Inc. (MWIV) – $106.58 Rating: Neutral Thesis: MWIV is a leading distributor to the companion and production animal markets. The company was recently selected as a non-exclusive value-added distributor for IDEXX, which will allow the company to supply a full range of diagnostic products, which could open the door to new customers leading to incremental share gains in the companion animal market. We also believe MWIV is gaining share in the production animal market due to attrition from industry consolidation, as well as solid execution by its sales force. We are Neutral on MWIV primarily due to valuation and potential headwinds in 2013 in the production animal business due to the harsh drought in 2012.

Description: MWI Veterinary is a leading distributor of animal health products to veterinary practices.

12-mo. Price Target: $109 (20x FY14E EPS) Market Cap: $1.35B Kevin K. Ellich, Sr. Research Analyst, 612 303-5666

Parental SupportTM, a proprietary technology that enables reliable and comprehensive genomic testing from a single cell. Natera also operates a CLIA laboratory in San Carlos, Calif. that provides a range of reproductive and prenatal genetic testing services.

Myriad Genetics, Inc. (MYGN) – $29.45 Rating: Overweight Thesis: The recently issued Clinical Lab Fee Schedule (CLFS) determined Myriad’s BRACAnalysis will remain on this schedule and will not be on the Physician Fee Schedule (PFS), removing an overhang on MYGN shares, in our opinion. The next steps will be for CMS intermediary Noridian to determine payment levels via gap-fill analysis. We believe current median prices (Medicaid and private pay within 6% of CMS) point to a very modest potential price decrease as a result of the gap-fill analysis, keeping us Overweight MYGN shares.

Description: Myriad Genetics, Inc. develops tests for predictive, prognostic and personalized medicine.

12-mo. Price Target: $35 (17x CY13E EPS of $1.66 + $7.52 in net cash/share) Market Cap: $2.45B William R. Quirk, CFA, Sr. Research Analyst, 612 303-6858

Natus Medical Inc. (BABY) – $10.91 Description: Natus Medical is a provider of healthcare products used for the screening, detection, treatment, monitoring and tracking of common medical ailments in newborn care, hearing impairment, neurological dysfunction, epilepsy, sleep disorders and balance/mobility disorders.

Market Cap: $317.1M

Nanosphere, Inc. (NSPH) – $2.73 Rating: Overweight Thesis: Our recent AMP (Association for Molecular Pathology) conference diligence suggests increased awareness and interest in Nanosphere’s Verigene instrument and Gram Positive blood stream infection panel, with solid booth traffic and a standing room only corporate presentation both backing this view.

Additionally, our recent HAI survey suggests modest adoption trends to date (2% currently using Verigene Gram Positive), although 8% of respondents described plans to evaluate the assay.

Based on favorable AMP diligence and our survey results we believe Nanosphere is in the early stages of Verigene adoption with expectations for continued traction as its microbiology focused pipeline launches.

Description: Nanosphere, Inc. manufactures genetic, infectious disease and proteomic tests.

12-mo. Price Target: $4 (9x 2013E EV/Revenue) Market Cap: $141.6M William R. Quirk, CFA, Sr. Research Analyst, 612 303-6858

National Research Corp. (NRCI) – $53.35 Description: National Research is a provider of performance measurement and improvement services, healthcare analytics and governance education to the healthcare industry in the U.S. and Canada. Its services include data collection, healthcare analytics, best practice identification and delivery of value-added business intelligence that enable clients to improve performance across key business metrics. NRC also provides healthcare information services to organizations across a range of service delivery segments.

The company has seven operating segments aggregated into one: NRC Picker U.S., NRC Picker Canada, Ticker, Payer Solutions, the Governance Institute (TGI), My InnerView (MIV) and Illuminate.

Market Cap: $360.7M

Nektar Therapeutics (NKTR) – $8.15 Description: Nektar Therapeutics is a clinical-stage biopharmaceutical company developing a pipeline of drug candidates, which utilize its PEGylation and advanced polymer conjugate technology platforms. As of Dec. 31, 2011, its pipeline was consisted of drug candidates across a range of therapeutic areas, including oncology, pain, anti-infectives, anti-viral and immunology. Its research and development activities involve small molecule drugs, peptides and other potential biologic drug candidates. In addition, it utilizes pharmacologic targets to engineer a new drug candidate. As of Dec. 31, 2011, the company’s NKTR-118, was an oral peripherally-acting opioid antagonist, in Phase III clinical studies for the treatment of opioid-induced constipation (OIC) in patients with non-cancer pain and cancer pain. Its NKTR-102, is a topoisomerase I inhibitor.

Market Cap: $959.4M NeoStem, Inc. – private Description: NeoStem is a international biopharmaceutical company operating in three segments: cell therapy (United States); regenerative medicine (China) and pharmaceutical manufacturing (China). NeoStem is a provider of adult stem cell collection, processing and storage services in the United States, enabling healthy individuals to donate and store stem cells for personal therapeutic use. In addition, the company collects and stores cord blood cells of newborns which help to ensure a supply of autologous stem cells for the child should they be needed for future medical treatment. In January 2011, NeoStem completed a merger with Progenitor Cell Therapy LLC (PCT), and in October 2011, the company acquired Amorcyte Inc.

Natera, Inc. – private Description: Natera, Inc., founded in 2004, is a genetic testing company focused on the development and commercialization of

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

Neurocrine Biosciences Inc. (NBIX) – $7.26 Rating: Overweight Thesis: NBIX remains our top small-cap pick as we believe shares partially reflect elagolix’s $1B+ market opportunity in endometriosis and assign no value for a second indication in uterine fibroids and for ‘854, which could have a similar opportunity to elagolix. We expect 2 major data readouts in the next 12 months to drive significant upside in NBIX shares – 1) 2Q13 Phase IIb results for ‘854 in tardive dyskinesia in schizophrenia patients, which we believe could add $500M to Street models and support Neurocrine’s decision to develop the drug independently in the US; and 2) Spring 2013 Phase II results for elagolix in uterine fibroids (UF), another potential $1B indication.

Description: Neurocrine develops drugs for neurological and endocrine diseases and disorders.

12-mo. Price Target: $19 (40x FY17E non-GAAP EPS of $1.82, disc @ 35%) Market Cap: $482.0M M. Ian Somaiya, Sr. Research Analyst, 212 284-9305 Neuronetics – private Description: Neuronetics, founded in 2001, develops and commercializes non-invasive therapies to treat chronic psychiatric and neurological disorders using MRI-strength magnetic field pulses.

It offers the NeuroStar TMS Therapy System for the treatment of major depressive disorders in adult patients. NeuroStar TMS Therapy, a non-systemic and non-invasive form of neuromodulation, stimulates nerve cells in an area of the brain that has been linked to depression by delivering highly-focused MRI-strength magnetic field pulses. The NeuroStar TMS Therapy System is FDA cleared and CE Marked and has been administered to over 8,000 patients through more than 250,000 treatments at 400 U.S. centers.

Nevro Corp. – private Description: Nevro, founded in 2006, is focused on the development and commercialization of high-frequency spinal cord stimulation for chronic pain. Nevro’s Senza High-Frequency Spinal Cord Stimulation System delivers electrical pulses to the spinal cord to reduce the transmission of pain signals to the brain. The electrical pulses are delivered by small electrodes that are placed near the spinal cord and are connected to a compact, batterypowered generator implanted under the skin. The company’s SENZA-RCT study, a prospective, randomized, controlled pivotal study is evaluating the safety and efficacy of the Senza System in 300 patients in 15 U.S. centers. The Senza System is cleared for sale in Europe and Australia.

NewLink Genetics Corporation (NLNK) – $12.21 Description: NewLink Genetics is a biopharmaceutical company focused on developing novel cancer immunotherapies. The company’s portfolio includes both “off-the-shelf” biologic and small-molecule immunotherapy candidates. NewLink’s biologic pipeline is based on HyperAcute technology, which is designed to harness multiple components of the innate immune system.

Market Cap: $255.0M

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Novadaq Technologies Inc. (NVDQ) – $9.99 Rating: Overweight Thesis: We view Novadaq as a compelling advanced surgical technology growth story with the potential to become standard of care across multiple indications, totaling approximately $2 billion in revenue potential. With continued robust unit sales and placements as well as increases in utilization and adoption across current sites and indications, we expect earnings and revenue trends to accelerate throughout 2013.

Description: Novadaq Technologies develops and commercializes real-time fluorescence medical imaging technologies and therapeutic devices for use in the operating room. The company sells consumable reagent kits and imaging units, which can be used to visualize blood vessels, nerves and the lymphatic system during surgical procedures.

12-mo. Price Target: $14 (11x 2014E EV/sales of $58.9Ml) Market Cap: $402.5M Matt Miksic, Sr. Research Analyst, 212 284-9335 Novavax, Inc. (NVAX) – $1.70 Rating: Overweight Thesis: Novavax was awarded a $97M contract from BARDA earlier this year to develop a seasonal and pandemic influenza vaccine with studies slated to begin in early 2012. Novavax is also developing an RSV vaccine that could advance into Phase II trials and gain a partner in 2012.

Description: Novavax is developing Viral-like Particle (VLP) vaccines for influenza and respiratory syncytial virus (RSV).

12-mo. Price Target: $4 (20x FY15E EPS of $0.50, discounted at 25%) Market Cap: $229.8M Edward A. Tenthoff, Sr. Research Analyst, 212 284-9403 NuVasive, Inc. (NUVA) – $13.51 Rating: Overweight Thesis: Our Overweight rating on NUVA shares is based on our view that the company will stabilize the business and recover from its recently disclosed share losses over the next 2-3 quarters. At around 1.25x forward sales, we view the stock as attractively valued given the value of the company’s leadership position in minimally invasive spine surgery (MIS). Additional upside catalysts include the launch of the company’s recently approved cervical total disc replacement (TDR) and other new products across its portfolio.

Description: NuVasive is focused on the development, design and marketing of products used in spine surgery.

12-mo. Price Target: $21 (1.5x EV/2014E sales of $677M, $83M net debt, and 44M shares out) Market Cap: $585.9M Matt Miksic, Sr. Research Analyst, 212 284-9335 NxStage Medical, Inc. (NXTM) – $11.00 Rating: Overweight Thesis: We believe home hemodialysis (HHD) penetration will continue to grow slowly and steadily over the long-term. While components to drive greater utilization are coming together slowly, NXTM has a superior product to FMS’s home hemodialysis machine, in our view, and BAX’s product is not likely to enter the U.S. market for another couple of years. Additionally, NXTM recently announced a new peritoneal dialysis (PD) product development program, which we believe is a good, long-term strategic

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

move as the company can leverage its existing infrastructure and participate in the $2 billion global PD market.

Description: NxStage Medical is a leading provider of innovative renal care solutions, focused on the home, critical care and incenter markets.

12-mo. Price Target: $18 (3.5x FY13E EV/Sales) Market Cap: $661.2M Kevin K. Ellich, Sr. Research Analyst, 612 303-5666 NxThera, Inc. – private NxThera, founded in 2008, develops medical technologies to treat a variety of endourology conditions, including benign prostatic hyperplasia (BPH). It is developing the proprietary Rez m™ vapor ablation system. The technology platform utilizes a simple, minimally invasive, vapor thermal therapy designed to measurably improve urinary flow and patient quality of life. BPH afflicts more than 32 million men in the United States.

Obagi Medical Products, Inc. (OMPI) – $12.27 Rating: Neutral Thesis: With limited visibility on longer-term EPS growth, we believe value creation potential for OMPI is limited. Given underwhelming growth for flagship product Nu-Derm, a challenging macroeconomic environment, the company’s ongoing inquiry by the state of California regarding 4% hydroquinone products and the push-out of the launch of the e-commerce platform by around six months, we believe there is limited potential for meaningful value creation in the near-term.

Description: Obagi Medical Products is focused exclusivity on medical aesthetics products.

