Cyberkinetics Neurotechnology Systems, Inc.

Technology BrainGate
The BrainGate Neural Interface System is an investigational device that Cyberkinetics has begun clinically testing. It is not an approved device and it is available only through a clinical study. The System consists of a sensor that is implanted on the motor cortex of the brain and a device that measures and interprets brain signals and translates these signals into useful computer control. It is hoped that the BrainGate System might someday allow people unable to use their arms or hands to control a computer using their thoughts.

Background of the Investigational BrainGate System Individuals with severe paralysis usually have intact brain function but are unable to move due to injury or disease affecting the spinal cord, nerves, or muscles. People who have such severe physical impairments have limited movement ability, and some are unable to use their arms, legs or hands. This is often referred to as quadriplegia. In all primates (including macaque monkeys and humans), the neurons in the motor cortex of the brain normally send their instructions (signals) out to the spinal cord, which in turn drives muscles. Consider the simple voluntary task of moving one finger. This act takes some intention and a simple plan that originates in the cerebral cortex. A few milliseconds before voluntary movement, neural signals, in the form of a stream of impulses, increase in the primary motor cortex. This increase in impulse rate of a large group of neurons carries the commands for movement. When the connection from the brain to the spinal cord has severed, as in severely paralyzed people, the central control for motor behavior in the brain remains healthy, but the command signals are ineffective because they are cut off from the muscles.

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Cyberkinetics Neurotechnology Systems, Inc. Technology (continued) BrainGate

Individuals who are unable to use their hands cannot write, type, use computers or operate basic controls and equipment such as light switches, remote control devices, and other appliances with their hands. There are currently available assistive devices that provide benefits to many of these individuals. These devices may be mobile (move with the individual) and/or utilized in their chronic care environment such as the home setting. Assistive devices have been developed that rely on some form of non-invasive switch that can be controlled by the individual. Strategies for switch driven assistive devices include the use of tongue or sip and puff switches, or the use of single switches connected to a digit or body part that can still be controlled by the individual. Other systems rely on the tracking of an individuals eye movement to create a computer input signal. They typically require the individual to use some other function, such as an eye blink, head movement, vocalization or pushing air (sip and puff) to create simple control responses.

Currently available assistive devices have other significant limitations for both the person in need and the caregiver. The location of these various types of switches must be adjusted frequently as the individual moves in relation to the device. Since many of these people have limited muscle control, adjustment can be a time consuming and constant process for the caregiver, significantly affecting the reliability and accuracy of these devices. In addition, these devices are obtrusive and may prevent the individual from being able to establish eye contact with caregivers. Devices that require the use of the mouth or of the eyes are sometimes considered disfiguring when placed on the individuals head. The level of control that can be achieved with the existing assistive devices is also problematic. The speed of communication for tasks such as typing or changing programs on a personal computer can be very limited. The rate of communication with assistive devices is so limited that they are frequently abandoned by those in need of caregivers. These devices, therefore, have limitations in functionality, ease of use and speed of use and so alternative approaches and devices are needed for many of these people. These types of assistive devices are not neural prosthetics in the sense that they do not directly utilize neural information or signals directly from within the brain. Over the last 30 years the National Institutes of Health (NIH) has actively funded numerous programs to develop neural prosthetics to assist these individuals in regaining their independence. The development of an implantable neural interface that could potentially provide a permanent, reliable and fast output signal to a personal computer would likely be a significant improvement in the quality of communication and computer control available to people with such disabilities. Further developments based on such a system could conceivably allow these people to control devices beyond personal computers such as environmental controls, medical devices designed to power their own limbs, and robotic equipment such as wheelchairs.

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Cyberkinetics Neurotechnology Systems, Inc. Technology (continued) BrainGate

