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Executive Summary EZRA has a unique opportunity to develop Generic versions of branded drugs which face limited generic competition due to difficulties in formulation. EZRAs core business revolves around a unique, mathematicallybased drug delivery technology called the Asymmetrically Controlled Tablet (ACT). This technology allows EZRA to develop a number of high barrier-to-entry, generic versions of extended release (once-daily) drugs. Pharmaceutical companies utilize drug delivery technology to preserve their brand drug franchises long past the 20 years of chemical patent protection. They do this by introducing a new improved drug formulation. The improved formulation may have gone from a three-times-daily dose, to a once-daily dose. For example, the ADHD drugs Concerta, Focalin, and the Central Nervous System drug Wellbutrin XL were given in multidose formats but are now delivered in once-daily formulations utilizing the brands own unique drug delivery technology. This accomplishes the following for the brand from a business perspective: The improved once-daily version of the drug franchise is intentionally difficult to engineer, limiting generic competition and extending the brand life and pricing structure years beyond the initial chemical patent. For example Wellbutrin was moved to Wellbutrin XL after its first number of years of the patent was expired. EZRA can compete against the pharmaceuticals expensive brand in generic form because of its unique drug delivery technology assessing a large pre-built market. EZRAs drug delivery technology is flexible in design so that it can be engineered to control and manipulate the release of the targeted chemical compound over a 24-hour period. The design of the intended EZRA generic drug does not infringe on the branded pharmaceuticals patent, and/or drug delivery patent, and concurrently satisfies the FDA requirements for generic equivalence. Therefore, EZRAs technology has the capacity to move around complicated delivery systems and engineered formulations as the generic alternative. Through this process, EZRA, working with a generic pharmaceutical distribution partner, can become a leading alternative against the innovators branded drug. One specific example that highlights the EZRA model is Anchen Pharmaceuticals. Anchen created a generic competitor to the once-daily version of GSKs Wellbutrin XL without infringing on GSKs patents. Anchen then partnered with the largest generic company in the world, TEVA Pharmaceuticals, to assist in commercializing the drug. Within the first year of generic sales, Anchen/TEVA captured 70% of the Wellbutrin XL franchise representing $650M of the $1.1B Wellbutrin XL produced in sales. EZRA has several opportunities to develop high barrier-to-entry generic drug formulations utilizing its drug delivery technology, the Asymmetrical Coated Tablet (ACT). Each target drug franchise currently sells in excess of $600M USD annually. EZRA plans to develop each drug with a modest capital raise and/or partnering with a large international generic company(s). This is the same model as that for Anchen discussed above. By partnering, EZRA can compete in a very capital intensive industry. In addition, EZRA transfers much of the financial and legal risk to a competent and established market partner with strong distribution capabilities. The EZRA technology is a platform with which many generic drugs will be developed. It can also be used for branded drugs for which the delivery profile is difficult, in addition to being used with newly formulated drug compounds.
