Executive SummaryOctober 2013

Paul Rohricht MS MBA

Scott Washburn MD

“Applied Catheter Technologies is a medical device company focused on maximizing

the performance of existing medical devices and the effectiveness of surgical

procedures, wi th the addit ion of Halofuginone, which are inherently l imited by scar t issue formation.”

History

Excessive collagen deposition is the root cause of scar tissue, resulting in

strictures and adhesions throughout the human body. Collagen deposition

occurs whenever the body suffers an injury due to trauma or surgical

procedures.

Formed in 2008 to develop a series of products which combines existing

medical devices with specific collagen-inhibiting pharmaceuticals, in order to

greatly enhance the performance of the devices.

Research conducted by Dr. Steve Hodges of Wake Forest University and the

Institute for Regenerative Medicine discovered a potent Type I collagen

inhibitor, halofuginone, that prevented excessive collagen deposition and

thereby eliminates the formation of a stricture (scar tissue).

ACT has secured exclusive rights to the patent estate from Wake Forest

University and is developing a suite of products which addresses high unmet

clinical need that focus on the anti-scarring properties of halofuginone.

Halofuginone

Halofuginone is a potent, non-toxic type 1 collagen

synthase (and to a lesser extent type 3) inhibitor. It’s effect

is blocking the trophic effects of TGF-β on collagen

synthase. Halofuginone is an ancient Chinese herbal

remedy derived from the roots of a species of Hydrangea.

Procedures at Risk

Urological Procedures*

Abdominal Surgeries

Plastic Surgery/Aesthetic

Benign Esophageal Strictures

Benign Biliary and Pancreatic Strictures

Benign Bowel Strictures

Tendon and Ligament Surgery

Veterinary Surgeries

*Initial clinical target.

Excessive collagen

deposition is the root

cause of scar tissue,

resulting in strictures

and adhesions

throughout the human

body.

Collagen deposition

occurs whenever the

body suffers an injury

due to trauma or

surgical procedures.

The Basic Problem

Early intervention is critical!

Normal wound healing begins when inflammatory and coagulation cascades initiate a series of events resulting in a “clot cover” of the injury site, which is mainly composed of thrombin and fibrin. The injured tissue heals beneath this cover.

When healing is complete, plasmin breaks down fibrin and exposes the healed, healthy tissue. If the balance between the formation and the destruction of fibrin is correct, then adhesion formation after tissue injury/damage should not occur. Whenever there is an inadequate breakdown of the fibrin matrix (fibrinolysis), there is an ingrowth of fibroblasts, blood capillaries, and nerves that lead to the formation of permanent fibrous connective tissue, or adhesions and strictures.

Adhesions are primarily composed of Type 1 collagen, whose formation is driven by the substance TGF-β. The progressive accumulation of collagen connective tissue and accompanying capillaries and nerves can destroy normal tissue architecture and disrupt its normal function as seen with urethral strictures, exuberant granulation tissue, keloid scarring, and atherofibrotic joint contracture, and implant encapsulation, among others. The healing process is depicted in Figure 1. The phase of scar formation (fibroplasia phase) begins within 24 hours of injury and under normal circumstances, resolves by the 14th day after injury. Adhesion and stricture formation represent a prolongation of the proliferatve phase of healing.

Initial Proof of Concept

Normal Rat

Non-coated catheter

Scar

Coated catheter

Inflammation

Rat study using a halofuginone

coated silicone catheter. Wake

Forest

Halofuginone diet

Normal diet

Rabbit study using a halofuginone

food supplement (oral). Egypt

Additional studies have been performed at Wake Forest using halofuginone coated devices

in the esophagus, trachea and abdomen with comparable results.

Candidate Drug: Halofuginone; Type I collagen inhibitor with

exceptional potency and low toxicity.

Pre-clinical research: In rabbit and rat with excellent scar prevention in

urethra, ureter, esophagus, trachea and abdomen.

Catheter: Supplied by Degania Silicone, Israel, FDA 510(k) approved.

Halofuginone: cGMP Synthesis by Scynexis, Durham NC.

Coating Process: Proprietary process in conjunction with Covalon

Technologies, Toronto, Canada.

Regulatory Processes: Regulatory submissions, ISO and Design

Controls conducted by ACT.

Our Solution

HaloGel and Abdominal Adhesions:

Rat Cecal Abrasion Model

A Extent of Adhesions B Tenacity of Adhesions

***

**

*

Figure 1: Scatter plot of adhesion extent and tenacity. (A) Significantly less adhesions were present in the

keratin-halofuginone treated animals than other groups. (B) Keratin-halofuginone group showed

significantly less dense adhesions than Interceed and keratin alone. * - p < 0.05, ** - p < 0.01, (KH)

keratin-halofuginon hydrogel.

Peyton, et al J Surg Research, 2012

Development Milestones

Prototype

Development

Coating

Development

Design Control and Regulatory Documentation

Halofuginone

Synthesis (RG)

Halofuginone

cGMP Grade

Coating

Validation

Pre-Clinical

Testing

Cytotoxicity

Testing

Additional Patent Filings and Prosecution

Prototype

Validation

2nd Human Trial

Orphan Status

Urethral Strictures

Treatment

1st Human Trial

Orphan Status

Urethral Strictures

Prevention

FDA

Submissions

510(k)

Phase 1 Phase II Phase III

Patent

Filings

Medical Directors

Anthony Atala, MD

Urologist

Steve Hodges, MD

Urologist

Christopher Sullivan, MD

ENT

Vincent D’Souza, MD

Radiologist

T.J. Pulliam, MD

Gastroenterologist

Scott Washburn, MD

OB/GYN

Partners

covalon

World Market Urological Catheters

2012 $ 1.13 B

US 50%

Europe 35%

Japan 10%

ROW 5%

Urethral Catheters $900 MM

Ureteral Stents $100 MM

1

7

Additional Markets

Abdominal Adhesion Barriers $600 MM (2013)

Plastic Surgery/Aesthetic $2.8 B (2010)

Benign Esophageal Strictures $40 MM (Est.)

Biliary and Pancreatic Stents $76 MM (2010)

Gastrointestinal Stents (bowel) $22 MM (2010)

Tendon and Ligament Surgery $50 MM (Est.)

Equine (below the hock) injuries $50 MM (Est.)

$3.6 Billion

Business Model

• Develop a suite of medical devices specific to a particular disease area;

• Add value by demonstrating safety and efficacy in human clinical trials;

• License those devices to key players;

• Longer-term: exit via acquisition of ACT

Market Size License Fee Royalty

Urological Devices $1 BB+ $40-$50 MM 7%

Abdominal Adhesion Barriers $500 MM $20-$30 MM 7%

Plastic Surgery/Aesthetic $2.8 B $50-$75 MM 7%

Esophageal Stents $40 MM $10-$15 MM 7%

Biliary & Pancreatic Stents $76 MM $25 MM 7%

Gastrointestinal Stents (bowel) $22 MM $5 MM 7%

Tendon and Ligament Surgery $50 MM $20 MM 7%

Equine (Below the Hock) $50 MM $20 MM 7%

$190-$240 MM $20-$40 MM Ann. Est.

Partnering

Thank You

Contact:

Paul Rohricht MS MBA

prohricht@appliedcatheter.com

(704) 249.8342