The operational foundation of the BrainGate Neural Interface System is based on the finding that with intact brain function, neural signals are generated even though they are not sent to the arms, hands, and legs. These signals can be interpreted by a computer to provide an alternate neural pathway to the normal neural pathway that is now non-functional. The system operates by continuously detecting and digitizing the activity of neuron populations in the primary motor area of the cerebral cortex. External components process and decode these signals into a prediction of desired movement serves as a control signal that the individual can then use to indicate intentions by controlling (moving) a cursor on a computer screen. The goal of BrainGate Neural Interface System development program is to create a product that can potentially allow quadriplegic patients to recover a host of abilities that normally rely on the hands. The system could be used in the individuals home environment or even be mobile with the patient. Such a system could someday potentially restore the ability to interface with a computer and other devices at a level of speed, accuracy and precision that is comparable to the use of hands by a non-disabled person. Cyberkinetics, Inc. announced in April 2004 that the Unites States Food & Drug Administration (FDA) had approved the Companys application to initiate a pilot clinical trial with its investigational device, the BrainGate Neural Interface System. The BrainGate System is designed to provide a means for people unable to use their hands to communicate with a computer directly with their thoughts. As an investigational device, the BrainGate System is only offered through the clinical trial and is not commercially available. At this writing, the company has reported on more than 6 months of clinical results with the first patient in this pilot trial Recent technological and scientific advances have generated wide interest in the possibility of creating a brain-machine interface (BMI), particularly as a means to aid paralyzed humans in communication. Advances have been made in detecting neural signals and translating them into command signals that can control devices. Studies in behaving monkeys have long shown that neural output from the motor cortex can be used to control computer cursors almost as efficiently as a natural hand would carry out the task. Additional research findings explore the possibility of using computer to return behaviorally useful feedback information to the cortex. Although significant scientific and technological challenges remain, progress in creating useful human BMIs is accelerating. Cyberkinetics BrainGate system has demonstrated the ability to read human neural outputs and translate them via computer into actions. The company is continuing to test the current configuration of the system while it works to make it more compact and independent of operator control. The activity of motor cortex (MI) neurons conveys movement intent sufficiently to be used as a control signal to operate artificial devices, but until now this has called for extensive training or has been confined to a limited movement repertoire. Here CYKN shows how activity from a few (7-30) MI neurons can be decoded into a signal that a monkey is able to use immediately to move a computer cursor to any position in its workspace (14 degrees visual angle).The results from CYKN, which are based upon on recordings made by an electrode array that is suitable for human use, indicate that neurally based control of movement may eventually be feasible in paralyzed humans.

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Cyberkinetics Neurotechnology Systems, Inc. Technology (continued) BrainGate

BrainGate 6 Month Update
Feasibility Study of the BrainGate Neural Interface System for Individuals with Quadriplegia

o o o o o

o o

No adverse events Patient able to send movement commands despite not using arm for over three years BrainGate System functions as planned Detects, transmits neural signals -Able to translate movement commands into -cursor control in numerous trials Proof of concept control of useful devices Work now focused on development of next generation software

BrainGate Plan 2005 o Complete Spinal Cord Injury Pilot Trial Accrual -2 leading rehab sites added - Patient screening underway Open ALS Pilot Trial Develop, test next generation operating system -Automate daily set-up -Interface to computer controlled devices Form Partnerships to develop limb movement Obtain grant funding

o o

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Cyberkinetics Neurotechnology Systems, Inc. Technology (continued) Pilot Study - BrainGate

Study Overview An open-label, 12 month, longitudinal, feasibility clinical study of the BrainGate Neural Interface System (CYKN) was initiated, under FDA Investigational Device Exemption (IDE) and Institutional Review Board (IRB) approvals, in May 2004. The study is designed to gather preliminary safety and efficacy data on the BrainGate System when used by people unable to use their arms or hands in a useful manner (quadriplegia or tetraplegia) to control a computer with thoughts.

Initial Study Participant As of March 2005, one person has been enrolled, implanted and is actively participating in the study at the Sargent Rehabilitation Center study site. Patient 001 is a 25 year-old ventilator-dependent male who is unable to move either upper extremity due to a C4 spinal cord injury suffered in July 2001.

Surgical Implantation In June 2004, after obtaining informed consent, a surgical procedure consisting of an incision and 3 cm diameter craniotomy located above the right primary motor cortex was conducted under general anesthesia. A 4x4 mm, 100 channel sensor was implanted on the surface of the cortex, in the precentral gyrus immediately posterior to the superior frontal sulcus, as identified on presurgical MRI. The surgery lasted approximately 3 hours and was uneventful. The patient was discharged to his primary residence 3 days post-surgery where he recovered for 3 days post-surgery where he recovered for three weeks prior to initiation of device testing.

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Cyberkinetics Neurotechnology Systems, Inc. Technology (continued) Pilot Study - BrainGate

Neural Activity in MI of a Person with Quadriplegia Neural waveforms were identified in recordings from 15 sessions run from 8/27/200410/12/2004. Recordings were similar to those obtained in prior studies in monkeys.

