Zenith Epigenetics Presentation at Rodman and Renshaw – September 8, 2013

Alright everyone, thank you for coming. Our next presenter will be Don McCaffrey, president and CEO of Zenith Epigenetics.

Thank you very much. It’s a pleasure to be here today, and we’ll go through a few different slides here. We’ll be touching on the corporate history of Zenith Epigenetics, and just so you know, the technology is a few years old, but the corporation is brand new, as a matter of fact this is the first presentation for the company.

We’ll also touch on the mechanism of action, the development progress that we’ve gone through to get our technology to where it is, we’ll do an IP update and a summary. We will be looking at forward looking statements so we have a safe harbor statement on here, just so you know.

Now the corporate history is, on June 3 of 2013, Zenith Epigenetics was spun out of a cardiovascular development company called Resverlogix. Now Resverlogix had been working for twelve years on a plaque regression technology. And as it discovered its own mechanism of action was epigenetics, the technology blossomed quite a bit. So for several years Resverlogix worked on epigenetic technology, and built up quite a portfolio, and the market really didn’t know anything about it, inside of Resverlogix. So it was spun out as an independant stand-alone private company. Resverlogix is a public company. And as part of that agreement there was a royalty structure, so should Resverlogix’s cardiovascular drug, which was for plaque regression, should that go to market, there is actually a 12% royalty that will get paid to Zenith Epigenetics. Zenith ended up with all of the epigenetic technology and the spin-off was quite successful. Each company is now following its own development path, and as Resverlogix is a public company, they’re already very different in shareholder base, with tens of millions of shares trading by then.

So that’s where we came from, now who are we? We have a very strong management team with in-depth long term experience in drug development. Jan Johannsson here is a former founder of Esperion Therapeutics which Pfizer bought for 1.3 billion dollars. Greg Wagner has a great depth of experience in drug development. He was in charge of projects at Sugen, including the sudent drug. Dr. Peter Johann our chairman Peter’s here today. He’s former head of global developmet at Roche and Boringer Ingleheim (sp) Arther Higgins is the former Chairman and CEO of Bayer. So as you see, and down here we have Ken Zuerblis, former Imclone – I always like to point out that that was post Martha Stewart.

So as far as the mechanism goes, we find it very exciting. And so did Dr. James Watson as far as our exact target which is Bromodomain 4. So a year ago January, Dr. Watson wrote an article in Cancer Discovery. This was his first solo paper that he’d put out since 1972. He’s written many papers with lots of people, but this was his first solo one since 1972. He focused that paper on BRD-4, and in his paper he states that he thinks it’s the most important medical breakthrough since he discovered DNA. That’s a pretty large statement. I’m glad it’s coming from him and not from me. In his paper he also stated that he hoped that within 18 months there would be a BRD4 candidate in human clinical trials. We were very thrilled at Resverlogix to be able to contact him and let him know that there had been one in the clinic for five years. And that was RVX-208 for cardiovascular use.

So our experience and depth and knowledge of the BRD family was huge, and that was why it was time to spin that company out and move on as a separate company.

Now, a lot of people think of epigenetics, and you think of your histone modulators, and the original versions that came to market and are now moving on to phases II and III. However, those are mainly writers and erasers, which are dealing with chemical to chemical alterations of the histone tail. Whereas the readers, where the bromodomains lie, are actually protein to protein interactions. So we feel, and we believe we’ve already seen this in the clinic, we feel that you’re going to have a lot less of the toxicology problems that they had in the earlier days with both writers and erasers. Some of the companies that have come out of there are doing exceptionally well like Enzyme and others have, and as far as collective IP goes, they don’t even come close to what we have overall. So we’re pretty excited about that. We’ll talk about that a little later on.

Now as far as the BET protein inhibition goes, this little green bubble-gum looking thing here is the BET protein and the acetylated protein has a natural attachment to it here at this binding site. Our drugs are very advanced at knocking those out of place either permanently or partially depending on what level of protein alteration that we want to do. There’s a very good MPEG on our web site for this that should help you understand it just a little bit more if you’re interested. Let’s see here…..

Now the field itself of epigenetics is growing quite fast. As you’ll see here, the small portion of it is actually the BET inhibitors, the red ones, where our sister company RVX-208 is about six years ahead of anybody in that category. Most of these are histone deacetylase inhibitors and methyl transferase. Now in the same type of bent, the indications are characterized here. Where most people have gone after oncology in the epigenetics field, including the second one to follow us into clinic is actually GSK. They started with one program in oncology in a (not midline) cancer. And based on what they’ve been doing on that they’ve now expanded it to six. So we are very encouraged by that, but we have opportunities also in inflammation, which we’re going to show you some stuff on today, CNS and CVD. So we are the most diversified of the companies that are actually working in these fields.

