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SEPSIS AND ENDOTOXEMIA THERAPEUTICS WORKBOOK

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									SEPSIS AND ENDOTOXEMIA
Therapeutic Market Poised for Expansion




 November 2010
 www.medwellcapital.com
Medwell Securities Inc. Disclaimer
(Medwell Securities Inc. is wholly-owned subsidiary of Medwell Capital Corp.)

This industry presentation (the "Presentation") provided is an
opinion only, and subject to change, and specifically is not intended
as investment advice.
The Presentation is based on the securities markets, economics,
general, business, and financial conditions prevailing as of the date
of the Presentation. In our overall analysis, and in preparing the
Presentation, MSI made numerous assumptions with respect to
industry performance, general business and economic conditions
and other matters. While in the opinion of MSI, the assumptions
used in preparing the Presentation are appropriate in the
circumstances, some or all of these assumptions may prove to be
incorrect.
The information contained in the Presentation is believed to be
accurate as of the date hereof and MSI disclaims any undertaking or
obligation to advise any person of any change in any fact or matter
after the date hereof; however, MSI reserves the right to change,
modify or withdraw the Presentation, but is not obligated to do so.
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made as to the accuracy or completeness of such information.
Medwell Capital owns 29,700,000 of the issued and outstanding
Class A common shares (approximately 40% of the basic shares
outstanding) and 14,400,000 whole purchase warrants of Spectral
Diagnostics, a company referenced in this report.
TABLE OF CONTENTS                                                                            Value Proxy: US$341M Licensing Deal for Phase 2 CytoFab™
                                                                                             Product .................................................................................... 41
About This Report – Sepsis and Endotoxemia .......................... 1                      Upcoming Value-Driving Milestones in Sepsis........................ 42
About Medwell Capital ............................................................. 2        Value Impact of Key Milestones ............................................. 43
EXECUTIVE SUMMARY .............................................................. 3           APPENDIX ................................................................................ 47
Sepsis is a Syndrome ................................................................. 5        Selected Technologies......................................................... 48
Sepsis has Many Triggers .......................................................... 6           EritoranTM (Eisai) ................................................................. 48
The Pathophysiologic Complexity of Sepsis .............................. 7                      CytoFab™ (AstraZeneca) ..................................................... 49
Sepsis Carries a High Risk of Mortality...................................... 8                 Xigris™ (Eli Lilly) ................................................................... 50
Sepsis is a Major Health Issue ................................................... 9            The Xigris™ Shortfall ........................................................... 51
Current Treatment is Non-Specific and Sub-Optimal ............. 10                              Talactoferrin AlfaTM (Agennix)............................................. 52
Urgent Need for New Effective Treatments ........................... 11                         Cytosorb TM (Cytosorbents) ................................................. 53
Prior Intervention Strategies .................................................. 12          REFERENCES ............................................................................ 54
Rationale & Outlook for New Therapeutics in Sepsis ............. 13
Leading Technologies and Clinical Programs .......................... 14
Leading Technologies Trial Results ......................................... 15
Endotoxin in Sepsis ................................................................. 16
Endotoxin as a Target for Sepsis Therapeutics ....................... 17
The Emergence of Theranostics.............................................. 18
Devices for the Extracorporeal Treatment of Sepsis .............. 20
Toraymyxin TM ......................................................................... 21
Other Targets and Treatments on the Horizon ...................... 25
Other New Treatments on Horizon ........................................ 27
Challenges in Commercialization ............................................ 31
CORPORATE AND CAPITAL MARKETS PERSPECTIVE ............... 32
Large and Small Corporate Players ......................................... 33
                                                                                 important milestone will be the clear demonstration of efficacy and safety
About This Report – Sepsis and                                                   in large, well-controlled human clinical studies.

Endotoxemia                                                                      This report provides an overview of existing and potential therapies for
                                                                                 sepsis and its frequently related condition endotoxemia. The review
Sepsis remains a significant problem in medical management, with an              discusses the progress of sepsis therapeutics in research and clinical
annual worldwide incidence of approximately 18 million cases with an             settings and concludes with an analysis of the private and public corporate
associated 30-40% mortality rate (Daniels 2009, Blanco 2008, Karlsson            entities pursuing commercialization.
2007). In the US alone, more than 750,000 patients annually are diagnosed
with sepsis, resulting in almost 250,000 deaths. The U.S. Center for             The information contained herein is intended as a general introduction to
Disease Control and Prevention indicates that sepsis is one of the top ten       sepsis and endotoxemia therapeutics and reference guide to the potential
leading causes of death in the U.S., and estimates place the annual cost         of this technology in creating value in the capital markets. This publication
burden to the US healthcare system at greater than $17B.                         is not intended to be used as the basis for trading in the shares of any
                                                                                 company, or undertaking any other financial transaction, without
Despite the enormity of the sepsis healthcare issue, very few new                consulting appropriate professional advisors in each instance.
treatments have been introduced over the past three decades, and the
mortality and morbidity rates of sepsis-related conditions remains high.         Medwell Capital Corporation
Current management of septic patients is predominantly non-specific,             November 2010
relying on a range of interventions such as intravenous fluids and
medications, antibiotics, mechanical ventilation, nutritional support and
corticosteroid therapy. The only therapeutic product currently approved
in the U.S. for direct treatment of septic shock is Xigris™ (Lilly), a product
not widely used due to concerns of cost, efficacy and potentially dangerous
bleeding side effects.

Therapeutic progress has been slowed by significant technological
challenges – sepsis is a complex and progressive condition associated with
substantial patient heterogeneity, confounding efforts to identify broadly
effective therapeutics and making consensus concerning best-practices
difficult to achieve.

On a foundation of research conducted over recent years, a small group of
promising therapeutic technologies has progressed into advanced clinical
trials in the North America and Europe. With significant clinical outcome
and business development events expected over the next few years, the
sepsis therapeutic market is positioned for major transformation and
advancement. Closely associated with this market revolution is the
potential for significant incremental value inherent in product
commercialization.

Despite the commercial promise of the sepsis market, real hurdles need to
be overcome to translate the therapeutic potential into clinical reality. An
                                                                                                                                                            1
About Medwell Capital
Medwell Capital is a publicly-traded, Canada based merchant banking firm
providing capital and related advisory services to the middle market
healthcare sector in North America and Europe.

Range of Services
 Corporate Finance: Private placements, PIPEs, public offerings
 Transaction Advisory: Mergers and acquisitions, licensing, strategic
   planning
 Investment Research: Industry analyses
 Direct Investment: Public and private companies

The Medwell team is comprised of a diverse group of professionals that
collectively possess over 200 years of industry experience.

   Finance/Capital Markets Experience – Corporate Finance, M&A, Equity
    Research, Venture Capital, Sales and Trading; IR/PR
   Operational/Corporate Experience – Strategy, Sales/Marketing,
    Licensing, Business Development
   Technical Expertise – Clinical, Regulatory, Intellectual Property

Strong Performance Record in Healthcare
 Top-ranked Canada-based investment banking team for healthcare
    2008/09 (Brendan Wood)
 Leaders in financing and M&A deals for small cap (<$1B EV) healthcare
    companies in Canada
 Advisor to 3 of top 10 global pharma companies on regional strategy
    and M&A transactions
 Advisor on top licensing deal in Canadian healthcare history
 Successfully raised > $2B for small-cap healthcare companies in
    Canada




                                                                           2
                                                                             high levels of endotoxin are associated with increased ICU and hospital
EXECUTIVE SUMMARY                                                            mortality (MEDIC study, Marshall 2004).
                                                                                                               ®
                                                                             Annual sales of the Toraymyxin column are estimated to be under
                                                                                                                ®
Sepsis is a clinical syndrome of systemic inflammation and organ             $100 million. Although Toraymyxin is approved for use in 18 countries,
dysfunction which may be triggered by infection, trauma or toxins.           the majority of product sales are derived from the Japanese market
                                                                th
Sepsis is associated with a 30-40% mortality rate, and is the 10 most        where Toray’s clinical and marketing efforts have been historically
common cause of death in the United States.                                  focused. Efficacy has been demonstrated in over 50 clinical trials, with
                                                                             the most recent EUPHAS trial showing a statistically significant
Recent estimates suggest there are as many as 18 million global cases        reduction in absolute mortality of 21% at 28 days. The treatment has
of sepsis per year, resulting in 2 million ICU admissions annually. In the   been safely used in over 75,000 patients to date.
U.S. (as in Europe), more than 750,000 patients are diagnosed with
sepsis annually, resulting in close to 250,000 deaths and a cost to the      In 2009 Toray granted an exclusive license to Spectral Diagnostics for
health care system of over $17 billion. Independent research suggests        the U.S. market, where Spectral has initiated a two-year Phase 3-
that these numbers may increase by as much as 50% by the year 2029.          equivalent EUPHRATES trial to obtain FDA approval for the device.
                                                                             Spectral is taking a unique theranostic approach to de-risking this trial,
There are currently two commonly used treatments for the treatment           by first screening patients for high levels of endotoxin with Spectral’s
of sepsis, one limited by its efficacy and side effects (Xigris™), and the   FDA-approved EAA diagnostic, and then treating them with the
                                                                                          ®
other by its historically restricted clinical and market development         Toraymyxin extracorporeal therapy. With an estimated 125,000
                    ®
efforts (Toraymyxin ).                                                       severe sepsis patients annually presenting with high endotoxins, this
                                                                             represents a potential blockbuster (>$1B) market opportunity in the
Eli Lilly’s Xigris™ is a drug approved for the treatment of severe sepsis,   U.S. (assuming the pricing model of Xigris™ at $10k per treatment).
with sales of $127m in 2009. The drug is designed to inhibit the
coagulation cascade associated with sepsis. The drug faces concerns          Competitor drugs in development continue to be plagued by difficulties
over its efficacy (with a reduction in absolute mortality of only 6.1%),     in finding ways to significantly impact sepsis’ complex inflammatory
potentially dangerous side effects (bleeding), and associated high cost      cascade. The most advanced drug in development for sepsis is Eisai’s
($10,000 per treatment). At the request of regulators, it is currently       Eritoran, which is due to release its Phase 3 data by early 2011. While
undergoing an additional clinical trial to demonstrate efficacy.             this could give Eisai a timing advantage over Spectral in entering the
                                                                             U.S. market, Eisai has had to enroll a very large cohort of
                               ®
Toray Industries’ Toraymyxin is a hemoperfusion column for the               approximately 2,000 patients in the hope that it can improve upon its
treatment of severe sepsis that was developed in Japan. The column is        Phase 2 results, where it failed to show a statistically significant
attached to a blood pump, where it has been shown to remove 90% of           benefit. By way of contrast, Spectral’s “theranostic” approach is
circulating endotoxins in the blood stream.                                  designed to improve the likelihood of obtaining confirmatory positive
                                                                             trial results, as well as regulatory acceptance and strong market
Endotoxin makes up part of the outer membrane of gram-negative               uptake.
bacteria, and is associated with the SIRS inflammatory cascade that
leads to organ failure and death in sepsis patients. Spectral’s new EAA      There are seven additional drugs for sepsis at the Phase 2 stage of
assay measures levels of endotoxin in the blood, and has shown that          development, some of which target endotoxins. If successful in clinical



                                                                                                                                                     3
studies, it would take at least five years before any of these drugs
reached the market. There are also three extracorporeal devices
currently under development to remove various proteins and cytokines
associated with sepsis, with strong indication that the extracorporeal
approach is safe. However, none of the drugs or devices under
                                                                    ®
development have been able to demonstrate significant Toraymyxin -
like efficacy to date.

A cohort of equity research analysts in the U.S. are currently valuing
Phase 2 sepsis technologies in the range of $100-350M. The financial
markets outside of the U.S. are generally placing much lower
valuations on biotechnologies at the current time. For example,
                                                                     ®
Canadian based Spectral, with rights to the proven Toraymyxin
technology in the U.S. and an ongoing Phase 3-equivalent trial
underway, has been given a technology value of just over $10M (at
time of printing), although this value has the potential to change
should ex-U.S. biotech markets recover, the Company’s FDA trial
continues to progress, and potential marketing partner discussions
develop.




                                                                         4
                                                                              This progressive accumulation of negative clinical signs is often referred to
Sepsis is a Syndrome                                                          as the Sepsis Cascade (See Figure 1: Sepsis Classification).

                                                                              For convenience, the term “sepsis” is used in its broadest sense within the
A syndrome is the association of several clinically recognizable signs and    document to encompass the variety of related conditions that specialists in
symptoms or characteristics that occur together, so that the presence of      critical care attempt to treat in these severely ill patients.
one feature alerts the physician to the presence of the others.
                                                                              Figure 1: Sepsis Classification
The Systemic Inflammatory Response Syndrome (SIRS) is a serious medical
condition characterized by a whole body inflammatory state secondary to
the activation of the innate immune system. It can be initiated by                                                          Sepsis + evidence of
conditions such as infection, trauma, burns, pancreatitis, blood                                                            end organ dysfunction
transfusions, and autoimmune disease. Endotoxemia may be related to
any one of these conditions and can trigger SIRS.                                    SIRS + confirmed                  Septic
                                                                                     process of infection
                                                                                                                       Shock
Sepsis is defined as SIRS in the presence of an infection, proven or
                                                                                                                                                    Sepsis + organ dysfunction, poor
suspected.                                                                                                       Severe Sepsis                      circulation, low blood pressure

This inflammatory state is associated with the release into the bloodstream
of numerous natural mediators of inflammation, including alterations in                                               Sepsis
blood clotting (Danner 1991, Nee 2010). These mediators cause septic
patients to present with the clinical signs and symptoms of sepsis such as:
          o change in temperature;                                                           Systemic Inflammatory Response Syndrome (SIRS)
          o heart rate > 90 beats/min;
          o hyperventilating > 20/min; or
          o changes in white blood cells.                                                                   Elevated heart rate, respiration
                                                                                                            Elevated white cell count
Endotoxin is an intrinsic component of the outer membrane of gram-                                          Abnormal body temperature
negative bacteria, and is a prototypical mediator capable of inducing these
systemic inflammatory changes. Normal healthy volunteers injected with
nanogram quantities of purified endotoxin showed marked increases in          Source: Medwell Capital
proinflammatory cytokines (van Deventer et al 1990) and depression of
cardiac function (Suffredini 1989, da Silva 1993).

Sepsis is further categorized according to increasing severity viz. severe
sepsis, and septic shock. Severe sepsis is sepsis with acute organ failure
and septic shock is severe sepsis with persistent low blood pressure
despite adequate fluid administration.



                                                                                                                                                                         5
                                                                                     Figure 2: The Pathophysiology of Sepsis

Sepsis has Many Triggers
Presently there is no single root cause that can be reliably attributed to the
negative physiologic changes associated with sepsis.

Very broadly, sepsis occurs with greatest frequency among populations
most prone to critical illnesses. Besides infection, patients experiencing
trauma, severe burns or undergoing major surgery for other diseases are at
risk. An immature or compromised immune system increases risk
(neonates, elderly) as do chronic or debilitating diseases such as diabetes
or cirrhosis.

Therapeutic interventions for other diseases (cancer) that reduce white cell
count or alter the microbiological environment (antibiotics) are clearly
seen to increase the risk of sepsis. The use of invasive devices routinely
used in a critical care setting (endotracheal tubes, vascular or urinary
catheters) increases the risk of microbial infection and heightens risk.

The principal microbial pathogens associated with sepsis risk have waxed
and waned since the 1970’s. Early on, gram- negative infections were most
closely associated with sepsis however in the late 1980’s observers
reported the increasing prevalence of gram-positive bacteria while noting
their facility in acquiring resistance to antibiotics and an ability to survive in
catheters and other implantable devices (Opal 2010).

Opportunistic fungal infections are increasingly associated with sepsis
cases and more recently it has been noted that gram-negative pathogens
are again becoming the prevalent in surveys of ICU infections (Opal and              Source: Hotchkiss RS The Pathophysiology and Treatment of Sepsis NEJM 348;2 Jan 9, 2003
Calandra 2009).




                                                                                                                                                                               6
                                                                                        Sepsis develops when the host response to a pathogen or a microbial toxin
The Pathophysiologic Complexity of                                                      is accelerated to an inappropriate degree. The immune system relies on a
                                                                                        process of molecular pattern recognition to determine the appropriate
Sepsis                                                                                  immunologic response to a foreign protein.