Spike Rates Tuned to Direction of Imagined Movement Perievent spike raters and spike rate histograms for Center Out task in a closed loop experiment. (Bottom right)

Performance Results on Closed-Loop Center-Out Task Across Sessions (8/27/049/20/04) In 7/8 sessions, the patients neural cursor selected significantly more intended targets than false positive/unintended targets. Significance calculated using one-sided z-test at alpha 0.01. (Top left)

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Cyberkinetics Neurotechnology Systems, Inc. Technology (continued) Pilot Study - BrainGate

Closed-Loop TV Control using Neural Interface The patient has used his neural cursor for environmental control. In combination with infrared technology, he turned his television on/off, changed channels and adjusted volume (see figure). The patient was able to hold a discussion with a nearby attendant and control the television.

Preliminary Observations of Device Safety There were no post-surgical complications, which is supported by the continued ability to record neural activity. No adverse events or other study-related complications have been reported. Safety assessments include daily checks of connector, weekly nurse visits, and monthly physician exams including neurological and mental status exams. Summary of Initial Observations o o Motor cortex neurons of humans remain active years after spinal cord injury. Modulation of neural activity is possible in MI in the absence of limb movement. Using the BrainGate system, the initial participant has immediately gained control of a computer interface, with no special training, and can operate the cursor while performing other voluntary motor tasks. The control signal provided has the potential for 3 dimensions of control from the signals obtained in MI and this signal has been used to control a range of potentially useful devices including computers, robots, and prosthetic limbs.

These observations suggest that the system should be useful in any disabled patient with an intact motor cortex. This initial case report suggests that the BrainGate system, which uses a tested, validated sensor implant which is removable and replaceable, may offer patients with severe disability a universal operating system with which they can control devices in the environment around them.

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Cyberkinetics Neurotechnology Systems, Inc.

Technology (continued)

Pilot Study - BrainGate

Future Goals o o Enable individuals with paralysis to use e-mail and telephones to communicate. Provide access to environmental controls, such as bed positioning, television, lights, and thermostats through a desktop application. Improve mobility by interfacing with powered wheelchairs. Provide patients with the ability to adjust their body position to avoid pressure sores. Facilitate control over all of these actions and a range of other software and external device applications through a single, universal integrated interface.

o o o

The BrainGate feasibility trial is being expanded to other clinical sites. Product development is being focused on creation of a streamlined operating system and on the design and testing of a totally implantable sensor system.

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Cyberkinetics Neurotechnology Systems, Inc. Technology (continued) NeuroPort

NeuroPort is a high resolution acute sensor that provides new levels of neural data for analysis in various acute neurosurgical applications such as: -Epilepsy -Brain Trauma -Stroke -Clinical research into neurological disease; drug function -Provides ability to directly monitor cortical neural activity in specific location NeuroPort is currently under FDA review for a 510(k) clearance for the indication of In-Patient Monitoring of Brain Electrical Activity. The current market size for the NeuroPort Acute Monitoring System is $100 million.

Alta
Alta is a fully implantable high resolution long term sensor that is indicated for chronic real-time monitoring of brain activity. Alta provides long term ability to directly monitor cortical neural activity in specific locations; Alta also allows outpatient monitoring and diagnosis as well as a wide range of potential applications. The current market size for the long term monitoring, diagnosis and treatment of neurological diseases is $1 billion.

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Cyberkinetics Neurotechnology Systems, Inc. Technology (continued)

Pipeline and Clinical Timelines:

Research and Development

Pre-Clinical Development

Clinical Trials

FDA Review
510(k)

Approval

NeuroPort BrainGate I - SCI BrainGate I - ALS BrainGate II Alta Sensor

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Cyberkinetics Neurotechnology Systems, Inc. Technology (continued) In conclusion CYKN develops products designed for use in functional restoration, monitoring, diagnosis and therapy:

BrainGate - Neural Interface System As described, CYKNs lead product is intended to allow a disabled person to control a computer using thought. This system utilizes a long-term implantable sensor, which incorporates a through-the-skin connector. The design is composed of a microarray; connector and electronics package consists of an amplifier, high-bandwidth telemetry and a power source.

NeuroPort - Neural Signal Processor A short-term (0-30 days) intraoperative and post-operative cortical monitor to gain real-time information directly from patients neural signals. Leveraging the BrainGate technology, this product may represent a novel offering in the existing market for cortical monitors by providing a new dimension of information from a dense population of neural cells. The NeuroPort device could represent a breakthrough in the ability to detect and respond to the onset of neurological diseases and disorders, such as epilepsy. A 510(k) application has been submitted to the FDA.

