Greg Simon #1 V7

OGAN GUREL, MD

February 27, 2007

Gregory C. Simon President FasterCures/The Center for Accelerating Medical Solutions 509 7th St., NW Washington, DC 20004 Dear Greg, It was good to talk with you and your team last week about the Medical Research Investment Analysis Service (MeRIA) project and, of course, the great work that is taking place at FasterCures more generally.

GENERAL THOUGHTS AND COMMITMENT TO THE PROJECT I, too, have been thinking and writing about the tremendous need for new and innovative financing and commercialization models that accelerate the development of life sciences discoveries. Philanthropies and nonprofit medical research organizations are clearly playing an increasingly important role in this transformation. By and large, the venture capital model has been the central paradigm for life sciences financing and development. Return on investment and its related metrics have been the primary benchmark to efficiently allocate capital. This works quite well for many industries; for healthcare though there are reasons to believe that free-market dynamics are incompletely aligned with societal benefits. The importance of NIH and FDA, the influence of philanthropy, the significant non-profit and governmental role in healthcare delivery, regulations such as the Orphan Drug Act1 and so forth all point to a multitude of nonfinancial or “extra-market” influences on capital deployment in the life sciences sector. And, as you and your team have pointed out2, philanthropies and nonprofit medical research organizations will gain even more influence. There are other subtle free-market factors that may also unintentionally cause capital misallocation relative to societal needs. We are experiencing, for example, an era of historically low interest rates which skews capital towards debt financing. This encourages private equity investment as attested to by the very evident surge of mega-deals in healthcare and other sectors. While private equity ostensibly plays an important role in making more efficient use of capital, these efficiencies are directed at existing businesses and current paradigms. This capital bias jeopardizes investments in the riskier, yet essential, early-stage ideas that are critical for advances in medicine. Again: philanthropy will need to play an important role in maintaining the proper balance in the face of these global market factors. 1 The wording in the preamble for the Orphan Drug Act (http://www.fda.gov/orphan/oda.htm) expresses this well: “… because so few individuals are affected by any one rare disease or condition, a pharmaceutical company which develops an orphan drug may reasonably expect the drug to generate relatively small sales in comparison to the cost of developing the drug and consequently to incur a financial loss …”

2 "Investing in Innovation: Accelerating Disease Research Through Philanthropy and Business:" FasterCures Meeting Report, November and December, 2005

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OGAN GUREL, MD Unfortunately when there are “extra-market” influences on capital deployment it becomes a challenge to determine return on investment. What is the return on investment for all the activities of the FDA – essential as they may be? What is the return on investment for the Michael J. Fox Foundation? Who can answer that question? While philanthropy and nonprofits clearly serve an important in society, the fact that return on investment cannot be measured in conventional terms implies that despite best intentions, scarce funds can potentially be grossly misallocated. Additionally and very significantly, this uncertainty in impact and outcomes potentially limit the generosity of donors and benefactors. While all this is certainly not new to you, I am writing to express, above all, the fact that I believe strongly in the validity and importance of the MeRIA project. Even though my uniquely outstanding experience and background will help to drive this project to success (to be outlined below), I am also aware that this is not just a technical exercise. Dedication, thought leadership and passion will be very important to achieving success.

EXPERIENCE AND CAPABILITIES I would bring to FasterCures and the MeRIA project deep experience in clinical medicine, basic biomedical science and business (both in biopharma and devices). Also of value are my substantial contacts in academia and the capital markets. The attached biographical sketch and CV provide more details for your reference. My specific experience and capabilities are highlighted by a number of relevant projects that I have previously led or have been closely involved with. These include: Project # 1: Developing an industry standard healthcare utilization forecasting system which combines a comprehensive database of demographic, sociocultural, economic, regulatory and technology factors with a sophisticated large data-set differential equation system that models such impacts as they unfold prospectively over time. This system has been extensively used with hundreds of hospital and health system strategic planning projects to help benchmark these institutions and their level of technology adoption. From this we were able to accurately forecast the impacts of these technology strategies on healthcare utilization, market share and other outcome measures. Significant strategic considerations emerging from these analyses included the concept that hospitals that invested in certain technologies - say drug-eluting stents – would undergo both positive and negative shifts in utilization. Optimizing the allocation of resources in anticipation of such technology shifts was a key deliverable of these strategic planning engagements. I was the principal architect and developer of this sophisticated database/forecasting and planning system. Project # 2: In a very unique engagement, a prominent philanthropist commissioned the management consultancy Booz, Allen & Hamilton to partner with a leading academic medical center to create a database identifying and tracking all worldwide therapies for glioblastoma multiforme – a fatal brain tumor. While academicians certainly lead advances in medical science, it was thought that fragmentation among investigators and individual research bias may hinder the rapid dissemination of medical research advances. The combination of a leading nonprofit with a top tier management consultancy could help to break through some of these limitations. I played a key role in selling this project, building the database and providing medical and technical advisory to the rest of the engagement team.