12-mo. Price Target: $12 (12x 2014E EPS of $1.10, discounted at 15%) Market Cap: $214.4M David Amsellem, Sr. Research Analyst, 212 284-9455 Obalon Therapeutics, Inc. – private Description: Obalon Therapeutics, founded in 2008, is focused on developing innovative, high-quality gastric balloon technologies for weight loss therapy. The Obalon Gastric Balloon is a novel, nonsurgical, fully-reversible device for weight loss. The balloon occupies space in the stomach to create a feeling of fullness to help people eat less. The device consists of a capsule containing a balloon that is swallowed and then remotely inflated. No anesthesia or endoscopy is required for placement and up to three balloons can be placed to help weight loss over the 12-week treatment period. At the end of the period, the balloons are removed in a short endoscopic procedure. The Obalon Gastric Balloon is CE Marked and is currently being studied in U.S. clinical trials.

Omeros Corporation (OMER) – $8.22 Description: Omeros Corporation is a clinical-stage biopharmaceutical company engaged in discovering, developing and commercializing products targeting inflammation, coagulopathies and disorders of the central nervous system. Its product candidates are derived from its PharmacoSurgerytm platform designed to improve clinical outcomes of patients undergoing arthroscopic, ophthalmological, urological and other surgical and medical procedures. Its PharmacoSurgery platform is based on low-dose combinations of therapeutic agents delivered directly to the surgical site throughout the duration of the procedure to

preemptively inhibit inflammation and other problems caused by surgical trauma and to provide clinical benefits both during and after surgery. The company has six ongoing clinical development programs, including four from its PharmacoSurgery platform and two from its addiction franchise.

Market Cap: $183.3M OMNI life science, Inc. – private Description: OMNI life Sciences, founded in 1999, is a wholly owned subsidiary of Orthopaedic Synergy, Inc. The company’s products are prescribed by orthopaedic surgeons for patients who require total joint replacement. OMNI is a leader in modular hip stem technology and total knee replacement systems. Its corporate strategic objectives include continued growth through line extensions to hip and knee product offerings as well as the introduction of new products that will complement its current product portfolio and provide new clinical options for their customers.

Omnicell, Inc. (OMCL) – $14.89 Rating: Overweight Thesis: Omnicell took a hit with the MTS acquisition, as it was perceived that the acquisition multiple was too high. We believe that MTS brings Omnicell into play with the increasing focus on curtailing readmissions and into non-acute care locations such as pharmacies and long term care facilities. MTS delivered better than expected operating results in the recent quarter and should gain momentum into 2013 as it gets more attention with valuebased models. In the acute care market (medication dispensing cabinets), we believe the company continues to take market share with its new G4 platform. The year end backlog metric will be a catalyst for the stock.

Description: Omnicell is a leading provider of patient safety solutions addressing the medication-use process and the medicalsurgical supply chain.

12-mo. Price Target: $16 (15x CY13E PF EPS + cash of $1.61) Market Cap: $497.9M Sean W. Wieland, Sr. Research Analyst, 415 616-1710 Oncolytics Biotech Inc. (ONCY) – $2.04 Description: Oncolytics is a biotechnology company focused on the development of oncolytic viruses for therapeutic use in a broad range of cancers. The company’s lead program is REOLYSIN, a proprietary formulation of the human reovirus, currently in a Phase III trial in head and neck cancers and has completed enrollment in a Phase II pancreatic cancer study.

Market Cap: $154.1M Oncothyreon Inc. (ONTY) – $4.72 Description: Oncothyreon is a biotechnology company that is developing novel synthetic vaccines and targeted small molecules for cancer. The company’s lead program is Stimuvax, a therapeutic vaccine that is partnered with Merck KGaA and currently in a Phase III lung cancer trial. Oncothyreon is also developing whollyowned ONT-10, a follow-on MUC-1 vaccine in Phase I studies, and PX-866, a small molecule inhibitor of PI3K. Market Cap: $206.3M

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

OptiMedica Corporation – private Description: OptiMedica, founded in 2004, is an ophthalmic company focused in the cataract therapeutic area. The company has developed the Catalys Precision Laser System to transform existing standards of care in cataract surgery. Catalys is a next generation laser cataract surgery platform that combines a femtosecond laser, integrated 3D Optical Coherence Tomography (OCT) imaging and OptiMedica’s pattern scanning technology in an ergonomic, easy-to-use system. Catalys includes a Liquid Optics Interface that ensures stable system-patient attachment and optimizes the optical path to the patient’s eye, and a proprietary Integral Guidance mapping system that ensures the femtosecond laser pulses are delivered safely and precisely to the intended location. In addition, Catalys features an easy-to-use graphical user interface designed to simplify the planning process and minimize the time the patient is under the dock. Catalys is cleared in the United States and CE Marked.

OrbusNeich Co., Ltd. – private Description: OrbusNeich, founded in 1979, is a global company that designs, develops, manufactures and markets innovative medical devices for the treatment of vascular diseases. Current products are the world’s first pro-healing stent, the Genous™ Stent, as well as other stents and balloons marketed under the names of Azule™, R stent, Scoreflex™, Sapphire™, Sapphire II and Sapphire NC. Development stage products include the COMBO Dual Therapy Stent, the world’s first dual therapy stent. OrbusNeich is headquartered in Hong Kong and has operations in Shenzhen, China; Fort Lauderdale, Fla.; Hoevelaken, The Netherlands; and Tokyo, Japan. OrbusNeich supplies medical devices to interventional cardiologists in more than 60 countries.

Orthofix International NV (OFIX) – $38.70 Rating: Neutral Thesis: Orthofix’s strategy going forward includes improving topline growth, in part driven by new products and in part through strategic investment. Management has been very successful over the past few years in driving substantial leverage on modest top-line growth. We look for greater clarity and visibility into how management plans to deliver on its strategy for improving growth before becoming more constructive on OFIX. Description: Orthofix International is a diversified orthopaedic products company offering a line of surgical and non-surgical products for the spine, orthopaedics, sports medicine and vascular market sectors.

12-mo. Price Target: $47 (6x 2014E EV/EBITDA of $128.6M) Market Cap: $41.9M Matt Miksic, Sr. Research Analyst, 212 284-9335 Osiris Therapeutics, Inc. (OSIR) – $9.45 Rating: Neutral Thesis: Osiris is developing P rochymal, a mesenchymal stem cell (MSC) therapy. Prochymal gained approval in Canada and New Zealand earlier this year to treat graft-vs.-host disease (GvHD) in children who have failed steroid. This was the first ever systemic stem cell therapy to be approved. Osiris is working toward a BLA submission in the U.S. and is also developing Prochymal in refractory Crohn’s disease, acute heart attack and Type I diabetes. Osiris continues to expand its BioSurgery commercial infrastructure for Grafix for wound healing and Ovation for bone and soft tissue

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repair.

Description: Osiris Therapeutics is the leading adult stem cell therapy company developing Prochymal.

12-mo. Price Target: $11.50 (projected EV of $360M + mid:13E net cash) Market Cap: $307.7M Edward A. Tenthoff, Sr. Research Analyst, 212 284-9403 Pacific BioSciences of California, Inc. (PACB) – $1.20 Rating: Underweight Thesis: Pacific Biosciences has shown mixed results in recent quarters, with instrument orders for its RS sequencing system remaining lower than expectations when the system was originally launched. Management remains focused on improving system performance, with recent software upgrades as well as a planned 4Q12 new chemistry introduction (average read length of 5,000 bases, 5% > 13,000) continuing to improve system performance.

We are encouraged with the ongoing and planned RS improvements, although limited visibility into end user instrument demand keeps us Underweight PACB shares.

Description: Pacific Biosciences of California, Inc. develops, manufactures and markets “third-generation” DNA sequencing instruments and consumables.

12-mo. Price Target: $1.85 (3.8x FY13E EV/Revenue) Market Cap: $68.0M William R. Quirk, CFA, Sr. Research Analyst, 612 303-6858 Pacira Pharmaceuticals, Inc. (PCRX) – $15.83 Rating: Overweight Thesis: Pacira launched Exparel, the only long-acting loco-regional anesthetic available, in April 2012 and is seeing sales annualizing at nearly $20M. Management has cited strong hospital formulary access, high reorder rates and Exparel usage in a number of surgical settings, all of which bode well for continued uptake of the product in our view. We continue to believe that Exparel is wellpositioned for significant commercial success (sale potential of at least $200M), as it fills a gap in the post-operative pain management landscape.

Description: Pacira is focused on hospital-based products for pain management.

12-mo. Price Target: $22 (15x 2014E EPS of $1.52, discounted at 12%) Market Cap: $514.3M David Amsellem, Sr. Research Analyst, 212 284-9455 Palatin Technologies Inc. (PTN) – $0.67 Description: Palatin Technologies is a biopharmaceutical company developing targeted, receptor-specific peptide therapeutics that modulate the activity of the melanocortin and natriuretic peptide receptor systems. Palatin’s primary product in clinical development is bremelanotide for the treatment of female sexual dysfunction, which has completed a Phase IIB clinical trial. In addition, Palatin has melanocortin receptor-based compounds for treatment of obesity, under development by AstraZeneca AB (AstraZeneca) pursuant to a research collaboration and license agreement, and PL-3994, a peptide mimetic natriuretic peptide receptor A (NPR-A) agonist, for treatment of cardiovascular and pulmonary indications.

Market Cap: $26.5M

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

Patterson Companies Inc. (PDCO) – $34.24 Rating: Overweight Thesis: We believe improvement in the dental consumable market should drive growth and operating margin expansion for PDCO over time. The company has a strong focus on returning capital to shareholders through its dividend and share repurchases as well as by making selective acquisitions. With the launch of Sirona’s Omnicam, we believe dental equipment growth should be strong over the next several quarters, and PDCO’s exclusive arrangement with Sirona in the U.S. market is a unique competitive advantage.

Description: Patterson Companies is a leading distributor of dental, vet, and rehab equipment and consumables.

12-mo. Price Target: $37 (16.5x CY13E EPS) Market Cap: $3.59B Kevin K. Ellich, Sr. Research Analyst, 612 303-5666 PerfectServe, Inc. – private Description: PerfectServe provides physician contact and patient care communication services for physicians and physician, nursing and hospital executives. The company’s system efficiently routes calls and messages while giving physicians complete control over how they are contacted. PerfectServe is based in Knoxville, Tenn., and processes more than 35 million clinical communication interactions each year involving more than 25,000 physicians.

Physicians Endoscopy L.L.C. – private Description: Physicians Endoscopy is a leading developer, owner and manager of single-specialty endoscopic ambulatory surgery centers (ASCs) in the United States. Headquartered in Doylestown, Pennsylvania, the company has ownership in 27 endoscopic surgery centers across a diverse geographic footprint of 13 states. Since inception, Physicians Endoscopy has been focused on de novo development of ASCs and has refined its development capabilities through the build-out of 19 de novo ASCs. Having a center base that is predominately the product of de novo development, rather than acquisition integration, has allowed the company to develop highly consistent operations.

Physicians Endoscopy leverages its centralized infrastructure to provide hands-on management and billing services to its centers that are designed to drive efficiencies, and ultimately utilization, as well as maximize profitability at the center-level. As a result of its comprehensive management services, Physicians Endoscopy has shown industry-leading same center sales growth.

Phytel, Inc. – private Description: Phytel provides healthcare organizations with proven population health technology to deliver timely, coordinated care to their patients. The company’s registry uses evidence-based chronic and preventive care protocols to identify and notify patients due for care while tracking compliance and measuring quality and financial results. Phytel’s registry includes more than 25 million patients and is installed in over 46 states. The company is based in Dallas.

POZEN Inc. (POZN) – $5.77 Description: POZEN is a pharmaceutical company focused on transforming medicine. The company had developed Treximet in collaboration with GlaxoSmithKline (GSK). Treximet is the brand name for the product combining sumatriptan 85 milli-

gram, formulated with RT Technology and naproxen sodium 500 milligram in a single tablet designed for the acute treatment of migraine. POZEN has developed VIMOVO with AstraZeneca AB (AstraZeneca). VIMOVO is the brand name for a fixed dose combination of the proton pump inhibitor (PPI) esomeprazole magnesium with the non-steroidal anti-inflammatory drug (NSAID) naproxen in a single tablet. On Nov. 23, 2011, POZEN entered into a purchase and sale agreement with CPPIB Credit Investments Inc. pursuant to which it sold, and CPPIB purchased, its right to receive future royalty payments from U.S sales of MT 400, including Treximet.

