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St. Jude Medical 2014 Investor Conference February 7, 2014

2014 Investor Day Conference

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Page 1: 2014 Investor Day Conference

St. Jude Medical 2014

Investor Conference

February 7, 2014

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Welcome and Opening Remarks

Dan Starks, Chairman, President and CEO

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This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Such forward-looking statements include the expectations, plans and prospects for the Company, including potential clinical successes, anticipated regulatory approvals and future product launches, and projected revenues, margins, earnings and market shares. The statements made by the Company are based upon management’s current expectations and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include market conditions and other factors beyond the Company’s control and the risk factors and other cautionary statements described in the Company’s filings with the SEC, including those described in the Risk Factors and Cautionary Statements sections of the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2012 and Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2013. The Company does not intend to update these statements and undertakes no duty to any person to provide any such update under any circumstance.

Forward-Looking Statements

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Agenda 8:00 a.m. Overview of St. Jude Medical’s 2014 growth program.

Dan Starks, Chairman, President and Chief Executive Officer

EPS leverage in 2014 and beyond.

Don Zurbay, Vice President, Finance and Chief Financial Officer

Highlights of our CRM business.

Eric Fain, M.D., Group President

The CardioMEMS™ HF System can become a significant new growth driver.

Lisa Andrade, Vice President and Chief Marketing Officer

Panel for Q&A

10:00 a.m. Break

Power of the EP portfolio.

Eric Fain, M.D., Group President

A special focus on Endosense.

Srijoy Mahapatra, M.D., FHRS, Vice President, Clinical, Medical and Scientific Affairs

Executing on a robust CV portfolio.

Eric Fain, M.D., Group President

A deeper dive into Portico™ transcatheter aortic valve.

Phil Ebeling, Senior Vice President, Research and Development

Growth through innovation in neuromodulation.

Eric Fain, M.D., Group President

Panel for Q&A

Lunch Buffet

12:30 p.m. Meeting Ends

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Overview of St. Jude Medical’s

2014 Growth Program

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We accomplished our major growth goals in 2013.

On a constant currency basis, we delivered adjusted EPS growth of 12% on 2% growth in revenue.*

We accelerated our sales growth rate each quarter starting the year with a 3% decline in Q-1 and ending the year with a 6% increase in Q-4.

* All sales growth values in this presentation are expressed on a constant

currency, year-over-year basis.

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Sales growth improvement was broad based due to

encouraging market dynamics and new products

launched in every business.

1H 2013 2H 2013

High voltage (2%) 4%

Low voltage (8%) 1%

Vascular 1% 3%

Structural Heart 2% 8%

Neuro (1%) 2%

AF 10% 9%

Total (1%) 4%

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We view ourselves as a company that entered 2014

with sales growing at an annual rate of

approximately 4%.

This is consistent with the guidance we gave on our Q-4 earnings call that sales would increase approximately 3-5% in 2014.

It usually is more meaningful to consider sales rates based on at least two quarter’s results (4% increase 2H 2013) instead of on a single quarter’s results (6% increase Q-4 2013).

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Looking forward to our sales growth in 2014

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St. Jude Medical’s growth program is based on

innovation. We provide innovative medical

devices that help reduce the cost of health care

and improve patient outcomes for some of our

most expensive, epidemic diseases.

Heart rhythm disorders

Atrial fibrillation

Heart failure

Hypertension

Chronic pain

Stroke

Coronary artery disease

Structural heart defects

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We estimate that the markets we participate in

exceed $20 billion in size and are growing at an

average rate of approximately 4%. Potential

markets (CardioMEMS™ HF System, renal

denervation) provide upside.

Size

Market $ billions Growth %

CRM 10.8 - 0 -

Structural Heart 3.1 9%

AF 2.9 9%

Vascular 1.8 6%

Neuro 2.0 5%

20.6

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We expect our growth rate to benefit from a

tailwind as our sales mix shifts to products in

faster growing markets.

Legacy markets Growth driver markets

CRM* AF

Mechanical heart valves Tissue and TAVR heart valves

Vascular closure Fractional flow reserve (FFR)

Third party Japan Optical coherence tomography (OCT)

Chronic Pain

CardioMEMS™ HF System

Left atrial appendage closure (LAA)

Deep brain stimulation

Renal denervation

* Revenue from CRM products was 59% of our sales mix in 2010 compared

with 51% in 2013.

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We have the right products in the right markets to

accelerate our sales growth over time.

We have plenty of opportunity.

Our primary focus therefore is execution.

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The organizational and leadership changes we have

made since Q-4 2012 are helping us improve our

execution.

Our customers are changing. We are changing with them.

It no longer makes sense to organize by physician specialty in a decentralized structure.

Our transition to a centralized structure helps us leverage our scale, align our priorities, capture technology synergies, improve our quality, and strengthen our focus on the new customer profile that is emerging as a result of health care reform and structural changes to the health care market.

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Our execution is focused on accomplishing all of the

following goals in 2014.

Meet or exceed the guidance we gave on our Q-4 earnings call.

Accelerate our sales growth rate during the year.

Exit 2014 capable of delivering both EPS leverage and mid to high single digit sales growth in 2015.*

* We are not yet issuing guidance for 2015.

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Key execution milestones for 2014

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We expect to resolve our Sylmar FDA warning

letter and improve our flow of new product

launches in the U.S. for our CRM business.

Allure Quadra™ CRT-P and our next generation low

voltage platform of devices (Endurity™ and Assurity™

pacemakers) have been launched in Europe in 2013 and

are approvable in the U.S. pending resolution of the

warning letter.

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We expect to resolve our Plano FDA warning

letter and accelerate neuromodulation sales

growth with new products.

Prodigy™ spinal cord stimulation (SCS) with SJM Burst

technology in Europe.

Protégé™ spinal cord stimulation (SCS) platform in the

U.S.

Submit our PMA for deep brain stimulation (DBS) for

Parkinson’s disease and Essential Tremor indications in

the U.S.

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We expect to accelerate sales growth in our AF

franchise.

The primary catalyst will be a successful ramp-up and

launch of our TactiCath™ line of contact force sensing

ablation catheters (our Endosense acquisition). Impact

should be visible 2H 2014 as manufacturing ramp-up is

completed.

A secondary catalyst will be the expanded roll out of our

MediGuide™ technology together with the effect this has

on adoption of our complete AF and CRM bundles.

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We expect our Nanostim™ retrievable leadless

pacemaker product line launch to begin

impacting sales growth 2H 2014.

Manufacturing ramp-up is underway and should be

completed by mid 2014.

Early KOL feedback encourages us that the Nanostim™

leadless pacemaker platform can evolve into a significant

new growth driver.

This is a disruptive technology.

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Our Portico TAVR program is expected to

contribute higher sales each quarter of 2014.

Our 23mm Portico™ heart valve with a transfemoral (TF)

delivery system was on the market in Europe in 2013 but

addressed less than 10% of the market.

We received CE mark for our 25mm Portico™ heart valve

with a TF delivery system in December 2013. Launch in

Europe already is underway.

We expect to launch our 27mm and 29mm Portico™

heart valve products with TF delivery systems in Europe

during 2H 2014.

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We are enthusiastic about the significant impact the

CardioMEMS™ wireless heart failure (HF) sensor

can provide to Class III HF patients.

CHAMPION trial

1. 28% reduction in hospital readmissions at 6 months.

2. 37% reduction in heart failure hospital readmissions

at 17 months.

This technology has the potential to provide

significant clinical and economic benefits for patients

who suffer from Class III heart failure and become a

major new growth driver.

* CardioMEMS is an independent, privately held company in which STJ holds an

equity interest and an exclusive option to acquire the company.

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We expect new products and expanded programs

throughout our business to help maintain or

improve our sales growth rate in 2014.

Continued role out of the dorsal root ganglion stimulation

(DRG) technology for chronic pain.

Expansion of our FFR, OCT, and LAA closure programs.

We remain optimistic about renal denervation as a

potential new growth driver. We look forward to

reviewing the SYMPLICITY HTN-3 clinical trial results

and incorporating lessons learned into our renal

denervation program.

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Summary of our sales growth expectations.

We entered 2014 with sales growing at an annual rate of

approximately 4%.

Our sales growth rate should improve as our product mix

continues to shift to faster growing markets.

We expect to launch multiple new growth drivers in 2014,

including CRM products in the U.S., Nanostim™ leadless

pacemaker, TactiCath™ ablation catheter, CardioMEMS™ HF

system, 25mm-29mm sizes of Portico™ heart valve, Prodigy™

SCS with Burst, Protégé™ SCS with upgradeability, and more.

Our goal is to accelerate our sales growth rate during the year

and exit 2014 capable of delivering mid to high single digit

sales growth in 2015.

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EPS leverage in 2014 and beyond Don Zurbay, Vice President and Chief Financial Officer

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We are well positioned to continue delivering

EPS leverage in 2014 and beyond.

Our 2014 guidance calls for sales growth of 3 – 5% and

EPS growth of 6 – 8%.

We are continuing to expand manufacturing in cost

advantaged locations.

We see significant opportunity to continue taking costs

out of our business with our on-going restructuring

programs.

