With companies in nutrition and health & wellness making crucial product development and marketing decisions, a clear picture of regulatory tracks for supplements, medical foods and drugs is essential. Co-hosted by Nutritional Capital Network and Todd Harrison, Co-Chair, Food, Dietary Supplements and Cosmetics Practice of Venable LLP, NCN's law firm sponsor.

1. Product Positioning in Nutrition and Health &
Wellness: Bringing your Supplements, Medical
Foods and Pharmaceutical Drugs to Market
Presentation and Conference Call
Tuesday, May 24th, 2011 11am-12pm (PST)
Agenda
Introduction Mike Dovbish, NCN
Grant Ferrier, NCN
Steve Allen, NCN
Legal Perspective Todd Harrison, Venable LLP
Q&A Todd Harrison and Audience
Conclusions and Upcoming Events Mike Dovbish, NCN

2. Purpose of Presentation
• Introduce Nutrition Capital Network (NCN):
Create context for upcoming events
• Discussion on product positioning for
Supplements, Medical Foods and
Pharmaceutical Drugs
May 24, 2011 2

3. Nutrition Capital Network Mission
• The mission of Nutrition Capital Network (NCN) is to:
– facilitate the financing and partnering process for small and medium-sized
companies
– introduce investors to the next generation of successful brands and
technologies in the nutrition, health & wellness, natural/organic and green
product industries.
– facilitating capital flow for the betterment of business and society at large.
• NCN accomplishes this mission by:
– creating a series of events and virtual tools to connect companies and
investors
• Conference Calls
– Q1 “Building a Winning Team: Tips on Hiring and Team Building for
the Entrepreneur”
– Q2 "Product Positioning in Nutrition and Health & Wellness: Bringing
your Supplements, Medical Foods and Pharmaceutical Drugs to
Market”
May 24, 2011 3

4. NCN‟s Focus
Companies in the nutrition and health &
wellness industry across the value chain
including the following sectors:
Dietary Supplements: VMS, Ingredients, Medical Foods,
H&B, Sports, LMRs Technology for OTC/Pharma
Natural & Organic Foods H&W Enabling Technology
Functional Foods Health & Fitness; Green Products
Healthy Foods, BFY Foods N&O Personal Care, Cosmetics
Weight Loss Household and Pet Products
May 24, 2011 4

5. Sponsors
Law Firm Partner NCN Investor Meetings are presented in
association with
Investment Banking Partner
Branding & Strategy Partner
Executive Search Partner
Government Trade Partner
May 24, 2011 5

6. NCN 2011 Cornerstone Investors
May 24, 2011 6

7. NCN Historical Summary
43 of 89: 48% thru NCN 4; 66 of 180: 37% thru NCN 6
NCN Apps/Eval. Pool Selected Secured Funding
I 98 24 12
II 84 22 13
III 78 22 8
IV 80 21 10
SSW Ing/Tech I 35 10 3
V 78 20 5
VI 85 19 6
SSW Ing/Tech II 35 8 2
VII 90 21 4
May 24, 2011 7

8. NCN Deal Flow Summary
Apparel and textiles 3 <1%
Functional Beverages 87 12%
Functional Foods 63 9%
Ingredients 129 18%
Medical Foods 6 1%
Natural & Organic Foods 162 22%
Natural Personal Care & Household 82 11%
Packaging 5 1%
Retail & Service 50 7%
Supplements 117 16%
Technology 32 4%
Total 736 100%
May 24, 2011 8

9. NCN 2011 Calendar
NCN Seminar at Expo East - Baltimore
• September 21-24, 2011
NCN at Supply Side West: Las Vegas
• October 11, 2011: 8-10 Companies
http://www.nutritioncapital.com/NCN_at_SupplySide
_October_2010
NCN IX Fall Meeting, Los Angeles
• November 14-15, 2011: 20-22 Companies
http://www.nutritioncapital.com/NCN_IX_Fall_2011
NCN X Spring East Coast Meeting
• May 2012: 20-22 Companies
May 24, 2011 9