Market Cap: $181.7M Pulmonx, Inc. – private Description: Pulmonx, founded in 1998, designs, develops, manufactures and markets minimally invasive medical devices and technologies to deliver effective endoscopic lung volume reduction (ELVR) to patients with emphysema-induced hyperinflation.

ELVR involves placing small one-way valves in the lung to prevent air from entering the most diseased regions while allowing secretions and trapped air to escape. The goal is to reduce the volume of the diseased portions of the lung to allow increased ventilation to healthier areas of the lung, thereby achieving the benefits of surgical lung volume reduction with far fewer risks and complications. The company’s products include the Chartis Pulmonary Assessment System, which is an assessment tool that provides precise flow and pressure readings within each lung compartment; and the Zephyr Endobronchial Valve, which is a small oneway valve that is placed in patients’ airways to control the flow of air into and out of diseased portions of the lung. The Zephyr EBV and Chartis Pulmonary Assessment System are CE Marked and sold in Europe, Asia and other countries worldwide.

Pyramid Healthcare, Inc. – private Description: Pyramid Healthcare offers treatment and care for adult and teen alcohol and drug abuse, mental health disorders and adolescent behavioral problems. The company offers detoxification services as well as residential and outpatient programs to help individuals learn and practice recovery and coping skills in a safe, supportive environment. Pyramid Healthcare was founded in July 1999 and has comprehensive care locations in Western, Central and Eastern Pennsylvania.

QIAGEN N.V. (QGEN) – $ Rating: Neutral Thesis: QIAGEN continues to experience solid results with its Quantiferon latent TB test (Cellestis acquisition), on-track to increase >20% year-over-year, as well as its early-stage personalized medicine business (>15 co-development projects ongoing with pharma partners, KRAS FDA approved), both benefitting QIAGEN’s largest segment (Molecular Diagnostics, 48% of revenue, 3Q12: +15% in CER). Our latest channel checks suggest minimal domestic HPV share loss for QIAGEN, although several accounts continue to evaluate competing technologies (i.e. HOLX/ Gen-Probe, Roche). Our diligence uncovered a large reference lab in the midst of a HPV transition from QIAGEN to Roche; this coupled with expectations for additional HPV account losses and challenging academic research markets represent potential headwinds to forward growth, keeping us Neutral on QGEN shares.

Description: QIAGEN is the market leader in pre-analytical sam-

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

ple prep technologies/products.

12-mo. Price Target: $17 (16x FY13E Non-GAAP EPS of $1.07) Market Cap: $ William R. Quirk, CFA, Sr. Research Analyst, 612 303-6858 Quality Systems, Inc. (QSII) – $17.61 Rating: Neutral Thesis: Quality Systems significantly depends on the license revenue to make numbers quarter to quarter but the increasingly physician market is shifting toward a SaaS model, which will pressure the company’s numbers. Moreover, we believe the company’s primary customer base (high-end physician market) is fairly saturated and large, sizeable deals are far fewer. We have seen this in the declining pipeline and system sales for the last five quarters. Further, we are concerned about the lack of product innovation beyond EHRs, which might limit growth opportunities beyond stimulus and worse yet, the company might start losing large customers for the lack of this product roadmap/innovation.

Description: Quality Systems, Inc. is a healthcare information technology company that provides clinical, financial, and administrative software solutions to the ambulatory and dental marketplaces.

12-mo. Price Target: $15 (12x proforma CY13E EPS of $1.26) Market Cap: $4.13B Sean W. Wieland, Sr. Research Analyst, 415 616-1710 Questcor Pharmaceuticals, Inc. (QCOR) – $25.05 Rating: Neutral Thesis: Questcor’s product, Acthar, which has approval for 19 indications and is actively promoted in four indications, is gaining more traction in nephrotic syndrome (NS), in addition to continued growth in multiple sclerosis (MS) relapses. With continued quarterly growth, we believe visibility on Acthar sales approaching $500M in 2012 and sales growth of around 25% in 2013 is strong.

That said, we expect that volatility for QCOR will remain the norm with continued anxiety surrounding Acthar managed care access (particularly in MS) as well as a lack of visibility regarding the outcome of the ongoing government investigation into sales practices. We believe that QCOR shares continue to reflect a calamitous Acthar managed care landscape, pointing to a near-term buying opportunity; however, we believe that a dramatic recovery in QCOR shares is a low probability event given the controversies surrounding Acthar.

Description: Questcor is focused on therapies for rare, difficultto-treat diseases.

12-mo. Price Target: $45 (10x 2014E EPS of $4.95, discounted at 20%) Market Cap: $1.48B David Amsellem, Sr. Research Analyst, 212 284-9455 Quidel Corp. (QDEL) – $17.48 Rating: Overweight Thesis: Our Overweight rating is based on Quidel’s long-term diversification plan, initially building on the momentum from its Sofia launch and more importantly penetrating the molecular diagnostics market with its pipeline Wildcat instrument. In the near term, Quidel is launching its AmpliVue C. diff assay domestically (CE Marked) and has multiple assays scheduled for its Sofia instrument in 2013 (hCG, Group A Strep, RSV, Vitamin D). We anticipate Quidel will launch its molecular diagnostics instrument,

36

Wildcat, into Africa in 2014 (HIV viral load, TB), with a domestic launch expected in 2015 (menu of at least 20 assays expected initially).

Description: Quidel Corp. is a leading rapid diagnostics company with multiple pipeline initiatives.

12-mo. Price Target: $26 (4.3x FY13E EV/Rev) Market Cap: $585.7M William R. Quirk, CFA, Sr. Research Analyst, 612 303-6858 Rainbow Medical – private Description: Rainbow Medical seeds and grows companies that are developing breakthrough medical devices invented by Yossi Gross, a world renowned entrepreneur with more than 500 filed U.S. patents and a long-term successful track record of creating and managing innovative medical technology companies.

Rainbow Medical seeks to generate exceptional returns for its investors by investing in its own intellectual property, developing disruptive products that address significant unmet medical needs, retaining majority ownership of its portfolio companies, and leveraging its world-class and hands-on management team to bring products to market in a fast and capital efficient manner.

Regeneron Pharmaceuticals Inc. (REGN) – $140.74 Rating: Neutral Thesis: Regeneron markets EYLEA for wet Age-related Macular Degeneration (AMD) and Central Retinal Venous Occlusion (CRVO) in the U.S., and overseas partner Bayer anticipates European approval by year-end. Partner Sanofi recently gained approval for ZALTRAP in 2nd-line metastatic colorectal cancer (mCRC). Regeneron and Sanofi also have 10 antibodies in clinical development including REGN727 targeting PCSK9 to lower cholesterol in the pivotal ODYSSEY trials and sarilumab in the pivotal rheumatoid arthritis MOBILITY trial.

Description: Regeneron Pharmaceuticals is emerging as a leading biotherapeutic company.

12-mo. Price Target: $140 (projected EV of $15.6B EV + YE:13E net cash) Market Cap: $13.72B Edward A. Tenthoff, Sr. Research Analyst, 212 284-9403 Repligen Corporation (RGEN) – $5.49 Description: Repligen is a supplier of critical products used to manufacture biologic drugs. The company manufactures Protein A for life science companies under long term supply agreements and also sells products directly to end users for use in their manufacturing processes. It also applies its biologic product development to RG1068, a synthetic hormone. On June 22, 2012, it had two central nervous system (CNS) rare disease programs in Phase I clinical trials. As of March 31, 2011, it sold a range of commercial bioprocessing products based on Protein A as well as a line of pre-packed chromatography columns, which are used in the production of monoclonal antibodies and other biopharmaceutical products. On Dec. 20, 2011, it acquired Novozymes Biopharma Sweden AB. As of Dec. 31, 2011, it had three active development stage programs underway including its diagnostic imaging program and two early stage CNS rare disease programs.

Market Cap: $170.8M

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

ReShape Medical – private Description: ReShape Medical, founded in 2005, specializes in a dual-intragastric balloon for weight loss, ReShape Duo, to be used as an aid in the treatment of obese or overweight patients.

ReShape Duo is a non-surgical alternative designed for those who have exhausted their efforts with diet alone and wish to avoid or do not qualify for surgery. It comfortably occupies existing space in the stomach for six months, serving as built-in portion control, to help patients feel full and satisfied with less food. The Duo has been used successfully in Europe since 2007 and is currently being evaluated in a U.S. FDA clinical study.

ResMed Inc. (RMD) – $40.73 Rating: Overweight Thesis: ResMed continues to deliver consistent constant currency top-line growth, reflecting traction with its latest line-up of flow generators (S9) as well as robust growth and share gains in masks. Additionally, the increasing prevalence of home sleep testing (HST) is driving a favorable mix-shift to higher price/higher margin flow generator devices. We expect this trend to continue, with private payers increasingly requiring prior authorization for more expensive in-clinic sleep studies. We believe the growing awareness of sleep disordered breathing, increased comfort associated with home sleep testing as well as the under-penetrated sleep market set the stage for continued ResMed growth, keeping us Overweight on RMD shares.

Description: ResMed is a leading developer, manufacturer and marketer of products for the screening, treatment and management of sleep-disordered breathing (SDB).

12-mo. Price Target: $47 (17x CY14E EPS of $2.37 + $6.99 in net cash/share) Market Cap: $5.70B David C. Clair, CFA, Research Analyst, 612 303-6747 William R. Quirk, CFA, Sr. Research Analyst, 612 303-6858 REVA Medical, Inc. (RVA AU) – 0.54 AUD Description: REVA Medical is dedicated to developing minimally invasive medical devices that leverage its proprietary biomaterial and stent technologies to improve the treatment of coronary artery disease. REVA’s initial focus is the development of a drugeluting bioresorbable coronary scaffold to advance the treatment of cardiovascular disease, the leading cause of death worldwide.

The ReZolve® scaffold is designed to provide the same clinical benefits as conventional metal stents, with the advantage of dissolving in the body after restoring arterial health. REVA’s bioresorbable technology allows for a controlled and safe resorption rate. Once the scaffold is dissolved, the artery is able to move naturally—a result not attainable with permanent metal stents. In addition, early encapsulation of the ReZolve® scaffold in the arterial tissue, coupled with the loss of scaffold structure over time, may reduce the incidence of late forming blood clots, or thrombosis, a rare but serious problem associated with drug-eluting metal stents currently on the market.

Market Cap: 167.7M AUD RF Surgical Systems, Inc. – private Description: RF Surgical Systems, founded in 2004, offers the radio frequency (RF) assure detection system that is used for detecting and preventing retained surgical sponges; RF surgical detection system, which reduces the risk of a retained sponge

medical error with the wave of the wand in hospitals and medical centers; and RF Detect Premium, a line of RF tagged surgical lap sponges, gauzes and towels embedded with the proprietary RF tag used as part of the RF Surgical Detection System. The company serves more than 2,500 operating rooms, surgical centers, and trauma and labor and delivery suites in the United States.

Regulatory clearance to market the system was granted by the FDA in November 2006.

Rigel Pharmaceuticals (RIGL) – $8.40 Rating: Overweight Thesis: We believe volatility in RIGL shares has created immense investor apathy and in our opinion, a unique opportunity for longterm investors. Based on our analysis, the current stock price not only heavily discounts the multi-billion dollar market opportunity for fostamatinib, with Rigel collecting a low- to mid-20% royalty on worldwide sales, but ignores the cash value of the licensing agreement for the drug.

Description: Rigel Pharmaceuticals develops drugs for inflammatory, autoimmune and metabolic diseases.