We expect economies of scale to evolve for each of our

new growth drivers.

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We are well positioned to maintain or improve our

gross margin beyond 2014.

Our gross margin is impacted by both positive and

negative factors.

Excise taxes provide a 50 basis point headwind to our

gross profit margin in 2014.

Additionally, we are negatively impacted by geographic

and product mix shifts and lower average selling prices.

We expect to offset the negative factors through

continued expansion of our manufacturing in cost

advantaged locations and other continuous improvement

initiatives.

The negative gross margin impact of our growth drivers

will improve as volumes increase and manufacturing

improvements are realized.

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Opportunities to leverage our global operations and

supply chain

Centralization of our world-wide manufacturing

organization will further enable us to optimize our $1.6

billion in global operations spending.

We are currently manufacturing approximately 60% of our

worldwide volume in cost advantaged locations with an

internal goal of reaching 80%.

Our cost advantaged facilities are at varying stages of

utilization and we have ample capacity to support our

revenue growth over the next five years.

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Optimization of our cost structure

From 2011 to 2013, S,G&A expenses have been reduced

by approximately 170 basis points as a percentage of

sales in a low sales growth environment.

Acceleration of sales growth provides a natural leverage

point to the fixed component of our cost structure

Our current organization has ample capacity to support our

increased sales.

Growth drivers require investment similar to a start up

company and our ratios will improve as we start to

generate meaningful sales.

Moving forward the negative impact of variable interest

entity accounting will ease.

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Optimization of our cost structure

We estimate that we have already generated over $100

million in incremental cost savings as a result of the

restructuring actions announced in 2012 .

We expect additional leverage and productivity

improvements in 2014 and beyond as a result of these

actions as well as the changes announced last week.

The optimization of our cost structure allows us to remain

committed to our innovation-based growth strategy with

our investment in R&D consistently being greater than

12% of sales.

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OUS Manufacturing's effect on the Tax Rate

The largest driver of our tax rate improvement is

expansion of manufacturing in cost advantaged

locations.

24.5%

22.0%

21.6%20.9%

18.5%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

2010 2011 2012 2013 20142010 2011 2012 2013 2014

24.5% 22.0% 21.6% 20.9% 18.5%

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We maintain a conservative balance sheet which

continues to benefit from strong and consistent cash

flow.

Balances as of December 31, 2013:

Cash on hand $1.4 billion

Debt outstanding $3.6 billion

Current credit ratings: Moody’s – Baa1, S&P – A, Fitch – A

For the three years ended 2013, we have generated cash flow from

operations of approximately $3.6 billion, 22% of net sales.

We have ample capacity to continue returning capital to shareholders

while maintaining the capacity to augment our growth strategy with

disciplined acquisitions.

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Dividends and Share Repurchases

Since 2011, the Company has completed $2.8 billion of share

repurchases with an average purchase price of $43.47 per

share.

Share repurchases will manage the dilutive impact of our stock

based compensation.

In February of 2011, the Company initiated a dividend and we

have increased our dividend an average of 9% annually.

The share repurchases and growth in dividend reflects the

strong confidence our management team and our board of

directors have in our long-term growth and success.

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Summary

Our goal is to continue growing sales at a 3% to 5% rate

for full year 2014 and create the conditions to support

faster sales growth in 2015.

We expect to continue delivering EPS leverage in 2014

and beyond.

We have a conservative balance sheet and strong cash

flow to continue to repurchase stock, increase our

dividend, and fund disciplined acquisitions as appropriate.

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Highlights of our CRM business Eric S. Fain, M.D. – Group President

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2013 CRM Highlights

Core CRM markets stabilizing and showing signs of growth

Acceleration of implant growth rates WW throughout the year

Stabilizing ASP trends

Accelerated our sales growth each quarter:

Exited year with share capture in both LV and HV

Market Share leader in U.S. De Novo CRT-D

Third party analysis of STJ data as well as independent large hospital

system experience confirmed the strong performance of Durata™ lead

Over 425,000 leads implanted WW and >6 years of follow-up

De Novo lead-to-port ratio returned to parity with device sales

Expanded our Industry leading product portfolio

Launched new ICD (WW) and pacemaker (Int’l) platforms

Extended our quadripolar leadership with MPP and CRT-P (Int’l)

Significant progress in remediation of Sylmar warning letter

We anticipate FDA re-inspection by the end of 1H 2014

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Implantable Electronic Systems:

Leveraging Operational Synergies in 2013

Capitalized on the combined strength of our organization and rapidly achieved functional integration:

Reduced costs and improved effectiveness by leveraging a single integrated R&D organization and associated core competencies

Began implementing operational synergies that enhance quality and improve cost structure while also leveraging our existing cost advantaged manufacturing locations

Leveraged integrated clinical study and field clinical engineering organizations to improve execution and timelines

Additional opportunities in the future as we move to common electronics and externals platforms

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2014 WW CRM Market Dynamics

Expect the 2013 global CRM market to be flat versus

2012 on a CC basis

Renewed unit growth but continued ASP pressure

2H 2013 likely up about 2% vs. 2H 2012 on a CC basis

The mid-point of our guidance range assumes the CRM

market is flat in 2014 vs. 2013 (on an “as reported” basis)

Our model assumes a CRM market of $10.8 billion in 2014

We expect to gain 50 bps of CRM share in 2014:

Differentiated product portfolio

HV replacement tailwind

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17%

19%

21%

23%

25%

27%

29%

31%

33%

2010 2011 2012 2013 2014 2015 2016 2017 2018

Esti

mate

d M

ark

et

Sh

are

2013 Year End De Novo Share (Est.) Year End Replacement Share (Est.)

Linear Trend to Current De Novo Share 2012 Year End De Novo Share (Est.)

Replacement Share

Share Delta of ~6.5%

Est. +2.0% in 2013

2012 De Novo Share

2013 De Novo Share

U.S. HV Replacement Market Dynamics Our replacements tailwind will continue to support market share capture

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CRM Portfolio Highlights

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Continued Innovation across Product Portfolios

Right Products at the Right Time

SJM Quadra family of

devices with

MultiPoint™ Pacing

Nanostim™

Leadless

Pacemaker

CardioMEMS™ HF

System

Allure Quadra™

CRT-P

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Quadripolar Pacing – Standard of Care in CRT Strong clinical evidence driving continued CRT-D share gains

U.S. De Novo market share leader

in CRT-D

Will remain the only quadripolar

system available in U.S. in 2014

Only next generation MPP system

in International markets

Over 100 publications provide broad

clinical evidence supporting the

benefits of the quadripolar system at

implant and follow-up

Clinical benefits also translate into

healthcare economic benefits

Estimated U.S. CRT-D De Novo Market Share

27%

29%

31%

33%

35%

37%

39%

41%

2011 2012 2013

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Distal 1

Mid 3

Proximal 4

Mid 2

Common Pacing Complications with Bipolar CRT

Addressed with Quadripolar System

Four electrodes and

10 pacing vectors

Allows implant without trading off

stability for electrical performance

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Quadripolar benefits can lower both the near-term

and long-term overall cost of care

Positive impact to hospitals, ACOs, bundled payment sites and payers

More pacing options to manage implant complications

100% Resolution of Phrenic Nerve Stimulation without surgical lead revision (SLR)1

Significant reduction in surgical lead revisions when compared to bipolar leads2

Better device longevity3

Patients with high LV thresholds could see significant longevity

improvement of up to 17 months using unique quadripolar vectors

Proven efficacy on both objective and subjective measures of HF improvement4

LV volumes, EF and 6-minute walking distance / MN Quality of Life score4

Overall, 66% of patients improved at least 1 class on NYHA scale

Lowered rate of LV lead deactivation/ replacement5

53% of patients programmed to a unique quadripolar vector to avoid pacing complication and

possible surgical lead replacement

pic

1. Zanon et al. Heart Rhythm, Vol. 10, No 5, May 2013. New Onset of Phrenic Nerve Stimulation During Left Ventricular Pacing at Mid-Term Follow Up: A Multicenter Clinical Experience.

2. Viani SM, et al. A new quadripolar lead for left ventricular pacing: short term reliability and future opportunities. Europace. 2011; 13(3), Abstract P408

3. Manyam et al. Heart Rhythm, Vol. 10, No 5, May 2013. Quadripolar Left Ventricular Leads Yield Lower Capture Thresholds With Expected Increase In Battery Longevity.

4. Forleo GB, et al. Heart Rhythm 2012; 9 (11), 1822-1828.e3

5. Turakhia et al. Heart Rhythm, Vol.10, No 5, May 2013. Decreased Risk of Left Ventricular Lead Deactivation and Replacement Associated With Quadripolar LV Leads.

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1. Tomassoni, G. et al. Post operative performance of a novel left ventricular quadripolar electrode lead. Heart Rhythm. 2011;8(5):S119 (Abs. PO1-43).

2. Thibault B, et al. Electrode Selection to Avoid Phrenic Stimulation with a Quadripolar Left Heart Lead. Heart Rhythm. 2011;8(5):S68 (Abs. AB30-3).