10. Nutrition Capital Network Selection
Criteria
NCN and members of our screening committee use the following basic
criteria to evaluate potential presenting companies, and believes that
similar criteria would be used by any experienced investor to screen
business ventures.
Novelty and Unique Position
• A demonstrated point of differentiation
• New company or concept for investors; not „shopped around‟ too much
• Potential for leadership in a defined sub-segment, channel or niche of
some size
May 24, 2011 10

11. Nutrition Capital Network Selection
Criteria (cont’d)
Insulation
• Protectability of product or service or technology; defense
against copycats
• Intellectual property: trademarks and patents
Economic Potential
• Size and growth rate
• Scalability; potential for economies of scale
• Profitability; Demonstrated gross margins
• Exit potential: A variety of interested parties
May 24, 2011 11

12. Nutrition Capital Network Selection
Criteria (cont’d)
The Management Team
• Pertinent experience of executives: health & wellness, medical, startups,
CPG companies, a specific distribution channel and/or marketing &
sales
• Demonstrated track record in early stage or returning capital
• Surrounding team: investors, partners, marketing & distribution
alliances, legal team
• Star power and charisma; name recognition
Tangibles
• Good branding or brand name, good quality & taste, unique packaging
or presentation
Intangibles
• The "WOW" factor; head turning potential
May 24, 2011 12

13. NCN Results
• Evaluated 832 companies since Oct. 2007
• Selected 200 companies to present at 11
NCN events – 8 dedicated meetings and 3
smaller satellite events
• 41% of companies (61/150) that presented
up to NCN 6 in April 2010 had received
funding or completed a transaction as of
April 2011
May 24, 2011 13

14. U.S. Condition-Specific Supplement, OTC,
Rx Sales & Growth in 2009 ($bil)
Supplement Supplement OTC OTC Rx Rx
Condition Sales Growth Sales Growth Sales Growth
General Health $4,340 4% n/a n/a n/a n/a
Cold/Flu/Immune $1,940 6% $5,770 2% $8,220 16%
Sports/Energy/Weight Loss $7,070 3% $560 -12% $150 -11%
Brain Health/Mental Acuity $510 10% n/a n/a $3,970 17%
Insomnia $260 12% $330 4% $2,100 -3%
Mood/Depression $430 11% n/a n/a $26,630 1%
Menopause $400 4% $120 0% $2,210 5%
Heart Health $1,880 8% $470 2% $18,910 4%
Joint Health $1,600 0% $520 -4% $11,230 14%
Sexual Health $480 -1% $90 15% $1,960 12%
Bone Health $1,670 8% n/a n/a $4,440 -11%
Gastrointestinal Health $1,090 11% $4,520 1% $13,640 -1%
Diabetes $970 3% n/a n/a $14,780 17%
Vision Health $340 6% $540 3% $5,730 13%
Hair/Skin/Nails $520 10% $2,830 0% $2,430 37%
Anti-Cancer $1,220 0% $980 3% $8,010 9%
Anti-Aging $300 3% n/a n/a n/a n/a
Sum of 17 Conditions $25,000 5% $16,740 1% $124,430 7%
Others $1,880 30% $1,800 2% $175,870 4%
Total $26,880 6% $18,540 1% $300,300 5%
May 24, 2011 Source: Nutrition Business Journal 14

15. Todd Harrison
Todd A. Harrison, Partner: Washington, DC Office. T 202.344.4724 F 202.344.8300
taharrison@Venable.com
AREAS OF PRACTICE
• Advertising and Marketing
• Advertising and Marketing Litigation
• Regulatory
INDUSTRIES
• Consumer Products and Services
• Drugs, Medical Devices and Biologics
• Dietary Supplements, Cosmetics and Functional Foods
BAR ADMISSIONS
• District of Columbia
• Maryland
EDUCATION
• J.D., highest honor, University of Tulsa College of Law, 1993
• Order of the Curule Chair
• B.S., magna cum laude, University of Houston-Clear Lake, 1989
May 24, 2011 15