The signs and symptoms of sepsis that clinicians seek to treat with                     The most potent of all the pathogen-associated molecular pattern (PAMP)
supportive care and new therapeutics have their origins in the                          molecules is bacterial lipopolysaccharide (LPS), also known as endotoxin.
dysregulation of pathways within the innate immune system.
                                                                                        PAMP’s as well as other danger-associated molecular pattern (DAMP)
Figure 3: SIRS Cascade                                                                  molecules will bind to Toll-like receptors (TLR’s) and begin a process of
                                                                                        intracellular signaling and cellular activation that ultimately results in the
                                 LPS and other                                          increased release of pro-inflammatory cytokines such as IL-1, IL-6 and TNF-
                              bacterial components                                      alpha (Rittirsch 2008, Sriskandan 2008, Anas 2010).

                                                                                        Disturbances of the coagulation pathways lead to deposition of fibrin clots
                                                                                        in small blood vessels, inadequate tissue perfusion and eventual organ
                                                                                        failure.

                                                                                        Figure 4: Immunosuppression in Sepsis
        Endothelium                  Neutrophils                    Monocytes


                                      Cytokines


                   Oxygen radicals                Lipid mediators

                                                                     Complement
     Increased
   TF and PAI-1
                                                                     Chemotaxis
   Procoagulant effect                                           Lysosomal enzymes


       Microvascular occlusion                         Vascular instability



   Coagulopathy             Fever            Vasodilation              Capillary leak


                         Sepsis and multiple organ failure




                                                                                        Source: Immunosuppression in Sepsis. Richard S. Hotchkiss, M.D., and Steven Opal, M.D.
                                                                                        Immunotherapy for Sepsis — A New Approach against an Ancient Foe. N Engl J Med 363;1
                                                                                        nejm.org July 1, 2010 ]




                                                                                                                                                                                 7
Sepsis Carries a High Risk of Mortality                                        Category                     Number of            Crude                  Number of
                                                                                                            Cases                Mortality*             Deaths
                                                                                                                                                        Annually
Mortality rates for sepsis vary according to severity, ranging from about
15% in sepsis, to over 80% in septic shock depending on the number and
severity of organ failures. In the USA, Wenzel (Figure 5) documented a         Sepsis                       400,000              15%                    60,000
range of 15%-45%, depending on severity of disease.
                                                                               Severe sepsis (sepsis        300,000              20%                    60,000
                                                                               plus organ failure)
Epidemiologic studies have demonstrated that risk of death in critically ill
patients is influenced more by the severity of the immune system response
than by factors related to the site or type of bacterial infection. Other
                                                                               Septic shock (severe         200,000              45%                    90,000
factors influencing outcome include the age and health status of the
                                                                               sepsis plus refractory
patient, the nature and source of the infection, and different genetic         hypotension)
effects on the immune system.

Poor outcomes often follow failure to institute early aggressive therapy
(e.g. within 6 hours of suspected diagnosis). Once vital signs such as blood   Sepsis is documented or suspected infection plus systemic inflammatory response
pressure stop responding to treatment, especially in conjunction with          syndrome including ≥ 2 of the following: temperature > 38° C or < 36° C; pulse > 90
multi-organ failure, septic shock is likely to be irreversible and fatal.      beats/min; respirations > 20/min or PaCO2 < 32 mm Hg; WBC’s > 12,000 cells/μL or
                                                                               < 4,000 cells/μL, or > 10% immature forms.

                                                                               *Crude Mortality estimates the rate at which members of a population have died over a
                                                                               defined period of time.
                                                                               Source: Wenzel RP: Treating sepsis. N Engl J Med 2002; 347(13): 966–967




Figure 5: Sepsis in the United States
                                                                                                                                                                       8
Sepsis is a Major Health Issue
                                                                                  Annual mortality of Severe Sepsis in the US
Sepsis presents major challenges with regard to its definition and                250,000
epidemiology. Recent estimates suggest there are as many as 18 million
cases of sepsis per year and that sepsis may be responsible for a majority        200,000
of the mortality associated with significant public health concerns such as
malaria, tuberculosis HIV/AIDS and others (Global Sepsis Alliance Press
                                                                                  150,000
release 2010). Most of the commonly cited statistics are derived from
surveys and epidemiology studies conducted in the late 1990’s and early
2000’s in the United States.                                                      100,000


More than 750,000 patients annually are diagnosed with sepsis in the U.S.,         50,000
resulting in almost 250,000 deaths. A roughly similar number of people are
                                                th
believed affected in Europe. Sepsis is the 10 most common cause of
                                                                                         0
death in the US, with limited treatment options available to this patient
population.                                                                                       AIDS              Breast            Acute       Severe
                                                                                                                    Cancer         Heart Attack   Sepsis
In the U.S., sepsis occurs in an estimated 35% of trauma patients, and
approximately 50% of trauma-related deaths in intensive care units (ICUs)
are the result of sepsis. Sepsis is both the leading cause of admission and    Source: Center for Disease Control and Prevention
death in ICUs. In the global context it also underlies the leading causes of
death in the developing world such as malaria, pneumonia, parasitic
diseases, tuberculosis, and infantile diarrhoea.                                 The average hospital… cost for a septic patient is $41,000 …
Rising disease incidence has been fuelled by the growing number of                ….totalling more than $17 billion annually in the U.S. alone
surgical interventions and an increase in the number of
immunocompromised patients under care. Independent research
projects indicate that the incidence of sepsis in the US will increase to
1,100,000 patients by the year 2029, representing an increase of just
under 50%.

The average hospital stay for a septic patient is 15-23 days, at an average
cost of $41,000 per patient, resulting in medical costs currently totalling
more than $17 billion annually in the U.S. alone.


 …the incidence of sepsis in the US is predicted to increase
 to 1,100,000 patients by the year 2029…

Figure 6: Sepsis Mortality in the U.S.
                                                                                                                                                           9
                                                                                 Figure 7: Summary of Sepsis Intervention

Current Treatment is Non-Specific and
Sub-Optimal                                                                                Sepsis             Severe Sepsis      Septic Shock

                                                                                                                   Organ              Blood
Current management of septic patients is predominantly non-specific,                         Microbial                               pressure
relying on a range of interventions. Treatment may include: intravenous                       toxins             dysfunction
fluids and medications to maintain normal blood pressure, antibiotics and                                                            collapse
other efforts to control the infection, oxygen, mechanical ventilation to
assist with breathing, nutritional support and corticosteroid therapy to
treat the inflammatory process.
                                                                                               Antibiotics         Vassopressors    Xigris®
                                                                                               IV Fluids           Ventilators
A septic patient in the ICU typically has multi-organ dysfunction requiring                                         Dialysis
constant skilled nursing care and the use of expensive, supportive
therapies such as mechanical ventilation, dialysis, and the administration
of blood products, vasopressors, and costly drugs and antibiotics. These
patients also undergo a wide range of other procedures, including
diagnostic imaging (X-rays, CT, MRI, ultrasound), blood tests, arterial blood
gases, and placement of blood and urine catheters. In many cases,
patients require surgical exploration, resection and debridement of
                                                                                 Source: Medwell Capital
necrotic tissues or fluid. The treatment of most sepsis patients in the ICU is
also multi-disciplinary, often requiring the expertise of consultants in
infectious disease, nephrology, surgery, nutrition and other fields.

None of the above measures specifically treats severe sepsis. The only
therapeutic product currently approved for direct treatment of septic
shock is Xigris™ (Lilly), an anticoagulant. This product is not widely used
due to concerns of cost, efficacy and potentially dangerous bleeding side
effects. Within this context, severe sepsis remains one of the leading
causes of death of patients in intensive care units, with 20-50% of patients
in developed nations ultimately fail to survive their stay in ICU.



    A SAFE AND EFFECTIVE THERAPY IS URGENTLY NEEDED
                 FOR ALL SEPSIS PATIENTS




                                                                                                                                                 10
Urgent Need for New Effective Treatments
Sepsis is a progressive and expensive disease. The condition is closely           March 5, 2002
associated with hospitalization and treatment, with one out of every ten
                                                                                  New Hope for Taming Deadly Septic Shock
ICU patients in the US developing sepsis. The average hospital stay for a
septic patient is 15-23 days, at an average cost of $41,000 per patient,
resulting in medical costs totalling more than $17 billion annually in the
U.S. ALONE.
                                                                                  August 14, 2007
Sepsis is widely regarded as the most challenging problem in intensive            Sepsis Drug Trials Doomed by Lack of Understanding
care, a direct consequence of the complexity of the disease, its rapid
progression and heterogeneity of the patient population. The execution of
more than 60 randomized trials involving more than 15,000 subjects and
costing more than $1 billion has produced only one sepsis-specific drug,
Xigris™ from Eli Lilly. This medication is given through a 96-hour infusion
and is approved only for adult patients with severe sepsis who are at high        August 14, 2008
risk of death. Disappointing Xigris™ sales ($127M in 2009) are likely due to      New Therapy for Sepsis Infections Raises Hope but Many
limited efficacy, narrow label and serious adverse side effects (bleeding).       Questions

 With only one therapeutic product currently approved for treatment of
 septic shock, there is clearly an urgent need for new effective and affordable
 treatments. The current treatment pipeline includes ten industry sponsored
 trials that are Phase 2 or later and actively recruiting subjects, and five
 programs to develop extracorporeal columns for the treatment of severe
 sepsis.
                                                                                  April 15, 2004
                                                                                  Search for sepsis drugs goes on despite past failures




                                                                                  April 2, 2005
                                                                                  Sepsis: The monster within




                                                                                                                                           11
Prior Intervention Strategies                                                     The most promising intervention strategy to date has been the advance of
                                                                                  evidence-based evaluation of supportive care. The Surviving Sepsis
                                                                                  Campaign began in 2002 amid some controversy but has persisted and in
In the ICU, the clinical signs and symptoms associated with SIRS can also be      January 2010 published results showing a 6.2% absolute reduction of
attributed to other potential diagnoses. The predisposing factors to sepsis       unadjusted hospital mortality (Dellinger 2008).
(genetic tendency, underlying disease, age, immune competency)
complicate attempts to differentiate and reliably predict patient outcomes.       Figure 8: Milestones in Sepsis/Critical Care
Heterogeneity in the patients and the course of their disease confounds
efforts to establish evidence-based best practices for therapeutic                2010     Surviving Sepsis Campaign data shows 6.2% absolute reduction in
interventions (supportive care or drugs).                                                  unadjusted hospital mortality
                                                                                  2004     Evidence-based evaluation of therapeutic interventions
As early as the 1950’s analysis of hospital data indicated that the use of        2002     Surviving Sepsis Campaign launched
antibiotics did not reduce rates or mortality of infection (Rogers 1959).         2001     Xigris™ launched in the US by Eli Lilly
                                                                                  1989     Bone et al. propose clinical definitions for sepsis and related conditions
Work to systematically stratify patients by severity of disease or presenting     1985     Acute Physiology & Chronic Health Evaluation (APACHE) II scoring system
symptoms began in the early 1970’s. Building on the early work done with                   published by Knaus et al.
trauma and burn patients (1969-1974), APACHE II was published in 1985.            1981     Ziegler et al. use human antiserum derived from inactivated J5 e. coli
                                                                                           strain for passive immunization against effects of endotoxin
Since then more than two dozen additional scoring systems have
                                                                                  1958     First Surgical ICU opens at Johns Hopkins (US)
undergone clinical validation and have been published. While useful in
                                                                                  1953     Ibsen pioneers use of mechanical ventilation
clinical trials as a measure to improve inclusion criteria, these systems have    1926     Dandy creates the First Intensive Care Unit
been unable to reliably predict the effect of one or more therapeutic             1908     Metchnikoff and Erhlich share Nobel Prize for work on humoral immunity
interventions on all-cause mortality.                                             1892     Pfeiffer and Koch characterize endotoxin
                                                                                  1891     Metchnikoff proposes the initial concepts of innate & cellular immunity
In other disease states, animal models of disease are studied in an attempt       1867     Lister reports that “antisepsis” (use of carbolic acid) reduces incidence of
to identify useful points of intervention in the disease process and guide                 infection
drug development. Presently, no animal species can replicate the                  1860     Pasteur and Koch publish work on “germ” theory
complete immunopathology of man. The heterogeneity of sepsis patients             1854     Nightingale institutes first critical care protocol
(severity of insult, co-morbid disease, physiologic/pharmacologic support         1846     Semmelweis demonstrates that handwashing reduces postpartum sepsis
given) in clinical practice or trials cannot readily be replicated in a
                                                                                  Source: Medwell Capital
controlled animal experiment (Dyson 2009). Not surprisingly, promising
pre-clinical efficacy is frequently not replicated in early phase human trials.

Biomarkers have been studied in an attempt to identify patient
populations with the greatest potential to benefit from a specific
therapeutic intervention. A recent review determined that 178 different
sepsis biomarkers had been studied in 3,370 studies. The authors
concluded that none have sufficient sensitivity or specificity to be routinely
employed in clinical practice (Pierrakos 2010).



                                                                                                                                                                     12
Rationale & Outlook for New Therapeutics                                           Phase 2 programs sponsored by AstraZeneca, Gambro, Fresenius and
                                                                                   CytoSorbents are far smaller. Their primary intent appears to be to “de-
in Sepsis                                                                          risk” an existing clinical hypothesis before moving into a larger Phase III
                                                                                   registration trial. Agennix’s response to this challenge is forecasted to
The leading technologies for sepsis share some common goals and                    appear in 2011.
approaches to modifying the inappropriate physiologic consequences of a
dysregulated innate immune system.                                                 Toray has taken the approach that the removal of endotoxin via
                                                                                   extracorporeal hemoperfusion can remove both a trigger of the
Xigris™ (Lilly) is activated protein C and targets factors responsible for         inflammatory response as well as a possible driver of the hyper-stimulation
coagulation, fibrinolysis and inflammation such as TNF-alpha.                      of the innate immune system. Spectral and Toray are together taking a
                                                                                   unique approach to “de-risking” their Phase III program by combining an
Talactoferrin alfa (Agennix AG) is thought to target TNF as well and may           FDA-approved diagnostic with a medical device (“Theranostic”) that has
possibly have an antibacterial effect as well as a significant effect in cancer.   achieved regulatory approval in Japan & Europe and focusing on removing
CytoFab™ (AstraZeneca) is similarly thought to neutralize the effects of TNF       a known trigger of the inflammatory cascade in sepsis patients.
in a sepsis patient. In 2005, Protherics was suggesting that TNF had a more
profound effect on sepsis syndrome than IL-1.                                      Future Outlook
                                                                                   Despite an on-going Phase 3 trial, Xigris™ has been relegated to niche
Eritoran (Eisai) has targeted the TLR-4 pathway in an attempt to down-             usage in specific patients where the clinician believes that the possible
regulate its negative effect in critically ill patients.                           benefits clearly outweigh both the risks and the cost of drug.

Gambro, Fresenius and CytoSorbents are exploring the hypothesis that the           Delivering high-quality data from well-designed clinical trials will continue
removal of “middle weight molecular peptides” such as cytokines via                to be a near-term challenge for all competitors in this market segment.
extracorporeal purification will have a statistically significant treatment
effect.                                                                            The nearest to market of the new technologies appear to be from Eisai and
                                                                                   Spectral Diagnostics. At last report, Eisai expects to see data from the
Lilly and Eisai Phase 3 programs intend to recruit very large patient              ACCESS trial before the end of 2010 and progress to regulatory
populations in an effort to overcome the hurdles of patient heterogeneity          submissions before the end of 2011. Spectral announced the initiation of
and geographic variations in standard-of-care for severe sepsis patients.          its first registration trial in 2010 with results expected in 2012.

                                                                                       Technologies nearest to market include Eritoran (Eisai)
                                                                                                     and Toraymyxin (Toray).