3. Dänschel W, et al. Initial Clinical Experience with a Novel Left Ventricular Quadripolar Lead. Oral Session 183/5. Europace, 2010; 12 (suppl 1): i127.

4. Osca J, et al. Initial Experience with a New Quadripolar Cable for Left Ventricular Stimulation. Impact Over Phrenic Nerve Stimulation and Pacing Thresholds. Heart Rhythm. 2011;8(5):S359 (Abs. Po5-14).

5. Mehta PA, Shetty AK, Squirrel M, et al. Elimination of phrenic nerve stimulation occurring during CRT : Follow-up in patients implanted with a novel quadripolar pacing lead. J Interv Card Electrophysiol 2011 Jul 21.

6. Viani SM, et al. A New Quadripolar Lead For Left Ventricular Pacing: Short Term Reliability and Future Opportunities. Europace 2011 (Abstract).

Clinical results show consistently strong performance

Reduction in Revisions PNS Resolution

Tomassoni1 Thibault2

Danschel3

Osca4

Mehta5

6

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Clinical Superiority of Quadripolar Technology

NCDR ICD Registry is a national, prospective database managed by the ACC

in collaboration with HRS

Updated analysis used NCDR ICD Registry data for implants performed from

January 1, 2012 through June 30, 2013

STJ quadripolar CRT Technology demonstrated an 89% reduction of failed

implants over non-quadripolar LV leads from all manufacturers

Additional publications expected in 2015 highlighting improved outcomes and

mortality

Non-Quad STJ Quadra P-value

1H 2012 4.20% 0. 51% <0.0001

2H 2012 4.53% 0.49% < 0.0001

1H 2013 4.20% 0.49% < 0.0001

Total (N=56,656) 4.30% 0.49% < 0.0001

NCDR ICD Registry Failed LV Lead Implants*

* Reasons LV leads were not implanted include diaphragmatic stimulation, unacceptable

thresholds, and target vein/coronary sinus access

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Quadra Assura™ CRT-D MultiPoint™ Pacing (MPP): Building clinical evidence with 2nd generation technology

Two-site LV stimulation extends the capabilities of Quadripolar technology platform with a focus on further improved patient outcomes

Studies demonstrate significant improvement

compared to conventional biventricular pacing

Improved acute hemodynamics with an MPP configuration in large majority of patients1-4

Equivalent improvement seen in both ischemic and non-ischemic patients3,4

No difference between quadripolar lead and multi-branch (2 leads)5

Reduced rate of CRT non-responders

26% more CRT responders (ESV >15% reduction) after 3-month of MPP6

IDE enrollments expected to complete in 2014

1. Rinaldi et al. Acute hemodynamic benefits of multisite LV pacing in CRT recipients. Abstract ACC 2012

2. Thibault et al. Acute hemodynamic comparison of multisite and biventricular pacing with a quadripolar LV lead. Europace 2013 ;15:984-991

3. Pappone et al. Multipoint LV pacing improves acute hemodynamic response assessed with pressure-volume loops in CRT patients. Heart Rhythm 2014 (in press)

4. Rinaldi et al. Acute effects of multisite LV pacing on mechanical dyssynchrony in patients receiving CRT. J Cardiac Failure 2013;19:731-738

5. Shetty et al. A comparison of LV endocardial, multisite and multipolar epicardial cardiac resynchronization: An acute hemodynamic and electro-anatomical study. Europace 2014 (in press)

6. Pappone et al. Multipoint LV pacing in a single coronary sinus branch Improves 3-month echocardiographic and clinical response to CRT. Abstract HFSA 2013

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Allure Quadra™ CRT-P

Strong demand and driving share capture

in Int’l markets

Significant competitive advantage in an

estimated $420M WW CRT-P market

Expands quadripolar portfolio to fastest

growing CRM segment

Market size expected to double in the next

5 years with new indications

No known competitive quadripolar

pacemakers in pipeline

Capitalize on rapid growth in the CRT-P

segment driven by BLOCK HF results

(AHA 2012) and BIOPACE (2H 2014)

Significant appeal to pacer implanters

who begin implanting CRT-P

Leverages new LV platform for improved

cost structure

$200

$250

$300

$350

$400

$450

2011 2012 2013 2014

$M

M

Estimated CRT-P Market Revenue

WW Market Size

11% CAGR

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Expanding portfolio of quadripolar lead

options

3 lead shape options

2 electrode spacing options to

facilitate basal pacing

All spacing options maintain 4

discrete electrode locations for pacing

vector selection

Smaller diameter for easier access to

tortuous anatomy

Designed for MRI compatibility

Quartet™ NXT LV Leads Extending Quadripolar Leadership with 2nd generation technology

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Leadership in Low Voltage Platform in 2014

Assurity™ and

Endurity™

Allure Quadra™ Accent MRI™ Nanostim™

Significant technology advantages to drive share

gains in ~$4B low voltage market

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Brady MRI Compatibility

Industry best lead handling

No scan zone/power restrictions

Efficient workflow using the STJ MRI

activator

Continued success in Int’l markets Strong adoption following launch in Japan

Accent MRI IDE Study: Expect to complete

MRI scans and follow-up in 2H 2014

Will continue to expand product portfolio of

MRI compatible devices Expect to launch restricted MRI models in

Int’l markets in 2014 for tiering

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Nanostim™ Leadless Pacemaker

Specifically designed for repositioning and chronic

retrievability (catheter-based)

Energy efficient design

High-capacity battery

No losses due to lead conductor resistance

Proprietary low-power “conducted communication”

Designed to prevent dislodgement

Double fixation: single turn helix (x 2 pull-strength)

plus angled nylon sutures

Radiographic indicator to ensure proper number of turns

Tethered test mode for intraoperative evaluation

Delivered via 18F introducer

Supported by Merlin™ Patient Care System

First and only commercially available leadless pacing system

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Standard Pacemaker Leadless Pacemaker

Implant procedure Surgical pocket + lead Percutaneous femoral based

Implant time 30 – 45 minutes 15-20 minutes

Cosmetics Scar, Visible Device No Scar, No Visible Device

Post-Implant Restrictions Limited arm movements

Wound care/ sutures

No heavy lifting

Minimal

(faster patient recovery)

Connections Lead-can connectors None

Chronic tricuspid valve

interference

Yes (lead) No (leadless)

Longevity 9-13 years 9-19 years

Battery Replacement Pocket access Femoral access

MRI compatibility Conditional – image impact Inherently MRI compatible

Comparison with Conventional Lead-Based System

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Complication Occurrence Leadless Advantage

Lead dislodgement 2.2% to 3.7% Not applicable/ No lead

Low risk of device dislodgement

Pneumothorax 1.6% to 2.6% No Risk - Not applicable

Lead perforation 0.5%-1% Not applicable – No Lead

Low risk of device perforation

Venous thrombosis 1%-3% No Risk – Not applicable

Chronic Lead failure 2%-4% of pts at 5 years Not applicable – No Lead

Hematoma requiring surgical

evacuation

<0.5% Reduced Risk

Skin erosion (generator

change)

0.8-0.9% No Risk – No Pocket

Pocket Infection • < 1% for single-

chamber

• 3-5% for generator

change

No Risk – No Pocket

Complications Associated with Pacemakers

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Launch Summary

Initial launch feedback and enthusiasm in EU

has been even greater than anticipated

Strong success with initial implants driving

continued demand

Strong interest from historically non-STJ

customers

Unprecedented interest in U.S. IDE study

Strong interest in Japan/Asia due to lack of

scar/visible device

Significant media attention and coverage

driving patient awareness

Significant market opportunity in ~$700M

single-chamber pacemaker segment

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Clinical Summary

LEADLESS Study: First in Man

Successful delivery in 32/33 patients (97%)

Short Procedure Times

Introducer in/out: 28 minutes

Catheter in/out: 16 minutes

Excellent pacing and sensing performance

LEADLESS II IDE Study

PMA Submission requirement: 300 patients followed

for 6 months

First implants Feb 2014

Leadless Pacemaker Observational Study (International)

1000 patients at ~100 sites followed for 5 years

Enrollment underway

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Nanostim™ Dual Chamber Leadless Pacemaker

Dual chamber pacemakers represent >70%

of worldwide pacing market

Approximately $3B market in 2014

Development work underway to expand

Nanostim technology

Single chamber development helps validate delivery

and dual chamber feasibility

Low power conducted telemetry scheme can be

leveraged for device-to-device communication

resulting in low impact to device longevity

Communication between devices demonstrated in

animal studies

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Summary of CRM Highlights for 2014

The global CRM market has stabilized

We expect to gain share in the high voltage segment due

to replacement market dynamics and leadership in

quadripolar CRT-D

The Nanostim™ leadless pacemaker and our Allure

Quadra™ CRT-P product lines give us clear leadership in

a $1 billion component of the low voltage segment

The midpoint of guidance that assumes we will gain

approximately 50 basis points of share in a stable market

is well supported and may be conservative

We have completed all remediation activities associated

with the Sylmar site Form 483 and warning letter and we

anticipate FDA re-inspection by the end of 1H 2014

Page 61: 2014 Investor Day Conference
Page 62: 2014 Investor Day Conference

The CardioMEMS™ HF System

can become a significant new

growth driver Lisa Andrade – Vice President and Chief Marketing Officer

* CardioMEMS is an independent, privately held company in which STJ holds

an equity interest and an exclusive option to acquire the company.

