# Presentation: 356183

## Anatomy of a Start-up

*Binding Science. Better Medicine.**TM*

*Anatomy of a Start-up*

## 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.

## 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.

## 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 LigoCyte’s value in anticipation of a merger, acquisition or initial public offering, and offer the potential for revenue return via pharmaceutical collaborations and partnerships.

## 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.

## 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

## GrowingLigoCyte Pharmaceuticalsfrom its origins inMontana ImmunoTech 

## 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

## 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 R&D
- 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

## Formative Concepts

*Platforms and Strategies for Drug Development*

## ProteoFlow®In Vitro Screening Assays

**The *****ProteoFlow******®***** system is a key discovery engine for:**
-  New therapeutic targets
-  Antibody development
-  Lead optimization
-  Inflammation
-  Infectious disease

## 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

## ProteoFlow® Partnerships

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

## Bioadhesion & Leukocyte Driven Inflammation

## 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

## Discovery Process for Inflammation

- Identification & Isolation of an Inflammatory Adhesion Molecule (IAM)

- Develop Therapeutic and Page Display Probe (Mabs)

- Identify & prepare  adhesive peptide mimic  (Phage display)

**1**

**2**

**3**

**Mab**
**Therapeutic &**

**QSAR**

**Probe**

- Example:** *****LigoCyte’s***
**Selectin Blocking Technology**

**Small molecule**
**drug**

**Peptide**
**drug**

- QSAR

## EL-246 mAb

- 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.

*L- and E- selectin blocking anti-inflammatory*

## EL-246

**EleuquinTM anti-inflammatory Ab for treating COPD**
- COPD is the flood of neutrophils into the lung, causing breakdown of lung tissue and secretion of mucus.
- LigoCyte’s 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).

## Bioadhesion & Infectious Disease

## 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.
- LigoCyte’s discovery process has revealed  that infections occur because a pathogen has learned to use many of the same molecules of the host’s adhesion and communication network to reach tissues and organs of the host.
- Synthetic or biological compounds that block or prevent the pathogen’s use of the host’s 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

## Discovery Process for Infectious Disease

*Discovery Process for Infectious Disease*

- Identification & Isolation of a Pathogen’s Adhesion Molecule (PAM)

- Develop Diagnostic Reagents and Probes (Mabs)

- Identify & prepare  adhesive peptide domains  (Phage display)

- DNA for encoding adhesive mimics inserted into vector delivery systems

**1**

**2**

**3**

**4**

**Diagnostics**
**&**
**Therapeutics**

**Therapeutics**
**&**
**Vaccines**

**Vaccines**

- Example:** *****LigoCyte’s***
**Candida Technology System**

## Candida Albicans Phosphomannoprotein Complex (PMC) Adhesin

-   Basis for PMC vaccine
- formulation

## 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

## Vaccine development

**CMIS**

-  Direct antigens to “M” cells.
-  Produce systemic IgA response
-  Prevent pathogen attachment mucosal surfaces

*Mucosal Immunization*

## NIH SBIR and DOD funded R&D programs

*How LigoCyte has Bootstrapped Discovery and Development*

## SBIR Grants

**	****NIH *****E. coli***** Diagnostic Phase I and Phase II SBIR**
- Develop a rapid diagnostic test for O157:H7
- Selected specific mAb
- Developed isolation and amplification method
- Army evaluating diagnostic potential

## 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**  **

## Biodefense

*USAMRIID** ** *

**LigoCyte**® **Pharmaceuticals, Inc.**
***“******Changing the way we fight disease”***
***Fort Detrick***
***February 1999***

*Biodefense*

## 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.

## 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)

## Protecting Ideas, Know-howand Processes

## 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

## LigoCyte Today

## 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, >65 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

## 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

## Focus

- 	Developing therapeutic drugs and vaccines for immunomodulatory markets:
- Inflammatory events => therapeutic drugs
- Infectious disease => vaccines and protective antibodies
-    _*Demonstrated blockbuster areas in biotechnology*_

## 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*_

## 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

## Biomanufacturing

- The biopharmaceutical industry is expanding at double-digit rates
- Major shortages in the industry’s 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.*_

**Notes:**
LigoCyte’s value creation strategy is to remain focused on our research & development strengths and partner our clinical stage drugs to pharmaceutical and biotechnology companies that have core competencies in regulatory affairs, manufacturing, and marketing and distribution.
This strategy recognizes the increasing importance pharma & biotech companies are placing on revenues from in-licensed products. As an aside in FY 2001 in-licensed products represented 20% of big pharma revenue and are forecasted to be 40% of revenues by 2007.
Our partnering model enables LigoCyte to do what it does best, feeds the needs of big pharma, and minimizes our cash burn.  
As you will see our Department of Defense and NIH funding is very impressive. While this will continue to be a strong component of of our income statement licensing fees, milestone payments, and royalties on product sales will significantly increase.

## Strategy

- Develop drugs
- Large demand for immunomodulatory drugs – highest sales revenue in biotechnology sector
- Partner drugs
- Merge our R&D strength with Pharma’s 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

**Notes:**
LigoCyte’s value creation strategy is to remain focused on our research & development strengths and partner our clinical stage drugs to pharmaceutical and biotechnology companies that have core competencies in regulatory affairs, manufacturing, and marketing and distribution.
This strategy recognizes the increasing importance pharma & biotech companies are placing on revenues from in-licensed products. As an aside in FY 2001 in-licensed products represented 20% of big pharma revenue and are forecasted to be 40% of revenues by 2007.
Our partnering model enables LigoCyte to do what it does best, feeds the needs of big pharma, and minimizes our cash burn.  
As you will see our Department of Defense and NIH funding is very impressive. While this will continue to be a strong component of of our income statement licensing fees, milestone payments, and royalties on product sales will significantly increase.

## Therapeutic and Vaccine Pipeline

***Compound     Indication     Research     Development     Preclinical     Clinical***

**ABT****	****     *****Anti-inflammatory mAb ***

**MC-D11****	****     *****Norwalk vaccine – “Cruise Ship Disease”***

**MC-L21****	****     *****Grp B Strep vaccine****** ***

**CAT-6.1****	****     *****Candida albicans therapeutic***

**MC-D12****	****     *****Anthrax vaccine****** ***

**Discovery     *****Innate immunity****** ***

**Notes:**
In fact our drug pipeline, as displayed here relies heavily on our drug development process.
Our pipeline includes anti-inflammatory antibodies, anti-infective antibodies, and vaccines.
Our Abbott partnered product will be in the clinic next year closely followed by our Candida therapeutic and Norwalk vaccine. 

## 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)

**Notes:**
Our current drug development programs address major unmet medical needs. You see a healthy market size for each of our initiatives.
We will move these compounds in to early stage clinical trials which will greatly increase value and enhance our partnering capabilities.

## 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, R&D**
- 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.

**Notes:**
Our Management Team works very well together. We have a tremendous amount of experience in the industry. Our backgrounds include Fortune 500 experience, start-up experience, and valuable product development experience.

## 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

**Notes:**
The LigoCyte story is impressive. From a small rocky mountain college town we have built a vibrant company. A company with excellent management, a company with commercially valuable technology, a company with remarkable financial health, and a company that is delivering on its commitments.
Our success is the result of a team that is focused and a team that concentrates on the vital few issues that really impact value creation.Our achievements are excellent indicators of future success.
I’ve enjoyed introducing you to LigoCyte – I look forward to your interest in being a part of this terrific company. 

## Binding Science. Better Medicine.TM

*Binding Science. Better Medicine.**TM*