12-mo. Price Target: $14 (35x 2017E fully taxed non-GAAP EPS, discounted 30%) Market Cap: $736.0M M. Ian Somaiya, Sr. Research Analyst, 212 284-9305 Rochester Medical Corp. (ROCM) – $9.67 Description: Rochester Medical develops, manufactures and markets a range of polyvinyl chloride (PVC)-free and latex-free urinary continence and urine drainage care products for the extended care and acute care markets. The company’s extended care products include a range of male external catheters (MECs) for managing male urinary incontinence and a range of intermittent catheters for managing both male and female urinary retention. Along with its silicone male external catheters, it also sells a range of latex male external catheters in the United Kingdom. Its Magic3 is a range of silicone intermittent catheters. Its extended care products also include the FemSoft Insert, a soft, liquid-filled, conformable urethral insert for managing female stress urinary incontinence in adult females. The company markets its products under Rochester Medical brand in the United States and the United Kingdom and through independent distributors in other international markets.

Rochester Medical also supplies its products to medical product companies for sale under private label brands owned by these companies.

Market Cap: $115.8M Sagent Pharmaceuticals, Inc. (SGNT) – $14.86 Rating: Neutral Thesis: As an emerging player in the generic injectibles space, SGNT has strong visibility on sustained double-digit top-line growth, with a deep abbreviated NDA (aNDA) pipeline (over 60 pending filings). That said, the business is leveraged on a network of manufacturing partners, bringing with it relatively low gross margins (roughly 15% in 2012). Though SGNT is looking for meaningful gross margin expansion from new launches (a number of older products have poor margins) and more favorable economics on new products coming out of certain partnerships, we believe that the shares are largely reflecting this expectation, with the Street at a 2014 EPS of $0.98 (a P/E of 15x), up from a 2012 net loss per share of near $0.85. As such, we believe upside

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

as we enter 2013 is limited, and would stay on the sidelines until visibility on execution improves.

Description: Sagent is primarily focused on generic injectible drugs.

12-mo. Price Target: $15 (15x 2014E EPS of $1.02, discounted at 12%) Market Cap: $414.0M David Amsellem, Sr. Research Analyst, 212 284-9455

exon skipping in other DMD mutations, equating to a blockbuster, multi-billion dollar orphan market opportunity.

Description: Sarepta Therapeutics is developing morpholino drugs for rare and infectious diseases.

12-mo. Price Target: $38 (projected EV of $918M EV + YE:13E net cash) Market Cap: $583.1M Edward A. Tenthoff, Sr. Research Analyst, 212 284-9403

Salix Pharmaceuticals, Ltd. (SLXP) – $40.97 Rating: Overweight Thesis: We view Salix as one of the most attractive earnings growth stories in specialty pharma, with strong visibility on a longterm estimated EPS CAGR approaching 20%, driven by continued strength for SLXP’s base business (strong Xifaxan and Apriso prescription growth) and contribution from newer growth drivers (i.e., Solesta and possibly crofelemer early next year). Despite the crofelemer delay and lack of clarity surrounding the future of Relistor’s expansion into chronic pain patients, we believe that SLXP shares at current levels fully exclude contribution from the expansion of Relistor and reflect only minimal, if any, contribution from other new product opportunities. With a 2014 P/E of only 8.5x, we believe SLXP shares are attractively valued.

Description: Salix is focused on the development of drugs for gastrointestinal diseases.

12-mo. Price Target: $55 (13x 2014E EPS of $4.45 discounted at 12%) Market Cap: $2.36B David Amsellem, Sr. Research Analyst, 212 284-9455

SentreHEART, Inc. – private Description: SentreHEART, founded in 2005, develops and manufactures catheter-based technologies in the areas of soft tissue closure. The company manufactures the LARIAT® suture delivery device for remote delivery of a pre-tied suture loop. Innovation in catheter and suture delivery technology enables physicians to remotely deliver a 40mm pre-tied suture loop for immediate and complete soft tissue closure through access as small as 4.3mm and with no metal, clips or fabrics left behind. The company has received regulatory clearance for soft tissue ligation and approximation in the United States, Europe and Canada.

Santarus Inc. (SNTS) – $9.10 Rating: Overweight Thesis: Following the recent appellate court ruling on Zegerid (in SNTS’s favor) and the exit of the Par generic from the Zegerid market, visibility on meaningful cash generation has improved significantly. With net cash likely to approach $200M by 2H14 (with a market cap of only around $550M) and limited risk of generics on top seller Glumetza and Zegerid prior to 2016, we believe SNTS shares are attractive (2013 and 2014 P/Es of 10x and 7x, respectively). Further, the stronger cash visibility in our view translates into limited downside risk on Uceris for ulcerative colitis (FDA action in 1/13), bearing in mind that the sales force expansion triggered by an approval translates into fairly low operating margins for the product, at least early in its commercial life.

Description: Santarus is focused on products for the treatment of GI disorders.

12-mo. Price Target: $12 (10x 2014E EPS of $1.27, discounted at 10%) Market Cap: $576.4M David Amsellem, Sr. Research Analyst, 212 284-9455 Sarepta Therapeutics, Inc. (SRPT) – $22.75 Rating: Overweight Thesis: Sarepta is developing Eteplirsen for the treatment of duchenne muscular dystrophy (DMD). Recently, at the World Muscle Society Congress, Eteplirsen showed statistically significant increases in both dystrophin-positive fibers and six-minute walk test (6MWT). We anticipate Sarepta will submit a 48-week data package for review at the end-of-Phase II meeting around year-end.

The real question now is whether the FDA will grant accelerated approval of Eteplirsen under PDUFA V. We see opportunities for 38

Signature Diagnostics AG – private Description: Signature Diagnostics, a molecular diagnostics company based in Germany, is engaged in the discovery of prognostic gene signatures that can be used for the early detection and prognosis of cancer. The company’s product candidates are designed to evaluate the expression of genes that are involved in the development and progression of colorectal cancer. Its lead product candidate, Detector C, is a blood-based screening test for the early detection of colorectal cancer.

Sonitus Medical, Inc. – private Description: Sonitus Medical, founded in 2006, develops hearing and communication solutions for transmitting sound through teeth. The company’s SoundBite prosthetic device is the world’s first non-surgical and removable hearing solution that relies on bone conduction to imperceptibly transmit sound via the teeth.

SoundBite is CE Marked and currently FDA cleared for the treatment of single sided deafness and conductive hearing loss. The SoundBite system has intended future indications for hearing disorders such as mixed hearing loss and tinnitus, as well as consumer and covert communications.

Sorin SpA (SORJF) – $2.04 Description: The Sorin Group is a global medical device company and a leader in the treatment of cardiovascular diseases. The company develops, manufactures and markets medical technologies for cardiac surgery and for the treatment of cardiac rhythm disorders. With more than 3,750 employees worldwide, the company focuses on three major therapeutic areas: cardiopulmonary bypass, cardiac rhythm management (CRM), and heart valve repair and replacement. Each year, more than one million patients are treated with Sorin devices in more than 80 countries. The company’s products are used in more than 5,000 hospitals worldwide.

Sorin has established itself as a market leader within cardiovascular device technology. The company is the world leader in cardiopulmonary bypass (extracorporeal circulation and autotransfusion), holds a strong market position in heart valves and is a growing player in the cardiac rhythm management market.

Market Cap: $971.3M

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

St. Jude Medical, Inc. (STJ) – $37.01 Rating: Overweight Thesis: We believe the CRT and ICD device sales, particularly for the quadpolar CRT-D, have offset any weakness from lost Durata sales, though the overall market for CRM has been challenging.

Atrial fibrillation is likely to continue being a strong performer for the company with AF ablation procedures growing at over a 20% CAGR since 2005, which is not expected to slow anytime soon. Although recent data from RESPECT, presented at TCT, did not show a statistical benefit on the primary endpoint, we believe there is a reasonable probability the Amplatzer occluder could be approved for PFO in patients with cryptogenic stroke given strong supportive data. Longer term, we continue to believe STJ has one of the strongest pipelines in large cap medtech and should continue to outperform as additional high growth opportunities come to fruition.

Description: St. Jude Medical, Inc. is the leading developer and supplier of mechanical valves, and a top supplier in cardiac rhythm management (CRM) products and neurostimulation.

12-mo. Price Target: $48 (13.4x CY13E EPS of $3.58) Market Cap: $11.21B Brooks E. West, Sr. Research Analyst, 612 303-6954 Thomas J. Gunderson, Sr. Research Analyst, 612 303-6467 STARR Surgical Company (STAA) – $5.21 Description: STAAR Surgical develops, manufactures and markets intraocular lenses (IOLs) and other products for ophthalmic surgery. Principal products include the company’s leading line of Visian implantable collamer lenses (ICLs) for the treatment of myopia and a selection of intraocular lenses (IOLs) for the treatment of cataracts. The company reported $68.2M in revenues in 2011, up 14%, and $0.14 in EPS, and expects to exceed 4% top-line growth in 4Q12 and mid-single digit growth in revenues for full year 2012.

Market Cap: $192.5M Sunesis Pharmaceuticals, Inc. (SNSS) – $4.18 Description: Sunesis is a biopharmaceutical company that is developing new cancer drugs. Sunesis’s lead program is vosaroxin currently in a Phase III VALOR trial in refractory acute myeloid leukemia and a Phase II study in platinum-resistant ovarian cancer.

Sunesis is partnered with Millennium Pharmaceuticals for an oral, selective pan-Raf kinase inhibitor and one additional undisclosed kinase inhibitor.

Market Cap: $195.3M Sunshine Heart Inc. (SSH) – $6.57 Description: Sunshine Heart is a medical device company engaged in the design and development of its C-Pulse heart assist device. The company’s C-Pulse heart assist system is an approach to assist the heart’s function, and is designed to treat clinical symptoms associated with Class III and ambulatory Class IV heart failure. The C-Pulse system reduces the symptoms of heart failure through the use of counter-pulsation technology, which enables an increase in cardiac output, an increase in coronary blood flow and a reduction in the heart’s pumping workload.

Market Cap: $60.5M Surefire Medical, Inc. – private Description: Surefire Medical, founded in 2009, develops innovative infusion systems for the interventional radiology market.

The Surefire infusion system is designed to precisely deliver embolic agents through the sophisticated expandable tip portion of its catheter. Because of this differentiated expandable tip, which collapses in forward flow to maintain blood flow and dynamically expands to the vessel wall in reverse flow to minimize reflux, Surefire’s infusion system is designed to substantially reduce damage to healthy tissue.

Svelte Medical Systems, Inc – private Description: Svelte, founded in 2007, has developed an innovative drug-eluting stent (DES) mounted on a proprietary delivery system which improves safety, reduces procedure time and lowers costs in the $6 billion global cardiovascular stent market. The company’s Integrated Delivery System (IDS) combines a balloonexpandable stent, delivery catheter and guidewire into a novel platform technology. The company’s DES features a novel amino acid based coating that is highly biocompatible and completely absorbs over nine to 12 months post-implant, leaving behind a bare metal stent and potentially eliminating the need for longterm dual anti-platelet therapy. The company holds a CE Mark for the IDS utilizing a bare metal stent, and is seeding the product in key opinion leader accounts and targeted clinical sites for a DES CE Mark trial, which Svelte plans to begin in the fourth quarter of 2012.

Symmetry Medical Inc. (SMA) – $8.43 Rating: Overweight Thesis: We expect SMA’s instrument and case business to pick up over the next several quarters driven by new product launches and instrument purchases across its customer base, as well as growth of its Codman business. Combined with favorable operating leverage, we expect earnings, revenue and margin trends to accelerate throughout 2013. We expect the stock to gain additional traction driven by the continued turnaround in ortho trends and utilization throughout 2013.

Description: Symmetry Medical is an outsourced manufacturer of implants, cases and related instruments for global orthopaedic device manufacturers and also develops instruments and implants for companies in the dental, osteobiologic, endoscopy and aerospaCE Markets, as well as for direct sale to hospital and physician customers.