Page 63: 2014 Investor Day Conference

63

CardioMEMS™ HF System

Sensor with Delivery Catheter System

Permanent implant

No batteries or components that

require replacement

Implanted into pulmonary artery

Uses a safe, well-understood right heart

catheterization procedure

Electronics

Patient configuration

Hospital/clinic version

Website

PA pressure readings and trends

Systolic, Diastolic and Mean

PA pressure waveforms

Heart rate

At-home

In-hospital

Page 64: 2014 Investor Day Conference

64

Heart Failure Burden in the United States1,2

5.1M Americans suffer from HF

>650,000 new HF diagnoses each year

1 in 2 HF patients die in 5 years

Burden on healthcare system is high

2.8M office and ED visits each year

1.0M HF hospitalizations each year

Leading cause of hospitalizations among >65

years old patients

Every 30 seconds, someone is hospitalized

for HF

1 Go A, et al. Heart Disease and Stroke Statistics 2013 Update: A Report from the American Heart Association.

Circulation. Published online December 12, 2012. 2 Blecker, S, Paul, M et al. Heart failure-associated hospitalizations in the United States. JACC 2013 61:12 (1259-1267)

Heart Failure is a growing and expensive public health issue

of HF patients

die in 5 years1

50% 5.1M

Page 65: 2014 Investor Day Conference

65

Economic Burden of HF Admissions in the US

Total cost of HF in the US

expected to double by 20301

$31B/year in 2013, $70B/year in 2030

>1/2 of costs spent on hospitalizations2

5.1 day average hospital length of stay4

High readmission rates

25% readmission within 30 days2

50% readmission within 6 months3

1/5th of all Medicare admissions in the

US have a diagnosis of heart failure5

Most HF patients suffer

re-congestion within 60 days

Even at the best hospitals6

1 Go A, et al. Heart Disease and Stroke Statistics 2013 Update: A Report from the American Heart Association. Circulation. Published online December 12, 2012.

2 2013 ACCF/AHA Guideline for the Management of Heart Failure: A report of the ACC/AHA Task Force on Practice Guidelines. Circulation. Published online June 5, 2013.

3 Focus Update Incorporated into the ACC/AHA 2005 Guidelines for the Diagnosis and Management of Heart Failure in Adults: Circulation 2009;119; e391-e479(e437) 4 National Health Statistics, National Hospital Discharge Survey: 2007 Summary October 26,2010 5 Emory Healthcare. Heart Failure Statistics. Emory Healthcare [serial online]. Published 2013. Accessed April 2, 2013. 6 Lala, et al. for H-FAN. HFSA 2013 7 MEDPAC, Report to Congress: Promoting Greater Efficiency in Medicare, June 2007. Advisory Board Cardiovascular Roundtable Research & Analysis as reported in Publication 20286C entitled

“Transformative Care Delivery, Part II: Reducing Preventable Readmissions.”

$31 Billon annual Cost of HF in US1

5.1 days

average hospital

length of stay4

$600M spent annually on

preventable Medicare HF

patient readmissions7

Page 66: 2014 Investor Day Conference

66

New York Heart Association (NYHA) Class III

Leads HF Admissions

NYHA Class III patients have marked limitation in activity even during minimal activity.

They are comfortable only at rest.

1 CVRG, 2007; McCullough, 2002; McAllister, 1999 [41-43} 2 Fonarow G, et al. Overview of Acutely Decompensated Congestive Heart Failure

(ADHF): A Report from the ADHERE Registry. Heart Failure Reviews 9, 179-185,

2004

Approximately 1 in 3 HF Patients are NHYA Class III.

These patients comprise almost half of the HF admissions.

29%

44%

0%

20%

40%

60%

80%

100%

% of HF patients % of HF admissions

NYHA I

NYHA II

NYHA III

NYHA IV

1 2

Page 67: 2014 Investor Day Conference

67

Economic Risks of HF Readmissions in the US

Medicare’s Hospital Readmissions Reduction (HRR) Program

Program penalizes hospitals who have above average risk adjusted

all-cause readmissions within 30 days following HF, Acute MI,

Pneumonia discharge

Withholding of all inpatient Medicare payments

Up to 2% in 2014

Up to 3% by 2015 and beyond2

Total 2013 impact3

$280M withheld

2,217 hospitals impacted

1 Dharmarajan K, Hsieh AF, Lin Z, et al. Diagnoses and Timing of 30-Day Readmissions After Hospitalization for Heart Failure,

Acute Myocardial Infarction, or Pneumonia. JAMA. 2013;309(4):355-363. Linden A, Adler-Milstein J. Medicare disease

management in policy context. Health Care Finance Rev. 2008;29(3):1-11. 2 CMS Hospitals Readmissions Reductions Program of the Patient Protection and Affordable Care Act (PPACA), 2010.

3 - http://www.kaiserhealthnews.org/stories/2012/october/03/medicare-revises-hospitals-readmissions-

penalties.aspx?referrer=search

2014 CMS Benchmark Target

30-day Readmissions Rate1

Page 68: 2014 Investor Day Conference

68 68

CardioMEMS™ HF System and Pressure Monitoring

Weight and BP

Impedance

Pressure

No Reduction in HF

Hospitalizations

Poor Marker

(TIM-HF, TELE-HF)

No Reduction in HF

Hospitalizations

High false positives

(DOT-HF)

Significant Reduction in HF

Hospitalizations

Right marker, Right management

approach

(COMPASS, CHAMPION,

HOMEOSTASIS™)

CardioMEMS

PA Pressure

The Right Approach to Management of HF

Page 69: 2014 Investor Day Conference

69 69

COMPASS

HOMEOSTASIS™

CHAMPION

Right Parameter – Pressure

Right Patients – Class III

Right Approach – Management to target pressures and

physician directed patient self management

Right Parameter – Pressure

Right Patients – Class III

Right Approach – Management to target pressures

Right Parameter – Pressure

Right Patients – Class III showed significant benefit

Wrong Patients – Including Class IV resulted in no benefit

Wrong Approach – Management to pressure spikes

X X

Multiple Studies have Shown that Pressure Monitoring

is the Right Strategy to Reduce HF Hospitalization

Page 70: 2014 Investor Day Conference

70 70

Cu

mu

lati

ve N

um

ber

of

HF

R H

osp

ital

izat

ion

s

0

20

40

60

80

100

120

140

160

180

200

220

240

260

Days from Implant

0 90 180 270 360 450 540 630 720 810 900

270 262 244 210 169 131 108 82 29 5 1280 267 252 215 179 137 105 67 25 10 0

No. at RiskTreatmentControl

Primary Endpoint

Treatment Control

CHAMPION Trial: Primary Endpoint Met Cumulative HF Hospitalizations Reduced At 6 Months and Full Duration

Abraham WT, Adamson PB, Bourge, RC et al. Wireless pulmonary artery hemodynamic

monitoring in chronic heart failure: a randomized controlled trial. The Lancet. 2011:377;658-66.

28%

Reduction at 6 months

37%

Reduction at Full

Duration

Page 71: 2014 Investor Day Conference

71 71

CHAMPION Trial: Principal Findings

Pulmonary Artery Pressure Monitoring

Medication Changes Based on PA Pressure p<0.0001

<1 medication change per patient per month

Pulmonary Artery Pressure Reduction

p=0.0077

Heart Failure

Hospitalization Reduction

p=0.0002

Quality of Life

Improvement

p=0.0236

*p values for Treatment vs Control Group

Abraham WT, Adamson PB, Bourge, RC et al. Wireless pulmonary artery hemodynamic

monitoring in chronic heart failure: a randomized controlled trial. The Lancet. 2011:377;658-66.

Page 72: 2014 Investor Day Conference

72 72

Nearly half of all HF

admissions are for patients

with preserved Ejection

Fraction1

Limited treatment options

available

Currently not candidates for

ICD or CRT therapy

CMS ADHF Admissions1

HF-pEF

HF-rEF

not assessed

43.6%

38.8%

17.6%

1 Kociol et al AHJ 2010

HF Patients with Preserved EF –

An Even Bigger Challenge to Manage

Page 73: 2014 Investor Day Conference

73

HF Management with CardioMEMS™ HF System

Reduced HF Hospitalization in Preserved EF Patients

0%

10%

20%

30%

40%

50%

HFrEF HFpEF

P<0.0001

vs control

P=0.0085

vs control

Re

lative

Ris

k R

ed

uctio

n

HF Hospitalization Reduction

(6 mos follow-up)

reduced EF (<40%) preserved EF (>40%)

1Kociol et al AHJ 2010 2 Adamson PB et al. CardioMEMS Heart Sensor Allows Monitoring of Pressures to Improve

Outcomes in NYHA Class III Heart Failure Patients (CHAMPION) Trial: Impact of Hemodynamic

Guided Care on Patients with Preserved Ejection Fraction. Additional updated data on file.

