Binding Science' Better Medicine'TM

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Binding Science. Better Medicine.TM
Anatomy of a Start-up
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Executive Summary

• LigoCyte is an immuno-regulatory drug discovery
  and development company.
• The Company has assembled a solid management team
  with experience in drug development and
  commercialization and is advancing its
  proprietary products from the pre-clinical stage
  into human clinical testing.
• These products address the treatment and
  prevention of inflammatory and infectious
  diseases, a 95 billion market.

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The Company will advance three compounds into the
clinic in the next four years

• Drug candidate for inflammatory diseases
  (partnered with Abbott Laboratories) currently a
  3 billion market projected to be 9 billion by
  2010.
• Norovirus vaccine to prevent diarrheal disease in
  children and the elderly, a 4 billion domestic
  market opportunity (a Phase I oral vaccine study
  has already been completed by the NIH and Baylor
  University).
• CAT-6.1 mAb for fungal infections in the elderly,
  the immuno-compromised, ICU patients and in
  premature infants, a 4 billion worldwide market
  growing at 10 per year.

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Company Growth

• Management has creatively grown the Company with
  a minimum of private equity capital.
• Successfully securing government grants and
  contracts has enabled LigoCyte to fine-tune its
  drug development and partnering strategy and to
  build the infrastructure necessary to advance
  products into human clinical studies.
• The Company is raising 15 million in equity
  capital, which will be focused entirely on moving
  products into human clinical studies.
• These clinical-stage candidates will greatly
  influence LigoCytes value in anticipation of a
  merger, acquisition or initial public offering,
  and offer the potential for revenue return via
  pharmaceutical collaborations and partnerships.

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Company Highlights

• Raised over 25 million in long-term federal
  grants and contracts through the NIH and the
  Department of Defense
• License/Collaboration with Abbott Laboratories
  for anti-inflammatory drug development
• New 24,000 sq. ft. state-of-the-art facility
  under construction
• Built a Board of Directors that includes noted
  biotech industry leaders and financing
  executives
• Management team consists of senior executives
  with direct industry experience in Fortune 500
  and start-up company environments. Experienced in
  all facets of the business.

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Company Highlights

• Contract research experience with industry
  leaders including Aventis, Merck,
  GlaxoSmithKline, Lilly, Biogen, ICOS and others
• 5-year, 10.5 million contract from NIH for
  innate immune drug development
• Multi-year programs in place with Department of
  Defense to fund vaccine development
• Assembled a group of clinical advisors who are
  thought leaders in their fields and active in
  leading clinical trials
• Cash flow neutral in 2003, projected positive for
  2004, 2005

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GrowingLigoCyte Pharmaceuticalsfrom its origins
inMontana ImmunoTech
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Growing LigoCyte

• Founded in 1994 as Montana ImmunoTech, Inc.
• 5 founding members
• Financed by founders, family and friends
• Montana State University (MSU) Spin-out, Start-up
  company
• MSU Technology Park
• Contacted with MSU for equipment and services
• Acquired MSU technologies
• Anti-inflammatory mAb
• Anti-fungal
• Vaccine
• Therapeutic mAb

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Growing LigoCyte

• Business model
• Partner driven for development
• Company was positioned for
• Discovery
• In licensing of technologies
• Translational development
• ProteoFlow assay discovery platform technology
• Anti-inflammatory targets
• Anti-infective targets
• SBIR grants used to fund RD
• Service based revenue generation
• ProteoFlow
• Physiological blood flow shear assays measuring
  adhesion and signaling
• Used to establish industry alliances
• Monoclonal antibody production and custom
  hybridoma construction
• Also to support internal programs

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Formative Concepts
Platforms and Strategies for Drug Development
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ProteoFlowIn Vitro Screening Assays

• The ProteoFlow system is a key discovery engine
  for
• New therapeutic targets
• Antibody development
• Lead optimization
• Inflammation
• Infectious disease

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ProteoFlow Putting Proteomics to Work