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OGAN GUREL, MD Project # 3: Developing a corporate innovation metric that utilized patent filing data to track and allocate patents weighted by different high-growth categories. Roughly speaking, these weighting factors were proportional to the rate of growth in patent number among these categories divided by the aggregate number of patents in that category at baseline. Companies that had relatively more patents in high-growth sectors were thus identified as being more innovative than companies that had their patents allocated to sectors experiencing less patent growth. Interestingly, these studies showed that company size (as defined by market capitalization) did not correlate with level of innovation. I was one of the originators of the algorithm for this innovation metric and built the patent database and calculation engine implementing this method.

IMPLICATIONS AND IDEAS All of these three projects outlined above are quite relevant to MeRIA. An important component of MeRIA would be to develop – as in Project # 1 above - an overall model of disease impact. This would track various disease impacts both current and projected in terms of number of lives saved, quality of life, economic impact, healthcare utilization and other such parameters. These impacts are changing over time. For example, diabetes in the U.S. has become twice as common since 19803 and Alzheimer’s disease is clearly increasing in its impacts – both epidemiological as well as economic. Existing epidemiological and economic models will be leveraged as well as my experience with healthcare forecasting model more specifically. This model will not, of course, be a definitive epidemiological/economic model but rather a simple framework in which to provide a common denominator by which foundations and their specific initiatives can be compared. For example, a research foundation that focuses on a very rare disease declining in incidence may have a smaller impact than one which concentrates on a more common and growing disease. Of course, many factors are involved as diseases such as AIDS – which strike people in the prime of their lives and which have geographical heterogeneity – may have more impact than simple demographics may suggest. Another critical component will be – as in project #2 –a database of existing and potential medical advances within each disease along with potential impacts of such advances and probabilities of success. The database will need to be consistently updated as new information such as late-breaking clinical trials, etc. comes in. This database would serve as the “investment advisory” core of the MeRIA project. Its heuristics will depend upon historical precedents for technology development (for example, estimated time from Phase II trials to market entry) as well as expert opinion to populate its prospective assessments. Expert opinion will be critical and a non-profit organization such as FasterCures has a significant advantage in garnering such expert input especially given the superlative stature of the FasterCures Board of Directors, my own strong academic connections and, very importantly, the conflicts facing physician-scientists when they participate in conventional forprofit investment advisory work. Furthermore, in order not to “reinvent the wheel,” linking with and leveraging the FasterCures Innovation in Disease Research database is certainly an intriguing concept. A third component will be similar to project # 3 where an impact metric will be established for each research foundation (indeed one can do this for individual philanthropies as well) that maps and thus ranks each foundation’s investment portfolio onto the previously 3“Diabetes: An American Epidemic”, Economist, 2/17/07, p.37.

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OGAN GUREL, MD described model of disease impact and database of medical advances. This impact metric can be used to both compare foundations – for the purposes of optimizing philanthropic capital allocation – as well as to help individual foundations optimize their own portfolios to maximize impact while also meeting their particular organizational mandates. A basic schematic outlining the relationship between these various sub-projects and the proposed results of the MeRIA project is depicted below.

