Neurox Pharmaceuticals, Inc.A Harvard Startup for Curing Alzheimer’s H. Rock Liao, PhD Co-Founder / CEO Woburn, MA 01801 http://neurox.us email@example.com
Neurox Pharmaceuticals, Inc. Our Mission Neurox plans to develop the world’s first anti-Alzheimer’s drugs that restore the growth of injured brain cells to improve learning and memory. Neurox is positioned to be the leader in supplying early anti- Alzheimer’s drugs to the pharmaceutical industry.
Neurox Pharmaceuticals, Inc. Who We Are All three founders are Harvard neurobiologists who specialize in brain development: Michael E. Greenberg, PhD / Non-Executive Chairman Chair & Professor of Dept of Neurobiology, Harvard Medical School, 2008-Present Professor & Director, Neurobiology Program, Children’s Hospital Boston, 1994-2008 Member, American Academy of Arts and Sciences Member, National Academy of Arts and Sciences Inventor of “Brain Cell-Based In Vitro Synapse Assay” Chair, Neuroscience Advisory Board, Roche, 2010 Consultant, Constellation Pharmaceuticals Advisory Board, Upstate Biotechnology Inc, 1996-2006 Advisory Board, Cogent Neuroscience Inc, 1998-2002 Advisory Board, Helicon Inc, 1991-2001 H. Rock Liao, PhD / CEO Postdoctoral research, Department of Neurobiology, Harvard Medical School, 2007-Present Predoctoral research, Department of Neuroscience, The Johns Hopkins University, 2001-2006 Inventor of Neurox’s core technologies “High-Throughput, Brain Cell-Based Drug-Screening System” & “Targeted Imaging” Founder and Developer of TheApps4U.com - an iPhone/iPod/iPad Apps Development company, 2009-Present Seth S. Margolis, PhD / Chief Scientific Advisor Assistant Professor, Department of Biochemistry, The Johns Hopkins University School of Medicine, Scheduled for 2012 Postdoctoral research, Department of Neurobiology, Harvard Medical School, 2006-Present Predoctoral research, Department of Pharmacology and Cancer Biology, Duke University Medical Center, 2000-2005
Neurox Pharmaceuticals, Inc. The Problem We Are Trying to Solve Alzheimer’s Disease (AD) is a progressive brain disease. It starts by destroying connections between brain cells and ultimately leads to the loss of brain cells. Learning and memory are therefore impaired. High impact: 35 million AD patients worldwide. Annual cost to economy exceeds $145B. Unmet medical need: There is currently no known cure.
Neurox Pharmaceuticals, Inc. Why Conventional Anti-AD Strategies Do Not Work The industry has long been focusing on removing toxic substances (e.g., amyloid beta and tau aggregates) from AD brains. Why they don’t work: Normally brain cells form connections with each other to communicate. However, when a patient is diagnosed with AD, the connections between brain cells are long gone. The injured brain cells are unable to re-grow processes and re-make connections on their own even after disease-causing factors are removed. Cells eventually die. What’s missing: The injured brain cells need additional help (e.g., stimulation) to re-grow. The industry has not yet found a solution.
Neurox Pharmaceuticals, Inc. Why Our Innovative Strategy Works We identify drugs that can stimulate the growth and connectivity of injured AD brain cells. BEFORE AFTER Cells re-grow processes and re-make connections Injured AD brain cells lost processes and connections after drug (2090N12) treatment Green: Processes of brain cells Red: Nucleus (center of cell)
Neurox Pharmaceuticals, Inc. Drugs That Revolutionize AD Therapies We have found, tested, and verified 12 such drugs to date. They work differently, but all can rescue the growth of the injured AD brain cells in vitro. We are the first in the world to show that AD is curable and its neurodegeneration is reversible. Most importantly, we already have these drugs identified and tested. We know what these drugs are and how they work. At Neurox, we will test these drugs in AD animals to evaluate their effect on improving cognitive functions. After animal testing, qualified drugs will be ready for sales (preclinical drug licensing). No clinical trials are required in our business model as we will be a supplier of early drugs to other pharmaceutical companies in filling their downstream drug pipelines.
Neurox Pharmaceuticals, Inc. Leading the Field Enabling technology: In addition to our innovative strategy, we have built a technology that enables large-scale drug screening using authentic brain cells, leading to very high-confidence results. The technology is a high- throughput version of a well-established in vitro assay where nearly all resulting findings were verified in vivo. Our technology employs automated high-speed imaging for important neuronal markers to quantify the fine structures of drug-treated brain cells and to evaluate a drug’s therapeutic effect on restoring the growth and connectivity of injured AD brain cells. Drug Bioimaging Enhanced growth & connectivity Green: Processes of brain cells Red, Blue: Connections between brain cells
Neurox Pharmaceuticals, Inc. Leading the Field Lead compounds: We have verified 12 anti-AD drugs (and counting): • 9 known/repurposed drugs (FDA-approved, clinical, or off-patent) • 3 natural compounds These compounds have the following advantages: Already verified (by us) in rescuing AD brain cells (well- established in vitro model) Relatively safe Known target/mechanism Higher success rate in animal testing Straightforward development of novel compounds based on known drugs
Neurox Pharmaceuticals, Inc. Intellectual Properties Technology: Drs. Greenberg and Liao, inventors of the drug-screening technology, have obtained the verbal agreement (licensing contingent upon funding) with Harvard for an exclusive commercial license. The technology will be kept as a trade secret (i.e., without patent filing) as it relies heavily on the expertise of the principals. Lead compounds: The compounds we’ve identified, to date, are existing drugs and many are covered by third-party’s patents. Instead of filing patents for the novel anti-AD use on these known drugs through Harvard (which may or may not be feasible, depending on each drug’s patent claims), we will identify novel, better, patentable compounds based on the known structures of these drugs. The novel-drug screening (using the same, licensed technology) and new patent filing will be carried out at Neurox, not Harvard, to save costs and time.