• Strength of Platform VALUE ADDED
• Reduces developmental time and cost
• Failing lead compounds as soon as possible
• Optimizing successful compounds
• Physiologic
• In vitro modeling includes use of human cells
• Direct visualization quantification of the
  disease process
• Precise analysis of adhesion and signaling
  interactions
• Analysis of microbial adherence to host cell
  types
• Candidate drug performance verified in in vivo
  model
• Compound dosing and efficacy

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ProteoFlow Partnerships

• Abbott
• Merck
• SmithKline
• Aventis
• Lilly
• ICOS
• Biogen
• Dyax
• Sunesis

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Bioadhesion Leukocyte Driven Inflammation
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Inflammation

• Inflammation is caused by the entry of
  leukocytes from the blood circulation into
  injured or infected tissue. A process regulated
  by adhesion and communication.
• In most instances, inflammation is beneficial,
  resulting in the elimination of a pathogen and/or
  the initiation of tissue/wound repair.
• Occasionally, the inflammatory process is too
  active or misdirected, resulting in tissue damage
  concurrent with events such as a heart attack,
  stroke, rejection of a tissue transplant.
• Inflammatory cells can also promote destructive
  changes in tissues and organs in autoimmune
  diseases such as psoriasis, rheumatoid arthritis
  and COPD

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Discovery Process for Inflammation
1
Mab Therapeutic
Probe
QSAR
Identification Isolation of an Inflammatory
Adhesion Molecule (IAM)
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Peptide drug
QSAR
Develop Therapeutic and Page Display Probe (Mabs)
3
Small molecule drug
Identify prepare adhesive peptide mimic
(Phage display)
Example LigoCytes Selectin Blocking Technology
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EL-246 mAb
L- and E- selectin blocking anti-inflammatory

• EL-246 treatment of animals, after the onset of
  sepsis, produced significant protection against
  acute lung injury.
• Greatly reduced neutrophil accumulation and
  myeloperoxidase in the lung and attenuated
  sepsis-induced lung injury.
• EL-246 significantly reduces myeloperoxidase
  levels and ischemic/reperfusion induced lung
  injury and mortality.
• Did not result in neutrophil respiratory burst
  dysfunction.
• Conclude that the use of neutrophil selectin
  adhesion blocking agents in patients appears to
  be unlikely to increase the risk of septic
  complications.

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EL-246

• Eleuquin anti-inflammatory Ab for treating COPD
• COPD is the flood of neutrophils into the lung,
  causing breakdown of lung tissue and secretion of
  mucus.
• LigoCytes Eleuquin limits inflammatory
  neutrophil entry into the lung.
• Proven effective in primate COPD models.
• The market for antibody therapy to treat chronic
  inflammatory disease is established (combined
  sales of Remicade and Enbrel over 2 billion in
  2002).
• May also help protect against death from inhaled
  pathogens (bioterrorism, biowarfare).

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Bioadhesion Infectious Disease
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Infectious disease

• In infectious disease, a pathogenic
  microorganism traffics from its point of entry to
  its target tissue in much the same way a
  leukocyte moves through the body by recognition
  of cellular addresses during passage through
  blood vessel walls.
• LigoCytes discovery process has revealed that
  infections occur because a pathogen has learned
  to use many of the same molecules of the hosts
  adhesion and communication network to reach
  tissues and organs of the host.
• Synthetic or biological compounds that block or
  prevent the pathogens use of the hosts adhesion
  molecules for trafficking has the potential to
  serve as a therapeutic compound.
• Pathogen derived adhesion molecules (adhesins) or
  mimetics may be used in vaccine formulation to
  elicit protective host responses that block
  adhesion and thus infection

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Discovery Process for Infectious Disease
Diagnostics Therapeutics
1
Identification Isolation of a Pathogens
Adhesion Molecule (PAM)
Therapeutics Vaccines
2
Develop Diagnostic Reagents and Probes (Mabs)
Vaccines
3
Identify prepare adhesive peptide domains
(Phage display)
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DNA for encoding adhesive mimics inserted into
vector delivery systems
Example LigoCytes Candida Technology System
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Candida Albicans Phosphomannoprotein Complex
(PMC) Adhesin
Basis for PMC vaccine formulation
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B6.1 anti-Candida albicans mAb therapeutic