Model of Disease Impact

Foundation mandates

Investment Optimization

Results

Impact Metric Foundation Comparisons

Database of Advances

Innovation in Disease

The ideas proposed here are certainly not intended to be all-inclusive. As you can imagine, given my experience, I have further details at hand around the architecture of these databases, their implementation and interrelationships as well as specific forecasting mathematics, algorithms and techniques which I would be happy to discuss with you as appropriate. I am very excited about meeting again to share ideas and discuss, in particular, a potential role at MeRIA/FasterCures going forward. I also know, having met you before, seen your work and being cognizant of the tremendous caliber of people involved with FasterCures, that working with you would be for me a great personal and professional pleasure. It is a great thing to do what one enjoys alongside top-notch people. And above all, it is best to be doing something which is truly helping people and society – a principle which has consistently guided me throughout my professional career. Best regards,

Enc:

1. “Biotech, Med Tech Business Models: Investors, Patients Deserve Better” 2. Biographical sketch 3. Updated CV

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BIOTECH, MED TECH BUSINESS MODELS: INVESTORS, PATIENTS DESERVE BETTER† By Ogan Gurel, MD MPhil As published by MidwestBusiness.com on December 11, 2006

CHICAGO – On several occasions in this column, I have commented on the importance of developing new business and financing models for the rapidly evolving areas of medical technology and biotech. These have included: So Far, Venture Capital Relatively Unsuccessful in Biopharma Market (11/14/2006) A Time to Make Friends: More Partnerships in Biotech, Med Tech? (7/12/2006) Tech Convergence a Key Theme at Orthopedics Conference in Chicago (4/3/2006)

The November column on venture capital also referenced a significant new book entitled Science Business by Harvard Business School professor Gary Pisano. While this book provides an outstanding overview and suggestions for future directions, it is unfortunately less than definitive in its recommendations. Last Monday, Michael Rosen in his MidwestBusiness.com column headlined “MoneyTree Report Points to Ongoing Saga of Life Science Financing” also commented on the increasingly challenging financing environment for early stage biotech ventures. In particular, Rosen pointed out how the growing emphasis on deal size has put the $2 million to $10 million range out of the deal radar screen for most venture firms. Most angel groups and universities only put up between $500,000 and $5 million at the high end. This has created a well-acknowledged problem with what has been termed “gap financing”. From both the business model and financing perspectives, this is clearly a hot and important topic these days. In this light, it was very interesting to come across some of the recent news around the awarding of the Nobel Peace Prize to Muhammad Yunus of the Grameen Bank, which provides microcredit to the large numbers of poor people around the world and particularly in India. What’s the connection? A related and interesting thought is in an article in the International Herald Tribune headlined “Microcredit Pioneer Criticizes Globalization at Nobel Ceremony” in which Yunus rails against globalization: Yunus called for legal recognition of a new category of corporation that would be neither profit-maximizing nor non-profit. It would be a ‘social business’ like Grameen Bank – the Bangladesh based microcredit institution– that Yunus started 30 years ago. First, I should say that I disagree with the Nobel Laureate’s position on globalization. After all, once some of these impoverished populations are brought out of poverty, would it not stand to reason that they can only benefit by an expanded global market for their goods and services? More to the point, he may be onto something in recommending entirely new ways of thinking on this front. While some of his suggestions are certainly extreme, the problem deserves out-of-thebox thinking when we talk about advanced business models for biotech and med tech. While Wall Street is often right, any venture capitalist or investment banker should respect the concept that ideas can come from anywhere and even from the third world. In his book, Pisano also hints at this “popularization” of biotech financing when he points out how various disease-oriented non-profit groups, charities and government groups are actively

† (Original link: Biotech, Med Tech Business Models: Investors, Patients Deserve Better)

12/11/06

Ogan Gurel, MD MPhil | 312-246-5160 | [email protected]