In the US, nearly half of HF

admissions are for patients with

preserved EF1

HF management guided by the

CardioMEMS HF System reduced

HF hospitalizations in patients with

either preserved or reduced EF2

The CHAMPION trial is one of the

first successful management

strategies to reduce HF

hospitalization in this patient

population

Page 74: 2014 Investor Day Conference

74 74

Intervention Trial

Mean Duration

of

Randomized

Follow-Up

Annualized Reduction

in

HF Hospitalization Rates

Number Needed to Treat

(NNT) per year to

Prevent 1 HF Hospitalization

Beta-blocker COPERNICUS 10 months 33% 7

Aldosterone antagonist RALES 24 months 36% 7

Cardiac resynchronization CARE-HF 29 months 52% 7

Beta-blocker MERIT-HF 12 months 29% 15

ACE inhibitor SOLVD 41 months 30% 15

Aldosterone antagonist EMPHASIS-HF 21 months 38% 16

Digoxin DIG 37 months 24% 17

Angiotensin receptor blocker Val-HeFT 23 months 23% 18

Angiotensin receptor blocker CHARM 40 months 27% 19

Pulmonary artery pressure

monitoring at home CHAMPION 17 months 33% 4

Clinical Significance of CHAMPION Results

Page 75: 2014 Investor Day Conference

75

CardioMEMS™ HF System Reimbursement Hospital Inpatient

Established ICD-9 procedure code for implant (38.26)

Maps to DRG 264 – average base payment with adjustments of $17,820

CardioMEMS™ HF System has applied for New Technology DRG Add-On

Payment

1 of 7 applications CMS will review

If approved, effective October 1, 2014 for 2-3 years

If approved, provides up to 50% of cost of device + DRG payment

Physician

Implant

Physician may bill for right heart catheterization + pulmonary angiography

(established codes) + sensor implant (unlisted CPT code)

For unlisted codes physician uses a comparable procedure

Remote Monitoring

Current coding applies (same as CRM) – Monthly

Page 76: 2014 Investor Day Conference

76

CardioMEMS™ HF System Launch Readiness

The manufacturing capacity and the inventory needed to

launch the CardioMEMS HF system product line in the

U.S. are already in place

We do not need to add sales representatives to support

this launch

Market development will take time, but we are ready to

begin launching the CardioMEMS HF system product line

in the U.S. after the product is approved by the FDA

Page 77: 2014 Investor Day Conference

77

CardioMEMS™ HF System Summary

CardioMEMS HF system is the right product for the right

market at the right time

We think the CardioMEMS HF system product line can

become a significant new growth driver for St. Jude

Medical

Page 78: 2014 Investor Day Conference

78 78

Panel for Question and Answer Session

Page 79: 2014 Investor Day Conference

Power of the EP Portfolio Eric S. Fain, M.D. – Group President

Page 80: 2014 Investor Day Conference

80 80

2014 Estimated Worldwide EP Market Size

Revenue in Millions

EP Ablation Catheters

$1,000 35% EP Diagnostic

Catheters $680 23%

Mapping/ Navigation/ Recording

$550 19%

Access $370 13%

ICE/Other $300 10%

2014 Market Revenue $2.9B

Market Growth: 9% - 11%

Page 81: 2014 Investor Day Conference

81

Treated with

Catheter Ablation

2.2%

2014

~$58 Billion

~12.9M

Symptomatic

AF

~$1.3B market

Treated with

Catheter Ablation

1.9%

2013

~$56 Billion

~12.5M

Symptomatic

AF

Estimated WW AF Market Opportunity AF is the fastest growing market segment within the EP space

Treated Population

~3% CAGR

(Sources: MRG, HRI, Miyasaka – Circ 2006, WHO 2002, US Census Bureau, STJ estimates)

~$4,500/case

19% Growth

Diagnosed Symptomatic

AF Population

~$1.1B market

AF Diagnosed Symptomatic AF Population

AF Population treated w/ Catheter Ablation

Page 82: 2014 Investor Day Conference

82 82

Growth in AF Ablation Procedures

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2011 2012 2013 est. 2014

210,000

250,000

295,000

350,000

’11 - ’14 CAGR = 19%

WW AF Ablation Procedures Catheter and Surgical

Page 83: 2014 Investor Day Conference

83 83

Favorable STJ Dynamics In A Growing Market

High interest in differentiated STJ technology

MediGuide™ Technology

TactiCath™ Quartz Contact Force Ablation Catheter (Endosense)

Advanced portfolio of ablation solutions

Building foundational clinical data

CABANA

EAST

STAR VT

Toccata/Efficas/Toccastar

Unmet need for optimized workflow and procedural

efficiencies

Page 84: 2014 Investor Day Conference

84

MediGuide™ Technology – Cornerstone of the

Integrated Lab

Expand STJ presence through

our Integrated Lab offering

Reducing radiation

Increasing workflow efficiency

and reducing healthcare costs

Potential for improving patient

outcomes

MediGuide Technology

3D visualization and precise

navigation platform across EP

and CRT procedures

Enables navigation of devices

on pre-recorded fluoroscopy and

enhances performance of

EnSite™ Contact Force Module

Page 85: 2014 Investor Day Conference

85

The MediGuide™ Technology Platform Continues to Grow

Increasing adoption as we continue to build synergies with

STJ’s broad portfolio of catheters and tools

Additional CRT tool options 2H 2014

Strong clinical evidence demonstrating radiation reduction for

increased patient and laboratory staff safety

Numerous Single Center and Multi-Center studies published in 2013

Potential for increased procedural/economic efficiencies and

improved patient outcomes

Page 86: 2014 Investor Day Conference

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2014 Advanced Ablation Solutions

St. Jude Medical

Advanced Ablation Solutions

TactiCath™ FlexAbility™

Catheter EnSite™

Precision™ Ampere™

WorkMate Claris™

Agilis™

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87

Extensive thought leader

involvement throughout design

and testing to result in best in

class workhorse catheter

Flex irrigated electrode tip

Full portfolio of curve shapes,

including asymmetric options

FlexAbility™ Ablation Catheter

Handle and shaft that performs across the range

of EP procedures, including transeptal and retrograde approaches

Platform for future MediGuide™ sensors

CE Mark and FDA approval anticipated 2H 2014

Page 88: 2014 Investor Day Conference

TactiCath™ Quartz Ablation Catheter

Irrigated ablation catheters

featuring contact force

technology

Technology acquired in

2013 from the Endosense

acquisition

Commercially available

today in Europe and other

International markets

FDA approval with AF indication anticipated 2H 2014

Page 89: 2014 Investor Day Conference

89 89

Ampere™ RF Ablation Generator

Complete redesign of hardware

and software to improve

workflow and optimize the

integrated lab experience with:

Intuitive design and adjustable

settings

High fidelity signals

New features, including power

control mode and remote control

CE Mark approved end 2013

and FDA approval anticipated

2H 2014

Page 90: 2014 Investor Day Conference

WorkMate Claris™ Recording System

Only fully integrated EP system

on the market with stimulation

Redesigned hardware and

software for exceptional signal

clarity

Easier, more efficient analysis of patient data, including

Application Control software for protection and compliance

Enhanced productivity through system integration and data

workflow integration for one, electronic patient record

First commercial availability in Europe and the US end 2013

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91 91

EP Summary

AF is an expensive, epidemic disease

The potential market for innovative medical devices that

help reduce the cost of care and improve outcomes for

patients who suffer from AF is only 2% penetrated

We expect revenue from our AF business to continue to

grow at a high single digit or low double digit rate in 2014

driven by our product innovation

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Page 93: 2014 Investor Day Conference

A special focus on Endosense Srijoy Mahapatra, M.D., FHRS - VP, Clinical, Medical & Scientific Affairs

Page 94: 2014 Investor Day Conference

94 94

2014 Estimated Worldwide EP Market Size

Revenue in Millions

*Estimated current market share

2014 Market Revenue $2.9B

Market Growth: 9% - 11%

EP Ablation Catheters

$1,000 35%

EP Diagnostic Catheters

$680 23%

Mapping/ Navigation/Recording

$550 19%

Access $370 13%

ICE/Other $300 10%

STJ 14%*

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95

Solution II: Flex Tip with best in

class maneuverability

Solution I: Leading the way with

Contact Force

2014: A New Era for STJ Ablation Catheters

TactiCath™ Quartz Ablation Catheter Commercial in International Markets

FDA Approval Anticipated 2H 2014

FlexAbility™ Ablation Catheter CE Mark Anticipated 2H 2014

FDA approval Anticipated 2H 2014

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TactiCath™ Quartz Contact Force Ablation Catheter

Background (Force Sensing)

Pioneering solution to give physicians a real-time,

objective measure of the force they apply to the heart wall

during a catheter ablation procedure

CE Mark approved for AF and supra ventricular tachycardia (SVT)

ablation

U.S. IDE clinical trial complete; anticipating FDA approval with an

AF indication in 2H 2014

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97

Why Contact Force?

Safely create durable transmural lesions

Time. Power. Force.