• B6.1 hybridoma produced using C. albicans PMC
  adhesin immunized mice
• Identified protective epitope on adhesin of C.
  albicans
• Has anti- C. albicans protective therapeutic
  effect
• Mechanisms of protection
• MAb B6.1 causes rapid complement fixation
• MAb B6.1 enhances phagocyte candidacidal activity
• Highly protective in lethal systemic challenge
  studies in mice
• Have selected fully human mAbs

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Vaccine development
CMIS
Mucosal Immunization

• Direct antigens to M cells.
• Produce systemic IgA response
• Prevent pathogen attachment mucosal surfaces

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NIH SBIR and DOD funded RD programs

• How LigoCyte has Bootstrapped Discovery and
  Development

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SBIR Grants

• NIH E. coli Diagnostic Phase I and Phase II SBIR
• Develop a rapid diagnostic test for O157H7
• Selected specific mAb
• Developed isolation and amplification method
• Army evaluating diagnostic potential

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SBIR Grants

• NIH Phase I and Phase II SBIR Rational design
  of adhesion blocking therapeutics
• Developing humanized anti-L-and E-selectin
  mAb,EL-246
• Target indication, COPD
• Successfully partnered
• Co-developing

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Biodefense
A Strategic Presentation to Medical and
Biological Defense Programs USAMRIID
LigoCyte Pharmaceuticals, Inc. Changing the way
we fight disease Fort Detrick February 1999
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Biodefense

• Current State (1999)
• Legitimate science has produced 1,500 pathogen
  banks trading freely in deadly microbes.
• Genetic engineering advances in the wrong hands
  can produce potent weapons.
• Today at least 17 nations are suspected of having
  or trying to acquire germ weapons.
• Catalogues catering to domestic radicals and
  militia groups carry guides to germ warfare.
• FBI now fighting wave of false anthrax threats
  to public and private facilities.

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LigoCyte Solution (1999)

• Objective Interdiction of germ weapon threats
  through blocking Bioadhesion technologies
• Goals Neutralization of microbial threats via
• Bioadhesion therapeutic
• Block ongoing microbial attachment
• Block toxin attachment
• Bioadhesion vaccines immunizing against
• Adhesins on microbial pathogens
• Lectins or carbohydrates on toxins
• Bioadhesion diagnostics (rapid detection)

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Protecting Ideas, Know-howand Processes
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Intellectual Property

• Developing a Strategy
• Advancing Candida therapeutic and vaccine patent
  protection established.
• Path for broadening EL-246 anti-inflammatory
  patent protection.
• Morgan, Bockius, Lewis (Washington DC) retained
  as key patenting agents

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LigoCyte Today
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Continuing SBIR Effort

• Group B strep NIH Phase I SBIR
• Group B Streptococcus vaccine for the elderly, a
  2.5 billion domestic market opportunity.
• 35 million elderly, gt65 years of age
• 15 million residing in rest homes
• Other susceptible populations
• 3.6 million diabetes patients
• 2.5 million cancer patients
• 1.4 million HIV patients
• High morbidity and mortality in newborns
• Submitting for Phase II funding

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Continuing SBIR Effort

• Anthrax spore antigen vaccine Phase I SBIR
• Induce protective mucosal response
• Prevent inappropriate macrophage-spore uptake
  and cytoplasmic spore germination
• Neutralize spores before they can enter the
  body
• Facilitates DoD efforts targeting anthrax toxins
  and capsule
• Newly funded

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Focus

• Developing therapeutic drugs and vaccines for
  immunomodulatory markets
• Inflammatory events gt therapeutic drugs
• Infectious disease gt vaccines and protective
  antibodies
• Demonstrated blockbuster areas in
  biotechnology