16. Todd Harrison
Todd Harrison focuses his practice on Federal Food and Drug Administration (FDA), United States
Department of Agriculture‟s Food Safety and Inspection Service (FSIS)/Animal and Plant Health
Inspection Service (APHIS)/Agricultural Marketing Service (AMS), Federal Trade Commission (FTC), and
the Drug Enforcement Administration (DEA), as well as other federal, state, and international consumer
protection agencies governing rules and regulations related to drugs, foods, dietary supplements,
homeopathic remedies, medical devices, medical foods and cosmetics. Mr. Harrison works extensively in
the areas of food and dietary supplement safety, labeling and advertising claims. He drafts opinion letters
regarding the status of food ingredients in the United States and assisted in the preparation of food
additive petitions, GRAS notifications, and new dietary ingredient notifications. He also assists companies
in developing self-determined GRAS position for food ingredients.
Mr. Harrison advises clients on issues related to FDA and FSIS‟s labeling requirements a well as on organic
products and genetically modified organisms. Additionally, he advises clients on international food issues.
Mr. Harrison has assisted companies on important FDA, FSIS, APHIS compliance issues, including HAACP,
good manufacturing practice, product recalls vs. market withdrawals, inspections, warning letters,
complying with FDA‟s and FSIS‟s standards of identities, importing meat and poultry products into the
United States, warning letters, and record keeping.
Mr. Harrison has been involved extensively on issues related to the marketing of foods and dietary
supplements, including health claims, qualified health claims, structure/function claims, and nutrient
content claims. He has developed strategies for companies to communicate information about their
products without running afoul of FDA, FSIS and FTC regulatory requirements. He also has a successful
track record of defending against U.S. FTC advertising complaints, enforcement actions and
prosecutions, and defending against competitor challenges in court and other forums.
May 24, 2011 16

17. Todd Harrison
PUBLICATIONS
• December 2010, Congress Passes S. 3386 Restore Online Shoppers‟ Confidence Act, Client Alerts
• September 2007, A Guide to the New Dietary Supplement GMPs: Reviewing the details, nuances and
potential impact of the new rule
• April 2007, Consumer Products Regulatory Report, Q1 2007
• July 2006, Consumer Products Regulatory Report, July 2006
• June 24, 2006, Pet Supplements Primer, Nutraceuticals World
• April 24, 2006, Revisiting Medical Foods, Nutraceuticals World
• March 2006, Consumer Products Regulatory Report, March 2006
• February 24, 2006, Food Allergy Labeling is Here!, Nutraceuticals World
SPEAKING ENGAGEMENTS
Mr. Harrison is a frequent speaker on regulatory law as it relates to foods, dietary supplements
and functional foods.
• May 24, 2011, "Bringing your Supplements, Medical Foods and Pharmaceutical Drugs to Market" for the
Nutrition Capital Network (NCN)
• May 3, 2011 - May 5, 2011, Response Expo 2011
• March 31, 2011 - April 1, 2011, ACI's Food & Beverage Marketing & Advertising Conference
• March 12, 2011, Natural Products Expo West 2011
• February 28, 2011 - March 2, 2011, ERA's Great Ideas Summit
• July 21, 2010, "State of the Industry" at the Nutritional Business Journal Summit 2010
May 24, 2011 17

18. Key Definitions
Key Definitions
May 24, 2011 18

19. Definition of a Medical Food
• A Medical Food is defined as a food
– formulated to be consumed or administered enterally under the
supervision of a physician,
– that is intended for the specific dietary management of a
disease or condition,
– for which distinctive nutritional requirements, based on
recognized scientific principles, have been established by
medical evaluation
• Narrowly construed
– FDA warning letters have indicated that allergies, arthritis,
asthma, cardiovascular disease, fibromyalgia, chronic fatigue
syndrome, failure to thrive, prenatal vitamins, autoimmune
disorders and diabetes are not conditions with distinctive
nutritional requirements
May 24, 2011 19