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providing venture financing to new biotech start-ups. The point that this is happening more and more is further substantiated by the Economist article headlined “Bench to Bedside” on Nov. 4. These groups and charities include the Cure Alzheimer’s Fund (CAF), which was started by several families with VC experience. The Milken Institute (a non-profit) is also sponsoring efforts to look into new approaches to life sciences financing. If the trend of socially driven popularization of biotech investment continues, investors would be looking not just at financial returns but also at social returns of the sort that Yunus is speaking. Ultimately, this is what most patients want. Though it is not yet clear whether or not this will require new legal frameworks, it is apparent that this would involve building new financing paradigms. For example, it may imply regulations that make it easier for smaller companies to access the public or semi-public financial markets. While Sarbanes-Oxley has clearly made this much more difficult, recent trends – as highlighted in the Dec. 10 New York Times article headlined “SEC to Ease Auditing Standards For Small Publicly Held Companies” – may reverse this tendency and make it easier for smaller companies to become and stay public. Another important paradigm would be to create disease-oriented holding companies that are large enough to sustain themselves as a public company but would have individual private holdings that would roughly correspond to today’s start-ups. One of the problems with early stage biotech and medical technology firms is that many of these technologies and ideas do not necessarily require a full-time management team at their beginning stages. Nevertheless, it goes without saying that one needs a management team to secure funding. The current system may be creating an environment fraught with inefficient management overhead and/or just bad management teams. (Disclaimer: Not all of them are bad. In fact, some are really good. They just may not be completely necessary). The investment community (investment banks and VC firms alike) generally abhor holding companies because they complicate deals and are more challenging to valuate. While these are valid concerns, they are more technical than fundamental problems. After all, General Electric is the quintessential holding company and some would argue that the only thing really holding that firm together is its unique and powerful approach to creating, developing and sustaining great management teams. In conclusion, models for biotech and medical technology should consider: 1. Facilitating earlier entry of biotech and med tech start-ups to the public markets to enable investment and engagement by investors who could be patients (or related to patients) potentially impacted by this technology 2. Facilitating holding company arrangements that can justify the management overhead (including public company cost structure) within which private company start-ups can be nurtured and developed When it comes to biotech and medical technology, investors and patients deserve better. Change is clearly in the wind.

Dr. Ogan Gurel is Chairman of the Aesis Research Group, which provides forward-looking information and research services to the health-care and life sciences investment community. Gurel was previously CEO of Duravest, a publicly traded Chicago investment company that initiates and develops next-generation medical technologies. Previous to Duravest, he was a vice president and medical director at Sg2, a healthcare intelligence think tank and consultancy serving hospitals and health systems. He can be e-mailed at [email protected].

12/11/06

Ogan Gurel, MD MPhil | 312-246-5160 | [email protected]

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OGAN GUREL, MD MPHIL BIOGRAPHICAL SKETCH

Dr. Ogan Gurel is Chairman of the Aesis Research Group, LLC – which provides comprehensive consulting and research services to life sciences investment firms and companies. Dr. Gurel was most recently Chief Executive Officer at Duravest, Inc. – a publicly traded holding company which is a global leader in convergent medical technologies. While at Duravest, he served as a Director on the Boards of Estracure, Inc – a Montreal-based next generation coronary stent company and BMTS, Inc. – a Munich-based orthopedic injury and pain management device company. Prior to Duravest, Dr. Gurel was Vice President and Medical Director at Sg2, LLC – a leading healthcare intelligence think-tank and consultancy serving hospitals and health systems. At Sg2, he was the principal architect of the industryleading Impact of Change™ healthcare utilization forecasting system and participated in a business development strategy that built the firm from startup to over $12M in revenues within three years. Dr. Gurel’s business background also includes management consulting at Booz, Allen & Hamilton where he was engaged in a number of strategy projects for leading healthcare and life sciences clients. These projects included developing a benchmarking system for ranking corporate innovation as well as an engagement to with a leading academic medical center to comprehensively identify and track brain cancer therapies. He has also served as an independent consultant to several medical device firms in which he was specifically involved with both European and FDA clinical trial development and oversight. Dr. Gurel also has deep experience in the basic biomedical sciences holding a B.A. cum laude in Biochemical Sciences from Harvard University after which he was a Visiting Researcher at the Institut Laue-Langevin in Grenoble, France. During this time he conducted NMR-based structural studies of DNA and neutron diffraction-based analyses of membrane protein structure. He also holds an M.Phil. degree in Biochemistry & Molecular Biophysics from Columbia University where his research involved x-ray crystallographic structural studies of cytokines. His work has been published in the peer-reviewed scientific literature including the European Molecular Biology Organization (EMBO) Journal and the Journal of Molecular Biology. He has also conducted research in computer science winning 3rd place in the national Westinghouse (now Intel) Science Talent Search for work related to microprocessor software development systems. Dr. Gurel has taught a number of subjects - cellular and molecular biology, neuroanatomy, bioinformatics and mathematical modeling - at several universities including the Columbia University College of Physicians & Surgeons, Harvard Medical School and Roosevelt University. On the clinical side, he received his M.D. with honors (Alpha Omega Alpha) from the Columbia University College of Physicians & Surgeons. Dr. Gurel completed surgical internship at the Massachusetts General Hospital with a joint appointment as Clinical Fellow in Surgery at the Harvard Medical School. Dr. Gurel is also experienced in international medical relief work both during the NATO military campaign in Kosovo as well as in Turkey after the massive 1999 earthquake. With extensive experience in international settings, he is fluent in French, Turkish and German and has conversational ability in Russian. Dr. Gurel is a frequent conference speaker worldwide, addressing the issue of emerging technologies and their impact on the future of healthcare. Although addressing a broad range of topics, he has focused in particular on convergent medical technologies including medical nanotechnology. His commentaries have been published in prominent publications, including the Wall Street Journal, and he is a regular columnist for Midwestbusiness.com, the Midwest’s most prominent technology newsletter, as well as other syndicated publications where he provides insight into the next generation of medical technology developments. He has also served as a juror for the prestigious Medical Device Excellence Awards (MDEA). Ogan Gurel, MD MPhil | 312-246-5160 | [email protected]