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Core Expertise

• Immune focused
• Molecular cell biology microbiology
• Cell surface receptors
• Cell signaling pathways
• Cellular adhesion molecules
• Mucosal immunology
• Cell-based high content assays
• Protein engineering
• Direct application to Biosecurity programs

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Building Success

• Significant government revenue from multiple
  sources
• Raised 24.9 million from NIH DoD, with
  critical support from Senators Baucus and Burns
• Ongoing, long-term programs
• Cash flow break-even
• Successfully built national clinical advisor
  network
• Positive climate for recruiting experienced
  pharma professionals
• 37 employees and growing
• New state-of-the-art 24,000 ft2 facility

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Biomanufacturing

• The biopharmaceutical industry is expanding at
  double-digit rates
• Major shortages in the industrys development
  capacity, especially in the intermountain region
• Competitive advantage for NIH drug development
  contracts
• Major investments will be required in
  biomanufacturing capacity
• LigoCyte can be the regional contractor for
  pilot-scale GMP production.

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Strategy

• Develop drugs
• Large demand for immunomodulatory drugs highest
  sales revenue in biotechnology sector
• Partner drugs
• Merge our RD strength with Pharmas demand for
  new compounds, stay focused on development
• Leverage government funding
• NIH DOD supporting drug discovery and
  development programs
• Expand preclinical pipeline
• Exploit core expertise in high-value area
• Develop human resources
• Process development, clinical, regulatory to
  support early-stage clinical evaluations

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Therapeutic and Vaccine Pipeline
Compound Indication Research
Development Preclinical Clinical
ABT Anti-inflammatory mAb
CAT-6.1 Candida albicans therapeutic
MC-D11 Norwalk vaccine Cruise Ship
Disease
MC-D12 Anthrax vaccine
MC-L21 Grp B Strep vaccine
Discovery Innate immunity
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Markets

• Anti-inflammatory mAb
• Partnered with Abbott Laboratories for clinical
  development
• Multi-billion dollar indication
• Sally Wenzel MD (National Jewish), Steve Rennard
  MD (U Nebraska), Don Mahler MD (Dartmouth), Ed
  Abraham MD (UCHSC)
• Candida therapeutic mAb
• Premature neonates third most common infection,
  second leading cause of death, 1/3 mortality rate
• Adult ICU infections hospitalized high risk
  populations
• Danny Benjamin MD, PhD, MPH (Duke), Amar Safdar
  (MD Anderson)
• Norwalk virus vaccine Stomach Flu, Cruise
  Ship Disease or Food Poisoning
• Critical military readiness issue
• Nursing homes, hospitals, child care, travelers
• 23 million cases per year in the United States
• Mary Estes PhD (Baylor)

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Management Team

• Michael A. McCue, CEO
• 30 years of pharmaceutical, biotechnology
  medical device management experience. Fortune 500
  start-up experience with Baxter, C.R. Bard, and
  Nimbus Medical
• Robert R. Goodwin, Ph.D., COO
• 15 years of business development and operations
  management experience. Led technology transfer
  office at University of Rochester, NY.
• Charles R. Richardson, Ph.D., Sr. VP, RD
• 30 years of drug development and executive
  management experience with Ribi and Corixa
  Corporation.
• Robert F. Bargatze, Ph.D., CSO
• 27 years of research and development experience.
  Key role in pioneering an understanding of the
  molecular mechanisms of inflammatory cell
  recruitment and mucosal immune cell recirculation
  at Stanford University.
• Larry W. Mikkola, MBA, CPA, Director of Finance
• 15 years of financial management experience with
  Westmoreland Coal Co. and KPMG.

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Highlights

• Proven Management, Board and Scientific Advisors
• Grew company improved financial health in
  difficult market
• Strong product pipeline
• Partnering opportunities well-timed
• Trial-focused clinical advisors
• Financially solid
• Business model fits within current future
  industry trends

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Binding Science. Better Medicine.TM