                                                                                                                                                             13
Leading Technologies and Clinical Programs
Figure 9: Leading Technologies and Clinical Programs

 Intervention                     Study Population   Condition                      Clinical Trial         Start      Projected          Comments
 Company                                                                            Details                           Completion

 Xigris™                          Adults             sepsis                         Phase 4                March      November           Last updated
 Eli Lilly                        >18 years          (vs. placebo)                  (recruiting)           2008       2011               August 2010
                                                                                    1500 subjects

 Eritoran tetrasodium             Adults             severe sepsis                  Phase 3                November   October            Last updated
 Eisai                            >18 years          (vs. placebo)                  (recruiting)           2007       2009               February 2010
                                                                                    2000 subjects

 Talactoferrin alfa               Adults             severe sepsis                  Phase 2                April      February           Last updated
 Agennix AG                       >18 years          (vs. placebo)                  [completed]            2008       2010               August 2010
                                                                                    190 subjects
                                                                                                                                         Data presented at
                                                                                                                                         International Sepsis
                                                                                                                                         Forum, Sep. 2010

 CytoFab™                         Adults             severe sepsis, septic shock    Phase 2                July       August             Last updated
 AstraZeneca                                         (vs. placebo, 2 dose levels)   (not yet recruiting)   2010       2011               June 2010
                                                                                    300 subjects

 CytoFab™                         Adults             severe sepsis, septic shock    Phase 2                June       September          Last updated
 AstraZeneca                      >20 years          (vs. placebo, 2 dose levels)   (recruiting)           2006       2011               June 2010
                                  [Japan]                                           20 subjects

 Toraymyxin™                      Adults             septic shock, endotoxemia      Phase 3                June       Predicted end of   Last updated
 extracorporeal hemoperfusion     >18 years                                         (recruiting)           2010       2012               November 2010
 Spectral Diagnostics (US)                                                          360 subjects
Source: Medwell Capital; Company Reports




                                                                                                                                                                14
Leading Technologies Trial Results
Figure 10: Leading Technology 28-day Mortality Outcomes


                                                 Active   Placebo   Absolute      Relative    P value
                                                  (%)       (%)     difference   Difference
                                                                        (%)          (%)
 Xigris Phase 3 PROWESS trial (n=1690)
                                                  24.7     30.8        -6.1        -19.4      0.005
                              APACHE II ≥ 25       31       44         -13         -29.5        -
 Eritoran Phase 2 trial (n=300)
                                      105mg       26.6     33.3        -6.7        -20.1      0.335
                              APACHE II > 25      33.3     56.3       -23.4        -40.8      0.105
 Talactoferrin Phase 2 trial (n=190)
                                     Overall      14.6     26.6        -12          -45        0.04
                             CVS dysfunction      22.4     28.6        -6.2         -22        0.44
                         No CVS dysfunction       2.6      22.6        -20          -88        0.03
 Cytofab Phase 2 trial (n=81)
                                                   26       37         -11         -29.7      0.274
 Toraymyxin Phase 2 EUPHAS trial (n=64)
                                                   32       53         -21         -39.6       0.03
Source: Company Reports




                                                                                                        15
Endotoxin in Sepsis                                                           Patients were grouped into those with low (<0.4 units), intermediate (0.4 –
                                                                              0.6 units) and high levels (>0.6 units) of endotoxin according to this assay
                                                                              (Marshall et al 2004).
What is Endotoxin?
                                                                              Figure 11: MEDIC Study
Endotoxin, otherwise known as bacterial lipopolysaccharide (LPS), is an
intrinsic component of gram-negative bacteria, making up the bulk of its      Endotoxin activity level                       <0.4    0.4 – 0.6   >0.6
outer membrane.                                                               Proportion of patients with severe sepsis      42.8%   26.6%       30.6%
                                                                              positive for endotoxin on admission to
In healthy individuals endotoxin is present within the intestine as part of   ICU
                                                                              Risk of severe sepsis in first 24 hrs of ICU   4.9%    9.2%        13.4%
the normal bacteria found in the gut. The host defence response portion
                                                                              admission
of the innate immune system relies in part on molecular pattern
                                                                              ICU mortality                                  ~11%    ~13%        ~17%
recognition of foreign proteins. Endotoxin in small amounts is the most       In-hospital mortality                          ~16%    ~23%        ~23%
dominant of these PAMP’s and promotes normal antimicrobial defence            Source: Marshall et al 2004
responses.
                                                                              In this study, high endotoxemia (endotoxin levels > 0.6 units) were
Abnormally elevated levels of circulating endotoxin (endotoxemia) can be      associated with increased ICU and hospital mortality.
the result of gram-negative bacterial infection, translocation from the gut
or less frequently from environmental exposure. In critically ill patients,   Figure 12: Endotoxin Pathways
the release of large amounts of endotoxin triggers the release of pro-
inflammatory mediators and pro-coagulant factors into systemic
circulation.

Endotoxin can be found to be present in excretions from the lungs, fluid
around the brain, urine, and the blood. In the period 1960-1990, the
exploration of the biology and immunopathologic effects of endotoxin
produced important knowledge and some puzzling contradictions (Hurley
1994, 1995, 2009)

        Not all patients with bacterial infections are endotoxemic
        Endotoxin is a prominent trigger of the sepsis cascade but not all
        sepsis patients have significantly elevated levels of circulating
        endotoxin
        Not every septic patient is bacteremic or endotoxemic

The role of endotoxin in sepsis was further elucidated by the discovery of
TLR receptors and separately by the publication of the MEDIC study in
2004.                                                                         Source: Modified from Lolis and Bucala 2


In this study a novel Endotoxin Activity Assay was used for the
measurement of endotoxin in 857 patients admitted to intensive care.
                                                                                                                                                         16
                                                                                   RATIONALE FOR EXTRACORPOREAL TREATMENT
Endotoxin as a Target for Sepsis
                                                                                   As alluded to above, a number of drugs that were being developed for
Therapeutics                                                                       sepsis treatment showed promising activity in Phase 2 but failed to show
                                                                                   significant efficacy in Phase 3. One possible explanation accounting for all
Typically, the candidate molecule most likely to produce a broadly                 the above failures is the fact that endotoxin is retained within the body,
applicable efficacy effect will target the immunopathologic process most           thus allowing residual/ongoing effect through as yet unrecognized
directly associated with one or more well accepted causes for the disease          mechanisms of action. The utilization of an extracorporeal strategy
being treated. Targeting processes further downstream have the potential           whereby endotoxin is removed from the body constitutes a novel
to produce notable efficacy but possibly in a smaller, less easily identified      approach.
population of patients.
                                                                                                                                                  ®
                                                                                   In addition to Toray’s hemoperfusion column (Toraymyxin ), currently
Drug Interventions                                                                 licensed to Spectral for the North American markets, four extracorporeal
                                                                                   devices are currently under investigation – Alteco’s LPS Adsorber,
                                                                                                                                            TM
At this time, modification of the host response to endotoxin appears to            Fresenius’ MATISSE Adsorber, Cytosorbent’s Cytosorb , and B.Braun’s
have the greatest potential to reduce mortality in septic patients.                DEAE-Cellulose Adsorber (See section titled “Devices for the Extracorporeal
However, notable failed programs include the monoclonal antibody (HA-              Treatment of Sepsis). Spectral’s development program is the most
1A) which showed great promise in a Phase 2 trial (Ziegler et al 1991) but         advanced of the five companies. Toraymyxin is approved in 18 countries
was not replicated in a larger Phase 3 trial (McCloskey et al 1994). Similar       outside of the USA. It has been used in over 75,000 sepsis patients since
outcomes were found with E5, a murine monoclonal antibody (Angus                   1992 and has been in over 50 randomized, controlled, and observational
2000).     Intravenous immunoglobulin therapy (antibodies), lipid A                studies. With the exception of the negative Phase 2 MATISSE trial and
analogues, and intravenous polymyxin-B have also not been shown to                 Alteco’s cardiac surgery study which was too small to make any inferences,
improve outcomes.                                                                  the studies suggest the extracorporeal strategy warrants significant merit.

Recently, the results of the large Phase 2 LIPOS trial (1379 patients) using a     The “EUPHAS” Phase 2 trial (Early Use of Polymyxin B Hemoperfusion in
phospholipid emulsion GR270773 for the neutralization of endotoxin failed          Abdominal Septic Shock trial) used the Toraymyxin hemoperfusion column
to show efficacy (Dellinger et al 2009). Even more recently, on the premise        in 64 patients with abdominal sepsis, which was terminated early due to
that inhibition of the LPS receptor TLR-4 would ameliorate the effects of          statistical and clinical significance. On the basis of these results, the
LPS, a trial evaluating TAK-242 was terminated early on the basis of               “EUPHRATES” trial (Evaluating the Use of Polymyxin B Hemoperfusion in a
insufficient effect (Rice 2010). Eritoran, an LPS analogue that functions as       Randomized Controlled Trial of Adults) has recently been initiated by
a TLR-4 antagonist, is currently nearing the end of clinical trials. Results are   Spectral Diagnostics (Rachoin 2010). This trial is taking a “theranostic
expected in the last quarter of 2010 or first quarter of 2011.                     approach” by recruiting only those patients with high levels of endotoxin,
                                                                                   as measured by the EAA assay and then treating them with the
The lack of efficacy of the above mentioned anti-endotoxin trials could be         hemoperfusion column. The reduction of endotoxin from very high levels
explained by a number of factors such as the intervention itself, the              should avoid, or at the very least, minimize, the release of the cascade of
heterogeneity of the target population, suboptimal dosing, or even a low           inflammatory mediators and procoagulant factors that cause diffuse
prevalence of endotoxemia in the target population.                                endothelial injury, reduced blood supply to critical organs, and
                                                                                   unresponsive shock.

                                                                                      The “EUPHAS” trial was stopped early for significantly
                                                                                                      positive outcomes.
                                                                                                                                                            17
The Emergence of Theranostics                                                    Statistics from the National Cancer Institute SEER program show that <10%
                                                                                 of all breast cancers were identified as metastasized/un-staged and
Advances in molecular biology and the drive towards “personalized                therefore possible targets for the drug.
medicine” have led to predictions that the global market for the vast array
of in-vitro diagnostics will grow from $37 billion to more than $50 billion by   Strategic applications for theranostics can be broadly categorized as:
2012 (PWC Diagnostics 2009).                                                     1. Rapid detection methods leading to faster differential diagnosis of
                                                                                      disease
Sales of in-vitro tests with clinical applications (including glucose                     – Elevation of procalcitonin levels as an indicator of microbial
monitoring) are expected to grow to $5 billion in the same period.                            infection
Diagnostics within this segment may be broadly categorized as:                            – real-time PCR testing of blood cultures for pathogen
                                                                                              identification
Figure 13: Diagnostic Segmentation                                               2. Improved therapeutic outcomes in specific patient populations
                                                                                          – Beyond the Herceptin example, co-receptor binding profile
 Category                  Purpose                                                            assays can guide the use of co-receptor antagonists
 Prognostics               prediction of risk for developing disease or                       (maraviroc)
                           condition                                                      – Continuous evaluation of risk/benefit associated with
 Screening Tests           early identification of illness prior to overt                     therapeutic intervention
                           symptoms                                                       – Viral load measurements as an efficacy surrogate for
 Early Diagnostics         assist prediction of disease probability and/or                    antiretroviral drugs
                           severity                                                       – Gene profiling to guide the dosing of warfarin has been
 Diagnostics               assist differential diagnosis of disease or                        recently been added to the product’s labeling by FDA
                           condition
 Companion                 assess risk/benefit of specific therapeutic           Regulatory approval of a theranostic combination implies that both the
 Diagnostics               intervention                                          therapeutic intervention and the companion diagnostic have reliably
                           guide treatment/dosing to optimal outcome             demonstrated appropriate efficacy and safety. The apparent limitation of
                                                                                 existing diagnostics in critical care medicine has been the inability to
                                                                                 demonstrate a favorable risk/benefit ratio in routine clinical use.
“Theranostics” is a term applied most frequently to Companion Diagnostics
that must be used in conjunction with one or more therapeutics to ensure
                                                                                 This shortfall can be largely attributed to the lack of demonstrable efficacy
the achievement of an optimal risk/benefit ratio when treating a patient.
                                                                                 in many therapeutic approaches however; it is worth noting that efforts to
                                                                                 create biologic or genotypic profiles of sepsis patients have thus far failed
Arguably the most commercially successful demonstration of this concept
                                                                                 to elucidate a useful subset of patients capable of responding to these
is the use of FDA-approved diagnostic tests to guide the use of Herceptin
                                                                                 same therapeutics.
(Roche) in Stage 4 breast cancer. Herceptin generated sales of >US $5B in
2009 on the basis of prolonging survival in a patient group (Stage 4,
                                                                                 The notable exception to the statements above may be the Endotoxin
overexpressing HER2) that were previously identified as having a poor
                                                                                 Activity Assay (EAA™) from Spectral Diagnostics. This assay was FDA
prognosis for survival (Gilham Theranostics 2002).
                                                                                 approved in 2003 for the rapid detection of endotoxin in whole blood.



                                                                                                                                                           18
As described in this report, endotoxin is a potent trigger of the sepsis
cascade. Marshall (2010) describes the unsuccessful early attempts to
neutralize the effect of endotoxin in sepsis patients. The strategy being
employed by the manufacturers of supportive care devices (Alteco,
Fresenius, Gambro, Spectral Diagnostics) is to remove endotoxin and/or
other “middle weight peptides” using extracorporeal hemoperfusion.

Among these manufacturers, Spectral Diagnostics and Toray are furthest
along the development pathway for a new theranostic combination. The
EUPHRATES trial uses this approved assay to identify endotoxemia in
severe sepsis patients and assesses the use of extracorporeal
hemoperfusion with the Toraymyxin hemoperfusion column on 28-day
mortality rates.




                                                                            19
Devices for the Extracorporeal Treatment                                     Company                   Location             Product/Technology
                                                                             Gambro AB                 Stockholm, Sweden    Cascade Hemofiltration
of Sepsis                                                                    Fresenius SE              Bad Homburg,         Ultraflux EMiC2
                                                                                                       Germany              Ultraflux AV1000S
The companies and technologies listed and discussed in this section appear   Alteco Medical            Lund, Sweden         LPS Adsorber
based on their support of clinical investigations for devices used in        Toray Medical Co.         Tokyo, Japan         Toraymyxin
extracorporeal treatment of sepsis or related critical illnesses.            Cytosorbents Corp.        Monmouth Junction,   CytoSorb hemoperfusion
                                                                                                       United States
Gambro (Stockholm, SE), Fresenius SE (Bad Homburg, DE) and Alteco            Source: Company Reports
Medical (Lund, SE) are the best known companies in North America and
the EU. Toray Medical Co. (Tokyo, JP) has a global presence in
hemodialysis and hemoperfusion. Cytosorbents Corporation (Monmouth
Junction, NJ) is a small company progressing an adsorbent polymer
technology through clinical trials.

The use of dialysis techniques to support the renal and cardiovascular
systems in critically ill patients has become common place. As clinical
investigations determined that hemofiltration, hemodiafiltration and fluid
replacement had positive effects on patient outcomes, manufacturers of
dialysis columns began to explore methods of improving the removal of a
series of what has now been termed “middle weight molecular peptides”.
Cytokines, endotoxin, fibrinogen and other lipoproteins are among the
sepsis-related factors that are removed from blood with varying degrees of
efficiency and clinical effect.

The adaptation and evolution of dialyzers in an attempt to remove small
proteins commonly associated with the sepsis cascade is a logical
progression in product development. The following tables provides a
sample summary of the early clinical investigations conducted to assess
possible benefits and risks of such treatment as well some lesser reports
(abstracts, pre-Phase 2 investigations) that have recently been published.

Clinical trials that are Phase 2 and later are reviewed in the section
Supportive Care (Devices & Other).