So let’s talk about the progress development. So a couple years ago while this program was still inside Resverlogix, we did a few things like identification of novel hits. So in this particular study we took a library of twenty eight million compounds and then broke them down to filtered subsets and random sets and all the way around, clustered docks – and what came out of this program was actually four new scaffolds. With almost no exception, the competitors working in bromodomain are working off the same scaffold – JQ-1. In this case, just this one program yielded four scaffolds, with a minimum of three hits on each scaffold. And what this turned into was our D series of compounds. Now D series contains 691 compounds for various oncology and autoimmune indications.

So we have very favorable chemical properties here, distinct from the other known BET inhibitors. It’s all unique binding mode. It’s based on our x-ray co-crystallography and that’s rightdown to 1.08 angstroms so it’s very very tight data. It’s tractable chemistry. It allows us to very swiftly go through libraries and build and expand our intellectual property, which we do on a regular basis. We’re adding about one patent to our portfolio every quarter.

So it also has all the standard very good pharmaceutical properties. It’s small molecule, it’s very aqueous solubility-wise, high permeability, good oral bioavailability, and as I mentioned in this one series alone there are 691 compounds.

So early on what we did while it was still in the other company, we did animal model testing so we would know what potentials we had. So one of them we did was multiple sclerosis with an EAE model. And we were able to show similar or better results than Novartis’s new drug. And we were very pleased with that. This is a very old compound that we were using. We’ve done some published work on that. We are now working in the area between one hundred and one thousand fold more potent than this particular compound.

Same compound, different animal model, was the RA model used against Embril. And in our first test we were showing 97% as effective as Embril. And again, we’ve advanced this program quite a bit. Now Embril is $30,000 a year back home where I’m from. And this compound is a small molecule that would be in the $1,500 a year range. So payer groups are going to very much like the direction this science is going.

We also went into oncology . And in this case we did a simple xenograph model of a compound in an AML model, and of course that’s a C Myc gene cancer which is currently incurable, That is what James Watson was writing about when he was referring to the bromodomains. So that’s why we started there was because of his article. And we were able to show quite a reduction in the growth of those tumors. But we went in and did further work. This is rather new work here, a different type of xenograph where in your vehicle you’re showing the progression, where here you start to see the metastasis more and more into the body, and as you go further – we ended it here because as you go further it starts to attack the spine and it immobilizes the mouse.

Cytrabine is one of the eight standard , this is in an AML model as well, Cytrabine is one of the eight standard drugs that are used in these cases right now. And as the previous speaker had just mentioned, the death rate is 36% which is too high. Cytrabine is usually used with one or two other of those eight drugs, so we will be repeating these tests with all eight and combinations thereof. So as you see here, even with the top standard drug, you still have a slight progression. Now with the two doses of one of our newer drugs, you see that this is pretty much stabilized. It’s actually, in my opinion better than the Cytrobine one. However, when you look at the 50 mg per kilogram dose, we actually see regression. So this is very exciting news for us. And we now have another compound from our very fast moving medicinal chemistry list that is ten times more potent than this compound.

So, moving forward we looked at, you know – we’ve done a lot of this work because we are in discussions with pharmaceutical companies and we’re doing all the - checking all the boxes - This one here is really just showing the potency difference of one of the earlier compounds which was very effective and we did some poster presentations on that at World Inflammation Congress in Paris. You see with the same efficacy level the difference in the trough levels is enormous. 107,000 to just 93. Not 93.000, just 93. That’s a pretty big difference.

Also we’ve done a bunch of early work in the oral PK across various species. In this case we have dog, mouse and rat. And as you can see it’s quite acceptable, rapid and extensive absorption, and favorable exposure in the pharmacology and toxicology evaluations.

Now as far as the IP where we’re going with all this, it’s pretty strong. There’s not a lot of people in this field, and we were very quietly in this field for years, before people knew we were there. It was not until April 23, 2012 that we even announced what our mechanism of action was, and that it was actually bromodomain, and that we had an enormous amount of IP, and way more scaffolds than the entire scientific community even knew existed. More than they had combined collectively. So as you see here, we have ten patents that are in the process of application, and these will go out to the mid 2030s. So there’s a lot of life in these.

Our approach as a business model is to move forward from this point. We have already identified three IND candidates for multiple myeloma or AML or both. And the approach going forward is to partner or license these with pharmaceutical companies, allowing us to continue working on this platform and developing newer compounds for other indications. There seem to be an enormous amount of indications with potential from epigenetic modification. So being able to turn genes on or off, like the C Myc gene. Being able to turn it off on a temporary or a permanent basis is what the potential of bromodomain epigenetics have. And that’s why people like James Watson, who really understand the details involved there are so excited about this potential. And it’s our library here that really lends us a huge lead in the field. And we have been approached by many pharmaceutical companies, actually. The opportunities are very exciting. And we’re moving forward with discussions on those.

So in summary we have an efficient and rapid drug delivery program with three candidates that have already been selected. The compounds from our discovery program have very good pharmaceutical properties. They’re all the Lipinski rules, and good solubility and low on the tox, and so we’re very pleased with that. We do have leads identified for AML and multiple myeloma and we are in discussion with various pharmaceutical companies. So on that note, thank you very much for attending today. We’ll talk to you again soon.