Confiden'al1

Phagenesis Case StudyExit to Nestle announced 1st Sep 2016

Terms of the deal to buy Phagenesis weren’t disclosed, but a person familiar with the acquisition

said medical-device makers of Phagenesis’s size typically sell for £100 million ($131 million).

The U.K. company’s investors include London-based Inventages Venture Capital—

which is largely funded by Nestlé— and London-based Anglo Scientific.

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Confiden'al2

Theproblem:Dysphagia(swallowingdysfunc'on)affects millionsofpeople,includingca.50%ofstrokepa'ents‣ significantimpactonhealth(3-6xhighermortalityrate),qualityoflife,andcostofcare(£billions)‣ BeforePhagenesis,noclinicallyproventreatment

PhagenyxCatheterforenteralfeeding+electricalneuro-stim

PhagenyxBaseStation

ThePhagenyxtreatmentOnly3daysof10minelectricalneuro-stimcycles,administeredbydoctor,nurseortherapist

ThetreatmentprinciplePharyngealelectricalstimulation(PES)createsneuro-sensoryinput“kickstarting”reorganisationofthemotorcortex

Healthybrain PostStroke Recovery

400+patientstreatedto

date

Approvedproductonthemarket

Strong patentportfolio

10+clinicalstudies

published

£1MfromWellcomeTrust

Jan2014Hemisphericstroke

Casestudy:TheStoryofMr.K. 62yearsoldFeb5th2014

AdmissiontorehabcentrePA-Score8/8(Materialentersdeepintoairway,noefforttoeject)Startofconventionalswallowingtherapy

April10th2014PA-Score7/8(Materialentersdeepintoairway,cannoteject)

April12th–14th2014PharyngealElectricalStimulation

April25th2014Mr.K.onnormaldiet,nosupervision PA-Score2/8(nearnormalswallowing)PEGtuberemoved

Keyinvestmentcriteriaiden;fiedinduediligence(2009)

✓ Clearmarketneed–pa'ents,doctorsandhealtheconomics

✓ Groundbreakingtechnologywithlibleeffec'vecompe''on

✓ Baseunitplusconsumablebusinessmodelwith>80%grossmargins

✓ Es'matedrevenuepoten'alof£300-500millionperannum

✓ Strongexitpoten'al:acquisi'veindustryforuniquetechnologies

Company Overview World’s first clinically proven treatment for dysphagia

Exceptionalmanagement andboard

PhagenesisToday

2010-2016: Fromconcepttocompany

Confiden'al3

Anglo Scientific’s Role From company launch to exit

BeforeAngloScien;fic (1990s-2009)

CompanyLaunch (2009-2010)

CompanyBuilding (2010-2015)

CompanyExit (2015-2016)

‣ Prof.Hamdy,ManchesterUniv:groundbreakingresearchondysphagiafrommid90s;seminalstudiespublishedintopjournals

‣ In2007,setsupPhagenesiswithco-founderfromUniv.techtransferofficetocommercialisefindings

‣ Overnext2years,trytoprogresscompany,butwithnomanagementoremployees(retainedUniversityjobs),noexperiencedBoard,etc.

‣ ThusfailtoobtainfundingandPhagenesisstagnatesatincep'on

‣ 2009:ASintroducedthroughinvestorswhoappreciatespoten'al,butdeemsstructureandteamuninves'ble

‣ ASconductsextensiveduediligence,securesrobustcurrent&futureIPagreementwiththeUniversity,writesnewbusinessplan,andbuildsexperiencedfoundingteaminc.2ASDirectors

‣ Onstrengthofrestructuredcompany,£2mraisedin2010 (ASinvestors+newinvestorsthatASabractstoinvestment)

‣ ASprincipalsserveasExec.Chair&Exec.Director,Companygrowstoteamof18,securesCEMark,£10m+offurtherinvestment,etc.

‣ ASalsoprovidesitsusualcorporateservices,e.g.CompanySecretarialandAccoun'ngun'lCompanyreadytohireownFD;primarycontactformostshareholders

‣ By2013,CompanygrowntostagethatitcanabractMedtronic’sformerheadofEuropeasChairman,andin2014a“risingstar”atMedtronicasCEO

‣ 1sttermsheetreceivedmid2015

‣ PhagenesisBoardappoints 3personnego'a'ngteam:- Chairman:highlevelrela'onships- CEO:clinical/opera'onalaspects- ASDirector:pointpersononall“dealpoints”duringthe12monthsofnego'a'ons

‣ Finalnego'ateddealunanimouslylaudedbyCompany’sshareholders

‣ ASalsoappointedbyshareholdersas“SellersAgent”toactontheirbehalfinpost-closingmabers

Iden;fyandvalidatedisrup;vesolu;ontobigmarketneed,andstructureintoinves;bleCompany

BuildCompanyfromwithin,recruittopworldclassindustry talentwhenCompanyready

Ac;verolethroughtoexit,workingcloselywith

boardandmanagement

Confiden'al

EISInvestorCaseStudy

4

Illustrative Returns Analysis

First Round

LastRound *

All Rounds Average

Excluding Earn-Outs 4.1x 2.7x 3.3x

Including Earn-Outs 5.7x 3.7x 4.6x

WithEIS

‣ £100kinvestmentinPhagenesis’firstround

‣ £70knetcostamerincometaxcredit

‣ £570kreturn, capitalgainstaxfree

‣ 8.2xtax-freereturn

EquivalentwithoutEIS

‣ £70kinvestment(samenetcost)

‣ £70kto£570k=8.2x‣ £792kneededtoachieve£570kamer 28%capitalgainstax

‣ £70kto£792k=11.3x

Toachievesameresult,non-EISinvestmentsneedtoreturn:

11.3xpreCGTtax; 8.2xpostCGTtax

*Laterroundsonlyopentoexistingshareholders;inordertoparticipateinPhagenesisaninvestorhadto“getinearly”