Figure 14: Extracorporeal Treatment Devices for Sepsis

                                                                                                                                                     20
                                                                               improved significantly, and crude mortality improved by an absolute
Toraymyxin            TM                                                       difference of 21% and a relative difference of 39.6%.. After adjusting for
                                                                               organ failure (SOFA score) the mortality rate remained statistically
                 TM
                                                                               significant – p=0.01. In support of this, a significant reduction in hospital
The Toraymyxin         device (PMX) is a selective endotoxin removal           mortality (41% on PMX vs 67% on conventional therapy) was also found
hemofiltration cartridge that uses Polymyxin-B to adsorb endotoxin as the      after adjusting for organ failure – p=0.026.
blood flows through the cartridge. Polymyxin-B binds strongly to
endotoxin, and has strong bactericidal activity against gram-negative          The adverse event profile appeared similar to other extracorporeal
bacilli. Polymyxin-B is covalently bound and does not leak into the blood,     therapies viz. clotting, hypotension and tachycardia (Cruz et al 2009,
thereby allowing the clinical application of Polymyxin-B without the known     Antonelli 2010).
toxic effects (kidney and central nervous system toxicity, Tani 2010).
                                                                               Figure 15: 28-Day Mortality
Toraymyxin is approved in 18 countries and has been used in over 75,000
patients, mostly in Japan due to an historically restricted clinical and                                     Conventional
                                                                                                                              Absolute        Relative
market development efforts.                                                                       PMX                         difference     Difference       Hazard ratio (CI)
                                                                                                               therapy
                                                                                                                                  (%)            (%)
                                                                                                                                                              0.43 (0.20 – 0.94)
Spectral acquired the US rights to PMX in 2009 From Toray Medical
                                                                                 Crude
Industries (Japan) with the strategic intent of applying their proprietary     Mortality (%)       32             53              21            39.6
                                                                                                                                                              Adjusted for SOFA
Endotoxin Activity Assay (EAA™) to guide the treatment of endotoxemia in                                                                                            score:
                                                                                                                                                               0.36 (0.16 – 0.8)
severe sepsis. The EAA assay takes less than one hour to conduct. Spectral                                                                                          p=0.01
is positioning the combined EAA diagnostic tool and the PMX therapeutic                                                                                       Adjusted for SOFA
device as the first “theranostic” in the sepsis market.                         In-hospital
                                                                                                   41             67              26            38.8
                                                                                                                                                                    score:
                                                                                 Mortality                                                                     0.43 (0.21-0.90)
                                                                                                                                                                   p=0.026
Compared to the gold standard Limulus Assay for the detection of
                                                                                  Mortality
endotoxin, there are several potential benefits of a more reliable,             rate per 100        1.4              3.2
                                                                                                                                   -              -                    -
reproducible, rapid endotoxin assay in the management of critically ill        patient-days,     (0.8–2.4)        (2.0-5.3)
patients, including indicating the presence of a gram-negative infection, a        mean
requirement for improved resuscitation, evaluation of prognosis and effect     Source: Cruz et al. Early use of Polymyxin B Hemoperfusion in Abdominal Septic Shock: the
                                                                               EUPHAS Randomized Controlled Trial. JAMA 2009;301(23):2445
of treatment, and identify patients who could benefit from anti-endotoxin
specific therapies (Bates 1998, Balk 2002).
                                                                               The EUPHAS trial was terminated early on the basis of positive interim
                                                                               results in fewer than 70 subjects. On the basis of this, and since many of
A systematic review by Cruz et al of selected published literature on the
                                                                               the other trials were small and of limited quality, a confirmatory Phase 3
use of PMX reviewed 9 randomized controlled trials and 19 observational
                                                                               trial, EUPHRATES, trial has been initiated (by Spectral Diagnostics) in the
studies which included more than 1,400 patients. Using a variety of assay
                                                                               United States. The trial is targeted to finish in late 2012.
methods, endotoxin was reduced by 33%–80% compared to baseline
levels, many inflammatory markers as well as oxygenation improved, and
vital signs improved. Overall, the data indicate a 45% relative reduction in
mortality (Cruz et al 2007, 2010).

Recently the results of the EUPHAS trial strongly supported the use of
PMX. 64 patients were enrolled with severe sepsis or septic shock that
underwent emergency surgery for intra-abdominal infection. Vital signs
                                                                                                                                                                     21
Spectral is taking a unique theranostic approach to de-risking this trial, by
first screening patients for high levels of endotoxin with Spectral’s FDA-
                                                                            ®
approved EAA diagnostic, and then treating them with the Toraymyxin
extracorporeal therapy.


             Toraymyxin is approved in 18 countries.


    A large systematic review indicates a 45% reduction in
                          mortality.




                                                                                22
Figure 16: Clinical Investigations of Extracorporeal Approaches to Sepsis

Reference                 Author            Title                        Device / Procedure          Company     Patient Population/Condition       Authors’ Conclusions
Critical Care Med.        Gromova, E        Clinical experience with     Alteco® LPS adsorber        Alteco    – Cancer patients with sepsis       – LPS levels significantly
(2010)                                      lipopolysaccharide                                       Medical                                         reduced in patient
14(Suppl 1):P409                            adsorber in cancer           LPS measured by LAL                                                         serum (1.8 to 2 times)
           th
Poster at 30                                patients with septic shock   assay                                                                     – LBP decreased (10-
International Symposium                                                  Pro-inflammatory & anti-                                                    32%)
on Intensive Care and                                                    inflammatory cytokines                                                    – Cytokines IL-6, TNF-
Emergency Medicine
                                                                         measured by ELISA                                                           beta, IL-8) were
                                                                                                                                                     reliably decreased

Blood Purif. (2009)       Yaroustovsky, M   Preliminary report           Alteco® LPS adsorber vs.    Alteco    – non-randomized cardiac surgery    – 2 subjects in each
Epub 2009 Aug 14                            regarding the use of         Toraymyxin™                 Medical     patients with post-operative        group survived to Day
28(3):227-33                                selective sorbents in                                                nosocomial pneumonia and            28
                                            complex cardiac surgery      adsorption of endotoxin                 severe sepsis caused by Gram-     – serum endotoxin and
                                            patients with extensive      by extracorporeal                       negative bacteria                   procalcitonin levels
                                            sepsis and prolonged         hemoperfusion                         – Alteco® LPS adsorber                markedly decreased
                                            intensive care stay                                                     o 6 subjects x 2 treatments      in both groups,
                                                                                                               – Toraymyxin™                         leukocyte levels
                                                                                                                    o 7 subjects x 2 treatments      improved in both
                                                                                                               – Endotoxin measured by LAL assay     groups, and a trend
                                                                                                                                                     toward normalization
                                                                                                                                                     of body temperature,
                                                                                                                                                     oxygen levels, and
                                                                                                                                                     blood pressure in
                                                                                                                                                     both groups
Perfusion                 Blomquist, S      Clinical experience with a   Alteco® LPS adsorber        Alteco    – 15 patients; coronary bypass      – The intended effects
(2009)                                      novel endotoxin                                          Medical     and/or valvular surgery             of the adsorber, i.e.
Jan;24(1):13-7                              adsorbtion device in         polyethylene discs with a             – Non-randomized                      removal of endotoxin
                                            patients undergoing          specific polypeptide that             – 9 treated, 6 controls               from the blood
                                            cardiac surgery.             binds LPS                                                                   stream could not be
                                                                                                                                                     evaluated in this
                                                                                                                                                     study, presumably
                                                                                                                                                     due to the small
                                                                                                                                                     number of patients
                                                                                                                                                     and the relatively
                                                                                                                                                     short perfusion times.




                                                                                                                                                                                23
Figure 16: Clinical Investigations of Extracorporeal Approaches to Sepsis (cont’d)

Reference              Author              Title                            Device / Procedure       Company      Patient Population/Condition                    Authors’ Conclusions
Acta Anaesthesiol      Kulabukhov , VV     Use of an endotoxin              Alteco® LPS adsorber     Alteco      – Case presentation (1            – LPS in bloodstream was almost eliminated
Scand.                                     adsorber in the treatment of                              Medical        subject)                       – Reduction in procalcitonin level and inflammatory
(2008)                                     severe abdominal sepsis                                               – Gram-negative sepsis              cytokines concurrently reduced
Aug;52(7):1024-5.                                                                                                                                  – Obvious improvement hemodynamic status
Epub 2008 May 20                                                                                                                                   – Author reported patient survival at Day 45 post
                                                                                                                                                     treatment

Blood Purif,           Umgelter, A         Treatment of septic patients     MATISSE®                 Fresenius   – 10 subjects with severe         – All patients survived to Day 5
(2008)                                     with an arginine-based           Endotoxin Adsorber                     sepsis / septic shock           – Hemodynamic parameters improved
26(4):333-9                                endotoxin adsorber column        EN 500                               – Treated for 5 consecutive       – Authors could not demonstrate reduction in
Epub 2008 May 16                           improves hemodynamics                                                   days                              endotoxin levels
                                           and reduces oxidative stress:    macroporous beads
                                           results of a feasibility study   immobilized with
                                                                            human serum albumin

Shock                  Bengsch, S          Extracorporeal plasma            H.E.L.P.                 B. Braun    – 15 ICU patients with severe     – reduction in plasma endotoxin levels from a
(2005)                                     treatment for the removal of     (Heparin induced                       sepsis and plasma endotoxin       median of 0.61 to 0.39 EU/mL (-35%) could be
Jun;23(6): 494-500                         endotoxin in patients with       extracorporeal                         concentrations >0.3 EU/mL         achieved (P < 0.001)
                                           sepsis: clinical results of a    lipoprotein fibrinogen                                                 – after 5-6 individual treatments initial vs. post-
                                           pilot study                      precipitation)                                                           treatment plasma endotoxin levels declined from a
                                                                                                                                                     median of 0.61 to 0.39 EU/mL (-35%) could be
                                                                            DEAE-cellulose                                                           achieved (P < 0.001).
                                                                            adsorber
Crit Care Med.         Reinhart, K         Open randomized phase II         MATISSE®                 Fresenius   – Severe sepsis or septic shock   – The endotoxin adsorber system did not result in a
(2004)                                     trial of an extracorporeal       Endotoxin Adsorber                     from Gram-negative                significantly improved primary end point in
Aug;32(8):1662-8                           endotoxin adsorber in            EN 500                                 infection                         patients with presumed Gram-negative sepsis
                                           suspected Gram-negative                                               – 76 subjects – standard of       – In patients with peritonitis, the adsorber treatment
                                           sepsis                           macroporous beads                      care                              likewise did not result in significantly improved
                                                                            immobilized with                     – 67 subjects – standard of         Acute Physiology and Chronic Health Evaluation II
                                                                            human serum albumin                    care + hemoperfusion              scores

Transfus Apher Sci.    Staubach, KH        A new endotoxin adsorption       MATISSE®                 Fresenius   – 19 healthy volunteers           – trends in improvement of morbidity and organ
(2003)                                     device in Gram-negative          Endotoxin Adsorber                   – 104 peritoneal dialysis           dysfunction were found as well as efficient LPS
Aug;29(1):93-8                             sepsis: use of immobilized       EN 500                                 patients                          removal in peritonitis patients
                                           albumin with the MATISSE
                                           adsorber.                        macroporous beads
                                                                            immobilized with
                                                                            human serum albumin

Ther Apher. (2001)     Ullrich, H          A new endotoxin adsorber:        MATISSE®                 Fresenius   – 6 patients with endotoxemia     – APACHE II score was reduced (23.5 pre-treatment
Oct;5(5):326-34.                           first clinical application       Endotoxin Adsorber                     (>20 pg/ml LAL) and a             vs. 22.3 post-treatment)
                                                                            EN 500                                 minimum of two systemic         – endotoxin adsorption was very well tolerated
                                                                                                                   inflammatory response
                                                                            macroporous beads                      syndrome (SIRS) criteria
                                                                            immobilized with
                                                                            human serum albumin



                                                                                                                                                                                              24
Other Targets and Treatments on the Horizon                                            Device Interventions in the Sepsis Cascade
                                                                                       The benefit of renal support for sepsis patients via hemodialysis/hemofiltration is
                                                                                       well established. New technologies seek to enhance the therapeutic effect of
This section will provide a broad conceptual overview of intervention strategies       extracorporeal filtration by selectively removing endotoxin or other “middle
that are currently seen as potentially most useful.                                    weight peptides”. Multiple candidate devices are discussed in the section titled
                                                                                       “Devices for the Extracorporeal Treatment of Sepsis.
In September 2010, ClinTrials.gov listed “Industry” as the primary sponsor in
under 20% of currently active trials related to “sepsis”. Clinical investigations      Diagnostics & Diagnosis
sponsored by academia reflect a wide range of research interests but share the         To improve the reliability and/or speed of differential diagnosis of sepsis or earlier
common intent of adding to the “body of knowledge” around sepsis or other              and/or more reliable identification of dysregulation of the innate immune system
related critical illnesses.
                                                                                       New diagnostic approaches under development include SeptiFast® (Roche) for
Where new therapeutic approaches are being studied, the clinical trial designs         the rapid identification of microbial DNA, PET scanning to identify sources of
are a result of the sponsor’s theory around why the intervention will have a           infection and the measurement of procalcitonin levels to guide antibiotic therapy.
positive effect on sepsis outcomes. These potential strategies for intervention
could be described as:                                                                 Supportive Care
                                                                                       Improve outcomes in sepsis patients via more effective management of symptoms
Drug Interventions in the Sepsis Cascade
                                                                                       associated with the dysregulation of the innate immune system. Drugs and
                                                                                       devices have been successfully developed. Evidence-based treatment algorithms
1.    ANTICOAGULANT PATHWAYS
                                                                                       have been shown to have a positive effect.
     Normal coagulation relies on tissue factor to produce fibrin needed for
     clotting and uses plasminogen-activator inhibitor type-1 (PAI-1) to control the
                                                                                       Anti-fungal drugs being studied include Ambisome® (Gilead) for pre-emptive
     production of Protein C, a natural anticoagulant. Xigris™ (drotrecogin alpha)
                                                                                       treatment of multiple candida (fungal) infection with Pfizer conducting a
     is a recombinant form of human Activated Protein C which exerts an
                                                                                       comparative trial of anidulafungin vs. caspofungin in deep tissue and systemic
     antithrombotic effect by inhibiting Factors Va and VIIIa.
                                                                                       fungal infection in the dysfunctional immune system.
2.    ENDOTOXIN & TLR RECEPTORS
                                                                                       Doripenem (Ortho-McNeil Janssen) a broad-spectrum carbapenem IV antibiotic
     Toll-like receptors are presently seen as an important target based on their
                                                                                       (trauma patients) and daptomycin (Cubist) a novel lipopeptide antibiotic targeted
     perceived ability to modify downstream effects of inflammatory activity.
                                                                                       against gram positive infection are seeking to improve the risk/benefit ratio of
     Endotoxin binds to TLR-receptors and upregulates the release of pro-
                                                                                       presumptive antibiotic therapy in seriously ill patients.
     inflammatory cytokines. Eritoran tetrasodium, a modified form of Lipid A, is a
     competitive antagonist of the TLR-4 signaling system and currently in Phase 3
                                                                                       Merck is conducting a large trial of V710 (staphylococcus aureus Vaccine) in
     development. TAK-242, a highly specific small-molecule inhibitor of TL-4 –
                                                                                       patients scheduled for cardiothoracic surgery.
     mediated signaling was designed to suppress cytokine levels (TNF-alpha,
     interleukins). Development of TAK-242 has been halted due to poor trial
                                                                                       Dobutamine, levosimendan, ivabradine and FE 202158 (selective V1a receptor
     results.
                                                                                       agonist) are being investigated for their positive effects on cardiac function in
                                                                                       critically ill patients.
3.    PRO-INFLAMMATORY CYTOKINES
     Down-regulation and/or neutralization of TNF-alpha or a variety of
                                                                                       Modification of existing Continuous Renal Replacement Therapy systems are
     interleukins were seen early on as readily accessible targets for drug
                                                                                       being studied by Gambro, Fresenius and CytoSorbents. They hypothesize that
     therapies. CytoFab™ is an ovine polyclonal antibody fragment designed to
                                                                                       extracorporeal hemofiltration using new synthetic membranes will remove
     neutralize TNF-alpha.
                                                                                                                                                                          25
middle weight molecular peptides that are commonly elevated in sepsis patients.
All three technologies are currently in Phase 2 trials.

Modification of the Innate Immune System Response
Identify new, previously recognized factors that could predispose patients to
developing sepsis. Modify the effect of factors known to influence the speed and
severity of the immune system dysregulation.

The current market leader (Xigris™, Lilly) and new compounds from Agennix,
Astra Zeneca, Eisai as well as a “theranostic” from Spectral Diagnostics represent
the near to market technologies and will be reviewed in the next sections.




