Neal G. Koller
President & Chief Executive Officer
President & Chief Executive Officer
- 3724a Thomas Point Road
Annapolis, Maryland 21403
USA
Tel: +1 443 994 0101
Fax: +1 410 990 9817
nkoller@plurogen.com
| PluroGen Therapeutics, Inc. 503 Broadleaf Way Charlottesville, Virginia 22911 USA Tel: +1 443 994 0101 Fax: +1 410 990 9817 www.plurogen.com |
March 26, 2008
RE: PluroGen Therapeutics, Inc. Investor Update: Q4 2007 and Full Year 2007 Review
PluroGen Therapeutics, Inc. Investor Update: Q1 2008
Dear Investor
PluroGen made important progress through the 4th quarter of 2007 and 1st quarter of 2008, moving significantly
forward on a number of strategic fronts, especially moving much closer to market entry. Consequently, we are
combining the 4th quarter and annual 2007 updates with that of the 1st quarter 2008 into this single report. As you will
observe, we have advantageously stretched our investors’ investment dollars well beyond originally anticipated, making
them work much longer, with many more milestones achieved than originally targeted.
The key point to report upfront is that we have been able to dramatically reduce our forecasted total capital requirements
from the original projected total of $17.75M to $6.6M. More specifically, for our 1st product to reach market the
remaining estimated investment has been reduced to $2.5M compared to the original $6.0M and for our 2nd product to
reach market the remaining estimated investment has been reduced to $2.0M as compared to the original $10.25M.
Investment was reduced because we have confirmed that the medical device regulatory approval path has opened for our
1st gel products in both the US and Europe and we have decided to move aggressively to obtain this approval.
This reduction in capital needs should directly translate into a better return for our investors - less capital needed results
in less percentage ownership dilution than originally presented. Your agreement to extend your notes has enabled
PluroGen to reach this point and we believe that this will ultimately yield significant reward for us all. Thank you. Of
further significance, the reduced levels of required capital makes investment in the Series A round an even better value
proposition than originally envisioned.
For our current investors, Plurogen has made extremely positive decisions, in a way that continues to protect and
enhance your exit value, and at the same time, provides you with a bigger piece of that ultimate return. We, therefore,
would like to encourage you to consider an additional investment in our new Series A equity round. An investment, for
example, of an equivalent amount to your 1st investment now will go a long way towards maintaining your current
percentage ownership, nicely improving your final return. It will also go a long way for PluroGen - we believe it
important for you to know that the budget to bring our 1st product to market is approximately $1.5M of the $2.5M
Series A. If we can raise the $1.5M internally, it will significantly help to reduce dilution and improve return. Any of
your earlier thoughts and projections about the amount of your ownership dilution are now obsolete. We have
significantly enhanced PluroGen as an investment for your portfolio, protecting your exit value and providing you with a
way to get a bigger piece of the ultimate return.
As a current investor, if you would like to invest in the next round, now is the time. Please let us know and we will be
happy to forward the Series A Offering Memorandum.
We are pleased with our progress and are happy to answer any of your questions. Thank you for your interest and your
investment in PluroGen. With your support, we have been able to significantly progress the Company. We hope this
update is informative.
Best regards,
Neal G. Koller
Q4 2007 and Full Year 2007 Review
Important Progress for PluroGen
Regulatory & Clinical
+ Completed draft of the Skin Irritancy Study
- FDA agreed to no Phase 2 Trial
- Initiated drafting of the pain trial protocol
Commercial Partner Activities and Product Development
Intellectual Property
Manufacturing
Funding
Q1 2008 Update
PluroGen Milestones Accomplishment
Regulatory & Clinical
Commercial Partner Activities and Product Development
Intellectual Property
Manufacturing
Funding
RE: PluroGen Therapeutics, Inc. Investor Update: Q4 2007 and Full Year 2007 Review
PluroGen Therapeutics, Inc. Investor Update: Q1 2008
Dear Investor
PluroGen made important progress through the 4th quarter of 2007 and 1st quarter of 2008, moving significantly
forward on a number of strategic fronts, especially moving much closer to market entry. Consequently, we are
combining the 4th quarter and annual 2007 updates with that of the 1st quarter 2008 into this single report. As you will
observe, we have advantageously stretched our investors’ investment dollars well beyond originally anticipated, making
them work much longer, with many more milestones achieved than originally targeted.
The key point to report upfront is that we have been able to dramatically reduce our forecasted total capital requirements
from the original projected total of $17.75M to $6.6M. More specifically, for our 1st product to reach market the
remaining estimated investment has been reduced to $2.5M compared to the original $6.0M and for our 2nd product to
reach market the remaining estimated investment has been reduced to $2.0M as compared to the original $10.25M.
Investment was reduced because we have confirmed that the medical device regulatory approval path has opened for our
1st gel products in both the US and Europe and we have decided to move aggressively to obtain this approval.
This reduction in capital needs should directly translate into a better return for our investors - less capital needed results
in less percentage ownership dilution than originally presented. Your agreement to extend your notes has enabled
PluroGen to reach this point and we believe that this will ultimately yield significant reward for us all. Thank you. Of
further significance, the reduced levels of required capital makes investment in the Series A round an even better value
proposition than originally envisioned.