Alta a fully Implantable Sensor was designed to replace the need for a through-the-skin connector in the first-generation BrainGate and NeuroPort systems, Alta will utilize short-range wireless telemetry to enable chronic and long-term monitoring of neural activity in the outpatient setting. The same technology will be used to make the BrainGate safer, more durable, cosmetically more acceptable, and to enhance patient mobility and quality of life. The system, currently under development, is designed to minimize clinical/regulatory hurdles by leveraging the current BrainGate technology whenever possible.

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Cyberkinetics Neurotechnology Systems, Inc. Management

Name/ Position Years Industry Experience Years with CYKN Prior Companies

Timothy R. Surgenor 24 President, Chief Executive Officer and Director John P. Donoghue, Ph.D. 25 Founder, Chief Scientific Officer and Director Christopher Flaherty Executive Vice President, Technology and Intellectual Property Burke T. Barrett 19 Vice President, Clinical Operations Kimi E. Iguchi Vice President, Finance Jon P. Joseph, Ph.D. 17 Vice President, R&D and Applications Development Nandini Murthy Vice President, Regulatory Affairs and Quality Systems 14 2 2 10 1 2 20 2 4 2

Biosurface Genzyme Tissue Repair Haemonetics Corporation

Brown University.

Insulet Corporation TransVascular

Cardiofocus, Cyberonics

Millennium Pharmaceuticals, Biogen IDEC

VIASYS, Nicolet Biomedical

Aspect Medical Systems, Thoratec

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Cyberkinetics Neurotechnology Systems, Inc. Board of Directors

Mark P. Carthy
General Partner, Oxford Bioscience Partners Mr. Carthy has been Chairman of the Board of Directors of Cyberkinetics since August 2002. Mr. Carthy joined Oxford Bioscience Partners in October of 2000. From 1998-2000, he was an advisor to Kummell Investments Limited, a Morningside Group affiliate, on its venture capital portfolio. Prior to Morningside, he was employed as Chief Business Officer of Cubist Pharmaceuticals, Inc. (NASDAQ:CBST) and Senior Director of Business Development at Vertex Pharmaceuticals Inc. (NASDAQ:VRTX). Mr. Carthy is a Director of a number of privately-held companies including ActivX Technology, Artesian Therapeutics, Inc., Astex Technologies Ltd., Ensemble, ImpactRx Inc., PowderMed Ltd., Scion Pharmaceuticals, Solexa Ltd. and Xanthus Life Sciences, Inc. He received his B.E. in chemical engineering from University College Dublin, Ireland in 1982, an M.S. in chemical engineering from University of Missouri in 1983 and an M.B.A. from Harvard Business School in 1987.

George N. Hatsopoulos, Ph.D.

Founder, Chairman and Chief Executive Officer, Pharos Dr. Hatsopoulos is the founder of Thermo Electron Corporation (NYSE:TMO), a world leader in analytical and monitoring instruments. He served as Chairman and Chief Executive Officer from its founding in 1956 until his retirement in 1999. During his tenure, Thermo Electron grew into an international company with over 24,000 employees in 23 countries, and created 23 publicly traded corporations addressing diverse markets varying from heart assist devices to biomass electric generation. Dr. Hatsopoulos was trained at the National Technical University of Athens and MIT, where he received his Bachelors degree in 1949, his Masters degree in 1950, his Engineers degree in 1954, and his Doctorate degree in 1956. He was on the faculty of MIT from 1956 - 1962 and a Senior Lecturer until 1990.

Philip W. Morgan
Consultant Mr. Morgan has been a Director of Cyberkinetics since August 2003. Mr. Morgan is currently a consultant to Global Life Science Ventures, which is located in Zug, Switzerland, Munich, Germany and London, England. Previously, Mr. Morgan was Healthcare and Biotechnology Investment Specialist with UK-based 3i plc where he worked on both European and American investments. Mr. Morgan has also held management roles with Rhne Poulenc (now Aventis (NYSE:AVE)), Johnson & Johnson (NYSE:JNJ) and C.R. Bard Inc. (NYSE:BCR). Mr. Morgan is a Director of the Global Life Science Ventures (GP) Ltd., the GLSV Special Partner Ltd. and Munich Biotech AG. He received his B.Sc. in Chemistry and Physics at the University of London in 1968 and his M.A. in Marketing at the University of Lancaster in 1971.