                                                                                     26
Other New Treatments on Horizon
Figure 17: Supportive Care (Devices & Other)


Intervention                    Study          Condition                                  Clinical Trial   Start      Projected    Comments
Company                         Population     (comparator?)                              Details                     Completion
cascade hemofiltration          Adults         sepsis                                     Phase 3          April      April        Last updated
Gambro Lundia AB                >18 years      (standard treatment, open label)           (recruiting)     2009       2012         October 2010
                                <90 years                                                 60 subjects
Ultraflux EMiC2                 Adults         septic shock                               Phase 2/3        July       January      Last updated
[for Continuous Hemodialysis]   >18 years      (single blind)                             (recruiting)     2008       2011         February 2010
Ultraflux AV1000S                                                                         24 subjects
[for Continuous
Hemofiltration]
Fresenius Medical Care
CytoSorb™ hemoperfusion         Adults         ARDS, ALI, sepsis                          Phase not        November   January      Last updated
Cytosorbents                    >18 years      (open label)                               listed           2007       2010         June 2009
                                <80 years                                                 (recruiting)
                                                                                          100 subjects                             MedaSorb name
                                                                                                                                   change to
                                                                                                                                   CytoSorbents Inc.
                                                                                                                                   May 2010
glutamine + antioxidants        Adults         critical illness, sepsis, MODS,            Phase 3          April      June         Last updated
Fresenius Kabi                  >18 years      hypoperfusion                              (recruiting)     2005       2011         September 2009
                                               (vs. placebo normal saline & EN formula)   1200 subjects


hydroxy-ethyl starch            Adults         severe sepsis, septic shock                Phase 3          December   March        Last updated
B. Braun                        >18 years      (vs. placebo Ringers acetate)              (recruiting)     2009       2012         October 2006
                                                                                          800 subjects
hydroxy-ethyl starch            Adults         sepsis, severe sepsis, septic shock        Phase 4          May        December     Last updated
Fresenius AG                    >18 years      (vs. placebo normal saline)                (recruiting)     2005       2007         October 2006
                                                                                          240 subjects




                                                                                                                                                       27
Other New Treatments on Horizon
Figure 18: Diagnostics & Diagnosis


Intervention                    Study                                  Condition                             Clinical Trial     Start     Projected    Comments
Company                       Population                             (comparator?)                              Details                  Completion
SeptiFast®                      Adults            severe sepsis, febrile neutropenia, neutropenia,              Phase 4         May         April     Last updated
Roche, Pfizer                  >18 years        hematologic diseases(vs. detection by blood culture)          (recruiting)      2010        2012       May 2010
                                                                                                             150 subjects
SeptiFast®                      Adults              severe sepsis, febrile neutropenia, suspected              Phase 4          May      September    Last updated
Roche                          >18 years                             endocarditis                            (recruiting)       2008        2010        February
                                                          (vs. detection by blood culture)                  2000 subjects                                 2010
procalcitonin level             Adults                          severe sepsis, septic shock                    Phase 3        November      April     Last updated
Biosyn, Brahms AG              >18 years                      (vs. placebo, sodium selenite)                 (recruiting)       2009        2012      January 2010
                                                                                                            1180 subjects
procalcitonin level             Adults                                severe sepsis                             Phase 4       December      March     Last updated
Brahms France                  >18 years                                                                      (recruiting)      2007        2010       December
                                                                                                             140 subjects                                 2009
Flucis®                         Adults                                severe sepsis                             Phase 3       November     October    Last updated
molecular imaging agent +      >18 years                                                                      (recruiting)      2008        2009      August 2009
PET scanning                   <80 years                                                                      30 subjects
Central Hospital; France

Figure 19: Supportive Care (Cardiovascular)


Intervention                 Study            Condition                                                Clinical Trial         Start      Projected    Comments
Company                      Population       (comparator?)                                            Details                           Completion
ivabradine                   Adults           multiple organ dysfunction syndrome                      Phase 2 (recruiting)   May        May          Last updated
 Servier                     >18 years        (vs. standard therapy)                                   70 subjects            2010       2012         August 2010
FE 202158                    Adults           septic shock                                             Phase 2 (recruiting)   November   December     Last updated
Ferring                      >18 years        (vs. placebo)                                            60 subjects            2009       2010         April 2010
dobutamine                   Adults           cardiogenic & septic shock                               Phase 2 (recruiting)   October    April        Last updated
Abbott                       >18 years        (vs. levosimendan)                                       40 subjects            2004       2006         June 2005




                                                                                                                                                                 28
Other New Treatments on Horizon
Figure 20: Supportive Care (Anti-Infectives)


Intervention                  Study            Condition                             Clinical Trial   Start       Projected    Comments
Company                       Population       (comparator?)                         Details                      Completion
daptomycin                    Adults           cSSI, s. aureus bacteremia,           Phase 4          April       April        Last updated
Cubist                        >18 years        renal impairment                      (recruiting)     2010        2012         August 2010
                                               (vs. vancomycin)                      120 subjects
doripenem                     Adults           pharmacokinetics, pharmacodynamics    Phase 4          April       November     Last updated
Ortho McNeil Janssen          >18 years        (open label)                          (recruiting)     2010        2011         June 2010
                              <90 years                                              50 subjects
V710                          Adults           s. aureus bacteremia, mediastinitis   Phase 2/3        December    January      Last updated
(s. aureus vaccine)           >18 years        (vs. placebo)                         (recruiting)     2007        2014         June 2010
Merck                                                                                8044 subjects
daptomycin                    Adults           endocarditis, bacterial               Phase 2          September   February     Last updated
Cubist                        >18 years        infective endocarditis                (recruiting)     2008        2011         April 2010
                                               (vs. vancomycin)                      80 subjects
Ambisome®                     Adults           sepsis                                Phase 4          March       February     Last updated
Fovea / Gilead                >18 years        (open label)                          (recruiting)     2008        2009         June 2008
                                                                                     30 subjects
                                                                                                                               Fovea acquired by
                                                                                                                               Sanofi-Aventis in 2009




                                                                                                                                                        29
Other New Treatments on Horizon
Figure 21: Other Notable Technologies in Development

Company         Compound                                 Clinical Trials                            Status

Artisan         ART-123                                  Phase 2b (closed)                          Press release April 2010.
Pharma          (Recomodulin® ‐ recombinant              750 sepsis patients with disseminated      Announced completion of patient enrolment. Report of results
                human thrombomodulin                     intravascular coagulation.                 promised for later in 2010.

AM-Pharma       BIAP                                     Phase 2 (closed)                           Phase 2 published (Crit Care Med 2009 Vol. 37, No. 2)
                Bovine intestinal alkaline phosphatase   36 severe sepsis/septic shock patients     Press release July 2008.
                                                         with acute renal failure.                  Future clinical trial programs to be conducted with recombinant
                                                                                                    form of enhanced human Alkaline Phosphatase.

Altor           ALT-836                                  Phase 2 (recruiting)                       Most recent update from company website is dated Feb. 2008.
Biosciences     Anti-tissue factor monoclonal antibody   120 sepsis patients with ARDS/ALI.
                                                         Started in April 2009.
                                                         Projected completion in April 2011

NIAID           Pleconaril                               Phase 2 (recruiting)                       No current updates on study progress from NIAID website or from
                                                         60 infants <15 days old with enteroviral   co-ordinating center at Univ. of Alabama Birmingham.
                                                         sepsis.
                                                         Started in June 2001.
                                                         Projected completion in April 2013




                                                                                                                                                                      30
                                                                                commercialization of Xigris™ should guide the pre-launch preparations
Challenges in Commercialization                                                 undertaken by these companies.

                                                                                The principles of evidence-based medicine are readily apparent in the
The market potential for therapeutic interventions that reduce mortality        literature most relevant to the critical care physician. Phase III programs
rates in critically ill patients remains largely untapped despite repeated      will need to address these concerns and the scrutiny that comes with it.
attempts to address these unmet needs.                                          Health economic data is needed in many jurisdictions; programs capable of
                                                                                generating the needed inputs will have an advantage at the time of launch.
As the sponsors of new technologies move into registration studies and
pre-launch development of the market, the lessons learned from the one          Given that all of the products in development lack definitive efficacy
successfully launched therapeutic (Xigris™) and the many unsuccessful           studies, assessments of pricing and reimbursement would appear to be
candidates that failed to complete Phase III trials will become increasingly    premature. Study designs, primary outcomes and patient numbers suggest
relevant.                                                                       that successful outcomes that are clinically relevant would support pricing
                                                                                similar to the overall cost of Xigris™.
As with other therapeutic areas, the concerns of Regulatory authorities for
patient safety (short and longer term) and the demonstration of robust
documentation to guarantee data quality and reliability will need to be
addressed.

The natural history of sepsis, ARDS, ALI or other related illnesses do not
lend themselves to protocol designs intended to provide long-term insight
into safety and efficacy questions. 28-day all-cause mortality is generally
thought to be the “gold-standard” for efficacy with follow-up periods as
long as 12 months being viewed as essential.

Studies with large patient populations where data is collected from many
hundreds of sites across the globe over periods that often exceed 3 years
will be challenged to demonstrate consistent data quality.            The
demonstration of statistically significant treatment effect from any
therapeutic intervention in a clinical trial with relatively small patient
numbers will require strict adherence to patient elucidation measures and
may prolong the initial period of patient recruitment beyond what might
ordinarily be expected.

As the time from publication of Phase 2 results to Regulatory submission is
increased, the effective patent life for commercialization of new entrants is
decreased.

New market entrants will face a difficult challenge in persuading the
community of critical care physicians and nurses that their product has
reliably demonstrated clinically meaningful efficacy and that safety issues
have been adequately explored. Lilly’s experiences with the launch and
                                                                                                                                                        31
CORPORATE AND CAPITAL MARKETS PERSPECTIVE




                                            32
Large and Small Corporate Players
The six leading clinical therapeutic products being developed for the treatment of sepsis are sponsored by a mix of large multinational pharmaceutical
companies and smaller life science technology companies, all of which are publicly-traded on various exchanges. The multi-billion dollar market capitalization
pharmaceutical companies include AstraZeneca (CytoFab), Eisai (Eritoran), and Eli Lilly (Xigris™). The life science technology companies have valuations less
than $100M and include Agennix Ag Talactoferrin), Spectral Diagnostics (Toraymyxin™), and Cytosorbents Inc. (CytoSorb). The only pure-play sepsis focused
company from this advanced clinical group is Spectral Diagnostics.

A key distinguishing factor between the larger and smaller companies in the sepsis field is the ability to access capital resources. Pivotal clinical trials for sepsis
therapeutics supporting regulatory approval in key markets require the recruitment of hundreds of patients across a range of sites. While large pharma
companies have solid R&D budget support, smaller companies such as Agennix and Cytosorbents continue to face financing issues regarding the ongoing
funding of their clinical programs. This issue is further compounded by the fact that these companies have a number of clinical programs ongoing (sepsis and
other) for a range of indications, necessitating capital allocation and R&D prioritization initiatives.

Figure 22: Key Sepsis Players

                                                                                  US ($M)                                                                      Stage of
        Company              Ticker       Location                       1              2                        Sepsis Product      Therapeutic Focus
                                                          Market Cap               Cash     Technology Value                                                Development
                                                                 3a                                                       4
AstraZeneca plc              AZN         UK              $71,643                $11,527     n/m                CytoFab              Broad range          Phase 2 complete
                                                                   3b
E. Lilly & Co.               LLY         USA             $40,406                $5,197      n/m                Xigris™              Broad range          Phase 4
                                                                  3c
Eisai Co. Ltd.               ESAL        Japan           $9,754                 $2,169      n/m                Eritoran             Broad range          Phase 3
                                                                  3d
Toray                        3402        Japan           $9,362                 $1,226      n/m                Toraymyxin (ex-US)   Broad range

Agennix AG                   AGX         Germany         $211                   $5          $99                Talactoferrin        Oncology, sepsis,    Phase 2 complete
                                                                                                                                    wound care
                                                                                                                              5
Spectral Diagnostics         SDI         Canada          $26                    $16         $10                Toraymyxin (US)      Sepsis               Phase 3

Cytosorbents Inc.            CTSO        USA             $11                    $1          $11                CytoSorb             Sepsis, surgery,     Phase 1 Proof of
                                                                                                                                    nephrology, trauma   Concept
Source: Bloomberg, Company Reports
1
  As of November 2, 2010
2
  As of November 2, 2010
3a, 3b, 3c, 3d
               Large, diversified companies with many non-sepsis related therapies
4
  Licensed from Protherics/BTG
5
  Licensed from Toray Industries




                                                                                                                                                                            33
Com pany Overview                                 Business Description
Nam e: BTG plc                                    B TG plc, a specialty pharmaceuticals co mpany, engages in the develo pment and co mmercializatio n o f life science techno lo gies primarily in the United States, Euro pe,
                                                  and A sia. It fo cuses o n medicines that are used in critical care situatio n, and to treat cancer, neuro lo gical, and o ther diso rders. The co mpany's pro duct pipeline
Type: Public Com pany                             co mprises Vo raxaze glucarpidase fo r the treatment o f delayed metho trexate eliminatio n; Variso lve po lido cano l endo veno us micro fo am, a P hase 3 clinical trial pro duct
                                                  to treat varico se veins; Onco Gel paclitaxel aqueo us gel injectio n, a P hase 2b pro duct candidate fo r the treatment o f o eso phageal cancer; and A ngio tensin therapeutic
Website: w w w .btgplc.com
                                                  vaccine, which is in P hase 2a clinical trials to treat hypertensio n. Its pro ducts pipeline also includes P ro larix, a P hase 2a pro duct fo r primary liver cancer; A cadra
Ticker: LSE:BGC                                                                     /2                                                                            34,
                                                  acadesine, which is in P hase 1 clinical trials to treat B -cell chro nic lympho cytic leukaemia; B GC20-01 a P hase 1clinical trial pro duct fo r multiple sclero sis; and
                                                            531
                                                  B GC20-1 , a P hase 1clinical trial pro duct to treat migraine headache. The co mpany o ffers B eneFIX fo r the treatment o f haemo philia B ; Cro Fab, an antido te used to
Location: London, United Kingdom                  treat mild o r mo derate enveno matio n fro m Cro talid snakes, which include rattlesnakes; two -part hip cup, a pro sthetic hip jo int replacement; Campath, a anti-lympho cyte
                                                  antibo dy to treat B -cell chro nic lympho cytic leukaemia; DigiFab, an antido te to treat patients with digo xin to xicity o r o verdo se; and three-part knee, a unico mpartmental
                                                  knee jo int replacement. The co mpany was fo unded in 1     948 and is headquarted in Lo ndo n, the United Kingdo m.


