HighThroughput Nucleosome Mapping

1
A Novel Technology to Understand Genetic
Regulation
Annie Kloimwieder, Ben Stingle, Brandy Houser,
Fatih Ozsolak, Jay Soriano, Kapil Vashistha
Epigenetic Solution
Value Proposition
Scientific Background
Our technology integrates molecular biology,
microarray and computational analyses to allow us
to characterize mammalian genetic regulation in a
high-throughput manner.
Remove DNA from cell sample.
Current small molecule and protein drugs
mechanisms of action involve direct or indirect
modification of DNA. These modifications include
methylation, acetylation, and nucleosome
positioning.
Digest DNA to free Nucleosomes.
Microarray technology probes the DNA sequences
that are part of the nucleosome.
A computer algorithm translates the position of
nucleosomes across the genome.
DNA Histone NUCLEOSOME

• PROBLEM Currently, researchers have an
  incomplete understanding of how genes are
  regulated, limiting their ability to understand
  and treat diseases such as cancer.
• DNA is wound around protein spools, called
  histones, which allow it to fit into the nucleus
  of a cell. Each protein core and its wrapped DNA
  strand are together called the nucleosome. Just
  as a spool of thread must be unwound in order to
  be used, DNA also must be unwound in order to
  express proteins and copy itself. As of today,
  there is no way to visualize the location of
  nucleosomes in a high throughput manner.
• SOLUTION The first method to determine
  nucleosome positions throughout the entire
  genome, using a combination of established
  instruments (DNA microarrays) and proprietary
  bioinformatics.

?Our technology has the capacity to determine
what modifications are made to the DNA throughout
the different stages of cancer progression. ?Stem
cell research has the promise of potentially
treating many different human diseases. This
technology would be a valuable tool in
understanding the evolution of a single cell from
its origin to its progenitor state and finally to
its terminally differentiated state. ?In
coordination with other technologies that are
able to look at protein-DNA interactions, DNA
methylation status, and gene transcription, this
technology offers a better and fuller
understanding of genetic regulation.
2
A Novel Technology to Understand Genetic
Regulation
Annie Kloimwieder, Ben Stingle, Brandy Houser,
Fatih Ozsolak, Jay Soriano, Kapil Vashistha
Service Model Value Drivers
Market Potential
The technology supports multiple
applications, which all can be commercialized.
Yet, resource constraints impose different
risk-reward profiles for each application.
Understanding these trade-offs influences the
evolution of the business.
Operations are based on three core elements
cost-efficiency, technological breadth, and
faster turnaround. More
importantly, bundling these services delivers a
fuller understanding of the epigenetic state,
providing greater insights into clinically
important phenomena.
Along with its proprietary technology, the
company provides three other technologies as
services Chip-to-Chip, DNA Methylation, and
Gene Expression. This broad set of tools permits
increased flexibility in approaching epigenetic
analysis. This translates to shorter lead-times
and cost savings to customers.
Risk
Therapeutic
Diagnostic
Tool
Service
License
Design of Analytical Process
Processing of Samples
Data Integration and Analysis
Market Opportunity
Pursuing the service model allows the company to
participate in an attractive market. We estimate
the 2007 U.S. Market for Gene Expression, SNP
Analysis, and Epigenetics to be in the range of
1.4B - 2.0B - Gene Expression 60 - SNP
Analysis 20 - Epigenetics 20 SNP Analysis
and Epigenetics are expected to grow 10
annually for the next 5 years. Sources
Conservative market estimate based on aggregating
estimated 2007 sales of largest players in
industry. Assumed Agilent has similar of
instrument sales as Affymetrix. Assumed
secondary costs are based on 1.08M arrays
annually by dividing arrays sales by estimated
cost of 500/array. Sales data sourced from
analyst reports (Robert W. Baird 2/07, Needham
3/07, Deutsche Bank 2/07). NimbleGen sales data
from market research.
2007 U.S. Market for Gene Expression, SNP
Analysis, and Epigenetics
3
A Novel Technology to Understand Genetic
Regulation
Annie Kloimwieder, Ben Stingle, Brandy Houser,
Fatih Ozsolak, Jay Soriano, Kapil Vashistha
Business Timeline
Business Milestones
Transition to commercial customers
Value captured
Refine process focus on academia
Setup facility and establish process
Transition resources to develop internal IP
Establish commercial partnerships
Fill first orders
Year 2
Year 3
Year 4
Year 5
Year 1
Evolution of Business
Inventors
Financial Projections and Assumptions
?Dr. David Fisher received his MD degree from
Cornell University Medical College. Dr. Fisher
has received a Faculty Teaching Award, Graduate
Program at Harvard Medical School, 1999 the
Gertrude Elion Award for Cancer Research (AACR),
1998 Pew Foundation Scholars Award, 1995 and
was named a McDonnell Foundation Research
Scholar, 1995. ?Fatih Ozsolak, Ph.D Candidate,
Harvard

• Sales
• Academic customers predominate initially, at
  lower volume
• By year 3, commercial contribution overtakes
  academic
• Size of orders increase as customers discover how
  to apply this data
• Operating costs
• 50 for service business
• Begin RD in year 3 for internal products at 5
  of sales, representing our portion of partnership
  expenses
• Partnerships
• First revenue from partnerships in year 4, scales
  modestly

• Overhead
• 1.5 Million to set up facility with a capacity
  of 4,560 samples
• Implies 347 cost per sample
• Assume 80 capacity utilization in years 2 and on
• Potential for further cost trimming through
  outsourcing
• Pricing
• 4,000 price per sample in academia
• Based on a price quote from analogous company
• 5,200 per commercial sample (30 markup)
• Significant volume discounts (30 in year 2)

• Excellent Profitability
• Breakeven is reached quickly
• High gross margins, though margins drop over time
  due to commoditization of the value of the
  information
• Maintains good net margins under these assumptions