12-mo. Price Target: $12 (7.5x 2014E EV/EBITDA of $85.7M) Market Cap: $307/9M Matt Miksic, Sr. Research Analyst, 212 284-9335 Synageva BioPharma Corp. (GEVA) – $44.66 Rating: Overweight Thesis: We believe Synageva’s lead compound sebelipase alfa (SBC-102) represents a compelling treatment option for lysosomal acid lipase deficiency (LAL-D), a rare autosomal storage disorder with no current treatment options. We expect the blockbuster opportunity for sebelipase alfa combined with a growing pipeline and high-margin biologics manufacturing expertise to enable Synageva to successfully follow in the footsteps of its more established peers (Alexion, Genzyme, BioMarin). We believe Synageva’s management team, given its experience in developing and launching into ultra-orphan disease, will be key to unlocking the $2B+ market opportunity for SBC-102.

Description: Synageva focuses on products for patients with rare life-threatening diseases.

12-mo. Price Target: $66 (40x 2020E fully taxed non-GAAP EPS, 39

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

discounted 30%) Market Cap: $1.13B M. Ian Somaiya, Sr. Research Analyst, 212 284-9305

treat more than 100,000 patients to-date. TEI sells its products directly and through partnerships with some of the world’s major medical device companies.

Synergy Pharmaceuticals, Inc. (SGYP) – $3.22 Description: Synergy is a development-stage biopharmaceutical company that develops drugs to treat gastrointestinal disorders and diseases. Synergy’s lead investigational drug, PLECANATIDE, is designed to treat chronic idiopathic constipation (CIC) and constipation-predominant irritable bowel syndrome (IBS-C). In October 2011, Synergy initiated a Phase II/III 800-patient, 12-week repeated-oral-dose, placebo-controlled clinical trial of plecanatide in CIC patients. Plecanatide is also being developed to treat IBS-C, with the first trial in IBS-C patients planned for 2012.

Market Cap: $204.7M

Teleflex Incorporated (TFX) – $68.40 Description: Teleflex is a global provider of medical technology products. The company develops, manufactures and supplies single-use medical devices used to provide access to the body for common diagnostic and therapeutic procedures in critical care and surgery. It serves hospitals and healthcare providers in more than 130 countries. Teleflex provides a range of medical technology products, which it categorizes into four groups: critical care, surgical care, cardiac care, and OEM and development services.

Market Cap: $2.79B

Team Health Holdings, Inc. (TMH) – $27.75 Rating: Overweight Thesis: We are Overweight TMH due to secular hospital outsourcing trends and benefits from the Affordable Care Act, which should help drive accelerating earnings growth over the next few years. TMH will benefit from the final Medicaid-to-Medicare rate parity rule, which is expected to add $30 million to FY13 annual revenues and approximately $0.19 to annual EPS. As healthcare reform moves forward, Team Health will also benefit from expanded coverage through the individual mandate and Medicaid expansion starting in 2014 since 21% of the company’s patient visits are from the uninsured.

Description: Team Health is one of the largest outsourced providers of healthcare professional staffing and administrative services to hospitals and other providers in the United States.

12-mo. Price Target: $30 (17x FY13E EPS) Market Cap: $1.89B Kevin K. Ellich, Sr. Research Analyst, 612 303-5666 TearScience – private Description: TearScience, founded in 2005, is focused on diagnostic and treatment devices targeted at the root cause for evaporative dry eye. TearScience’s system includes two medical devices: the LipiView Ocular Surface Interferometer and the LipiFlow Thermal Pulsation System. Evaporative dry eye occurs when meibomian glands in the eyelids become obstructed and do not secrete the oily lipids needed to keep the water portion of tears from evaporating too quickly. LipiView provides detailed digital images of a dry eye patient’s tear film for the physician to assess the lipid layer while the LipiFlow treats a root cause of evaporative dry eye disease by unblocking obstructed meibomian glands located in the eyelids during an in-office procedure. LipiView and LipiFlow are CE Marked and FDA cleared.

TEI Biosciences, Inc. – private Description: Founded in 1991, TEI Biosciences provides biologic products for a range of soft tissue repair and reinforcement applications from dura, tendon and hernia repair to wound management and plastic and reconstructive surgery. The company’s products include SurgiMend, for implantation to reinforce weak or damaged soft tissues; PriMatrix, for skin wound management; Durepair, for cranial and spinal dura mater repair; Xenform, for pelvic floor reconstruction; and TissueMend, for tendon augmentation. The company’s novel biologic implants have been used to

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The Spectranetics Corporation (SPNC) – $15.07 Rating: Overweight Thesis: Spectranetics remains a top small cap pick, with continued strong growth potential for the atherectomy and lead management businesses. We believe the atherectomy business should be a long-term source of growth with peripheral procedures now getting clinical data that are credible. Additionally, outpatient procedures have been gaining more favorable CMS reimbursement and we expect this trend to remain intact for at least the next 3-5 years, providing for a second leg of growth for the business.

Additionally, we note SPNC has benefited from strong underlying lead management volumes, as well as a shift to GlideLight, which itself has had a strong U.S. rollout, and provides a 15% price premium over the prior generation lead management laser sheath.

We continue to believe revenue growth can rise from the current guidance of 8-10% to mid-teens in the next 18-24 months. Longer term, we see strong upside potential from products for ISR (instent restenosis) and venous occlusion.

Description: Spectranetics markets the only excimer laser system approved in the United States, Canada, Europe and Japan for use in minimally invasive interventional procedures within the cardiovascular and lead management markets.

12-mo. Price Target: $18 (4.0x EV / 2013E Sales, assuming net cash of $31.6M and 35.9M shares outstanding) Market Cap: $522.4M Brooks E. West, Sr. Research Analyst, 612 303-6954 Thomas J. Gunderson, Sr. Research Analyst, 612 303-6467 Theravance Inc. (THRX) – $21.45 Rating: Overweight Thesis: We believe Phase III data for Breo/Relvar and LAMA/LABA support regulatory approval in 2013 and an eventual takeout by partner GSK. In addition, we believe MABA/ICS is underappreciated by investors, representing upside to Street estimates. We expect an FDA advisory panel in early 2013, ahead of the May 12 PDUFA to be the next key catalyst for THRX, with detailed Phase III LAMA/LABA data at the 2013 ATS (May 17-22) to provide additional upside to shares.

Description: Theravance develops therapeutics for respiratory disease and bacterial infections 12-mo. Price Target: $35 (40x FY16E FT non-GAAP EPS of $2.20, discounted @ 30%) Market Cap: $2.07B M. Ian Somaiya, Sr. Research Analyst, 212 284-9305

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

Thoratec Corporation (THOR) – $34.51 Rating: Overweight Thesis: Thoratec is the incumbent in ventricular assist devices for end-stage heart failure, with its HeartMate® II device which has bridge to transplant (BTT) and destination therapy (DT) indications and a leading market share in the U.S. market. While Thoratec faces impending competition from HeartWare in the U.S. BTT segment, we are biased toward a more modest loss of BTT market share than some on Wall Street, with continued domestic revenue growth for the HeartMate franchise in the DT market.

Description: Thoratec engages in the development, manufacture and marketing of proprietary medical devices used for circulatory support.

12-mo. Price Target: $44 (4.6x EV/CY13E revenue, assuming $308M of net cash and 59.7M shares outstanding) Market Cap: $2.04B Brooks E. West, Sr. Research Analyst, 612 303-6954 Thomas J. Gunderson, Sr. Research Analyst, 612 303-6467 Titan Medical Inc. (TMD CN) – 1.27 CAD Description: Titan Medical is a medical device company focused on the development and commercialization of robotic surgical technologies, specifically its Amadeus Composer™ surgical system. The four-armed robotic surgical system is designed to allow surgeons to perform procedures within small-sized surgical spaces for various areas of surgical specialties and procedures. The company expects to complete OUS regulatory submission and an FDA 510(k) filing in 2H14, followed by commercialization in 2015.

Market Cap: 82.8M CAD Tornier N.V. (TRNX) – $17.48 Rating: Overweight Thesis: We see TRNX as well-positioned to benefit from the rapidly growing extremities space, driven by its strong existing position in upper extremities and its expanding footprint in lower extremities, boosted recently by its acquisition of OrthoHelix.

Going forward, we expect the company to deliver on its goal of double-digit upper extremities growth by mid-2013 and doubledigit lower extremities growth in Q4 due in part to new product launches from OrthoHelix.

Description: Tornier is a global medical device company with a focus on orthopaedic devices, specifically in the area of extremity arthroplasty, reconstruction and sports medicine.

12-mo. Price Target: $22 (3.0x on 2014E EV/Sales of $334M) Market Cap: $694.5M Matt Miksic, Sr. Research Analyst, 212 284-9335 TranS1 Inc. (TSON) – $2.69 Rating: Overweight Thesis: We view TranS1’s technology as highly differentiated and in many ways at the center of the battle for leadership in minimally-invasive surgery (MIS) of the lower lumbar spine. We see improving private payor coverage and adoption over the next 3–6 months, driven by the company’s expanding base of peerreviewed clinical evidence, the Level I CPT code obtained earlier this year and the recent RVU assignment for AxiaLIF, which we estimate to be toward the high end of the $2,500-3,000 range typically paid for TLIF and ALIF procedures. With improving coverage, we see AxiaLIF gaining wider acceptance as a safe, effective and

attractive alternative to traditional lumbar fusion systems.

Description: TranS1 manufactures and markets minimally invasive surgical instruments and implants for the spine. The company’s flagship product is the AxiaLIF, which includes a line of implants and instruments that are designed to deliver implants and bone grafts minimally invasively to the lower levels of the lumbar spine during spinal fusion.

12-mo. Price Target: $5 (5x on 2014E EV/Sales of $23 mil) Market Cap: $73.6M Matt Miksic, Sr. Research Analyst, 212 284-9335 TransMedics, Inc. – private Description: TransMedics, founded in 1998, develops living organ transplant systems. The company has developed the first commercial, portable warm blood perfusion system that allows for a new type of organ transplant, called a living organ transplant.

The TransMedics Organ Care System is a portable warm blood perfusion system, designed to maintain organs in a warm and functioning state outside the human body during transport from organ donor to recipient. The company’s products are used in heart, lung, liver and kidney transplants. It serves hospitals and clinicians, patients and families, donor organizations, and insurers and payors. The company markets and sells its products in the United States, the European Union, Asia and the Middle East.

Tranzyme, Inc. (TZYM) – $4.05 Description: Tranzyme is a clinical-stage biopharmaceutical company focused on discovering, developing and commercializing mechanism-based therapeutics for the treatment of upper gastrointestinal (GI) motility disorders. The company is developing TZP102, an oral ghrelin agonist for treating symptoms associated with chronic upper GI motility disorders. Enrollment is complete in a multinational Phase-IIb trial evaluating TZP-102 given once daily in diabetic patients with gastroparesis. Tranzyme has initiated a second Phase-IIb trial (DIGEST) evaluating TZP-102 given prior to meals in diabetic patients with gastroparesis.

Market Cap: $103.9M Tria Beauty, Inc. – private Description: Tria Beauty creates light-based skin care products for home use. The company’s Hair Removal Laser is the first and only FDA-cleared hair removal system available for at-home use. The Tria Skin Perfecting Blue Light treatment for acne targets bacteria in the skin to clear acne breakouts and improve complexion. The Tria Skin Rejuvenating Laser treats multiple signs of a facial aging and is Health Canada approved and CE Marked for sale in Europe.

Trius Therapeutics, Inc. (TSRX) – $5.08 Rating: Overweight Thesis: Trius is developing tedizolid to treat acute bacterial skin and skin structure infections (ABSSSI) with data from the second pivotal study expected by 2Q13. Trius is partnered with Bayer in Asia, which plans to initiate pivotal lung infection studies and trials in Japan this year. Trius is also developing a preclinical dual DNA Gyrase B (GyrB) and Topoisomerase IV E (ParE) program representing an entirely new class of drugs with broad spectrum antibiotic activity.

Description: Trius Therapeutics is developing antibiotic drugs including tedizolid for gram-positive infections.

