Ann: Appendix 4C, page-9

My comments are based on the experience I have gained from working, researching and investing in medical device space over the last 10-12 years.

There is ongoing improvement in terms of more spending in preventative healthcare, as an example of inefficiencies being addressed, but the private payers are run as businesses. For example, what about if the surgeon starts missing out on income now that the new device doesn't require the regular visits to inject saline into the implant? Is he going to recommend it to his patients or do we have to wait for the patient advocacy groups to pressure them? Will the private payers pay the extra $$ when the outcome is essentially the same? I'm hoping competitive pressures will force the best surgeons to uptake the device and for them to advertise as such, but will this be the dominant outcome across all surgeons in the US?

I think eventually we will win through as the device is a 'no brainer' and saline implants won't be able to compete, except on price. I expect the end game will be a buy out from one of the big boys as they won't like the margin drops on their products and they can scale the sales with their existing sales force. However, I think they will wait for AXP to burn the marketing and early expansion dollars first, before they swoop. Just my opinion.