Trading Statistics (Currency: USD)
                                                                                                                                                                                Share Pricing in USD
Last (Delayed Quote)                  $           4.15 Shares Out. (m m )                                           256.87         4.00




                                                                                                                                                                                                                                         Thousands
                                                                                                                                                                                                                                 6,000
                                                                                                                                   3.80
52 w k High/52 w k Low                       4.04523 / Avg. Vol - 3 m o (m m )                                         0.28        3.60                                                                                          5,000
                                              2.40597                                                                              3.40
                                                                                                                                   3.20                                                                                          4,000

Financial Inform ation (Currency: USD)                                                                                             3.00
                                                                                                                                                                                                                                 3,000
                                                                                                                                   2.80
                                                                                                                                   2.60                                                                                          2,000
Market Capitalization (m m )          $       1,064.64 LTM Revenue (m m )                               $           149.46
                                                                                                                                   2.40
                                                                                                                                                                                                                                 1,000
Cash & ST Invst. (m m )               $        125.48 LTM EBITDA (m m )                                 $            21.85         2.20
                                                                                                                                   2.00                                                                                          0

Technology Value (m m )               $        983.24 LTM Net Incom e (m m )                            $            17.15

                                                                                    Last Updated November-02-10                                               LSE:BGC - Share Pricing -Volume          LSE:BGC - Share Pricing




Sepsis-Related Technologies and Products                                                                         Recent Key Events
- CytoFab (AZD9773), an investigational ovine polyclonal antibody fragment that neutralizes                      - July 2010: AstraZeneca to file for approval in U.S.; EU filing date extended from 2014 to 2015
TNF-alpha                                                                                                        in order to strengthen submission
- Status: First of tw o new Phase 2 trials for CytoFab in the treatment of severe sepsis initiated               - June 2010: Tw o additional Phase 2 studies announced; including a smaller study (20
June 2010; 20 subjects; anticipated completion Sept 2011                                                         subjects) in Japan and a larger study (300 subjects) in NA, EU and Australia
                                                                                                                 - July 2009: Phase 2 dose-escalation study in 74 severe sepsis patients completed; no data
                                                                                                                 has been published to date
                                                                                                                 - Dec 2008: BTG acquired Protherics and the license for CytoFab


Strategic Positioning                                                                                            Upcom ing Milestones
- Dec 2005: Protherics and AstraZeneca announced late-stage licensing agreement for                              - Sept 2011: Estimated study completion date of first of tw o new Phase 2 clinical trials for
CytoFab; under the agreement Protherics to receive an initial payment of ₤16.3M, a ₤7.5M                         CytoFab in the treatment of severe sepsis; primary endpoints are safety/tolerability
equity investment to be paid in cash, and milestone payments up to ₤171M, excluding royalties;                   - 2015: Projected MAA submission (EU) and NDA submission (U.S.) dates
under the agreement AstraZeneca is responsible for clinical development and Protherics for
bulk manufacturing




                                                                                                                                                                                                                                          34
Com pany Overview                                  Business Description
Nam e: Eli Lilly & Co.                             Eli Lilly and Company develops, manufactures, and sells pharmaceutical products w orldw ide. It offers neuroscience products to treat
Type: Public Com pany                              schizophrenia, manic episodes, and bipolar maintenance; depression and diabetic peripheral neuropathic pain; attention-deficit hyperactivity
                                                   disorder in children, adolescents, and adults; depression, bulimia nervosa, and obsessive-compulsive disorders; and bipolar depression and
Website: w w w .lilly.com                          treatment-resistant depression. Eli Lilly distributes its products principally through independent w holesale distributors, as w ell as directly to
Ticker: NYSE:LLY                                   pharmacies. The company w as founded in 1876 and is based in indianapolis, Indiana.
Location: Indianapolis, United States


Trading Statistics (Currency: USD)                                                                                                                             Share Pricing in USD

                                                                                                                     39.00
Last (Delayed Quote)                   $          35.34 Shares Out. (m m )                              1153.14




                                                                                                                                                                                                                      Millions
                                                                                                                                                                                                                 45
                                                                                                                     38.00
                                                                                                                                                                                                                 40
52 w k High/52 w k Low                     38.08 / 32.02 Avg. Vol - 3 m o (m m )                           6.92      37.00
                                                                                                                                                                                                                 35
                                                                                                                     36.00                                                                                       30

                                                                                                                     35.00                                                                                       25
Financial Inform ation (Currency: USD)                                                                                                                                                                           20
                                                                                                                     34.00
                                                                                                                                                                                                                 15
Market Capitalization (m m )           $      40,406.13 LTM Revenue (m m )                      $     22,823.20      33.00
                                                                                                                                                                                                                 10
                                                                                                                     32.00                                                                                       5
Cash & ST Invst. (m m )                $       5,196.60 LTM EBITDA (m m )                       $      7,989.70
                                                                                                                     31.00                                                                                       0

Technology Value (m m )                $      42,092.23 LTM Net Incom e (m m )                  $      4,815.30

                                                                                Last Updated November-02-10                                 NYSE:LLY - Share Pricing -Volume          NYSE:LLY - Share Pricing




Sepsis-Related Technologies and Products                                                               Recent Key Events
- Xigris (Drotrecogin alpha (activated)); a recombinant activated protein C, inhibits Factors Va       - Feb 2009: FDA w orking w ith Lilly to further evaluate the incidence of severe bleeding and
and VIIIa in the coagulation cascade; also inhibits PAI-1 and tumor necrosis factor production         death in patients w ho received Xigris; FDA w ill communicate results of study and
- Status: Phase 3 confirmatory trial for Xigris in adult patients w ith severe sepsis initiated Mar    recommendations upon completion of the review ; timeline uncertain but likely to take several
2008; 1,500 subjects; anticipated completion Nov 2011                                                  months
                                                                                                       - Mar 2008: Recruitment commenced for second, large confirmatory Xigris trial to maintain
                                                                                                       original approval for treatment of severe sepsis in adult patients; target enrolment of 1,500
                                                                                                       subjects from 182 sites w orldw ide


Strategic Positioning                                                                                  Upcom ing Milestones
- Xigris is the only approved pharmaceutical therapy indicated for the treatment of severe             - Nov 2011: Forecasted completion date for Xigris Phase 3 confirmatory trial
sepsis in adult patients
- Xigris increases the risk of bleeding and has a series of contraindictions including active
internal bleeding, hemorrhaging stroke and trauma w ith life-threatening bleeding
- Sales figures for 2009 w ere US$127M, 2008 US$161M; sales have been hindered by small
eligible patient population due to contraindictions and high relative cost of treatment (US$1,700
per day)
- Annual reassessments from EMEA are required; as a result of these review s and remaining
questions over the current risk-benefit profile, a new trial focused on patient selection and
safety assessments w as initiated



                                                                                                                                                                                                                       35
Com pany Overview                                  Business Description
Nam e: Eisai Co. Ltd.                              Eisai Co., Ltd. manufactures and markets pharmaceutical drugs, over-the-counter drugs, and pharmaceuticals production systems and
Type: Public Com pany                              equipment primarily in North America, Europe, and Asia. Its primary products include Aricept, w hich is in Phase 1 clinical trials to treat
                                                   Alzheimer's disease; AcipHex, a proton pump inhibitor that is in Phase 3 clinical trials. Eisai also offers consumer healthcare products, food
Website: w w w .eisai.co.jp                        additives, and chemicals. The company w as formerly know n as Nihon Eisai Co., Ltd. and changed its name to Eisai Co., Ltd in 1955. Eisai w as
Ticker: TSE:4523                                   founded in 1941 and is headquartered in Tokyo, Japan.
Location: Tokyo, Japan




Trading Statistics (Currency: USD)                                                                                                                          Share Pricing in USD

                                                                                                                  42.00
Last (Delayed Quote)                   $          34.23 Shares Out. (m m )                            284.94




                                                                                                                                                                                                                       Thousands
                                                                                                                                                                                                              10,000

                                                                                                                  40.00
52 w k High/52 w k Low                        45.5475 / Avg. Vol - 3 m o (m m )                          1.67                                                                                                 8,000

                                              33.99641                                                            38.00
                                                                                                                                                                                                              6,000
                                                                                                                  36.00
Financial Inform ation (Currency: USD)                                                                                                                                                                        4,000
                                                                                                                  34.00
Market Capitalization (m m )           $       9,753.93 LTM Revenue (m m )                    $      9,819.32
                                                                                                                  32.00                                                                                       2,000

Cash & ST Invst. (m m )                $       2,168.60 LTM EBITDA (m m )                     $      2,190.76
                                                                                                                  30.00                                                                                       0

Technology Value (m m )                $     12,334.72 LTM Net Incom e (m m )                 $       590.81

                                                                                Last Updated November-02-10                              TSE:4523 - Share Pricing -Volume          TSE:4523 - Share Pricing




Sepsis-Related Technologies and Products                                                            Recent Key Events
- Eritoran (Eritoran tetrasodium (E5564)); structurally similar to lipid A, acts as a TLR4          - Sept 2010: Modified patient enrolment completion date for ACCESS clinical trial for eritoran
antagonist to block excessive reaction of the innate immune system to endotoxin
                                                                                                    - Mar 2010: Review of interim efficacy of Phase 3 ACCESS trial did not reveal safety
- Status: Phase 3 ACCESS clinical trial for use of eritoran in severe sepsis initiated June 2006;   concerns and enrolment of patients continued; recommended increasing enrolment from 1,500
2,000 subjects; anticipated completion of data collection for primary outcome measure Oct           to 2,000 subjects
2010
                                                                                                    - Jan 2010: Phase 2 trial data published; results indicated eritoran w as w ell-tolerated in
                                                                                                    patients w ith severe sepsis (300 subjects)


Strategic Positioning                                                                               Upcom ing Milestones
- High expectations for eritoran to populate Eisai's product pipeline w ith the U.S. Patent         - Oct 2010: Anticipated completion of data collection for primary outcome measure (all-cause
expiration looming for the company's Alzheimer's treatment, Aricept (Nov 2010); significant         mortality at Day 28) of ACCESS clinical trial for use of eritoran in severe sepsis
dow nw ard pressure on Eisai shares after low er-than-expected Phase 3 efficacy results in          - Mar 2011: Simultaneous regulatory submissions planned for eritoran in Japan, U.S. And
Mar 2010                                                                                            Europe by FY 2010




                                                                                                                                                                                                                        36
Com pany Overview                                 Business Description
Nam e: Toray Industries Inc.                      Toray Industries, Inc. and its subsidiaries provide fibers and textiles, plastics and chemicals, IT-related products, carbon fiber composite
Type: Public Com pany                             materials, environment and engineering products, and life science products. It has operations in Europe, North America, and Asia. Toray
                                                  Industries formed a joint development agreement w ith Daimler AG to develop components made from carbon-fiber reinforced plastics for
Website: w w w .toray.co.jp                       series production vehicles. The company w as formerly know n as Toyo Rayon Co., Ltd. and changed its name to Toray Industries, Inc. in
Ticker: TSE:3402                                  January 1970. Toray Industries w as founded in 1926 and is headquartered in Tokyo, Japan.
Location: Tokyo, Japan


Trading Statistics (Currency: USD)                                                                                                                          Share Pricing in USD

                                                                                                                    6.10




                                                                                                                                                                                                                   Millions
                                                                                                                                                                                                              90
Last (Delayed Quote)                  $           5.74 Shares Out. (m m )                            1631.48        5.90                                                                                      80

52 w k High/52 w k Low                       6.95297 / Avg. Vol - 3 m o (m m )                           6.81       5.70                                                                                      70

                                              5.20543                                                               5.50                                                                                      60

                                                                                                                                                                                                              50
                                                                                                                    5.30
Financial Inform ation (Currency: USD)                                                                                                                                                                        40
                                                                                                                    5.10
                                                                                                                                                                                                              30
Market Capitalization (m m )          $      9,362.04 LTM Revenue (m m )                        $   16,166.83       4.90
                                                                                                                                                                                                              20

Cash & ST Invst. (m m )               $      1,226.41 LTM EBITDA (m m )                         $    1,498.11       4.70                                                                                      10

                                                                                                                    4.50                                                                                      0
Technology Value (m m )               $     15,724.52 LTM Net Incom e (m m )                    $       21.80

                                                                              Last Updated November-02-10                                TSE:3402 - Share Pricing -Volume          TSE:3402 - Share Pricing


Sepsis-Related Technologies and Products                                                            Recent Key Events
- Toraymyxin, a selective blood endotxoin removal hemofiltration cartridge that captures            - June 2010: Phase 3 EUPHRATES trial initiated by Spectral Diagnostics; 360 subjects recruited
endotoxin
- Status: Phase 3 EUPHRATES trial initiated by Spectal Diagnostics June 2010; 360 subjects;         - June 2009: Results of Phase 2 EUPHAS trial announced by Spectral; findings demonstrated
anticipated completion 2013                                                                         that Toraymyxin, w hen combined w ith conventional therapy, significantly improved
                                                                                                    hemodynamics and organ dysfunction and reduced 28-day mortality in patients w ith severe
                                                                                                    sepsis and septic shock




Strategic Positioning                                                                               Upcom ing Milestones
- Mar 2009: Spectral acquired the US rights to the Toraymyxin device w ith the strategic intent     - H2 2011: Spectral interim data and analysis from Phase 3 EUPHRATES trial for Toraymyxin in
of applying their proprietary Endotoxin Acitivty Assay (EAA) to guide the treatment of              sepsis
ednotoxemia in severe sepsis patients                                                               - 2013: Anticipated final data and commercial launch of Toraymyxin in U.S. Market by Spectral
- May 2008: Collaboration w ith Spectral Diagnostics; Spectral to have access to Toray's
distributors in China, India, Russia and Canada for the sales and promotion of EAA in
combination w ith Toraymyxin
- July 2007: Toray announced its partnership w ith Torii Pharmaceutical Co. Ltd for the joint
promotion of Toraymyxin in Japan




                                                                                                                                                                                                                        37
Com pany Overview                                  Business Description
Nam e: Agennix AG                                  Agennix AG, a biopharmaceutical company, engages in developing therapies in the areas of unmet medical needs to improve the length and
Type: Public Com pany                              quality of life of seriously ill patients primarily in Germany and the United States. The company’s lead program, talactoferrin, is an oral targeted
                                                   therapy in Phase III clinical development for the treatment of severe sepsis and non-small cell lung cancer. Its other clinical development
Website: w w w .agennix.com                        programs include RGB-286638, a multi-targeted kinase inhibitor in Phase I testing for solid tumors; satraplatin, the oral platinum-based
Ticker: DB:AGX                                     compound for prostate and other cancers; and a topical gel form of talactoferrin for diabetic foot ulcers. The company w as founded in 1997
Location: Planegg, Germ any                        and is based in Planegg, Germany.



Trading Statistics (Currency: USD)                                                                                                                           Share Pricing in USD

                                                                                                                   11.00
Last (Delayed Quote)                   $          5.08 Shares Out. (m m )                                41.55                                                                                               100,000
                                                                                                                   10.00
52 w k High/52 w k Low                      10.12836 / Avg. Vol - 3 m o (m m )                            0.00                                                                                               80,000
                                                                                                                    9.00
                                              4.90987
                                                                                                                    8.00                                                                                     60,000

Financial Inform ation (Currency: USD)                                                                              7.00
                                                                                                                                                                                                             40,000
                                                                                                                    6.00
Market Capitalization (m m )           $        210.97 LTM Revenue (m m )                        $        9.39
                                                                                                                                                                                                             20,000
                                                                                                                    5.00
Cash & ST Invst. (m m )                $          4.81 LTM EBITDA (m m )                      -$         16.25
                                                                                                                    4.00                                                                                     0

Technology Value (m m )                $         99.18 LTM Net Incom e (m m )                 -$         14.31

                                                                              Last Updated November-02-10                                   DB:AGX - Share Pricing -Volume          DB:AGX - Share Pricing




Sepsis-Related Technologies and Products                                                             Recent Key Events
- Talactoferrin alfa, a recombinant form of human lactoferrin; effectiveness has been                - Feb 2010: Additional positive long-term mortality data from Phase 2 released; results show ed
demonstrated in treatment of both non-small cell lung and renal cancer and severe sepsis             talactoferrin also reduced all-cause long-term mortality compared to placebo
- Status: Phase 2 clinical trial of talactoferrin for severe sepsis completed Dec 2009; first of     - Dec 2009: Study results from Phase 2 trial for treatment of severe sepsis released;
tw o Phase 3 trials to be initiated early 2011; 930 subjects; second trial to be run consecutively   reduction in mortality w as seen both in patients w ith and w ithout cardiovascular depression
                                                                                                     - Late 2008: Tw o Phase 3 trials for use of talactoferrin alfa in cancer treatment intiated in U.S.;
                                                                                                     expanded to Europe in 2010
                                                                                                     - Apr 2008: Phase 2 trial for use of oral talactoferrin for treatment of severe sepsis in the
                                                                                                     presence/absence of cardiovascular depression initiated; 190 subjects recruited


Strategic Positioning                                                                                Upcom ing Milestones
- Re-financing strategy for 2010 includes raising €9.8M in a private placement w ith existing        - Early 2011: Expected initiation of first of tw o Phase 3 trials of talactoferrin for severe sepsis
shareholders (Mar 2010), a €15M loan from major shareholder dievini Hopp Biotech at an               (target of 930 subjects), w ith the second study run consecutively
interest rate of 6% per annum (July 2010), and a planned rights equity offering; €76M has            - 2017: Revised anticipated launch of talactoferrin for severe sepsis; potential for 2015 launch
been raised as of Oct 2010                                                                           date if Phase 3 trials are licensed out and run concurrently
- Re-financing to put the Company on sound financial ground and create negotiating pow er
w ith potential partners; the Company is actively seeking a partnership for oral talactoferrin




                                                                                                                                                                                                                  38
Com pany Overview                               Business Description
Nam e: Spectral Diagnostics Inc.                Spectral Diagnostics Inc., a medical diagnostics company, manufactures, commercializes, and markets rapid diagnostics and various
Type: Public Com pany                           proprietary reagents. Its lead product, Endotoxin Activity Assay (EAA), is a biomaker for the identification of patients at risk for sepsis. The
                                                company also offers RapidWN West Nile Virus IgM Test, an assay that helps physicians in obtaining diagnostic information regarding
Website:                                        exposure to the West Nile virus; and Toraymyxin, a therapeutic hemoperfusion device that removes endotoxin from the bloodstream. Spectral
w w w .spectraldiagnostics.com                  Diagnostics Inc. operates primarily in Canada, the United States, and Europe. The company w as founded in 1991 and is based on Toronto,
Ticker: TSX:SDI                                 Canada.
Location: Toronto, Canada