Page 98: 2014 Investor Day Conference

98

Established Clinical Value for

TactiCath™ Contact Force Ablation Catheters

TOCCATA • Safety and feasibility of Force Sensing

EFFICAS I • Contact Force parameters on minimum values and

Force Time Integral

EFFICAS II • Significantly better outcome using Contact Force

TOCCASTAR • IDE clinical data

Page 99: 2014 Investor Day Conference

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Optimal Force leads to reduced recurrence of AF

TactiCath™ Ablation Catheter Guidelines for Force

Sensing

1. Reddy et al.; The relationship between contact force and clinical outcome during radiofrequency catheter ablation of atrial

fibrillation in the TOCCATA study. Heart Rhythm, 2012 Nov;9(11):1789-95.

2. Neuzil et al. Electrical reconnection after pulmonary vein isolation is contingent on contact force during initial treatment: results

from the EFFICAS I study. Circ Arrhythm Electrophysiology. 2013 Apr;6(2):327-33.

Page 100: 2014 Investor Day Conference

100

TactiCath™ Ablation Catheter Clinical Findings

Reddy et al.; The relationship between contact force and clinical outcome during

radiofrequency catheter ablation of atrial fibrillation in the TOCCATA study. Heart

Rhythm, 2012 Nov;9(11):1789-95.

0

20

40

60

80

100

0-10 g 10-20 g 20+ g

100% 53% 80%

47%

20%

No success Success

100%

80%

60%

40%

20%

0%

Using Force less than 10g leads to AF recurrence;

Greater than 20g for each lesion is good target

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101

TOCCASTAR Study

Study Design

Prospective, multicenter (EU & US), IDE study

Randomized TactiCath™ Ablation Catheter vs. Biosense

Webster ThermoCool™; non-inferiority comparison

Safety and effectiveness study, 12 months follow-up

post PVI

317 patients with paroxysmal AF

Expect results to be presented at HRS; intend to publish

findings in a leading medical journal

Trial completed, PMA submitted

Anticipate FDA approval 2H 2014 (AF indication)

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102 102

TactiCath™ Quartz Ablation Catheter Advantages

TactiCath ablation catheter's proprietary optical sensor

technology leads to potential clinical advantages over other

sensing alternatives

Technical Feature Potential Clinical Advantage

Fiber optic sensing Force measured closer to tip Force measured where power applied

50Hz sampling rate (vs. 20Hz) Higher rates allow visualization of transient peaks with cardiac movement and increase the feeling of real-time feedback

No calibration required Saves time and shortens procedure

Other sensor needs recalibration as often as every 15 min due to temperature changes

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103 103

Integration Update

Functional transitions completed in Q4 2013

Development, manufacturing, and quality functions have

been integrated into St. Jude Medical

European sales teams are fully commercial

FDA PMA Submission Complete

Submitted Continued Access Protocol

Expect CAP cases 1H 2014

Anticipated FDA approval 2H 2014 (AF indication)

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104

Part II: New Era for STJ Ablation Catheters

Solution: Flex Tip with best in class

maneuverability and signal quality

FlexAbility™ Ablation Catheter CE Mark and FDA approval anticipated

2H 2014

Internal STJ Development Project

Elite KOLs supporting efforts with

pre-clinical evaluations to ensure

steady stream of feedback

throughout the process

Share gaining opportunity with

workhorse device that is

complementary with TactiCath™

ablation catheter with premium

contact force technology

Page 105: 2014 Investor Day Conference

105

Flex Tip is a critical element

incorporated into design

International Markets have the first

generation Flex Tip available; it is

the best selling STJ ablation

catheter in both Europe and Japan

To achieve best in class maneuverability,

we launched a collaborative effort between

clinical, R&D, and external physicians

Features targeted for optimized performance include:

durability, signal quality, handling, and lesion quality

22 EP’s have validated multiple design iterations over the

past 6-months via pre-clinical effort

FlexAbility™ Ablation Catheter

Page 106: 2014 Investor Day Conference

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Ablation Catheter Summary

One of the most significant new growth drivers in our AF

business for 2014 will be the launch of our TactiCath

contact force sensing line of ablation catheters

Physician feedback leads us to believe that contact force

sensing catheters may help improve the safety and

efficacy of AF ablation procedures

During 2014, we expect to launch both TactiCath™ and

FlexAbility™ lines of ablation catheters and gain share in

the $1 billion ablation catheter segment of the EP market

Page 107: 2014 Investor Day Conference
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Executing on a robust CV portfolio Eric S. Fain, M.D. – Group President

Page 109: 2014 Investor Day Conference

109 109

STJ PCI Optimization™ Leadership in 2013

We are the WW leader in the fast-growing market of FFR-guided

interventions for coronary artery disease

The global market for FFR products exceeded $250 million in 2013 with

strong double digit growth

We believe we will take share and continue to grow the FFR market in 2014

We are driving OCT market expansion

We grew our OCT disposables revenue double digit as customers switched

from IVUS to OCT

We are advancing the field of imaging with even higher resolution, new stent

planning tools and 3D reconstruction

We are the leader in clinical evidence development for FFR and OCT

FAME I, FAME II, FAME III, ILUMIEN I

Page 110: 2014 Investor Day Conference

110

FFR & OCT Markets Underpenetrated & Growing

0%

5%

10%

15%

20%

25%

30%

35%

40%

FFR OCT IVUS

Revenue growth driven

by STJ technologies:

FFR & OCT

Growth in OCT at the

expense of IVUS

Even at today’s low

penetration rates, the

current combined market

for IVUS, FFR and OCT

is ~$800 million

2012 2013 2014*

FFR, OCT & IVUS

Penetration - WW

* 2014 penetration rates are projected

2012 2013 2014* 2012 2013 2014*

Page 111: 2014 Investor Day Conference

111 111

2014 PCI Optimization™ System Growth: Driven by Workflow Enhancement, Technology Advancement,

and Clinical Outcomes

Workflow

• Pre-installed, ready to use FFR into all new cath lab systems

• Fully integrated OPTIS™ systems

• Leverage growing install base of ILUMIEN™ OPTIS™ system and QUANTIEN™ platform

Technology

• Launch new PressureWire Aeris™ system

• Roll out automated stent planning tools & 3D reconstruction

• Introduce angio co-Registration with OCT

Outcomes

• Adoption of appropriate use criteria

• Leverage FAME clinical programs

• Now funding FAME III

• Build upon ILUMIEN™ OCT clinical program

Page 112: 2014 Investor Day Conference

112 112

Nearly all hemodynamic/cath

lab systems sold today have

Aeris-compatible FFR pre-

installed, making every recipient

a potential customer with no

capital purchasing barrier

Pre-installed FFR into Nearly All New Cath Lab Systems

Workflow Enhancement Drives Penetration

Page 113: 2014 Investor Day Conference

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STJ’s first cath lab-integrated

PCI optimization™ platform,

offering both anatomical (OCT)

and physiologic (FFR)

assessment

Always there, always on, no

barriers for usage

Provides competitive advantage

Limited launch anticipated 2H

2014

Workflow Enhancement Drives Penetration

Fully Integrated OPTIS PCI Optimization™ System

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Technology Advancement Drives Preference

The only wireless FFR system on

the market

Designed for quick access and

smooth stent delivery

Near 1:1 torque response

matching frontline workhorse

guidewires

Incorporates new miniaturized

radio transmitter for better

maneuverability and margin

improvement

Launch ongoing

9th Generation PressureWire Aeris™ System

PressureWire Aeris 9th generation PressureWire

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Directly links OCT with

angiography-- the standard

of care imaging modality

Provides for more accurate

lesion assessment and stent

deployment compared to

angio or OCT alone

Accelerates the OCT

learning curve

Limited launch anticipated

2H 2014

Technology Advancement Drives Preference

Angio Co-Registration with OCT

Page 116: 2014 Investor Day Conference

116 116

Clinical Outcome Drives Penetration

FAME Clinical Program Influenced Appropriate Use Criteria

FAME Clinical Program AUC & Expert Consensus

supports the use of FFR

Page 117: 2014 Investor Day Conference

117

Left Atrial Appendage Closure

We expect LAA closure to become an essential tool in the

tool box of full-service EP and interventional practices

STJ has wide access to AF patients through existing sales

channels

Full commercialization of the AMPLATZER™ Cardiac Plug (ACP) is underway in approved markets

Stable market share in a market with strong double digit growth

LAA closure device inclusion in ESC guidelines has helped contribute to market growth

Page 118: 2014 Investor Day Conference

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LAA Closure – Amplatzer™ Amulet device

