Manufacturing platform for rapid, cost-effective, and scalable

production of therapeutics in tobacco

“insero” = to plant ”gen” = gene

Lucas Arzola (EL)Karen McDonald (PI)

Vasilis Voudouris (Mentor)

The Business Model Canvas

SpeedCost-EffectivenessRobustnessScalabilitySafetyEase of CustomizationU.S. Supply

R&DManufacturingRegulatory ApprovalLicensingMarketing

Tobacco SuppliersGene Synthesis CompaniesCMOs - Purification - Fill & Finish- Packaging- QA/QCCROs- Clinical TrialsFDA

IP – Patents, Trade SecretManufacturing Facility

Capital InvestmentsManufacturing CostsLicensing CostsMarketing

Contract Manufacturing Fully Integrated Manufacturing (Sales) Licensing (Royalties)

U.S. Government- CDC - HHS BARDA- DOD DARPAForeign GovernmentsNGOsVaccine Manufacturers- Established and

Emerging Biotech

Distribution through Government and Pharma Companies

PublicationsConferencesLong-Term Contracts with Government and Vaccine Manufacturers

Target Product – seasonal & pandemic flu vaccines

The Business Model Canvas

SpeedCost-EffectivenessRobustnessScalabilitySafetyEase of CustomizationU.S. SupplyProduct uniformity

R&DManufacturingRegulatory ApprovalLicensingMarketing

Tobacco SuppliersGene Synthesis CompaniesCMOs - Purification - Fill & Finish- Packaging- QA/QCCROs- Clinical TrialsFDAAAT Foundations- Alpha 1

Foundation- Alpha Net

IP – Patents, Trade SecretManufacturing Facility

Capital InvestmentsManufacturing CostsLicensing CostsMarketing

Contract Manufacturing Upfront/Milestone Payments w/PartnersLicensing (Royalties)GrantsVirtual Biotech Company (Sales) (INITIALLY)Fully Integrated Manufacturing (Sales)

WholesalersAAT deficient patients

Distribution through Wholesalers

PublicationsConferencesLong-Term Contracts with Wholesalers

Target Product – alpha-1 antitrypsin (AAT)

Product, Indications and Market

What are we selling? First target product: Alpha-1 antitrypsin (AAT) Pivot from flu vaccines!

What is it indicated for? AAT Deficiency (AATD) – hereditary disorder resulting in low levels of AAT in

blood/lungs, leading to early onset of emphysema Estimated 100,000 patients in the U.S. (94% remain undiagnosed)

Treated by AAT augmentation therapy Currently commercially available AAT is purified from donated human plasma Dosage: 60 mg AAT/kg body weight patient per week (~250 g/year per patient) An average patient pays close to $100,000/year for AAT Total market opportunity in the U.S. - ~ $10B/year, Current market

~600M/year Market will increase as diagnosis improves

Also being studied for treatment of cystic fibrosis

Revenue ModelWhat is our revenue model? For profit – manufacturing of high-value proteins using our core technology

platform, initially outsourcing purification & fill and finish to a CMO Physical product with physical sales channel – rely on established wholesalers,

hand off product to them Phase in product development and production level to build a pipeline and

create revenue streams – earlier product development will be leveraged for later products, go after different markets incrementally, this strategy is aligned with the phases required to scale up a manufacturing process: lab (~100 g/year level for sale to research labs, and for toxicology and

animal studies in years 1-3), pilot (~3 kg level for human clinical trials in years 3-6), production (~100 kg/year in years 7+)

Biotechnology startups traditionally follow a licensing model - our goal is to develop a working product and seek a partnership with a large biotech company that will fund product development through clinical trials and regulatory approval (joint venture for product co-development, startup is acquired if product is successful)

AAT Pricing for Augmentation Therapy AAT for augmentation therapy is derived from donated human plasma, not recombinant

(% worldwide market share) Bayer/Talecris – Prolastin (73%) Kamada (Israel)/Baxter Healthcare Corp (USA) – Aralast NP and Glassia (12.5%) CSL Behring – Zemaira (9%) LFB – (3.5%) Grifols – Trypsone (2%)

How do competitors price their product for AAT augmentation therapeutics? Prolastin - $350/gram Zemaira - $430/gram Aralast NP - $510/gram Glassia - $460/gramDirect to patient programs - coordinate services to make it easier for patients to receive augmentation therapy

Help secure insurance coverage Coordinate patient infusions Provide health management

Sponsor diagnostic testing to make it easy for physicians to test patients

Recombinant AAT Pricing for Research Use

Much smaller market (estimate ~ 1M /year) but higher cost per gram, for example: GenWay Biologics (E. coli derived – >90% purity by SDS-

PAGE) 0.005 mg - $75 0.025 mg - $165 1 mg - $3,235

MyBioSource (E. coli derived - >90% purity by SDS-PAGE) 0.005 mg - $150 0.025 mg -$205 1 mg - $2,995

Product Pricing

How do we price our product? For augmentation therapy – Need to determine Cost of Goods

based on process design, material and energy balances, personnel, etc and Total capital investment required

Using SuperPro Designer – unit operation sizing/design/costing, flowsheeting, material and energy balances, scheduling, economics, profitability – for upstream

Need costing information from CMOs for downstream processing

CMO: cGMP Purification, QA and Fill and Finish

Payment Flow Diagram for Augmentation Therapy

For healthcare: = money= information= relationship

Venture Capital

Large Pharma

Physician

Hospital/Clinic

Patient

Employer

Government

Taxpayer

Government Payor

Private Payor

Financial Metrics

What are the key financial metrics?

• Burnrate (expenses per month)• Cash on hand• Date of insolvency• Funding pipeline (Funnel with probabilities of conversion)• Funding conversion rate • Total capital investment• Total production costs• Discounted cash flow rate of return

Income Statement

View: Annual Data | Quarterly Data All numbers in thousands

Period Ending Jun 30, 2011 Jun 30, 2010 Jun 30, 2009 Total Revenue 520 - 1,177 Cost of Revenue - - 501

Gross Profit 520 - 676

Operating Expenses

Research Development 3,084 2,517 797

Selling General and Administrative 7,091 2,072 1,805

Non Recurring - - -

Others - - -

Total Operating Expenses - - -

Operating Income or Loss (9,654) (4,590) (1,926)

Income from Continuing Operations

Total Other Income/Expenses Net (2,438) (1,475) 20

Earnings Before Interest And Taxes (12,092) (6,065) (1,906)

Interest Expense 51 13 -

Income Before Tax (12,142) (6,078) (1,906)

Income Tax Expense - - 2

Minority Interest - - -

Net Income From Continuing Ops (12,142) (6,078) (1,907)

Non-recurring Events

Discontinued Operations - - -

Extraordinary Items - - -

Effect Of Accounting Changes - - -

Other Items - - -

Net Income (12,142) (6,078) (1,907)

Preferred Stock And Other Adjustments - - -

Net Income Applicable To Common Shares (12,142) (6,078) (1,907)

Balance Sheet:

Rough Income Statement (iBio as Proxy)