20. Definition of a Dietary Supplement
• A Dietary Supplement is defined as a product
– that is intended to supplement the diet, which contains one or
more of the following dietary ingredients: a vitamin, a mineral,
an herb or other botanical, an amino acid, a dietary substance
to supplement the diet by increasing the total daily intake, or a
concentrate, metabolite, constituent, extract, or combination of
these ingredients.
– ingested in pill, capsule, tablet, or liquid form.
– not represented for use as a conventional food or as the sole
item of a meal or diet.
May 24, 2011 20

21. Key Requirements for Medical Foods
Key Requirements for Medical Foods
May 24, 2011 21

22. Specifically Formulated and Processed
• A medical food is specifically formulated and processed
(as opposed to a naturally-occurring food used in its
natural state) for the partial or exclusive feeding of a
patient by oral intake or tube.
May 24, 2011 22

23. Dietary Management of a Patient
• Medical food is intended for the dietary management of
a patient who has
– limited or impaired capacity to ingest, digest, absorb, or
metabolize ordinary foodstuffs or certain nutrients because of
therapeutic or chronic medical needs, or
– other special medically-determined nutrient requirements that
cannot be addressed through modification of the normal diet
alone
 Ganeden Biotech 2006 Warning Letter – Psoriasis, chronic
constipation, arthritis, Crohn‟s Disease and Colitis, and IBS
do not have distinct nutrient requirements
May 24, 2011 23

24. Unique Nutritional Requirements
• Medical foods provide nutritional support specifically modified for
the management of the unique nutrient needs that result from a
specific disease or condition, as determined by medical evaluation
– Bioenergy Corvalen Warning Letter 2010 – No distinctive
nutrient need for patients with fibromyalgia, chronic fatigue
syndrome, or cardiovascular disease
– Nestle‟s Boost Kid Essential Warning Letter 2009 – No
distinctive nutrient need for the medical condition “failure to
thrive”
– Efficas Warning Letter 2007 – No distinctive nutrient need for
individuals suffering from allergies or asthma
– Metagenics Warning Letter 2003 – No distinctive nutrient
requirements for type 2 diabetes, arthritis, psoriasis, eczema,
chronic fatigue, and migraine headaches.
May 24, 2011 24

25. Medical Supervision
• It is intended for use under medical supervision
• Medical foods are intended only for patients receiving
active and ongoing medical supervision, wherein the
patient requires medical care on a recurring basis for,
among other things, instructions on the use of the
medical food
May 24, 2011 25

26. Path to Market for Medical Foods
Path to Market for Medical Foods
May 24, 2011 26

27. Barrier to Entry is Moderate
• Does not require FDA approval, but
– FDA views this category as being very narrow
– FDA will require all ingredients to be GRAS-E
– The minimum efficacy requirement is the Significant
Scientific Agreement (SSA) standard
– Distribution Channels are limited
– Importing, without prior, consultation with FDA, is
done at the company‟s own peril
– FDA may not believe a pill is an appropriate delivery
vehicle.
May 24, 2011 27

28. Unique Nutritional Need Requirement
• Scientific dossier must be developed to demonstrate
that a specific disease or medical condition has unique
nutritional needs that cannot be otherwise met through
simple modification to the diet.
– The nutritional need requirement will require at a
minimum Significant Scientific Agreement.
 It is insufficient to state the product works
nutritionally if the scientific literature does not
show that the nutrients you are providing are
necessary.
– Cannot use the Medical Food category to
circumvent the New Drug Approval process
May 24, 2011 28

29. Safety
• Medical foods, like “conventional” food products, must
contain only ingredients that are either GRAS for use in
food or approved as food additives by FDA.
– The ingredients must be generally recognized,
among qualified experts, as having been adequately
shown to be safe under the conditions of intended
use.
 May require at least one safety study in the
intended patient population.
May 24, 2011 29