Trading Statistics (Currency: USD)                                                                                                                       Share Pricing in USD

                                                                                                                0.85                                                                                      400




                                                                                                                                                                                                                Thousands
Last (Delayed Quote)                 $          0.32 Shares Out. (m m )                              75.90
                                                                                                                                                                                                          350
                                                                                                                0.75
52 w k High/52 w k Low                     0.77894 / Avg. Vol - 3 m o (m m )                           0.04                                                                                               300
                                            0.28101                                                             0.65
                                                                                                                                                                                                          250

                                                                                                                0.55                                                                                      200
Financial Inform ation (Currency: USD)
                                                                                                                                                                                                          150
                                                                                                                0.45
Market Capitalization (m m )         $         25.82 LTM Revenue (m m )                       $        2.91                                                                                               100
                                                                                                                0.35
                                                                                                                                                                                                          50
Cash & ST Invst. (m m )              $         16.34 LTM EBITDA (m m )                    -$           3.58
                                                                                                                0.25                                                                                      0

Technology Value (m m )              $          9.78 LTM Net Incom e (m m )               -$           4.59

                                                                           Last Updated November-02-10                                 TSX:SDI - Share Pricing -Volume          TSX:SDI - Share Pricing




Sepsis-Related Technologies and Products                                                          Recent Key Events
- "Theranostic" consists of diagnostic tool (Endotoxin Activity Assay (EAA)) and therapeutic      - June 2010: Phase 3 EUPHRATES trial initiated; 360 subjects recruited
device (Toraymyxin (PMX)); EAA guides the treatment of endotoxemia, PMX is a selective            - Mar 2010: Private placement for $19.5M completed
blood endotoxin removal hemofiltration cartridge that captures endotoxin                          - Feb 2010: IDE approval received from U.S. FDA
- Status: Phase 3 EUPHRATES trial initiated June 2010; 360 subjects; anticipated completion       - June 2009: Results of Phase 2 EUPHAS trial announced; findings demonstrated that
2013                                                                                              Toraymyxin, w hen combined w ith conventional therapy, significantly improved hemodynamics
                                                                                                  and organ dysfunction and reduced 28-day mortality in patients w ith severe sepsis and septic
                                                                                                  shock
                                                                                                  - Mar 2009: U.S. Rights for the development and commercialization for Toraymyxin acquired by
                                                                                                  Spectral
Strategic Positioning                                                                             Upcom ing Milestones
- Mar 2010: Raise of $19.5M completed (grew from $14M prior to closing); funds to be used to      - H2 2011: Interim data and analysis from Phase 3 EUPHRATES trial for Toraymyxin in sepsis
advance Toraymyxin tow ards regulatory approval and commercialization in U.S.                     - 2013: Anticipated final data and commercial launch of Toraymyxin in U.S. Market
- July 2008: An exclusive distribution agreement signed w ith BB Medical, a distributor of
medical technologies, for EAA in Russia
- May 2008: Spectral to have access to Toray Industries' distributors in China, India, Russia
and Canada for the sales and promotion of EAA in combination w ith Toraymyxin




                                                                                                                                                                                                                 39
Com pany Overview                                              Business Description
Nam e: Cytosorbents Corporation                                Cytosorbents Corporation, a therapeutic medical device company, engages in the research, development, manufacture, and
Type: Public Com pany                                          commercialization of blood purification technologies that w ould remove middle molecular w eight toxins from circulating blood and physiologic
                                                               fluids. It is developing tw o products, CytoSorb and BetaSorb utilizing its adsorbent polymer technology. The company w as formerly know n as
Website: w w w .m edasorb.com                                  MedaSorb Technologies Corporation and changed its name to Cytosorbents Corporation on May 7, 2010. Cytosorbents Corporation w as
Ticker: OTCBB:CTSO                                             founded in 1997 and is headquartered in Monmouth Junction, New Jersey.
Location: Monm outh Junction, United
States

Trading Statistics (Currency: USD)                                                                                                                                                          Share Pricing in USD

                                                                                                                                             0.50                                                                                               20,000
Last (Delayed Quote)                            $              0.10 Shares Out. (m m )                                          106.12




                                                                                                                                                                                                                                                         Thousands
                                                                                                                                             0.45
                                                                                                                                             0.40
52 w k High/52 w k Low                                 0.3 / 0.059 Avg. Vol - 3 m o (m m )                                         0.81                                                                                                         15,000
                                                                                                                                             0.35
                                                                                                                                             0.30

                                                                                                                                             0.25                                                                                               10,000
Financial Inform ation (Currency: USD)                                                                                                       0.20
                                                                                                                                             0.15
Market Capitalization (m m )                    $            11.04 LTM Revenue (m m )                                   $              -     0.10
                                                                                                                                                                                                                                                5,000

                                                                                                                                             0.05
Cash & ST Invst. (m m )                         $              0.60 LTM EBITDA (m m )                                 -$           3.02
                                                                                                                                             0.00                                                                                               0

Technology Value (m m )                         $            10.62 LTM Net Incom e (m m )                             -$           2.77

                                                                                                  Last Updated November-02-10                                         OTCBB:CTSO - Share Pricing -Volume           OTCBB:CTSO - Share Pricing


Sepsis-Related Technologies and Products                                                                                     Recent Key Events
- CytoSorb, hemoperfusion device that filters cytokines and other toxins from the blood via                                            0:
                                                                                                                             - Feb 201 $ 299K raised thro ugh seco nd year participating in New Jersey Emerging Techno lo gy and
                                                                                                                             B io techno lo gy Financial A ssistance P ro gram, and $ 80K tho ugh sub-co ntracting wo rk fo r the University o f
extracorporeal purification; clinical applications include the treatment of sepsis, the prevention
                                                                                                                             P ittsburgh; funds to be used to suppo rt Euro pean sepsis study, which reached the halfway po int in subject
and treatment of organ dysfunction, and the prevention and treatment of post-operative                                       enro lment (50 subjects to date)
complications of cardiopulmonary bypass surgery                                                                                                                                                            00
                                                                                                                             - Dec 2009: Clinical trial re-initiated with revised pro to co l; target o f 1 subjects
- Status: CytoSorb Clinical trial for the treatment of sepsis initiated Dec 2007; 100 subjects;                                                                                             3
                                                                                                                             - No v 2009: P reliminary clinical data repo rted; data fro m 1 subjects demo nstrated impro vements in many o f the
                                                                                                                             seco ndary and explo rato ry endpo ints o f the trial
anticipated enrolment completion 2H 2010/Q1 2011
                                                                                                                             - Feb 2009: $ 1 .09M raised thro ugh participatio n in New Jersey Emerging Techno lo gy and B io techno lo gy
                                                                                                                             Financial A ssistance P ro gram and seco nd clo se o f Series B financing
                                                                                                                                                                                      0%
                                                                                                                             - July 2008: $ 4.45M private placement o f Series B 1 Cumulative Co nvertible P referred Sto ck clo sed; the
                                                                                                                             funding is targeted fo r the German sepsis study
                                                                                                                             - Dec 2007: Cyto So rb clinical trial o pened fo r enro lment in Germany; Cyto So rb to be tested in as an adjuntive
                                                                                                                             treatment fo r acute respirato ry distress syndro me and acute lung injury in the setting o f sepsis; target o f 75
                                                                                                                             subjects
Strategic Positioning                                                                                                        Upcom ing Milestones
- M ultiple applicatio ns fo r Cyto So rbents' blo o d purifying adso rbent po lymer techno lo gy including sepsis, o rgan   - 2H 2010/Q1 2011: Anticipated completion of enrolment for CytoSorb clinical trial for the
transplantatio n and kidney failure
                                                                                                                             treatment of sepsis
- Regulato ry appro val and subsequent co mmercializatio n o f Cyto So rb to initially be fo cused o n Euro pean
market
- Co mpany lo w o n cash and reliant o n no n-traditio nal so urces o f financing at small amo unts, also experiencing
difficulty in reaching enro lment targets
            0:
- M ay 201 $ 6M purchase agreement signed with Linco ln P ark Capital Fund, a Chicago -based institutio nal
investo r; o ver a 25-mo nth perio d Cyto So rbents will have the right to sell co mmo n sto ck in amo unts fro m
$ 50,000-$ 750,000 fo r up to an aggregate o f $ 6M




                                                                                                                                                                                                                                                                     40
Value Proxy: US$341M Licensing Deal for Phase 2 CytoFab™ Product
In December 2005 Protherics (now BTG plc) announced a licensing deal with AstraZeneca worth US$341M for the development and commercialization of
CytoFab™ for the treatment of severe sepsis. At the time, the transaction was the largest single product licensing deal achieved by a UK biotechnology
company.

The deal value, excluding royalties, included an upfront cash payment of £16.3m. In addition, AstraZeneca made a £7.5m equity investment in BTG/Protherics.
BTG receives additional payments worth up to £161m payable upon the achievement of milestones and will receive royalties on net global sales of 20%. BTG
will also receive payments for the commercial supply of CytoFab™ which is estimated to bring the effective royalty rate to approximately 25% of sales.

Under the terms of the deal, AstraZeneca is responsible for all clinical development, regulatory submissions and marketing, and BTG is responsible for bulk
drug manufacturing, including the supply of clinical trial material.

CytoFab™ is an ovine anti-TNFα polyclonal antibody fragment (FAb) that had generated clinically significant results from a Phase 2 trial in 81 patients with
severe sepsis.

The announcement of the deal on 8 December 2005 resulted in an immediate 44% increase in Protherics’ share price on the LSE, representing £61.2M in
incremental market value. Given that it represented a significant landmark in Protherics drug development strategy, it was unsurprising that investors saw the
deal as a very positive development for the company.

Figure 23: CtyoFab Licencing Deal Summary of Terms

 Upfront payment                                     £16.3M
 Equity investment                                   £7.5M
 2010                      Initiation of Phase III clinical trials             £10.0M
 2011                      Interim analysis                                    £15.0M
 2012                      Regulatory submission                               £20.0M
 2012                      First sales, first territory                        £45.0M
 2013+                     EU and Japanese approvals                           £46.0M
 2013+                     Approval in other indications                       £25.0M
 Total milestones                                                              £161.0M
 Net global sales royalty                            20%
Source: Company announcement




                                                                                                                                                           41
Upcoming Value-Driving Milestones in Sepsis
A range of key clinical and business development events in the sepsis space are forecast to occur over the next 30 months that have the potential to influence
share prices and valuation. While precise timing of events is difficult to predict, management of the leading sepsis players has provided the following general
guidance regarding their sepsis programs.

Figure 24: Key Milestones in Sepsis Space

        Company                                        H2/10                                                 H1/11                                               H2/11
                                   Full data set from Phase 3 ACCESS clinical trial of
                                                                                           Global NDA filing of Eritoran for treatment of
                                    Eritoran for treatment of severe sepsis ( 2,000
                                                                                                           severe sepsis
                                                       patients)

                                                                                                                                                 Full data set from Phase 3 clinical trial of
                                                                                                                                                Xigris™ for treatment of adult patients with
                                                                                                                                                       septic shock (1,500 patients)

                                                                                                                                                    Results of Phase 2b clinical trial of
                                                                                                                                               CytoFab™for treatment of adults with severe
                                                                                                                                                           sepsis (300 patients)


                                                                                                                                                  Results of Japan Phase 2 clinical trial of
                                                                                                                                               CytoFab™for treatment of adults with severe
                                                                                                                                                            sepsis (20 patients)

                                                                                         Commence Phase 3 clinical trial of Talactoferrin in
                                                                                            adults with severe sepsis (930 patients)

                                                                                           Announce licensing partner for Talactoferrin in
                                                                                                        treatment of sepsis

                                     Completion of European trial of CytoSorb for
                                                                                                                                               Commence randomized, controlled pivotal US
                                  treatment of severe sepsis in setting of respiratory   File for CE Mark approval in Europe for CytoSorb in
                                                                                                                                                 study of CytoSorb for treatment of severe
                                                failure (100 patients)                              the treatment of severe sepsis
                                                                                                                                                                  sepsis
                                  Commence Phase 3 “EUPHRATES” trial in the U.S.,
                                   combining the EAA endotoxin test to screen for
                                  patients with high endotoxin, with the Toraymyxin                                                              Completion of “EUPHRATES” Phase 3 trial
                                           column to remove the endotoxin.




                                                                                                                                                                                                42
Value Impact of Key Milestones
The progression of therapeutic products through clinical studies has resulted in significant value impact to sponsor companies given the economic potential of
the sepsis market. Net Present Value (NPV) analyses on sepsis therapeutics from Wall Street investment research shows significant variance related to the
application of risk-adjustments to different products. Current valuations range from US$100M through US$350M for advanced clinical products for potential
treatment of severe sepsis.

Figure 25: Street NPV Ranges for Sepsis Products

 Product                         Analysts          Consensus Range
 Eritoran                           6               $110M - $170M
 Talactoferrin                      4               $140M - $210M
 Cytofab                            4               $93M - $350M
Source: Bloomberg, Analyst reports

Given the significant leverage associated with the large commercial potential of the sepsis market, key clinical and business development event outcomes have
substantial impact on public market value of sponsor companies. Incremental public-market value creation associated with recent positive key
clinical/business events in the sepsis space has ranged from 40-44% (one-month post event).

The U.S. financial analysts are currently valuing Phase 2 sepsis technologies in the range of $100-350M. Phase 2 milestone events, such as completing trials or
entering into a licensing arrangement, have historically resulted in similar valuations. As to Phase 3 sepsis technologies, Eisai recently established a much
higher valuation benchmark when its market cap plunged by over $1B, as a result of the interim analysis on Eritoran indicating that Eisai must add to the
number of patients enrolled in the trial.

          The financial markets outside of the U.S. are generally placing much lower valuations on biotechnologies at the current time. For example, Canadian
                                                                 TM
          based Spectral, with rights to the proven Toraymyxin technology in the U.S. and an ongoing Phase 3-equivalent trial underway, has been given a
          technology value of just over $10M (at time of printing), although this value has the potential to change should ex-U.S. biotech markets recover, and
          as the Company’s FDA trial progresses, and potential marketing partner discussions develop.

 On the reverse side, suboptimal clinical data from a recent interim analysis of Phase 3 Eritoran data (March 2010) contributed to an 11% price decline in Eisai
share price, representing over $1B in lost value one-month post event.

Some recent notable examples of value-impact events in the sepsis space are included below.




                                                                                                                                                             43
Value Impact of Key Milestones
Agennix AG – On December 1, 2009, Agennix announced the results from the Talactoferrin randomized, double-blind, placebo-controlled Phase 2 trial in
severe sepsis. The trial evaluated Talactoferrin versus placebo in 190 adult patients with severe sepsis. The trial achieved its primary endpoint of a reduction in
28-day all-cause mortality. Over the following month post-announcement, the share price of Agennix increased 40%, representing €27.9M in incremental
market value, and trading volume increased 60%.

On February 26, 2010, Agennix announced additional positive long-term mortality data from its Phase 2 Talactoferrin trial in severe sepsis. Results showed
that Talactoferrin also reduced all-cause mortality compared to placebo over the longer term -- at three months and at six months. Over the following month
post-announcement, the share price of Agennix increased 43%, representing €31.9M in incremental market value, and trading volume increased 1.8x.

Figure 26: Agennix Share Price




Source: Capital IQ




                                                                                                                                                                44
Value Impact of Key Milestones
BTG plc – On December 8, 2005, Protherics (predecessor to BTG plc) announced a major global licensing deal for its Phase 2 CytoFab™ sepsis product with
AstraZeneca. The total “headline” value of the licensing deal was $341M. Over the following month post-announcement, the share price of Protherics
increased 44%, representing ₤61.2M in incremental market value, and trading volume increased 13.4x.