2nd generation device

Improves upon an already successful ACP device

Pre-loaded in catheter sheath to improve ease-of-use

Addresses a broader range of patient anatomies

Expect European launch in 2H 2014

AMPLATZER™ Amulet

Disc and Proximal End

Screw

Page 119: 2014 Investor Day Conference

119

LAA Closure – Re-launch U.S. IDE Study

The ACP IDE trial enrollment was stopped in December 2013

Trial was an event-driven design comparing LAA to OAC and

requiring up to 3000 patients

Made decision to stop enrollment due to expected near-term

approval of a competitive device and potential enrollment challenges

No safety or efficacy issues

Currently working with FDA on a revised trial design which

should result in an accelerated time to market

Expect to start enrollment in 2H 2014

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Renal Denervation Update We remain optimistic about renal denervation as a potential

new growth driver

Hypertension is an expensive, epidemic disease that has

significant clinical and cost implications for physicians,

hospitals, payers and patients

Like many early stage therapies, we recognize there is a lot to

learn – at this time there are more questions than answers

What we do know is that renal denervation has consistently

been shown to be safe

We also know that STJ has a strong history with RF ablation

technologies

The internally developed EnligHTN™ system uses a multi-

electrode system that differs from the competitive system

We look forward to reviewing the SYMPLICITY HTN-3 clinical

trial results with our Global Renal Denervation Advisory Board

and the EnligHTNment Clinical Trial Steering Committee and

will incorporate lessons learned into our program

Page 121: 2014 Investor Day Conference

121

Tissue Valves Represent a Growing Segment for STJ

2009 2010 2011 2012 2013 2014E

TAVR has helped the surgical aortic

valve replacement (SAVR) market to

grow through increased patient

referrals

Since the launch of the Trifecta™

valve, STJ has almost doubled tissue

valve revenue through market growth

and share gains

STJ Tissue Heart Valve Market Share

STJ Tissue Heart Valve Revenue

$0

$50

$100

$150

$200

$250

$300

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E

Millio

ns

Trifecta Milestones:

CE Mark 2010

FDA 2011

PMDA 2012

Page 122: 2014 Investor Day Conference

122 122

CV Summary

PCI optimization™ is a large potential opportunity where

we lead in innovation, clinical development and market

expansion

We expect a steady improvement in our growth rate as we

continue to transition our sales mix from legacy products

to growth drivers

We are optimistic that in 2014 our tissue heart valves,

FFR, OCT and LAA will continue to grow at a high single

digit or low double digit rate

Page 123: 2014 Investor Day Conference
Page 124: 2014 Investor Day Conference

A deeper dive into Portico™

Transcatheter Aortic Valve Phil Ebeling – Sr. Vice President, R&D

Device referenced is approved for CE Mark. Not available for sale in the U.S.

Page 125: 2014 Investor Day Conference

125

Market Opportunity

Diagnosed Prevalence (Severe Aortic Stenosis): 500K

25% TAVR penetration

Patients (US/EMEAC/Japan) 125K

Estimated 2013 Market Size ~$1.0B

Forward 5 Year CAGR 17%

Market Opportunity $2.5-3.0B

Transcatheter Aortic Valve Replacement (TAVR)

Page 126: 2014 Investor Day Conference

126

Positive Market Dynamics for TAVR

Positive Dynamics

650 WW TAVR centers today

Favorable reimbursement in place in 8

OUS geographies

Long term clinical and economic

evidence is available and supports

TAVR

Improving overall TAVR outcomes

(improved patient selection, lower

profile devices)

TAVR moving into lower-risk patients

(SURTAVI, PARTNER II)

$329.1

$470.6

$648.5

$738.3

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2013 2014

Reve

nu

e i

n T

ho

us

an

ds

ID

U.S.

$978

$1,209

Page 127: 2014 Investor Day Conference

127 127

Portico™ Transcatheter Aortic Valve offers a design

alternative to many existing TAVR limitations and

challenges

Designed to be fully resheathable and repositionable

Designed to mitigate heart block

Designed to minimize PV Leak

Designed to minimize coronary ostia blockage post

implantation

Designed for maximum durability

Page 128: 2014 Investor Day Conference

128 128

Portico™ Transcatheter Aortic Valve is designed to

be fully resheathable and repositionable*

The unique valve and delivery system design of Portico heart valve

allows the ability to fully reposition the valve:

Resheath the valve proximally or distally*, in situ

Retrieve the valve, if necessary

Resheathability is designed to enable optimized valve positioning

during implantation and helps insure better outcomes (ex: PV Leak) *Until fully deployed

Manoharan, G., St. Jude Medical Portico™ Transcatheter Aortic Valve Clinical Experience, EuroPCR, 05/17/2012.

Page 129: 2014 Investor Day Conference

129

Portico™ Transcatheter Aortic Valve is designed to

mitigate heart block

Designed to address conduction system interference

Ability to fully reposition the valve in situ for improved placement accuracy

Valve placed low within the stent frame allows for sealing without the valve

extending deep into the LVOT

Nonflared annulus section of the stent frame

Valve placed

low within the

stent frame

Nonflared

annulus section

of the stent

Page 130: 2014 Investor Day Conference

130

Portico™ Transcatheter Aortic Valve is designed to

minimize PV Leak

Calcific

nodules

Single porcine pericardium cuff seam

The large cells in the annulus section of

the stent are designed to minimize the

risk of PV leak

Less metal — minimizing the potential of a

stent strut resting against a calcific nodule

More tissue — allowing the tissue to

conform around calcific nodules

Paravalvular Leak Simulation

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131

Portico™ Transcatheter Aortic Valve is designed to

minimize coronary ostia obstruction post implant

Large stent cells in the

aortic section of the stent,

allows access to coronary

ostia post-implant

Manoharan, G., St. Jude Medical Portico™ Transcatheter Aortic Valve Clinical Experience, EuroPCR, 05/17/2012.

Aortic

Section

Annulus

Section

Page 132: 2014 Investor Day Conference

132

Portico transcatheter aortic

valve is designed for leaflet

coaptation in round and

elliptical annulus

configurations

In vitro testing is completed

over the valve’s use range

and in various annulus

configurations to

assess durability and

hemodynamic

performance

Circular Configuration

Ellipse 0° Ellipse 90°

Portico™ Transcatheter Aortic Valve is designed for

maximum durability and hemodynamic performance

Page 133: 2014 Investor Day Conference

133

* Manoharan, G., How New Designs Lead to Improved Clinical Results in TAVR, TCT 2013

Page 134: 2014 Investor Day Conference

134

Portico™ Transcatheter Aortic Valve

US IDE Pivotal Trial, CE Mark Update

Full IDE approval using 23 & 25mm valves at 40 US sites

in a head to head trial with other TAVR valves

~1610 patients split into high and extreme risk cohorts

Randomized against commercially available TAVR valves

Primary non-inferiority endpoint for all-cause mortality and disabling stroke at

one year

27 & 29mm will be added in the trial in 2H 2014

FDA has indicated that TAVR is now considered established rather than novel

FDA has recently engaged STJ on alternative trial designs that should

significantly reduce the size and duration of the trial

STJ will start enrollment under current design and use patients toward future

analysis

On track for the first implants in 1H 2014

CE Mark

23, 25mm valves - market released

27, 29mm valves - enrollment to begin 1H 2014, commercialize 2H 2014

Page 135: 2014 Investor Day Conference

135 135

Next Generation Portico™ Transcatheter Aortic

Valve – Product Pipeline

Delivery System Designs:

Improved placement accuracy (co-axial alignment of

the valve)

Reduction in vascular complications (further profile

reduction)

Improved user interface (ergonomics)

Valve Designs:

Further minimization of PV Leaks (integrated solutions)

Broader range of valve sizes

Page 136: 2014 Investor Day Conference

136 136

Portico™ Transcatheter Aortic Valve Summary

Positive clinical and economic evidence is driving the

growth of the TAVR market

Portico transcatheter aortic valve is a next generation

product line that addresses many existing TAVR

limitations and challenges and is expected to become a

competitive new growth driver for St. Jude Medical

Page 137: 2014 Investor Day Conference
Page 138: 2014 Investor Day Conference

Growth through innovation in

Neuromodulation Eric S. Fain, M.D. – Group President

Page 139: 2014 Investor Day Conference

139

Plano Warning Letter Resolution

Completed all remediation activities associated with the

Plano site Form 483’s and warning letter

Anticipate FDA re-inspection by end of 1H 2014

Page 140: 2014 Investor Day Conference

140

WW Neuromodulation Dynamics

Approximately $2.0 billion market in 2014

~$1.5B chronic pain; ~$0.5B deep brain stimulation

Expect both the US and International markets will grow at a mid to high single digit rate in 2014

Payers increased focus on clinical outcomes

Market fundamentals support continued strong growth

Severely under penetrated market

Increasing stigma and impact from long-term opioid use

Growing evidence for improved outcomes and healthcare economics with earlier intervention

Opportunities for share capture through innovation

Leverage innovation resident in CRM devices and bring to SCS/DBS systems

Create novel stimulation modes and explore anatomical targets

Expand indications

Page 141: 2014 Investor Day Conference

141

SCS for Chronic Pain:

Need for alternative stimulation modes

SCS for Neuropathic pain is an accepted

standard of care in the treatment of

chronic pain

However, as therapy adoption grows there

is increasing awareness of SCS non-

responders or patients who become non-

responders over time

Anecdotal evidence suggests as high as 20-

30% of CP market (over time)

Little predictive evidence to say who will

respond/not respond

Increasing market need for an alternative

stimulation mode to address non-

responders

Page 142: 2014 Investor Day Conference

142

Evolution of Stimulation Modes to Tune Therapy

Tonic

Standard waveform in today’s devices

Relatively low energy

Recharge ~1-2 hours, ~2 times per week

High Frequency

Reduces paresthesia

Rapid battery drain

Recharge ~4-6 hours, 1-2 times daily

STJ Burst

Reduces paresthesia

Minimal battery drain

Recharge ~1-2 hours, ~2 times per week

Page 143: 2014 Investor Day Conference

143

Lateral

Discriminatory

Pathway

Medial

Affective/Attentional

Pathway

Pain Perception

Attention to pain

Why Burst Stimulation?