30. Medical Food - Effectiveness
• At a minimum, FDA would require Significant Scientific Agreement
to establish the effectiveness of a medical food.
– In an advanced notice of proposed rulemaking (withdrawn),
FDA indicated that the scientific evidence is likely somewhere
between the SSA standard and the standard for a new drug
approval.
– The FDA has indicated its position on this issue by stating, “it is
essential that the claims made for such a product present an
accurate interpretation of the scientific evidence concerning the
usefulness of that product or specific formulation…, [and]…a
strong standard of substantiation would be one that requires
that all pertinent data be considered in the formulation of the
product and in the development of any claims about its use.”
FDA Advanced Notice of Proposed Rulemaking, 61 Fed. Reg.
60661, 60669-70 (Nov. 29, 1996).
May 24, 2011 30

31. Marketing Claims
• Medical Foods can be marketed with claims related to
the dietary management of a disease.
– This product is intended for the dietary management
of individuals with Type 2 diabetes
May 24, 2011 31

32. Marketing Channel
• The Orphan Drug Act does not restrict the marketing channel that
Medical Foods may be marketed.
– FDA takes a limited view of the marketing channel
 Hospitals, pharmacies (behind the counter), and physician
offices, etc.
 FDA does not believe that the products should be mass
marketed
– Are Glucerna and Boost Glucose Control medical
foods, foods for special dietary use, or hybrids?
 Labeled to be taken under the supervision of a
medical practitioner
 Mass marketed
 Dietary uniqueness
May 24, 2011 32

33. Examples of Medical Foods Presently
Marketed
• Axona® - A prescription medical food that is marketed
for the dietary management of Alzheimer‟s.
• GlycemX™ 360 – A medical food that is marketed for
the dietary management of diabetes.
• VSL#3® - A probiotic medical food marketed for the
treatment of IBS, ulcerative colitis, etc.
• Limbrel®500 – A medical food marketed for the
treatment of osteoarthritis.
May 24, 2011 33

34. Dietary Supplement Core Concepts
Dietary Supplement Core Concepts
May 24, 2011 34

35. SAFETY
• Under DSHEA, a supplement or dietary ingredient is
unsafe if:
– It presents a significant or unreasonable risk of
illness or injury, under the conditions of use
recommended or suggested in labeling, or under
ordinary conditions of use, or
– It is a new dietary ingredient for which there is
inadequate information to provide assurance that it
does not present a significant or unreasonable risk
of illness or injury.
May 24, 2011 35

36. New Dietary Ingredients
• A “new dietary ingredient” is an ingredient that was not
marketed in the United States before October 15, 1994,
and does not include any dietary ingredient which was
marketed in the United States before October 15, 1994.
May 24, 2011 36

37. New Dietary Ingredients
• Questions & Answers About New Dietary Ingredients:
Q1: What if I know that an ingredient was marketed before
October 15, 1994, but do not have evidence? Must I
submit an NDI notification?
Q2: My ingredient is an extract of a food that was present
in the food supply before October 15, 1994. Do I need
to submit an NDI notification?
Q3: My ingredient was a component of food in the food
supply in chemically altered form. Do I need a NDI
notification?
May 24, 2011 37

38. Dietary Supplement Claims
• Health Claims
• Qualified Health Claims
• Nutrient Content Claims
• Structure / Function Claims
May 24, 2011 38

39. Dietary Supplement Claims:
30-Day Notification
• No more than thirty (30) days after a supplement bearing a
structure/function claim is marketed, the manufacturer, packer,
or distributor of the supplement must notify the FDA Office of
Nutritional Products, Labeling and Dietary Supplements.
May 24, 2011 39

40. Dietary Supplement Claims:
Disclaimer
• The FD&C Act requires the following disclaimer to appear in
connection with a structure/function claim:
“This/these claim(s) has/have not been evaluated by the Food and
Drug Administration. This product is not intended to diagnose,
treat, cure or prevent any disease.”
Statement must also…
Be at least 6 point font size,
Be bold,
Be entirely enclosed inside a box,
Be listed by itself preferably on the same panel as claim or include a
link to the claim.
May 24, 2011 40