OGAN GUREL, MD MPHIL (312) 246-5160

[email protected]

EXECUTIVE SUMMARY ƒ Snapshot: Experienced executive with extensive biopharma/med tech, business and consulting experience (>20 years) in addition to clinical training with outstanding academic and educational credentials. ƒ Capabilities: Skilled in executive management, strategy formulation, market analysis and entrepreneurship. Additional skills in rigorous mathematical and financial modeling, qualitative/quantitative analyses, problemsolving and large-scale project development. ƒ Experience: Executive management at both private and public companies. Deep knowledge of the basic biomedical sciences, healthcare technology assessment, as well as clinical trial design/implementation. Outstanding scientific and clinical advisory team development skills. ƒ Recognized as an industry thought leader in medical technologies with excellent presentation, organizational and project execution skills and a deep and broad network in healthcare, finance, business, academic and the capital markets.

EXPERIENCE Jan ‘05 Present

Chairman, Aesis Research Group, LLC

Chicago, IL

ƒ Providing comprehensive, forward-looking intelligence, information and research services to the healthcare and life sciences investment/corporate sectors. ƒ Regular columnist with Midwestbusiness.com and the Redington Life Sciences Newsletter. ƒ Recognized as an industry thought leader.

Sep ‘05 Sep ‘06

Chief Executive Officer, Duravest, Inc.

Dec ‘01 Jan ‘05

Vice President & Medical Director, Sg2, LLC

2001

Associate, Booz, Allen & Hamilton

Chicago, IL

Led a publicly-traded medical technology holding company with Sarbanes-Oxley compliance. Negotiated and executed on a $6.5M acquisition of an orthopedic/pain management company. Recruited a world-class scientific and medical advisory board; clinical trial investigator selection. Developed and implemented a comprehensive corporate strategy to make Duravest (www.duravest.com) a global leader in convergent medical technologies. ƒ Led global investor relations (“road-show”) efforts. ƒ ƒ ƒ ƒ

Evanston, IL

ƒ Played a critical entrepreneurial role in the early development of the firm. ƒ Lead research and content development efforts. Developed content work in multiple sectors including Imaging, Cancer Care, Outpatient care, Cardiovascular Diseases, Surgical Services, Neurosciences, Orthopedics, Payment & Finance, ICU of the Future and Emergency Departments. ƒ Developed the Impact of Change™ Database and Forecasting system – an industry-leading healthcare utilization forecasting engine. ƒ ƒ ƒ ƒ ƒ

Chicago, IL

Developed a database of healthcare B2B exchanges determining industry success factors. Formulated in-licensing strategy and alliance strategies at major pharmaceutical firms. Engaged in a business restructuring project at a leading diagnostics company. Produced a comprehensive benchmarking database of corporate innovation. Provided senior medical and scientific consultation for multiple consulting engagements.