12-mo. Price Target: $13 (projected EV of $498M EV + mid:13E net

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

cash) Market Cap: $197.4M Edward A. Tenthoff, Sr. Research Analyst, 212 284-9403 TYRX, Inc. – private Description: TYRX, founded in 1998, manufactures drug-device combination products utilizing novel polymer technology, resorbable materials and drug delivery technology to address surgicalsite infections (SSIs) and inflammatory tissue-reaction associated with implanted medical devices. The company’s commercial products include antibacterial mesh pouches for defibrillators and pacemakers. TYRX was the first and remains the only company to have achieved FDA clearance for a dual-drug eluting product that contains a novel resorbable material. TYRX is deploying its capabilities across a broad range of combination medical products.

Ulthera Inc. – private Description: Founded in 2004, Ulthera develops and markets medical devices based on therapeutic ultrasound. The company offers the Ulthera System, a nonsurgical cosmetic procedure that is used to counter the affects of aging on the skin through tightening and lifting skin tissues. Ulthera offers its products to dermatologists, plastic surgeons, and facial plastic surgeons through distributors in Canada, Australia, Asia, Europe, and the Middle East.

United Therapeutics Corporation (UTHR) – $49.26 Description: United Therapeutics is a biotechnology company focused on the development and commercialization of products to address the unmet medical needs of patients with chronic and life-threatening conditions. The company’s therapeutic products and product candidates include prostacyclin analogues, phosphodiesterase type 5 (PDE-5) inhibitor, monoclonal antibodies (MAbs), glycobiology antiviral agents and cell-based therapy. Its product portfolio includes Remodulin®, Tyvaso®, Adcirca®, oral treprostinil (UT-15C), oral treprostinil (UT-15C) combination therapy, Ch14.18 MAb, Beraprost-MR, 8H9 MAb, IW001, glycobiology antiviral agents, PLX cells, and pulmonary tissue replacement and remodeling. On July 11, 2011, the company acquired a 100% interest in Revivicor, Inc. Market Cap: $2.50B Vascular Solutions Inc. (VASC) – $14.22 Description: Vascular Solutions is a medical device company focused on providing clinically advanced solutions to interventional cardiologists and interventional radiologists. Vascular offers products and services in three categories: catheter products, hemostat products, and vein products and services. Catheter products consists of catheters used in minimally invasive medical procedures for the diagnosis or treatment of vascular conditions, and also includes products used in connection with gaining percutaneous access to the vasculature to perform minimally invasive procedures. Hemostat (blood clotting) products consist of the D-Stat Dry hemostat, a topical thrombin-based pad with a bandage used to control surface bleeding, and the D-Stat Flowable. Vein products consists of the Vari-Lase endovenous laser, laser console and procedure kits used for the treatment of varicose veins.

Market Cap: $228.8M

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VCA Antech, Inc. (WOOF) – $19.00 Rating: Neutral Thesis: We believe the macroeconomic environment and the competitive landscape will continue to pressure WOOF’s same-store animal hospital growth and limit margin expansion. While we are encouraged by the company’s cost reduction initiatives, they are not enough to offset weak SS volume growth. WOOF’s lab business (Antech Diagnostics) has been performing well; however, competition could intensify over the next few years due to the entry of a third competitor into the national diagnostic testing reference Markets. We expect shares of WOOF to remain rangebound until there is better visibility for SS growth to recover and margin expansion.

Description: VCA Antech is one of the largest operators of veterinary clinics in the United States.

12-mo. Price Target: $20 (6.5x FY13E Adj. EBITDA) Market Cap: $1.69B Kevin K. Ellich, Sr. Research Analyst, 612 303-5666 Veran Medical Technologies, Inc. – private Description: Veran Medical Technologies, founded in 2003, develops a suite of products for minimally invasive delivery of interventional oncology therapies. It offers products based on its electromagnetic 4D ig4™ navigation system that enable physicians to diagnose diseases and deliver therapies to organs that move with patient movement and respiration. The ig4™ system displays diagnostic information, such as contrast-enhanced computer tomography at the point-of-care and therapy delivery. Additionally, Veran Medical Technologies offers its SPiN Drive® system, which is an electromagnetic-based navigation platform that allows physicians to biopsy solitary pulmonary modules for the potential early diagnosis and treatment of lung cancer. Veran Medical Technologies’ Always-On Tip Tracked™ Instruments utilize electromagnetic sensors that can be integrated with ig4™ and SPiN® Drive systems to track instruments in real time. Veran Medical Technologies has a strategic alliance with GE Healthcare.

Vertex Pharmaceuticals Inc. (VRTX) – $45.01 Rating: Neutral Thesis: Vertex markets INCIVEK for the treatment of hepatitis-C virus (HCV) infection and recently signed agreements with Janssen and GlaxoSmithKline to begin Phase II all-oral combo studies with its HCV nucleotide analog VX-135 (ALS-2200). Vertex also markets KALYDECO™ for the treatment of cystic fibrosis patients with the G551D mutation. Vertex has initiated additional Phase III studies to broaden the KALYDECO™ label and intends to start a pivotal trial in homozygous F508del patients in early 2013.

Description: Vertex Pharmaceuticals is a biopharmaceutical company developing innovative drugs for HCV, cystic fibrosis and other serious diseases.

12-mo. Price Target: $57 (NPV of $12.6 billion based on corporate cash flows out to 2021 discounted back at 17.5%) Market Cap: $9.68B Edward A. Tenthoff, Sr. Research Analyst, 212 284-9403 ViroPharma Incorporated (VPHM) – $24.36 Rating: Overweight Thesis: ViroPharma markets Cinryze® for the prevention of hereditary angioedema (HAE) attacks. The company is now building its European business with recent launches of Cinryze®, Buccolam®

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

for pediatric epilepsy and Plenadren® for adult adrenal insufficiency. ViroPharma has bought back 14.9 million shares for $323M and the company’s board has authorized another $200M buyback program.

Description: ViroPharma sells Cinryze and is focused on drugs to treat orphan diseases.

12-mo. Price Target: $37.50 (sum of the parts NPV of $3.0 billion) Market Cap: $1.65B Edward A. Tenthoff, Sr. Research Analyst, 212 284-9403 Vocera Communications, Inc. (VCRA) – $27.05 Rating: Overweight Thesis: Vocera continues to be one of our top picks for its ability to grow the top-line at least in the mid-20% range for the foreseeable future because of the abundance of the market opportunities with limited competition. Vocera continues to see solid growth within the hospital market and is starting to give some focus to nonhealthcare verticals, where there is significant unmet demand.

Sprint-Nextel’s decision to sunset push-to-talk service could be a catalyst to heat up the non-healthcare vertical, especially in the hospitality segment. Further, Vocera just launched its first nonEnglish language (French) in France and we believe that international market offers significant upside to growth. In the near term, the expansion in sales force and traction in DoD facilities should provide a lift to Q4 and 1H13 estimates.

Description: Vocera is a provider of wireless communication services targeting industries with mobile workforce.

12-mo. Price Target: $35 (5x CY14E EV/revenue) Market Cap: $606.2M Sean W. Wieland, Sr. Research Analyst, 415 616-1710 Volcano Corporation (VOLC) – $27.02 Rating: Overweight Thesis: Volcano’s family of diagnostic tools, including IVUS (intravascular ultrasound) and FFR (fractional flow reserve), enables interventionalists to better treat coronary blockages. In each of the major worldwide markets (IVUS and FFR), VOLC is a dominant force in its duopolies with larger competitors (BSX, STJ), and we believe will continue to grow revenues with a combination of market share steal and market penetration. VOLC has caught a tailwind with rising pressure wire sales (FAME and FAME II data on FFR and revised guidelines) and is benefiting from substantial investments made in the Japan market. The trend to more documentation for stent placement, and emerging new markets in peripheral arteries, allows for modest growth to continue even as PCI procedures decline. While VOLC has some interesting products in the pipeline (e.g. FLIVUS, IGT balloon, IFR and OCT), we worry about launch timelines due to the broader FDA regulatory slowness.

Description: Volcano Corporation makes and markets IVUS equipment for intra-vessel imaging, pressure wires for flow measurements, and OCT equipment for medical and telecom use.

Additionally, VOLC is developing therapeutic products and is on the forefront of enabling clinical studies for the diagnosis and treatment of vulnerable plaque.

12-mo. Price Target: $32 (3.7x EV/2013E revenues, including $127M net cash and 55M s/o) Market Cap: $1.47B Brooks E. West, Sr. Research Analyst, 612 303-6954 Thomas J. Gunderson, Sr. Research Analyst, 612 303-6467

Watson Pharmaceuticals, Inc. (WPI) – $85.11 Rating: Overweight Thesis: With a stronger U.S. generics pipeline plus a stronger emerging markets generics presence (providing higher margins), we believe the recent acquisition of Actavis positions Watson for meaningful long-term earnings growth. Further, with favorable competitive dynamics for an extended period likely for Concerta®, Adderall XR (AXR) and Lidoderm®, plus attractive synergies from the Actavis purchase and optionality on other generic opportunities (e.g. INTUNIV, OxyContin), we believe WPI’s current one-year forward P/E of 11x is sustainable. In that context, we believe the risk/reward profile for WPI shares is attractive.

Description: Watson is focused on generics, plus brands for urology and women’s health.

12-mo. Price Target: $103 (11x 2014E EPS of $9.65, discounted at 12% Market Cap: $10.95B David Amsellem, Sr. Research Analyst, 212 284-9455 Wright Medical Group, Inc. (WMGI) – $20.05 Rating: Overweight Thesis: Management’s sharp focus on cash flows is paying off.

The company is executing on operating improvements in extremities and working capital management, particularly in inventory management which have contributed to the rise in cash flows.

Additional drivers of improving performance include re-acceleration in extremities sales, consolidation of orthopaedic share and better utilization of instrument sets, and an increased focus on customer satisfaction.

Description: Wright Medical Group, Inc. markets orthopaedic implants, instruments and biologics for use in large joint and extremities reconstruction surgery.

12-mo. Price Target: $26 (2x 2014E EV/Sales of $485M) Market Cap: $785.9M Matt Miksic, Sr. Research Analyst, 212 284-9335 XenoPort, Inc. (XNPT) – $7.65 Rating: Neutral Thesis: Xenoport’s commercial product, Horizant®, continues to demonstrate lackluster sales and further, XNPT recently terminated its partnership with partner GlaxoSmithKline for Horizant®, and now intends to promote the product in the U.S. on its own using a contract sales force targeting specialist physicians in select territories. Given the challenging competitive dynamics in both restless legs syndrome (RLS) and post-herpetic neuralgia (PHN), it is not clear to us that XNPT will be able to drive a significant expansion of prescription (Rx) volumes. Thus, we remain cautious on XNPT shares, given the current Horizant sales trajectory and the long road ahead for XP23829 (‘839) (in Phase I development for multiple sclerosis). Given dynamics surrounding Horizant and niche-like potential for product candidate arbaclofen placarbil (launch likely no earlier than 2H14), visibility on cash generation is quite limited.

Description: XNPT uses its Transported Prodrug platform to improve upon existing agents.

12-mo. Price Target: $10 (25x 2015E EPS of $0.51, discounted at 20%) Market Cap: $323.5M David Amsellem, Sr. Research Analyst, 212 284-9455

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

YM BioSciences Inc. (YMI) – $1.63 Rating: Overweight Thesis: We believe CYT387 has a significant market opportunity in myelofibrosis with worldwide peak sales of $500M, despite a three-year lead time for Incyte’s Jakafi®. We believe CYT387 will not only be used in Jakafi® failures, but the unique anemia benefit profile should enable the drug to be the preferred therapy in patients with severe anemia, particularly those who are transfusion dependent. We expect the signing of a global partner in late 2012/ early 2013 to drive significant upside, as it validates CYT387’s market opportunity and potentially eliminates financing risks.

Description: YM Biosciences is a biotechnology company focusing on the clinical stage development and regulatory pathway of hematology and oncology drugs.