Neurox Pharmaceuticals, Inc. How We Find New, Patentable Drugs Based on A Known Drug Finding novel therapeutic compounds based on a known drug is straightforward. With our powerful drug-screening platform, we screen a collection of random molecules (commercially available) that are structurally similar to the known drug. An example is drug S008-0063, a novel, patentable molecule similar to a market drug named imipramine (an FDA-approved anti- depressant also known to enhance connectivity between brain cells). S008-0063 was identified in just a month and shown to be very effective and even better than its reference drug imipramine in enhancing brain cell’s connectivity. 3.0 O 2.5 Index of Neuronal N N H Connectivity 2.0 No Drug Treatment O N 1.5 Imipramine S008-0063 Imipramine S008-0063 1.0 0.5 0.0 Note: Both drugs are capable of enhancing connectivity only in normal but not AD brain cells. They are only for demonstrating the principle of new drug discovery. Due to confidentiality consideration, our anti- AD drugs are not shown here, but the same principle applies.
Neurox Pharmaceuticals, Inc. How Do We Generate Revenue? Products / Revenue: Neurox will sell preclinical anti-AD drugs to other pharmaceutical companies through licensing. The revenue includes upfront cash, milestone payments and royalties. Customers: Pharmaceutical companies that R&D drugs for AD Facts: The top 50 pharmaceutical companies, by number of drugs, develop 60% of their formulas in-house and acquire the remaining 40% from external sources through licensing, M&A, or forming alliances. Price tag: The average upfront cash for early drug licensing (including preclinical and Phase-I drugs) ranges from $25 Mil to $42 Mil. We conservatively price our product (preclinical drug) at $10 Mil per licensing, not including milestone payments and royalties.
Neurox Pharmaceuticals, Inc. Time to Revenue Our niche – early drug supplier feeding the drug R&D pipeline in industry: Neurox focuses on the preclinical phase of drug development (green area below). It will take, on average, 2 years (mostly animal testing) to finalize an end product. We expect to make our first sales (3 anti- AD preclinical drugs) by the end of the 2nd year. Our business model has the following advantages: No risky, costly and lengthy clinical trials No hurdles of FDA approval Time to revenue is much shorter Sales / Where we are End product: now Preclinical drug 2 years Clinical Development Basic Drug Preclinical FDA Research Discovery Development Approval Phase I Phase II Phase III Animal models of disease
Neurox Pharmaceuticals, Inc. Cash Flow Neurox will continue to generate new, patentable anti-AD drugs, with a total of 36 preclinical drugs for sale within 5 years. Note that from the 3rd year on (after attaining profitability) we will increase the output capacity through purchasing additional equipment, hiring more staff and re-allocating resources. We plan to raise $5 Mil and $10 Mil in Series A and B, respectively, to fund the operations in the first 2 years. The company will be self- sustaining financially from the 3rd year. Capital (Series A) (Series B) input $5 Mil $10 Mil Profitable 300 Million ($USD) Revenue 200 1st year 2nd year 3rd year 4th year 5th year 100 Gross Margin 0 Net Profit after Revenue $30 Mil $42 Mil $77 Mil $255 Mil Tax (3 drugs) (4 drugs) (7 drugs) (22 drugs) Note that only upfront cash from licensing is included in the financial analysis shown here. Milestone payments and royalties are beyond the 5-year scope.
Neurox Pharmaceuticals, Inc. Exit Strategy Cash dividends: Neurox plans to distribute 30% of the net profit (after tax) among shareholders annually. FY2012 FY2013 FY2014 FY2015 FY2016 Cash Dividend ($Mil) - 5.9 8.1 15.4 54.0 Company sale: We plan to grow the company to be highly profitable in preparation for a sale in 5 years. Its unadjusted equity book value (lower-end estimate of company’s value) is expected to reach $340 Mil. However, comparable sales have reached $500 Mil to $650 Mil in the past. Note that the milestone payments and royalties (not realizable within 5 years) will potentially reach a total value of $1.4B at the time of sale.
Neurox Pharmaceuticals, Inc. Conclusion Neurox is positioned to be the leader in supplying anti-AD preclinical drugs. We are ready to show the world, for the very first time, that AD is curable. While the industry still employs conventional approaches and continues to suffer from the lack of progress in treating AD, Neurox has found the solution. Our drugs are about to revolutionize AD therapies. Early drug development particularly depends on high level of intellectual input. Our Harvard team brings in the best expertise, experience and innovation to guarantee Neurox’s success. It is our intention to enhance and extend the lives of millions, and in that process, create a successful company.