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FDA Regulatory Guidance EZRA follows the generic Abbreviated New Drug Application process. This is a short, well defined process outlined by the FDA which allows for generic drug approval to the brand named drug. The Pioneer brand drug has already completed the difficult clinical trial which may have required 7.5 years time and inordinate amounts of money. EZRA simply has to conduct a blood level study comparing the release of EZRAs drug in the body to the brand (36 patients). For this reason, EZRA can conduct a number of trials for generic drug approval supporting a valuable suite of products. Drug Development Timeline: Brand versus EZRA Generic Brand Clinical Trial (New Drug Application) Phase 1 1-2 Years EZRA-Generic Trial (Abbreviated New Drug Application) Manufacturing and Equivalence Testing (Blood Level Study) +18 Months 15-24 months EZRA relies upon the Food and Drug Administrations (FDA), expedited approval process referred to as the Abbreviated New Drug Application. Approximate EZRA development and FDA approval time is 39 months versus the Brands New Drug Application of 7.5 years. Capital and Use of Proceeds EZRA is currently raising $6.5M USD to complete generic clinical development of its first high-value drug target. EZRA will fund the development of the second drug through existing funds, and funds from Milestone payments from strategic partners. EZRA will initiate each new generic drug development cycle on a yearly basis therefore stacking its product pipeline. Within 3-4 Years, EZRA will have built a generic drug pipeline in excess of $150M dollars, proven its unique drug delivery technology, and ideally achieved its target of possible exit valuation in excess of $250M. Phase II +2 Years FDA Approval Time 39 Months Phase III and Total Time FDA Approval Time +3.5 years 7.5 years
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Year 1
Drug 1 Revenue Drug 2 Revenue Total Drug Revenues Interest Incom e UAMS Royalty Developer Royalty Gross Profit
Year 3
81,938 0 81,938
Drug Target Overviews Drug 1 currently sells in excess of $600M in annual revenue. The active chemical ingredient (API) is difficult to deliver throughout the Gastro Intestinal tract. The drug delivery technology utilized by the innovator for sustained release is patented, and is also specialized to that particular API, therefore keeping high-barriers to entry for generic competition. EZRA is able to develop this drug in its own unique ACT Drug Delivery Technology. EZRA does not infringe on the innovators drug delivery system. Drug 2 currently sells in excess of $900M in annual revenue. The active chemical ingredient (API) is difficult to deliver throughout the Gastro Intestinal tract. The drug delivery technology utilized by the innovator for sustained release is patented, and is also specialized to that particular API, therefore keeping high-barriers to entry for generic competition. EZRA is able to develop this drug in its own unique ACT Drug Delivery Technology. EZRA does not infringe on the innovators drug delivery system.
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Generic Drug Pricing Model Below is a hypothetical example of direct to consumer drug pricing and market share as generic competitors enter the marketplace. The brand controls 100% of the market for many years leaving hurdles in place, such as difficulties in formulations or key patents. A generic company cannot enter the market until: a) the patent expires or the patent is invalidated, b) the generic is non-infringing to the brands patents, or c) the formulations are duplicated in a completely different delivery system. Provided one of the avenues is taken from the above options, generic competitors put downward pressure on prices and significantly erode market share based solely on a low price strategy. Each subsequent generic introduced, will correct to the lower price with those previous introduced. Typically, the brand does not follow and keeps their premium pricing in place.
Brand Price Market Share Year 1 Year 2-5 Year 5-10 $150 100% 20% 20% 10%
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Competitive Advantages of the ACT Technology EZRA matches one or more advantages to the brand technology, and/or other competitors in choosing its drug targets. To be approved as an FDA generic substitute, EZRA must demonstrate bioequivalence with the brand drug. Being able to replicate across a spectrum of drug franchises without infringement to the formulation or the brands technology is competitive advantage of the ACT platform; allowing EZRA access to large markets. Being able to provide higher milligram strength dose-loads in a sustained release fashion is a distinct competitive advantage. Price of manufacturer on a per pill basis is substantially less than other drug delivery technologies (note examples in above graph). Being able to control and manipulate the release profiles of several sustained release drug delivery technologies utilizing mathematics and geometry, where other technologies are designed from a biological perspective specifically with the delivery of the brands active ingredient in mind.
Cross-Sectional
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asymmetrical
symmetrical
water-insoluble polymer
water-soluble polymer
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As demonstrated below, the EZRA simulations track the brand drugs release, demonstrate bioequlivancy, and fall within the FDA parameters for generic approval. This in-vitro testing needs to be replicated in human clinical trials to satisfy FDA ANDA (Abbreviated New Drug Application) guidelines. Please note that the ANDA guidelines do not require a demonstration of either drug safety or efficacy, EZRA needs to only demonstrate bio equivalence.
Operations Summary EZRA, in an effort to control both startup costs and maintain complex industry levels of excellence and compliance, will initially outsource testing, compliance, and marketing functions. By implementing an effective outsource strategy, EZRA is capitalizing on top industry experts and reducing select industry risks. EZRA recreates the expertise of a Large Pharmaceutical company in a lean and nimble small organization. EZRA Core drug development experts have developed over 200 drugs from start to finish. The advisory board careers span years at Merck, Johnson and Johnson, Teva, Watson and Perrigo company.