41. Dietary Supplement Claims:
Substantiation
• In considering the number and type of studies required to
substantiate a claim, advertisers should consider:
1. The meaning(s) of the claims being made, express
and implied;
2. The relationship of the evidence to the claim;
3. The quality of the evidence; and
4. The totality of the evidence.
5. Accepted norms in the relevant research field.
May 24, 2011 41

42. Drug, Medical Food, or Dietary Supplement:
The Pros and Cons of Each Approach
Drug, Medical Food, or Dietary
Supplement:
The Pros and Cons of Each Approach
May 24, 2011 42

43. Drug, Medical Food, or Dietary Supplement:
The Pros and Cons of Each Approach
GRAS
Medical Food
Food Additive
Dietary
Management of a
Disease
Intended to become
component of or affect
characteristics of food Intended to become
Your component of or affect
Product characteristics of food
Intended to Intended to
supplement diet diagnose, cure,
mitigate or treat
disease
Dietary Supplement
Drug
May 24, 2011 43

44. Drug Pros
• Pros of marketing drugs that have gone through FDA‟s
approval process
– Make express disease claims
– Exclusivity during initial marketing phase regardless
of patent consideration
– Higher Price Point
– Prescription drugs covered by insurance plans
May 24, 2011 44

45. Drug Cons
• Cons of marketing drugs that have gone through FDA‟s
approval process
– Extensive amount of R&D time
– Drug approval process takes years
– Costs will most likely be in the tens of millions, if not
higher
– No guarantee of approval
– Significant regulatory oversight
May 24, 2011 45

46. Medical Foods Pros
• Pros of marketing a product as a medical food
– Lower barrier to market entry
– FDA premarket approval not required
– Express disease management claims
– Less costly to manufacture
– Less regulatory oversight
– FDA objects may be able to rebrand as a dietary
supplement or conventional food with appropriate
structure/function claims
May 24, 2011 46

47. Medical Foods Cons
• Cons of marketing a product as a medical food
– Extensive amount of R&D time
– Requires at least Significant Scientific Agreement
– Clinical studies are costly
– Category narrowly construed
– Limited marketing channels
– Lower barrier of entry
– FDA may disagree that the product is appropriately
marketed as a medical food
May 24, 2011 47

48. Dietary Supplement Pros
• Pros of marketing an ingredient as a food or dietary
supplement
– Lowest barrier to market entry
– No FDA premarket approval required – NDI is a
notification, not an approval process – Interesting
issue whether FDA can deny a notification
– No restrictions on marketing channels
– U.S. consumers understand the implied meaning of
structure/function claims
– Less costly to manufacture
– Less regulatory oversight
May 24, 2011 48

49. Dietary Supplement Cons
• Cons of marketing an ingredient as a food or dietary
supplement
– Limited to structure/function claims or FDA-permitted
health claims
– Generally not covered by insurance
– Generally no barriers to entry by competitors
May 24, 2011 49

50. Q&A
At this point, Steve Allen will kick-off Q&A
followed by the conference call moderator
to give instructions to the audience for
Q&A.
May 24, 2011 50

51. NCN 2011 Calendar
NCN Seminar at Expo East - Baltimore
• September 21-24, 2011
NCN at Supply Side West: Las Vegas
• October 11, 2011: 8-10 Companies
http://www.nutritioncapital.com/NCN_at_SupplySide
_October_2010
NCN IX Fall Meeting, Los Angeles
• November 14-15, 2011: 20-22 Companies
http://www.nutritioncapital.com/NCN_IX_Fall_2011
NCN X Spring East Coast Meeting
• May 2012: 20-22 Companies
May 24, 2011 51

52. THANKS FOR JOINING US
We Look Forward To Seeing You at
Supplyside West and NCN IX!