For our current investors, Plurogen has made extremely positive decisions, in a way that continues to protect and
enhance your exit value, and at the same time, provides you with a bigger piece of that ultimate return. We, therefore,
would like to encourage you to consider an additional investment in our new Series A equity round. An investment, for
example, of an equivalent amount to your 1st investment now will go a long way towards maintaining your current
percentage ownership, nicely improving your final return. It will also go a long way for PluroGen - we believe it
important for you to know that the budget to bring our 1st product to market is approximately $1.5M of the $2.5M
Series A. If we can raise the $1.5M internally, it will significantly help to reduce dilution and improve return. Any of
your earlier thoughts and projections about the amount of your ownership dilution are now obsolete. We have
significantly enhanced PluroGen as an investment for your portfolio, protecting your exit value and providing you with a
way to get a bigger piece of the ultimate return.
As a current investor, if you would like to invest in the next round, now is the time. Please let us know and we will be
happy to forward the Series A Offering Memorandum.
We are pleased with our progress and are happy to answer any of your questions. Thank you for your interest and your
investment in PluroGen. With your support, we have been able to significantly progress the Company. We hope this
update is informative.
Best regards,
Neal G. Koller
Q4 2007 and Full Year 2007 Review
Important Progress for PluroGen
Regulatory & Clinical
- Decided to re-investigate medical device regulatory approval
- Developed new information and data indicating this path may be open to PluroGen’s 1st products
- Met with Italian Health Ministry which confirmed pan-European medical device approval open
- Confirmed medical device approval path open in the US
- Began search for medical device regulatory experts
- Maintained low expense, forward activity for drug approval
- FDA agreed the Company can go directly to Phase 3 Trial
+ Completed draft of the Skin Irritancy Study
- FDA agreed to no Phase 2 Trial
- Working with FDA, the agency suggested PluroGen pursue a pain trail (in place of the infection trial) for
Phase 3
- Initiated drafting of the pain trial protocol
- Began drafting FDA Investigational New Drug Application (IND)
- Filed an FDA Orphan Drug Application for our 1st product
Commercial Partner Activities and Product Development
- Signed agreement with Derma Sciences, Inc. (NASDQ: DSCI) a well established wound care company to
prototype our next round of products - Signed Letter of Intent with Welcare Industries, SpA (Orvieto, Italy) a well established European skin & wound
cleansing medical device company to distribute PluroGen branded products & branded ingredients
Intellectual Property
- Filed provisional patent for our gel’s bio-activity against biofilms
- Filed provisional patent for our gel’s bio-activity in blood flow
- Filed provisional patent around the manufacture of our gel
- Signed renegotiated license agreement with UVA for more favorable terms on core gel technology
- Secured PluroGel™ trademark
Manufacturing
- Final formulation and top 5 candidates selected for our 1st product
- Built more than 140 formulation prototypes
- Initial response to our selected formulation was very positive from the prestigious Shriners Burn Hospital
in Cincinnati, Army Burn Center (ISR) in San Antonio and Salt Lake City Burn Center
- Placed top 5 formulations on long term accelerated stability testing
Funding
- Obtained convertible noteholders’ approval to extend maturity date to 9/30/08
- Raised $ 1.65 million in cash and negotiated $250 thousand in reductions in amounts due to suppliers
- Series A Offering
- Early meetings with potential investors, including VC firms have been positive, no firm commitments yet.
Q1 2008 Update
PluroGen Milestones Accomplishment
Regulatory & Clinical
- Aggressively pursuing medical device regulatory approval
- Selected US regulatory consultant and in contract negotiation
- Search initiated for EU regulatory consultant
- Manufacturing in adjustment to requirements for medical device regulations
- Welcare began their EU medical device approval for our PluroGel™ ingredient in their skin & wound cleansers
- Provides PluroGen with early draft and early input on the European approval process
- Continue to maintain low expense, forward activity for drug approval
- Low-level work on drafting the pain trial protocol
- Follow-up with FDA on the FDA Orphan Drug Application for our 1st product
Commercial Partner Activities and Product Development
- Derma Sciences completed product development phase identifying 2 top candidates as dressing materials for our
gels
- Derma Sciences anticipates finished, packaged product samples in Q2 2008
- Successfully built and shipped milestone 1st product to Welcare
- Welcare projects market introduction in Q4 2008
Intellectual Property
- Converted the provisional patent to a patent application and filed it for our gel’s activity against biofilms
- New license agreement for cutting-edge antimicrobial silver nano-technology
- Provides internal capability in the emerging next-generation antimicrobial materials and products
- Complementary and synergistic to core gel technology and target burn and wound markets
- New license agreement for cutting-edge natural gel technology
- Provides internal capability to enhance delivery materials to improve wound healing results
- Complementary and synergistic to core gel technology and target burn and wound markets
Manufacturing
- Ordered 1st piece of commercial scale manufacturing equipment
- Passed month 1 testing of long term accelerated stability test
Funding
- Series A Offering
- Adjusting offering documents to lowered investment requirement to $2.5M for Series A and $2.0M for
Series B - Initial meetings for lower capital equipment with potential investors have been positive but no firm
commitments