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Clinical Timeline - approximate The following timeline illustrates the development process and estimated market entry for EZRAs initial partnered drug product.
Clinical Manufacturing
Market Launch
Month 0
Month 9-11
Brand and Generic Market Analysis The #1 selling brand drug in the United States is Lipitor, generating $5.8 billion in sales annually, followed by th Nexium with over $4.7 billion in sales (2008). The 200 ranked brand drug in sales revenue is Xopenex HFA, coming in at $151 million in revenue. Brand drugs finishing outside the top 200 had additional combined sales of nearly $26 billion. The generic drug industry alone will generate an estimated $40 billion in sales by 2010 (US th only). The #1 selling generic drug is Hydrocodone which generated $1.7 billion, while the 200 selling generic had $46 million in sales. Those generics outside the top 200 sold an additional $6.7 billion (2008). Of note, nearly $13 billion of brand pharmaceutical patents expired in 2007 alone. A single drug, when taking EZRA business model into consideration, could generate hundreds of millions in revenue for the company. For
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Year 1 Source of Cash Investment Interest Income Drug 1 Revenue Drug 2 Revenue 6,500,000 81,938 0 0 6,581,938
Year 2
Year 3
Year 4
Year 5
Year 6
Use of Proceeds Repurchase of Member Interest Accounts Payable Royalties Paid Operations Clinical Development Fixed Assets Member Distributions
(32,750,000) (34,000,000) (2,674,000) (4,391,050) (1,805,000) (1,805,000) (85,000) (60,000) (109,437,390) (121,364,557) (146,751,390) (161,620,607) 109,352,390 121,304,557
Increase/(Decrease) Cash
4,506,938
4,462,072
4,854,690
43,572,532
152,924,921
274,229,478
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Management Dr. Cherng-ju Kim, Ph.D. Inventor and Drug Delivery Consultant He is a Professor in the Department of Pharmaceutical Sciences at the College of Pharmacy, University of Arkansas for Medical Sciences (UAMS). Dr. Kim holds a Ph.D. in Chemical Engineering (1984) from McMaster University, Hamilton, Ontario, Canada with a Major in Polymer Reaction Engineering. A Masters in Engineering (Environmental) (1979) from Environmental Science and Engineering Department at Manhattan College, Riverside, N.Y. and a Bachelors in Engineering in Chemical Engineering (1974) from Korea University, Seoul, Korea. In 1986, he founded Khimm Chemical Co., Toronto, Ontario, Canada to develop and market reverse osmosis membranes for home drinking water systems. He later sold his interest in 1988. From 1984 to 1986 Dr. Kim was a research Scientist, Membrane Research and Development with Zenon Environmental, Inc., Burlington, Ontario, Canada where he worked on developing synthetic ultra-filtration membrane for treating food processing wastewater. Dr. Kim currently holds six patents, and has written three books and 71 academic papers, all addressing pharmaceutics. Michael Geranen Chairman / CEO Founding member of EZRA Innovations LLC, subsequently Michael was with CAM-Global, a firm dedicated to the success of young Health Care and Life Science based companies. In his capacity as an investment banker and consultant, Michael has assisted many companies in the development and execution of their business models through various measures of Corporate Development; including business planning, competitive intelligence, market research, sales force development and alliance management. Subsequently two products Michael has worked on are being marketed nationwide under the brands of Quigley, Inc. and SinoFresh HealthCare. Michael is also one of two founding members of Assura Pharmaceuticals, a CAM-Global portfolio company dedicated to providing safe and effective medicines to the general public. He has worked on many projects with companies such as Pfizer, Aventis, J&J and other organizations. Michael attended Lutheran College, Finlandia University
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This overview is for informational purposes and is not an offer to sell or a solicitation of an offer to buy any securities in EZRA Innovations, LLC, or any of its subsidiaries, and may not be relied upon in connection with the purchase or sale of any security.
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