Pain processing patterns and

pathways

Lateral discriminatory pathway –

controls pain perception

Medial affective/attentional pathway –

controls emotional response and

attention to pain stimuli

IPG stimulation patterns and

pathways

Tonic – Modulates only the lateral

pathway

Burst – Modulates both the lateral

and medial pathways to maximize

effectiveness

1. Jahnsen H, Llinás R. : Voltage-dependent burst-to-tonic switching of thalamic

2. Harvey A. Swadlow1 & Alexander G. Gusev : The impact of 'bursting' thalamic impulses at a neocortical synapse. Nature

Neuroscience 4, 402 - 408 (2001).

3. Sherman SM : A wake-up call from the thalamus. Nature neuroscience, 2001 cell activity: an in vitro study. Arch Ital Biol.

1984 Mar;122(1):73-82.

4. DeRidder D, Plazier M, Kamerling N, Menovsky T, Vanneste S. (2013) Burst Spinal Cord Stimulation for Limb and Back

Pain. World Neurosurg. 2013 Jan 12. pii: S1878-8750.

5. DeRidder D., Vanneste S., Plazier M., van der Loo E., & Menovsky T. (2010). Burst Spinal Cord Stimulation: Toward

Paresthesia-Free Pain Suppression. Neurosurgery, 66(5): 986-990.

1-3

5

4-5

Page 144: 2014 Investor Day Conference

144

STJ Burst – Growing Body of Clinical Data*

Burst vs. Tonic Clinical Experience

Consistent results across studies and sites

Patient preference for Burst over Tonic

Reduced paresthesia

Improved activity levels

Reduced attention to pain

0

1

2

3

4

5

6

7

8

9

Belgium The Netherlands Total

Vis

ual

an

alo

g S

cale

A Multicenter Study on Tonic and Burst Spinal Cord Stimulation (N=102)

baseline tonic stimulation burst stimulation

* Data on file

0

2

4

6

8

10

12

14

16

18

Pain intensity Impact on life(affective)

Patient preference

Vis

ual

an

alo

g S

cale

A Randomized Double-blind, Placebo-controlled Study: FBSS (N=20)

Placebo Tonic (500Hz) Burst

0

1

2

3

4

5

6

7

Overall Pain Limb Pain Trunk Pain

Vis

ual

an

alo

g S

cale

Burst in Patients with Chronic Tonic Stimulation (N=21)

Tonic Burst

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145

Smallest SCS device on the market (<18cc)

Rechargeable with industry leading 10 years

longevity

Only device capable of bi-modal stimulation

patterns of both Burst and tonic

Compatible with all legacy leads to include

percutaneous, paddle and perc-paddle types

Lower power requirements vs. high frequency

Reduced paresthesia sensation

Expect CE mark and European launch 1H 2014

Prodigy™ SCS System with Burst Technology

SUNBurst IDE Study

Burst vs. tonic

First patient enrolled 2014

Page 146: 2014 Investor Day Conference

146

Protégé™ SCS System with

Upgradeable Technology

First and only upgradeable SCS system

Smallest SCS device on the market (<18cc)

Longest warranty in its class

Compatible with legacy leads to include

percutaneous, paddle and perc-paddle types

New features can be introduced to the

Protégé system via software updates allowing

for upgraded technology to be used

Anticipate U.S. launch 2H 2014

ID: H1’14

´ ´

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147

SCS MRI Platform

Receive

Transmit

Initial approval covers head and

extremity scans with few restrictions

Addresses the majority of scan

procedures performed

Includes percutaneous and paddle

leads Paddle lead MRI scan capability is

unique to STJ and represents largest

and fastest growing portion of our

business

Anticipate EU and U.S. launch in

2H 2014

Providing STJ SCS patients access to diagnostics capabilities of

the MRI technology

Page 148: 2014 Investor Day Conference

148

Delivering the Next Generation Implantable Platforms

New redesigned SCS and DBS system families

Common electronics platform leveraging CRM

experience to impact the following attributes:

Size - New smaller size/shape to address implanter and

patient needs

Programmability - Expanded stimulation modes

Configurability – Compatible with legacy and new lead

constructs to serve novel anatomical target sites (DRG)

Longevity - Improved longevity and features to meet

global requirements

MRI compatibility - Designed for maximum patient

safety and practice efficiency in the MRI environment

Manufacturability - Improved manufacturability to

achieve high quality and reduce manufacturing costs

Platform design to be completed 2014

Rechargeable

Current

New

Primary Cell

Current

New

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149

Delivering the Next Generation External Platforms IP

G

Pa

tie

nt

Co

ntr

oll

er

Cli

nic

Pro

gra

mm

er

Tri

al

Invisible

Trial

New

Programmer

Wireless

Patient Controller

Current 2014 2015

Page 150: 2014 Investor Day Conference

150

SCS of the Dorsal Root Ganglion (DRG)

Traditional SCS

DRG Stimulation

DRG is where the primary sensory neurons (PSNs) are located

PSNs serve as a primary source of information and important “pain” processing point

DRG is consistently located from person to person making targeting reliable and repeatable

Requires ~95% less power

Less positional variation in stimulation

Targets both focal and broad areas of intractable chronic pain that traditional SCS therapy has low rates of success such as:

Peripheral neuropathy

Groin pain

Abdominal pain

CRPS

CAUTION: Investigational Device. Limited by Federal Law

to investigational use. Not available for sale in the US.

Page 151: 2014 Investor Day Conference

151

6%

4%

<1%

0%

2%

4%

6%

8%

10%

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

CRPS FBSS PeripheralNeuropathies

SC

S P

en

etr

ati

on

Pre

va

len

ce (

Th

ou

san

ds)

SCS of the DRG

Peripheral Neuropathies

Highest prevalence of all pain syndromes with lowest SCS penetration rate

Lowest traditional SCS success rate at 54%

Highest DRG stimulation success rate at 90%

CAUTION: Investigational Device. Limited by Federal Law

to investigational use. Not available for sale in the US.

Page 152: 2014 Investor Day Conference

152

Head, back, leg and vascular

ONS (intractable chronic migraine)

RAP (refractory angina pectoris)

FBSS (with or without prior surgery)

PVD (peripheral vascular disease)

Thorax and focal lower extremity

Thoracic Neuropathies (Post-mastectomy,

thoracotomy)

Abdominal and Visceral Pain

Post-Surgical Pain (i.e. hip, knee, foot, etc.)

Groin and Testicular Pain

Phantom and Stump Pain (Post Amputation)

CRPS (localized foot/ knee/hand/)

Distally Located Neuropathies

Traditional SCS focus SCS of the DRG focus

CAUTION: Investigational Device. Limited by Federal Law

to investigational use. Not available for sale in the US.

SCS of the DRG Addresses a Unique and

Complementary Patient Population

Page 153: 2014 Investor Day Conference

153

Spinal Modulation, Inc. Axium™ SCS System

Complements STJ Portfolio for Chronic Pain

STJ traditional SCS is very effective for

back pain

SMI Axium SCS system is ideal for difficult-to-

treat anatomies including the groin, abdomen,

foot and lower limb

Together we offer the broadest portfolio of

products to treat chronic pain

STJ distribution in Europe and Australia

STJ sales reps trained

STJ has exclusive option to acquire SMI based

on regulatory and revenue milestones

Axium U.S. IDE study ongoing

CAUTION: Investigational Device. Limited by Federal Law

to investigational use. Not available for sale in the US.

Page 154: 2014 Investor Day Conference

154

DBS for Movement Disorders –

Pathway to Broad Indication Coverage

Parkinson’s Disease

IDE clinical trial completed with all effectiveness and safety endpoints met (results published in Lancet Neurol 2012: 11:140-149)

Related device quality systems improvements being implemented

FDA PMA submission 1H 2014

Essential Tremor

IDE clinical trial completed with all effectiveness and safety endpoints met

FDA PMA submission 1H 2014

CE submission 1H 2014

Dystonia

CE mark approval 2H 2013

Page 155: 2014 Investor Day Conference

155

Neuromodulation Summary

We have completed all remediation activities associated

with the Plano site Form 483’s and warning letter and we

anticipate FDA re-inspection by the end of 1H 2014

We expect the combined U.S. and Int’l market of $2 billion

to grow at a mid to high single digit rate in 2014

We are leveraging our CRM experience to launch

redesigned, next generation SCS and DBS system

families

We expect revenue for our neuromodulation business to

accelerate during 2014 due to the impact of new products

Page 156: 2014 Investor Day Conference

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Panel for Question and Answer Session

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157 157

Thank you for attending

St. Jude Medical’s

2014 Investor Meeting