Figure 27: Protherics Share Price




Source: Capital IQ




                                                                                                                                                    45
Value Impact of Key Milestones
Eisai – On March 26, 2010, Eisai announced that the Data Monitoring Committee (DMC) had reviewed interim data for the first 1,500 patients in its Phase 3
trial of Eritoran for severe sepsis. The observed efficacy in the Phase 3 trial was not strong enough to warrant early stoppage of the trial, and the DMC
recommended that the trial continue to full enrolment. The market was expecting a stronger efficacy signal to emerge in the interim analysis leading to early
stoppage of the trial, enabling an accelerated filing timeline. Further, with the looming U.S. patent expiration of its key Alzheimer’s disease treatment, Aricept,
(about 25% of gross profit) on November 25, 2010, expectations were exceptionally high for Eisai to execute on its product pipeline. As a result, the news on
Eritoran was considered significantly disappointing and exerted downward pressure on Eisai Shares, with over $1 billion in market value lost in the month
following the announcement. The market cap prior to the news was approximately US$11.5 billion.

Figure 28: Eisai Share Price




Source: Capital IQ




                                                                                                                                                                46
APPENDIX




           47
                                                                               Eisai discussed the projected future for Eritoran in its presentation of
Selected Technologies                                                          Q1’2010 results (dated July 30, 2010). Patient enrolment in ACCESS is
                                                                               projected to be complete by September 2010 with simultaneous
                                                                               regulatory submissions planned for Japan, U.S. and Europe by the end of
EritoranTM (Eisai)                                                             FY 2010 (March 31, 2011).

                                                                               Figure 29: Eritoran tetrasodium
Eritoran tetrasodium (E5564) is similar in structure to lipopolysaccharide
lipid A and acts as a TLR4 antagonist to block the excessive reaction of the
innate immune system to endotoxin.                                             Eritoran                          Lipid A

A Phase 2 study initiated in September 2002 and completed in April 2005
evaluated 300 subjects with severe sepsis who received either high dose
(105 mg/6 days) or low dose (45 mg/6days) eritoran delivered by
intravenous infusion twice daily.

Results were released by Eisai in August 2005 followed by a publication in
August 2009. 300 adults were treated with Eritoran for six days but failed
to reach statistical significance (p=0.335) in its primary objective of
reduction of 28-day mortality. Pre-specified subgroup analysis did however
suggest a trend towards lower mortality (33.3% vs. 56.3% in the placebo
group, p=0.105) in the highest dose group in those patients at highest risk
of mortality as defined by the APACHE II scoring system.

ACCESS (A Controlled Comparison of Eritoran Tetrasodium and Placebo in
Patients with Severe Sepsis) was announced in August 2005; initiated in
June 2006 and was targeted to complete the enrolment of 2,000 subjects
by October 2009. Conducted in 159 study locations globally, severe sepsis
patients will receive 105 mg by intravenous infusion.

In March 2010, Eisai announced that the ACCESS Data Monitoring
Committee had completed their review of the planned interim efficacy
analysis of the first 1,500 subjects that completed the 28-day follow up to
treatment. The DMC recommended continued enrolment to the planned
goal of 2,000 subjects and did not express safety concerns that would
warrant stopping the trial at that time.




                                                                                                                                                    48
                                                                                 Primary endpoints are safety/tolerability related with 7 day and 28 day
CytoFab™ (AstraZeneca)                                                           mortality rates listed as secondary outcome measures. Currently estimated
                                                                                 study completion date is August 2011.
Also listed as AZD9773, CytoFab™ is an investigational ovine polyclonal
                                                                                 AstraZeneca released its Q2’2010 R&D pipeline update in July 2010.
antibody fragment which neutralizes TNF-alpha; an inflammatory mediator
                                                                                 Projected dates for MAA submission in the EU and NDA submission in the
strongly implicated in sepsis.
                                                                                 United States are now projected for 2015.
TNF is a cytokine involved in inflammation and stimulates the acute phase        Figure 30: CytoFab polyclonal antibody fragment
reaction. Its primary role is the regulation of immune cells, and is produced
mainly by macrophages. It is a potent chemo-attractant of neutrophils to
sites of inflammation. High concentrations of TNF can cause shock-like
symptoms.

The compound was developed by Protherics and licensed to Astra Zeneca
in Dec. 2005. BTG (LSE: BGC) a UK-based specialty pharmaceutical
company acquired Protherics and the license for CytoFab™ in Dec. 2008.

In 2006, Rice et al published results of treatment for 81 septic patients with
either shock or two organ dysfunctions with either placebo or a loading
dose of CytoFab™ followed by 9 additional doses at 50 units/kg every 12
hrs. Treated subjects had 5.2 more ventilator-free days than placebo (p =
0.04), 5.0 more days out of ICU than placebo (p = 0.03) and fewer deaths in
(26% vs. 37% mortality; p=0.24).

AstraZeneca announced in November 2006 that Regulators would consider
a single Phase III study sufficient for approval but an expanded Phase II
program would need to be conducted. A Phase 2 dose-escalation study in
74 severe sepsis patients was completed in July 2009. No data has been
published to date.

Two additional multi-center Phase 2 studies were announced in June 2010
that will evaluate the safety and tolerability of two intravenous infusion
dosing regimens in adults with severe sepsis or septic shock. A smaller
study of 20 patients from 7 sites will be conducted in Japan. The larger
study will be conducted in a total of 88 sites (55 in North America, 18 in the
EU, 15 in Australia) with a target enrolment of 300 subjects.




                                                                                                                                                       49
                                                                              The FDA and Eli Lilly reached agreement to perform a second, large
Xigris™ (Eli Lilly)                                                           confirmatory trial in order to maintain the original approval for the drug.
                                                                              According to ClinTrials.gov (last updated August 13, 2010), recruitment
                                                                              commenced in March 2008. Target enrolment is 1,500 subjects from 182
Drotrecogin alpha (activated) or DrotAA is recombinant activated protein
                                                                              clinical trial sites worldwide. Forecasted study completion date is currently
C. Used in the treatment of severe sepsis, septic shock and disseminated
                                                                              November 2011.
intravascular coagulation, it exerts an antithrombotic effect by inhibiting
Factors Va and VIIIa in the coagulation cascade. In-vitro data also suggest   Figure 31: Proposed actions of rAPC in modulating the Systemic Inflammatory,
that Xigris also has indirect profibrinolytic activity as well as an anti-    Procoagulant, and Fibrinolytic Host Responses to Infection
inflammatory effect by inhibiting TNF production, by blocking leucocyte
adhesion to vessel walls, and by limiting the inflammatory responses
within the vessel walls induced by thrombin generation

Marketing approval was obtained from the FDA based on 13 Phase I
studies, 2 Phase 2 studies, and one large Phase 3 study, the PROWESS
(Recombinant Human Activated Protein C Worldwide Evaluation in Severe
Sepsis) trial.

The PROWESS study design included two planned interim analyses and was
terminated after the second interim analysis showed a statistically
significant reduction in 28-day all-cause mortality (p=0.0054). Additional
analyses suggested treatment effect in patients with 2 or more organ
failures, and those with severe disease as measured by the APACHE II score
                                                                              Source: Bernard G et al. Efficacy and Safety of Recombinant Human Activated Protein C for
>24. Predefined subgroup analyses of patient groups with Disseminated         Severe Sepsis. NEJM 2001
Intravascular Coagulation (DIC) and shock suggested benefit. However, the
definitions of DIC and shock used in the trial were slightly different to
those normally used in clinical practice. The application of standard
definitions suggested no benefit to either of the two groups.

Alteration of the trial design halfway through the study resulted in
extensive FDA analyses to assess the potential impact on the outcomes. No
impact of the change in eligibility criteria on outcome could be found.
There are also significant side-effects of bleeding, resulting in
contraindications in patients with high risk of bleeding.

After approval was granted by the FDA, two further studies were
conducted – the ADDRESS (Administration of Drotrecogin alpha in Early
Stage Severe Sepsis) study, and the RESOLVE (Resolution of Organ Failure
in Pediatric Patients with Severe Sepsis) study. Both studies were
terminated early because they were unlikely to show benefit.



                                                                                                                                                                          50
The Xigris™ Shortfall
Xigris™ (drotrecogin alpha), developed by Eli Lilly, was the first drug to demonstrate a reduction in mortality in severe sepsis patients and was launched in the
US in November 2001. Xigris™ is a recombinant form of human activated protein C that modulates microvascular function by decreasing inflammation and
coagulation, and increasing fibrinolysis.

Xigris™ sales have failed to deliver the blockbuster returns that were hoped for, and have been hindered by the fact that the major side-effect of Xigris™ is a
risk of serious bleeding events, so its use is contraindicated in patients with active internal bleeding, haemorrhaging stroke and trauma with life threatening
bleeding. As this patient group represents a significant proportion of the at-risk population and dysfunction of the coagulation process is common in severe
sepsis, as few as 25% of patients may be eligible for Xigris™ treatment. Additional issues with the relatively high cost of treatment (about US$1700 per day)
have also hindered sales progress.

Xigris™ is indicated for only those patients with severe sepsis who have a high risk of death (e.g. as determined by APACHE II score ≥25), as the efficacy of
Xigris™ has not been established in patients with lower risk of death. Xigris™ indicated 6% absolute reduction of 28-day all-cause mortality compared to
placebo (relative reduction: 19.4%) (Bernard et al 2001).

It is generally believed that Xigris™’ sales are not a true representation of the potential market for a safe and effective therapy for sepsis. The case with Xigris™
demonstrated that significant side effects that were revealed after market approval considerably affected the demand for this medicine and left the severe
sepsis market untapped to a large extent.

Figure 32: Xigris Sales Performance                                                               Figure 33: Incidence of Serious Adverse Events
                                     Xigris’ sales performance by region                                                       Placebo Group             Drotrecogin Group
                                                                                                           VARIABLE                                                                    p Value
                       250                                                                                                        (N= 840)                   (N = 850)
                                                                                                    At least one serious adverse event (%)
  Xigris sales ($mn)




                       200

                       150                                                                                                          12.1                         12.5                    0.84
                       100                                                                          Serious bleeding event (%)*
                       50
                                                                                                                                    2.0                           3.5                    0.06
                        0
                             2002     2003   2004   2005   2006    2007   2008   2009
                                                                                                    Thrombotic events (%)
                                                    US     Ex-US                                                                    3.0                           2.0                    0.20
Source: Company data                                                                              * A serious bleeding event was defined as any intracranial hemorrhage, any life-threatening bleeding, any bleeding event
                                                                                                  classified as serious by the investigator, or any bleeding that required the administration of 3 units of packed red cells on two
                                                                                                  consecutive days.

Figure 34: Phase 3 PROWESS Trial Data-Xigris™

                              Number of deaths                                      Xigris™ (%)           Placebo (%)              Absolute Mortality Difference (%)                  Relative Mortality Difference (%)
 Overall                                                                                24.7                   30.8                                    -6.1                                             -19.4
                                st      nd
 APACHE 1 + 2 (3-24)                                                                    19                      19                                       0                                                0
                                rd      th
 APACHE 3 + 4 (25-53)                                                                   31                      44                                     -13                                              -29.5
Source: FDA CDER Medical Review BLA# 125029/0




                                                                                                                                                                                                                                51
                                                                                      mortality in those
                                                                                      without
Talactoferrin AlfaTM (Agennix)                                                        cardiovascular
                                                                                      dysfunction (n=69)
                                                                                      28 day all-cause
Talactoferrin alfa is recombinant form of human lactoferrin that has                  mortality in those
demonstrated immunomodulatory and antibacterial properties. It has                                                 22.4            28.6           6.2           22        0.44
                                                                                      with cardiovascular
been previously described as novel dendritic cell recruiter and activator             dysfunction (n=121)
that is orally administered and appears to mediate its activity specifically in      Source: Data presentation at American Thoracic Society Meeting – Agennix announcement
                                                                                     May 17, 2010
the gut.
                                                                                     Reduction in mortality according to severity of disease as measured by the
Agennix has previously reported positive Phase 2 results for oral
                                                                                     APACHE II scoring system is tabulated below:
talactoferrin alfa in cancer (non-small cell lung, renal) that have culminated
in two large Phase 3 trials in NSCLC being conducted in the US and Europe.
                                                                                     Figure 36: Talactoferrin 28 day mortality according to severity of disease
Initiated in late 2008 in the US and expanded into European sites in 2010,
these large multi-center studies intend to recruit more than 1,800 subjects                                                        Mortality
with the first study completion date currently forecasted as November                   APACHE II      Talactoferrin                    Relative            Absolute
                                                                                                                       Placebo (%)
2011.                                                                                     score             (%)                      difference (%)      difference (%)
                                                                                          0 – 18            3.8             8.7            56                  4.9
                                                                                         19 – 23            7.7            13.8            44                  5.1
In April 2008, the Company announced the initiation of a Phase 2                         24 – 27           16.7            33.3            50                 16.6
randomized, placebo-controlled trial of oral talactoferrin 1.5 mg every 8                  > 27              35             60             42                  25
hours in 190 severe sepsis patients stratified by clinical study site and
presence/absence of cardiovascular dysfunction. Study results were press             Agennix held its end of Phase 2 meeting with the FDA in August 2010 and
released in December 2009 followed by a further presentation of results at           has been told that it needs to conduct two well-controlled Phase III studies
the International Conference of the American Thoracic Society in May 2010            to support a BLA submission. The first randomised, placebo controlled trial
and the International Sepsis Forum in September 2010. Two thirds of the              is due to be started in early 2011, with 930 patients with severe sepsis
patients had sepsis-associated cardiovascular depression.                            being treated with talactoferrin/placebo and standard of care in 100-150
                                                                                     sites worldwide.
Figure 35: Talactoferrin 28 Day Mortality
                                                                                     The company is aiming to have a meeting with the EMEA in the coming
 Parameter             Talactoferrin    Placebo    Absolute     Relative   p value
                            (%)           (%)      Reduction   Reduction             months to discuss the approval requirements for Europe. Agennix
                                                      (%)         (%)                anticipates it will be able to use the clinical data from the planned Phase 3
 28 day all-cause                                                                    trials for its European submission. It will have a similar clinical trial design
                           14.6             26.6      12          45       0.043
 mortality                                                                           to that used during the Phase 2 trial, with all patients centrally screened
 28 day all-cause
 mortality adjusted                                                                  before they are enrolled in the trial to ensure that they meet the eligibility
                           14.6             26.6      12          45       0.057     criteria. The second Phase 3 trial is planned after the first one has been
 for cardiovascular
 dysfunction (n=190)                                                                 completed. The primary endpoint will be 28-day all-cause mortality with
 28 day all-cause           2.6             22.6      20          88       0.031     secondary endpoints of three, six and 12 month all-cause mortality.




                                                                                                                                                                          52
                                                                                 Figure 37: Polymer Beads Packed into Cartridges Compatible with Standard
Cytosorb TM (Cytosorbents)                                                       Hemodialysis Machines or Blood Pumps


CytoSorb™ is a hemofiltration cartridge containing highly porous polymer
beads designed to filter cytokines and treat the potentially fatal cytokine
storm from SIRS. As blood is pumped through the CytoSorb™ cartridge
using standard dialysis equipment, the beads bind and remove cytokines
and other toxins from blood.

Studies in endotoxin induced shock in rats significantly reduced the
mortality rate, inhibited the inflammatory response, reduced cytokines
TNF-α and IL-6, and improved blood pressure.

The Company is currently conducting its proof of concept European Sepsis
Trial – a multi-center, randomized, open-label controlled clinical trial using
its flagship CytoSorb™ device to treat up to 100 patients with severe sepsis
in the setting of Acute Lung Injury / Acute Respiratory Distress Syndrome.
The trial opened for enrollment in December 2007, and as of February
2010 has enrolled 50 patients.

On November 13, 2009, Cytosorbents commented in their press release
that fully monitored completed data sets on 13 patients showed the
treatment was well tolerated with no serious device related adverse
effects. Analysis of the data demonstrated improvements in many of the
secondary and exploratory endpoints of the trial, including 28-day and 60-       Source: Cytosorbents Corporate Presentation, October 2010
day mortality, ventilator free days, pace of ventilator weaning, organ
failure scores, vasopressor use, and days in the intensive care unit. No
quantitative data have been released by Cytosorbents to date.

Pending a successful trial, the Company will seek CE Mark approval and
commercialization of CytoSorb™ in the European Union.




                                                                                                                                                            53
                                                                                                  Care 2007, 11:R47 (doi:10.1186/cc5780)
                                                                                                  http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2206475/pdf/cc5780.pdf
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