Theo Melas-Kyriazi
Self-employed Mr. Melas-Kyriazi has been a director of our company since November 2004 and is currently self-employed. Mr. Melas-Kyriazi was affiliated with Thermo Electron Corporation (NYSE:TMO) from 1986 to October 2004. He served as Chief Financial Officer of TMO from 1999 until October 2004, and from 1994 to 1997, he served as Chief Executive Officer and President of Thermo Spectra Corporation, a publicly traded subsidiary of TMO. Mr. Melas-Kyriazi received his Bachelor of Arts Degree in Economics from Harvard College in 1981 and his MBA from The Harvard Business School in 1983.

Nicholas G. Hatsopoulos, Ph.D.

Assistant Professor, University of Chicago Since 2002, Dr. Hatsopoulos has been an Assistant Professor in Organismal Biology and Anatomy at the University of Chicago. From 1998-2001, Dr. Hatsopoulos was an Assistant Professor of Research in the Department of Neuroscience at Brown University. Dr. Hatsopoulos has completed two postdoctoral research fellows, one in the Department of Neuroscience at Brown University and the other in the Computation Neuroscience Program at the California Institute of Technology. Currently his research focuses on the neural basis of motor control and learning and he is investigating what features of motor behavior are encoded and how this information is represented in the collective activity of neuronal ensembles in the motor cortex. Dr. Hatsopoulos completed his B.A. in Physics from Williams College in 1984, his M.S. in Psychology in 1991 and his Ph.D. in Cognitive Science from Brown University in 1992.

Daniel E. Geffken
Senior Vice President and Chief Financial Officer, Omnisonics Medical Technologies, Inc. Mr. Geffken has been a director of Cyberkinetics since January 2005 and is currently the Senior Vice President and Chief Financial Officer of Omnisonics Medical Technologies, Inc. Mr. Geffken joined Omnisonics Medical Technologies, Inc. in December of 2003. Previously, Mr. Geffken was Senior Vice President of Finance and Chief Financial Officer at Transkaryotic Therapies, Inc. from February 1997 to April 2003. Prior to Transkaryotic Therapies, Inc., Mr. Geffken held a variety of senior financial roles at Cytotherapeutics, Inc, Anderson Group (now Moscow CableCom Corp.) and Medchem Products (now C. R. Bard Inc.). Mr. Geffken also spent several years at KPMG. Mr. Geffken received his Bachelor of Science Degree in Economics from The Wharton School at the University of Pennsylvania in 1979 and his MBA from The Harvard Business School in 1987.

John P. Donoghue, Ph.D.

Founder and Chief Scientific Officer Dr. Donoghue co-founded Cyberkinetics in 2001. He is currently the Henry Merritt Wriston Professor at Brown University. Since 1991, Dr. Donoghue has been Chairman of the Department of Neuroscience and since 1998 he has served as Executive Director of the Brain Science Program at Brown University. Dr. Donoghue has performed over 20 years of research on brain computer interfaces and his laboratory is internationally recognized as a leader in this field. His research has been funded by the National Institute of Health (NIH), the National Science Foundation (NSF), and the Defense Advanced Research Projects Agency (DARPA), as well as private foundations. Dr. Donoghue has over 50 publications, including in top journals such as Nature, Science and the Journal of Neuroscience and he has served on many external advisory panels, including those for the NIHs Neurology and Mental Health institutes and the space medicine panel of the National Aeronautics and Space Administration (NASA). Dr. Donoghue received an A.B. from Boston University in 1971, an M.S. in Anatomy from the University of Vermont in 1976 and a Ph.D. in Neuroscience from Brown University in 1979.

Timothy R. Surgenor
President and Chief Executive Officer Mr. Surgenor joined Cyberkinetics in 2003 from Haemonetics Corporation (NYSE:HAE), a medical device company located in Braintree, MA where he was Executive Vice President with responsibility for business development, global marketing, quality assurance and regulatory affairs from 1999- 2003. While at Haemonetics, Mr. Surgenor was an active member of the investor relations effort. From 1994 -1999, Mr. Surgenor was President of Genzyme Tissue Repair, the cell therapy division of Genzyme Corporation (NASDAQ:GENZ) located in Cambridge, MA. While at Genzyme Tissue Repair, Mr. Surgenor led successful public offerings which raised approximately $100 million. Previously, Mr. Surgenor was Executive Vice President and Chief Financial Officer of BioSurface Technology, Inc. and also held various positions in operations at Integrated Genetics. Mr. Surgenor received a B.A. in Biochemistry from Williams College in 1981 and an M.B.A. from Harvard Business School in 1987.

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