12-mo. Price Target: $3.50 (32.5x FY19 FT non-GAAP EPS of $0.49, discounted at 35%) Market Cap: $289.0M M. Ian Somaiya, Sr. Research Analyst, 212 284-9305 Zimmer Holdings, Inc. (ZMH) – $64.69 Rating: Overweight Thesis: We expect management to deliver on its strategy to drive organic growth in extremities, trauma, and eventually spine, and remain confident in their ability to deliver top-line growth over the next couple of quarters through new product launches and improved performance across lagging U.S. territories. Additional drivers of revenue growth include the continued improvements in U.S. volume trends for hips and knees, which account for 70% of Zimmer’s revenues.

Description: Zimmer manufactures and markets orthopedic, spine and dental implants.

12-mo. Price Target: $85 (7.25x on 2014E EV/EBITDA of $1,954 mil) Market Cap: $11.22B Matt Miksic, Sr. Research Analyst, 212 284-9335 ZIOPHARM Oncology, Inc. (ZIOP) – $4.69 Description: ZIOPHARM is a biopharmaceutical company developing a rich pipeline of new cancer therapies. Palifosfamide is in the pivotal PICASSO 3 trial for first-line metastatic soft tissue sarcoma and the pivotal MATISSE trial for first-line metastatic small cell lung cancer. Ad-RTS IL-12 is a DNA therapeutic that is being developed with partner Intrexon Corporation currently in a Phase II cancer study. Indibulin is a novel, tubulin binding agent that is in a Phase I/II metastatic breast cancer study. Lastly, Darinaparsin is organic arsenic currently in studies with Solasia Pharma K.K. Market Cap: $360.3M Zogenix, Inc. (ZGNX) – $2.57 Description: Zogenix is a pharmaceutical company commercializing and developing products for the treatment of central nervous system disorders and pain. The company’s product, Sumavel DosePro, offers needle-free subcutaneous administration of sumatriptan for the treatment of migraine and cluster headache in a prefilled, single-use delivery system. Its lead product candidate, Zohydro (hydrocodone bitartrate, formerly ZX002), is a 12-hour extended-release formulation of hydrocodone without acetaminophen for the treatment of chronic pain requiring opioid therapy.

It completed Phase II development of Zohydro in 2011. Sumavel DosePro and Zohydro are used for the treatment options available to patients and physicians in the United States. Its second

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DosePro investigational product candidate, Relday, is an injectable formulation of risperidone for the treatment of schizophrenia. In May 2012, it submitted a New Drug Application to the FDA. Market Cap: $242.2M Zyga Technology, Inc. – private Description: Zyga Technology, founded in 2008, designs and develops minimally invasive surgical solutions to treat common but underserved painful conditions of the spine. Zyga Technology markets the SImmetry Sacroiliac Joint Fusion System™, which utilizes a minimally invasive lateral access approach to achieve sacroiliac joint fixation. The system uses guidewires and cannulas to control and direct the position and placement of instruments and implants. The system facilitates preparation of the sacroiliac joint and precise placement of bone graft material and implants to fuse the joint together. Zyga Technology is also developing the GLYDER™ Facet Resurfacing System, which is a minimally invasive, non-fusion therapy to resurface painful facet joints.

Sources: Piper Jaffray, company reports and websites, FactSet Research Systems, Inc. and S&P Capital IQ Price and market capitalizations reflect closing prices on November 9, 2012.

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

HEALTHCARE CONFERENCE INVESTMENT RESEARCH TEAMS SPECIALTY PHARMACEUTICALS David Amsellem Senior Research Analyst Piper Jaffray & Co. 212 284-9455 david.a.amsellem@pjc.com

Traver Davis Research Associate Piper Jaffray & Co. 212 284-5031 traver.a.davis@pjc.com

Rebecca Forest Research Associate Piper Jaffray & Co. 212 284-5033 rebecca.m.forest@pjc.com

David Amsellem is a principal and senior research analyst at Piper Jaffray covering specialty pharmaceuticals.

Prior to joining Piper Jaffray in 2008, Amsellem spent five years at Friedman Billings Ramsey, where he was a senior research analyst covering small- and mid-cap pharmaceuticals from 2006–2008 and a senior associate on the biotechnology equity research team from 2003–2006. Amsellem was recognized as the No. 1 ranked analyst in North America for accuracy of earnings estimates in the pharmaceuticals sector in the 2008 Financial Times/ StarMine “Best Brokerage Analyst” survey. Amsellem has more than 10 years of Wall Street experience, including work in life sciences investment and merchant banking at Prudential Vector Healthcare.

Amsellem graduated from Cornell University with a bachelor’s degree in industrial relations.

HEALTHCARE SERVICES: ALTERNATE SITE PROVIDERS Kevin Ellich Senior Research Analyst Piper Jaffray & Co. 612 303-5666 kevin.k.ellich@pjc.com

Bradley Maiers Research Associate Piper Jaffray & Co. 612 303-6646 bradley.d.maiers@pjc.com

Kevin Ellich is a principal and senior research analyst at Piper Jaffray covering healthcare services and alternative site providers. With more than 10 years of industry experience on both the buy- and sell-side, Ellich’s coverage universe includes clinical/diagnostic labs, dialysis, ambulatory surgery centers, home health, physician practice management/hospital outsourcing companies, and other alternative site providers.

Prior to joining Piper Jaffray in April 2011, Ellich spent four years at Collins Stewart and RBC Capital Markets covering health care providers and services. Ellich also worked at American Express Financial Advisors, Wachovia Securities, and hedge fund Aplos Advisors.

Ellich holds a bachelor’s degree in business from the University of Minnesota.

MEDICAL TECHNOLOGY Thomas Gunderson Michael Dinerman Daniel Garofalo Senior Research Analyst Research Analyst Research Analyst Piper Jaffray & Co. Piper Jaffray & Co. Piper Jaffray & Co. 612 303-6467 212 284-9325 612 303-9656 thomas.j.gunderson@pjc.com misha.a.dinerman@pjc.com daniel.f.garofalo@pjc.com Thomas Gunderson is a managing director and senior research analyst at Piper Jaffray, following medical technology companies. In over 15 years as an analyst, Gunderson has been recognized by several industry publications, including The Wall Street Journal, Institutional Investor, First Call, and Medical Device and Diagnostic Industry. In 2010, Thomson/Reuters recognized him as one of the “Top Ten Overall Earnings Estimators” across all stock sectors.

Gunderson holds a bachelor’s degree from Carleton College and graduate degrees in cell biology and business administration.

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

TECHNICAL/MICROGROUP PROJECT Craig Johnson Leah Williams Sr. Technical Analyst Research Analyst Piper Jaffray & Co. Piper Jaffray & Co. 612 303-6428 312 267-5080 craig.w.johnson@pjc.com leah.j.williams@pjc.com Craig Johnson is a principal and senior technical research analyst at Piper Jaffray. He joined the Piper Jaffray private client research group in 1995 as associate analyst. Johnson offers frequent technical commentary on the broader market and individual stocks.

Prior to joining the firm, Johnson worked as a consultant for the Drake Small Business Development Center in Des Moines, Iowa.

Johnson earned a bachelor’s degree with an emphasis in finance and marketing and a Master of Business Administration degree from Drake University. He holds the Chartered Financial Analyst and Chartered Market Technician designations, is an active member of the Twin Cities Society of Securities Analysts, and is a co-chapter chair of the Market Technicians Association. He is also on the board of directors for the Market Technicians Association.

MEDICAL TECHNOLOGY & HOSPITAL SUPPLIES Matthew Miksic Senior Research Analyst Piper Jaffray & Co. 212 284-9335 matt.s.miksic@pjc.com

Sachin Kulkarni Young Li Research Analyst Research Analyst Piper Jaffray & Co. Piper Jaffray & Co. 212 284-5030 212 284-9310 sachin.k.kulkarni@pjc.com young.x.li@pjc.com

Matt Miksic is a managing director and senior research analyst at Piper Jaffray, covering medical technology and hospital supply stocks with an emphasis on orthopaedics, spine and ophthalmology.

Miksic joined Piper Jaffray after spending eight years in equity research at Morgan Stanley, where he was a member of the medical technology and hospital supply coverage team since 2002, with lead coverage of orthopaedics, spine and hospital supplies. Prior to Morgan Stanley, Miksic was a senior manager with Arthur Andersen in its business consulting division, and spent five years with a software startup.

Miksic holds a bachelor’s degree in computer science from Rutgers College and a Master of Business Administration degree from the Leonard N. Stern School of Business at New York University.

MEDICAL DIAGNOSTICS, LIFE SCIENCE TOOLS William Quirk David Clair Senior Research Analyst Research Analyst Piper Jaffray & Co. Piper Jaffray & Co. 612 303-6858 612 303-6747 william.r.quirk@pjc.com david.c.clair@pjc.com William Quirk is a managing director and senior research analyst at Piper Jaffray, focusing on the medical diagnostics and life science tools sectors.

Prior to joining Piper Jaffray in 2006, Quirk worked in equity research at RBC Capital Markets in Minneapolis and at Paine Webber in New York. In 2012, he was named the most accurate earning forecaster for the life science tools industry by StarMine.

Quirk received a bachelor’s degree in business from St. Norbert College and a master’s degree in business from the Carlson School of Management at the University of Minnesota. He holds the Chartered Financial Analyst designation.

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The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

BIOTECHNOLOGY M. Ian Somaiya Do Kim Senior Research Analyst Research Analyst Piper Jaffray & Co. Piper Jaffray & Co. 212 284-9305 212 284-9405 m.ian.somaiya@pjc.com do.g.kim@pjc.com

Matthew Luchini Research Analyst Piper Jaffray & Co. 212 284-9322 matthew.w.luchini@pjc.com

Ian Somaiya is a managing director and senior research analyst at Piper Jaffray covering the biotechnology industry.

Prior to joining Piper Jaffray in 2010, Somaiya worked in equity research at Thomas Weisel Partners. Somaiya was recognized as “Best on the Street” by The Wall Street Journal in 2006, 2007 and 2009 for his biotechnology coverage. Formerly, Somaiya was a senior analyst at Morgan Stanley with responsibilities for small- and midcapitalization biotechnology companies. He spent a year with The Carson Group in its healthcare consulting practice prior to making his transition to the sell-side at Prudential Securities.

Somaiya received a bachelor’s degree in biology/neuroscience from New York University.

DRUG DISCOVERY Edward Tenthoff Senior Research Analyst Piper Jaffray & Co. 212 284-9403 edward.a.tenthoff@pjc.com

Chad Messer Research Analyst Piper Jaffray & Co. 212 284-9326 chad.j.messer@pjc.com

Neera Ravindarn, M.D. Research Analyst Piper Jaffray & Co. 212 284-9401 neera.dahiya.ravindran@pjc.com

Ted Tenthoff is a managing director and senior research analyst at Piper Jaffray, focused on the drug discovery sector of the biotech industry.

Prior to joining Piper Jaffray in 2003, Tenthoff worked at Think Equity Partners. Prior to that, he covered the genomics sector at Robertson, Stephens & Company, and was a medical technology analyst at Lehman Brothers.

He was ranked No. 1 stock picker for life science tools and services in the 2006 Starmine Analyst Awards.

Tenthoff received a bachelor’s degree in investor relations from the University of Pennsylvania.

MEDICAL TECHNOLOGY Brooks West Senior Research Analyst Piper Jaffray & Co. 612 303-6954 brooks.e.west@pjc.com

Michael Dinerman Daniel Garofalo Research Analyst Research Analyst Piper Jaffray & Co. Piper Jaffray & Co. 212 284-9325 612 303-6956 misha.a.dinerman@pjc.com daniel.f.garofalo@pjc.com

Brooks West is a principal and senior research analyst at Piper Jaffray covering medical technology companies.

West brings extensive industry and financial experience to the Piper Jaffray healthcare team, having covered medical technology for the last four years as a senior analyst at Craig-Hallum Capital. Prior to that, West was director of marketing and business development at Urologix Inc. He also spent more than ten years in investment banking, venture capital and investment management.