1997 - 2000 Consultant (Independent) – Various clients

ƒ ƒ ƒ ƒ

Boston, MA

Monitored European clinical trial sites and implemented clinical program management. Preparing market analyses, preclinical scientific papers and clinical trial protocols. Organized preclinical data and provided medical and scientific consultation. Developed clinical trial protocols and write-ups of supporting materials ensuring compliance with GCP, GMP, FDA and European regulatory guidelines. 1

EDUCATION & MEDICAL TRAINING 1996 - 1999 Massachusetts General Hospital and Harvard Medical School

Boston, MA

ƒ Intern in General Surgery (1996 – 1997); successfully passed USMLE Step 3. ƒ Academic appointment as Clinical Fellow in Surgery. 1987 - 1996 Columbia University College of Physicians & Surgeons

New York, NY

MD (Alpha Omega Alpha medical honor society) MPhil (Biochemistry & Molecular Biophysics)

ƒ Sciarra Prize for excellence in Neurology ƒ Graduate studies and research in structural biology (“X-ray crystallographic structural studies of cytokines”) with Prof. Wayne Hendrickson. Course work in advanced mathematics and physics. ƒ Successfully passed NBME Part I (> 99.9%) and USMLE Step 2 board exams. 1982 - 1986 Harvard University

Cambridge, MA

AB cum laude in Biochemical Sciences ƒ Senior thesis research in Biochemistry (“Molecular Dynamics of DNA”) with Prof. Martin Karplus. ƒ Additional senior-level independent research in classical archaeology with Prof. David Gordon Mitten. ƒ Varsity Crew (Major “H”). 1978 - 1982 Stuyvesant High School

ƒ Westinghouse Science Talent Search winner ƒ IBM T.J. Watson Scholar.

New York, NY (3rd

place) for research in computer science.

RESEARCH & TEACHING; OTHER WORK EXPERIENCE Present

Columnist (MedTechFutures), Midwestbusiness.com

Chicago, IL

ƒ Regular bi-weekly column providing insights into the future of healthcare and medical technology. 2002-2005

Adjunct Professor, Roosevelt University

Chicago, IL

ƒ Teaching courses in cellular & molecular biology, bioinformatics and mathematical modeling. Jun-Sep ‘99 Staff Physician, International Medical Corp / Red Cross

Golcük, Turkey & Skopje, Macedonia ƒ Red Crescent Organization (Red Cross): Provided patient care and managed relief logistics. ƒ International Medical Corps (IMC): Patient care, supervisory work and logistical support.

1989 - 1996 Graduate Student, Columbia University

New York, NY

ƒ X-ray crystallographic structural studies of growth factors (insulin, IGF-1, bFGF, SCF4). 1987 - 1989 Visiting Researcher, Institut Laue-Langevin

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Grenoble, France

Neutron diffraction & difference Fourier analysis of membrane proteins (bacteriorhodopsin).5

1985 - 1986 Research Assistant, Harvard University

Cambridge, MA

ƒ Molecular dynamics and nuclear magnetic resonance (NMR) studies of solution-form DNA.

SKILLS & INTERESTS Languages: Fluent in French and German; conversational in Russian. Travel: Europe & Japan. IT: Windows, Database design and implementation (Access, VBA, SQL, SAS), MS Office, UNIX, FORTRAN, HTML. Interests: Classical piano, Writing Athletics: Shotokan Karate (Yellow Belt), Crew (1st place Head of the Charles), Running (NYC Marathon 3:06). Citizenship: U.S. 4 Jiang X, Gürel O, Mendiaz EA, Stearns GW, Clogston CL, Lu HS, Osslund TD, Syed RS, Langley KE, Hendrickson WA, (2000), "Structure of the active core of human stem cell factor and analysis of binding to its receptor Kit," EMBO J. 19(13):3192-203. 5 Popot JL, Engelman DM, Gürel O, Zaccaï G, (1989), “Tertiary structure of bacteriorhodopsin. Positions and orientations of helices A and B in the structural map determined by neutron diffraction.” J Mol Biol. 210(4):829-47.

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