West received his bachelor’s degree in business administration from Boston University.

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HEALTHCARE SERVICES: INFORMATION TECHNOLOGY, CONTRACT RESEARCH Sean Wieland Senior Research Analyst Piper Jaffray & Co. 415 616-1710 sean.w.wieland@pjc.com

Mohan Naidu Research Analyst Piper Jaffray & Co. 312 267-5083 mohan.a.naidu@pjc.com

Sean Wieland is a managing director and a senior research analyst at Piper Jaffray, focusing on healthcare information technology and health care services. Wieland has 20 years’ experience in healthcare information technology, including direct industry experience and more than 12 years on the sell-side. He is a three-time Wall Street Journal “Best on the Street” winner and StarMine award winner for earnings accuracy.

Prior to joining Piper Jaffray in 2005, Wieland was a senior research analyst at WR Hambrecht and Prudential Securities. Before joining the sell-side, he spent seven years in the industry, working in multiple roles at IDX Systems Corporation, most recently as a senior sales executive, where he learned firsthand about the need for technology in the healthcare setting.

Wieland earned his Master of Business Administration degree and his bachelor’s degree in electrical engineering from the University of Vermont.

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T E C H N I C A L C H A R T S F O R P A R T I C I P AT I N G P U B L I C C O M P A N I E S (charts are alphabetical by ticker)

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NO T E S

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NO T E S

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attestation under Regulation Analyst Certification, found at the end of this report or at the following site: attestation under Regulation Analyst Certification, found at the end of this report or at the following site: http://www.piperjaffray.com/researchdisclosures. http://www.piperjaffray.com/researchdisclosures.

The 24th Annual Piper Jaffray Healthcare Conference November 27–28, 2012

Disclosure pages at end of book: Disclosure pages at end of book:

Important Research Disclosures IMPORTANT RESEARCH DISCLOSURES Important Research Disclosures

Rating Buy (OW) Hold (N) Sell (UW)

Rating Buy (OW) Hold (N) Sell (UW)

Count 318 227 27

Distributions of Ratings/IB Services Distributions of Ratings/IB Services Piper Jaffray Piper Jaffray IB. Serv./Past 12 Mos. IB. Serv./Past Percent Count Percent Count Percent Count 55.59 56 17.61 318 55.59 56 39.69 0 3.96 227 39.69 0 4.72 0 0.00 27 4.72 0

12 Mos. Percent 17.61 3.96 0.00

Distribution ofofRatings/IB Services showsnumber the number of companies currently in each rating category fromand which Piper Jaffray and Note:Note: Distribution Ratings/IB of Services shows the of companies currentlyof in each rating category from which Piper Jaffraycategory its affiliates Ratings/IB Services shows the number companies currently in each rating from received which Piper Jaffray an Note: Distribution its affiliates received compensation for investment banking services within the past 12 months.

FINRA rules require disclosure of which compensation for investment banking services within past 12 months.

FINRA rules require disclosure which ratingsFINRA most closely with its affiliates received compensation forthe investment banking services within the pastof12 months. rulescorrespond require disclosure of which ratings“buy,” most closely correspond with “buy,”Piper “hold,” and “sell” Piper Jaffray ratings are not the equivalent of buy, hold or “hold,” and “sell”closely recommendations. ratings arerecommendations. not the“sell” equivalent of buy, hold or sellPiper but instead relative ratings most correspond withJaffray “buy,” “hold,” and recommendations.

Jaffrayrepresent ratings recommended are not the equivalent of buy, ho sell but instead Nevertheless, represent recommended relative most weightings.

Nevertheless, Overweight corresponds most closely with buy, Neutral with weightings. closely with buy, NeutralNevertheless, with hold and Underweight withcorresponds sell. See Stock most Rating definitions below. sell but insteadOverweight representcorresponds recommended relative weightings.

Overweight closely with buy, Neutral with hold and Underweight with sell. See7, Stock Rating definitions below. Figures above are from November 7, 2012.

Figures above are from November 2012. hold and Underweight with sell. See Stock Rating definitions below. Figures above are from November 7, 2012.

Analyst Certification – David Amsellem, Kevin K. Ellich, Thomas J. Gunderson, Craig Johnson, Matthew Miksic, Analyst Certification – David Amsellem, Kevin K. Ellich, Thomas J. Gunderson, Craig Johnson, Matthew Miksic, William R. Quirk, CFA, M. Ian Somaiya, Edward A. Tenthoff, Brooks E. West, Sean W. Wieland, Senior Research William R. Quirk, CFA, M. Ian Somaiya, Edward A. Tenthoff, Brooks E. West, Sean W. Wieland, Senior Research Analysts ANALYST CERTIFICATION Analysts The views expressed in this report accurately reflect my personal views about the subject company and the subject security. In addition, no The views expressed in this report accurately reflect my personal views about the subject company and the subject security. In addition Analyst Certification – David Kevin K.orEllich, Thomas J. Gunderson, Johnson, Matthew Miksic, William R. contained Quirk, CFA, in this report. part of— my compensation was, is, orAmsellem, will be directly indirectly related to the Craig specific recommendations or views part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this repo

M. Ian Somaiya, Edward A. Tenthoff, Brooks E. West, Sean W. Wieland, Senior Research Analysts

Piper Jaffray research analysts receive compensation that is based, in part, on overall firm revenues, which include investment banking Piper Jaffray research analysts receive compensation that is based, in part, on overall firm revenues, which include investment banking The views expressed in this report accurately reflect my personal views about the subject company and the subject security. In addition, no part of my revenues. revenues. compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report.

Complete disclosure information, price charts and ratings distributions on companies covered by Piper Jaffray disclosure information, price charts ratings distributions oninvestment companies covered

by Piper Jaffray Complete Piper Jaffray research receive compensation is based, in part, and onhttp://piperjaffray.com/researchdisclosures overall firm revenues, which include banking revenues.

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by PiperMinneapolis, Jaffray Equity Research be found on the Piper Jaffray website: http://piperjaffray.com/researchdisclosures or by writing to Piper Jaffray, Equity Research Department, 800 Nicollet Mall, Minneapolis,

Ratings and Other Definitions Ratings and Other Definitions MN 55402

Stock Ratings: Piper Jaffray ratings are indicators of expected total return (price appreciation plus dividend) within the next 12 months.

Stock Ratings: Piper Jaffray ratings are indicators of expected total return (price appreciation plus dividend) within the next 12 month At times analysts may specify a different investment horizon or may include additional investment time horizons for specific stocks. Stock At times analysts may specify a different investment horizon or may include additional investment time horizons for specific stocks. Sto performance is measured relative toDEFINITIONS the group of stocks covered by each analyst. Lists of the stocks covered by each are available at RATINGS AND OTHER performance is measured relative to the group of stocks covered by each analyst. Lists of the stocks covered by each are available at www.piperjaffray.com/researchdisclosures. Stock ratings and/or stock coverage may be suspended from time to time in the event that www.piperjaffray.com/researchdisclosures. Stock ratings and/or stock coverage may be suspended from time to time in the event that there is no Ratings: active analyst opinion orare analyst coverage, buttotal thereturn opinion orappreciation coverage isplus expected resume.

Research reports andanalysts ratings Stock indicators of analyst expected (price dividend)to the next months.

At times there Piper is noJaffray activeratings analyst opinion or coverage, but the opinion or coverage iswithin expected to12resume.

Research reports and ratings shouldmay notspecify be relied upon as individual investment advice.

As always, an investor’s decision to buy or sell a security must depend on a different investment horizon may include additional investment time horizons specific stocks.

Stock to performance is measured should not be relied upon as or individual investment advice. As always, anforinvestor’s decision buy or sell a securityrelative must depend on individual including existing holdings, time horizons and risk tolerance.

Piper Jaffray sales and trading personnel may to thecircumstances, group of stocks covered by each analyst.

Lists of the stocks covered by each are available at www.piperjaffray.com/researchdisclosures.

Stock ratings individual circumstances, including existing holdings, time horizons and risk tolerance. Piper Jaffray sales and trading personnel may provide written orcoverage oral commentary, tradefrom ideas, ortoother information about stockopinion to clientsanalyst or internal trading desks reflecting and/or stock mayor beoral suspended time time in theorevent that there aisparticular no active analyst coverage, the opinion or desks reflect provide written commentary, trade ideas, other information about a particular or stock to clients orbut internal trading different opinions than to those expressed the research Inbeaddition, Piper Jaffray technical are baseddecision on coverage is expected resume.

Researchby reports and ratingsanalyst. should not relied upon as individual investmentresearch advice. Asproducts always, an investor’s different opinions than those expressed by the research analyst. In addition, Piper Jaffray technical research products are based on different methodologies may contradict the opinions contained in fundamental research reports. to buy or sell a securityand must depend on individual circumstances, including existing holdings, time horizons and risk tolerance. Piper Jaffray sales and different methodologies and may contradict the opinions contained in fundamental research reports. trading personnel may provide written or oral commentary, trade ideas, or other information about a particular stock to clients or internal trading desks

reflecting different than those expressed byrelative the research analyst.

In addition, Piper of Jaffray technical research products are based on different (OW): opinions Anticipated to outperform to the median of the group stocks covered by the analyst.

Overweight Overweight (OW): Anticipated to outperform relative to the median of the group of stocks covered by the analyst. methodologies and may contradict the opinions containedtointhe fundamental research reports.

(N): Anticipated to perform in line relative median of the group of stocks covered by the analyst.

Neutral Neutral (N): Anticipated to perform in line relative to the median of the group of stocks covered by the analyst.

Underweight (UW): Anticipated to underperform relative to the median of the group of stocks covered by the analyst.

(UW): Anticipated to to underperform relative the median group of stocks covered by the analyst.

Underweight Overweight (OW): Anticipated to outperform relative the median of the group to of stocks coveredof bythe the analyst.

Neutral (N): Anticipated to perform in line relative to the median of the group of stocks covered by the analyst.

Other Important Information Underweight (UW):Important Anticipated to underperform relative to the median of the group of stocks covered by the analyst.

Other Information

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OTHER IMPORTANT INFORMATION The material regarding the subject company is based on data obtained from sources deemed to be reliable; it is not guaranteed as to accuracy and does not purport to be complete. This report is solely for informational purposes and is not intended to be used as the primary basis of investment decisions.

Piper Jaffray has not assessed the suitability of the subject company for any person. Because of individual client requirements, it is not, and it should not be construed as, advice designed to meet the particular investment needs of any investor. This report is not an offer or the solicitation of an offer to sell or buy any security. Unless otherwise noted, the price of a security mentioned in this report is the market closing price as of the end of the prior business day. Piper Jaffray does not maintain a predetermined schedule for publication of research and will not necessarily update this report. Piper Jaffray policy generally prohibits research analysts from sending draft research reports to subject companies; however, it should be presumed that the analyst(s) who authored this report has had discussions with the subject company to ensure factual accuracy prior to publication, and has had assistance from the company in conducting diligence, including visits to company sites and meetings with company management and other representatives.

Notice to customers: This material is not directed to, or intended for distribution to or use by, any person or entity if Piper Jaffray is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to such person or entity. Customers in any of the jurisdictions where Piper Jaffray and its affiliates do business who wish to effect a transaction in the securities discussed in this report should contact their local Piper Jaffray sales representative. Europe: This material is for the use of intended recipients only and only for distribution to professional and institutional investors, i.e. persons who are authorized persons or exempted persons within the meaning of the Financial Services and Markets Act 2000 of the United Kingdom, or persons who have been categorized by Piper Jaffray Ltd. as professional clients under the rules of the Financial Services Authority. United States: This report is distributed in the United States by Piper Jaffray & Co., member SIPC, FINRA and NYSE, Inc., which accepts responsibility for its contents. The securities described in this report may not have been registered under the U.S. Securities Act of 1933 and, in such case, may not be offered or sold in the United States or to U.S. persons unless they have been so registered, or an exemption from the registration requirements is available.

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