Excellerant Packet 7-24-07 v2

EXCELLERANT
Life Sciences Accelerator

A combined real-estate, incubator and CRO deal
Vision/Mission Statement: Excellerant aims to be the world’s leading Life

Sciences Accelerator whose mission is to help bridge the Innovation Gap and
bring life-saving life sciences technologies faster to market.
Æsis Research Group

Ogan Gurel, MD MPHIL
14 July 2007
Confidential
The document does not represent a prospectus or an an offer to sell the securities and it is not soliciting an
offer to buy the securities in any state where offers or sales are not permitted.
Confidential Æsis Research Group
OUTLINE
EXECUTIVE SUMMARY
OVERVIEW & B ACKGROUND
THE BUILDING
THE CRO
BUSINESS PLAN & R EVENUES
INVESTMENT FINANCIALS
PO Box 578025 Chicago, IL 60657-8025 | Tel (312) 246-5160 | Fax (773) 409-5897 | gurel@aesisgroup.com P. 2
Providing investment intelligence and research services to healthcare investment decision makers
EXECUTIVE SUMMARY
An unprecedented opportunity exists in the greater Chicago area to purchase an existing 70,000 sf high-end research
facility for a low price of less than $4M (as compared to an estimated replacement value of $28M and an overall
capitalization of at least twice that). A contract research organization (CRO) that four years ago had annual revenues
of nearly $20M is the sole tenant of the building but has recently reduced its operation to a minimal level of activity.
This CRO requires restructuring. The building and CRO – despite the unusual “fire-sale” circumstances – are fully
FDA certified. The business plan involves purchasing the building and the assets of the CRO, restructuring the latter to
function in about 10,000 sf and leasing the remaining space to life sciences (biotech & medtech) startups and
development stage companies. Because rental rates can be quite low (perhaps 75% less than other incubators which
have to make up the full cost of their capitalization) and the facilities are of such high quality, demand for this space
should be very high. Only the very best companies will be permitted to lease and stay within the building.
Furthermore, the effectively subsidized rent enables investors (through the Excellerant holding company) to hold equity
stakes in the tenants without any cash investment (unlike most venture capital firms). Management expertise as
appropriate will also be provided to those companies bridging the “innovation gap.” And unlike conventional business
incubators – whose business model is limited to rental income – this unique facility will tie tenancy to the achievement
of development milestones and thus the value of each tenant will be accretive not only from a rental basis but also from
the value-added equity position. In short, the mission of this unique facility, the associated CRO and advanced
incubator model is to be the leading Life Sciences Accelerator in the nation.
Excellerant will be a pace-setting paradigm for desperately needed new approaches to accelerating biopharma and
medical technology innovation while providing high returns to its investors.
OVERVIEW & B ACKGROUND

This section includes three articles which outline some of the background
behind the opportunity.
 The ‘Innovation Gap’: Preventing Ideas From Untimely Deaths

o Provides some background on factors inhibiting startup development
and commercialization of life sciences ideas from bench to bedside
 Call to Action: How to Accelerate Medical Technology in Illinois Beyond

o Outlines in general terms the basic business proposition underlying
the Life Sciences Accelerator
 The Future is Bright For Life Sciences in State of Illinois

o Describes how a number of trends are leading to potential growth in
life sciences development in the State of Illinois.
The ‘Innovation Gap’: Preventing Ideas From Untimely Deaths

By Ogan Gurel, MD MPhil
As published by MidwestBusiness.com on May 29, 2007
CHICAGO – The Memorial Day holiday is a paradox – both solemn and joyous. It honors those
who have fallen in military service to their country. With fluttering flags at gravestones and taps in
the air, it is the most solemn of holidays. It unofficially starts the summer season. With sparkling
weather framing joyous graduates, family picnics, the Indianapolis 500 and baseball pennant races,
the holiday holds its own festive note as well.
I don’t think anyone has figured out how to greet people after the holiday. It doesn’t quite sound
appropriate to say: “Did you enjoy the weekend?” It sounds overly somber and presumptuous to
say: “Did you have a reflective weekend?” This seems to strike the right tone: “I hope you had a
restful holiday weekend.”
I wish it were restful for me as I spent at least part of the weekend thinking about the topic for
today’s column. It addresses another paradox – the “innovation gap” – which is a term originally
coined by Mary Good (the former undersecretary for technology in the U.S. Department of
Commerce) about the biopharma and medical technology industries. One solace to a less-than-
restful weekend was the realization that this innovation gap problem, which has vexed many over
the past decade or so, will certainly not be solved over a holiday (particularly one spent with family
and friends at picnics and other events).
What is the paradox of the innovation gap?
In an era in which the potential for truly revolutionary medical breakthroughs has never been
greater, the realization of such potential appears to fall far short of its promise. While fundamental
discoveries such as genomics, molecular medicine and related R&D spending grow exponentially,
the number of novel drugs and products reaching the market continues to decline. While some call
it the sparse pipeline problem, that is only one manifestation (the tail end) of the innovation gap.
A few definitions are helpful. This is according to the National Institute of Standards &
Technology (NIST), which has published an excellent study on the situation:
“Invention” [is] shorthand for a commercially promising product or service idea
based on new science or technology that is protectable (though not necessarily by
patents or copyrights).
“Innovation” [refers to] the successful entry of a new science- or technology-based
product into a particular market.
The innovation gap represents the inability to take fundamental inventions at the level of the
university research lab or an entrepreneur’s initial idea into at least the preliminary stages of
commercial development. Roughly speaking, there are two underlying causes for the innovation
gap: one financial and the other operational.
The financial reason concerns a relative lack of funding for the phase between invention and
innovation. The operational reason relates to organizational, managerial and technical factors that
tend to impede the leap from invention to innovation. While the two factors are certainly related
to each other – one can think of it like the chicken or the egg issue – it is useful to address each
one separately.
The Gap Financing Problem
After 1995, the overall proportion of seed-stage deals (then about 16 percent) fell dramatically (4.54
percent in 2006), according to the recent MoneyTree survey. The survey outlines total venture
capital invested, seed-stage deals and the percentage of seed money to total money. Indeed, most
innovation gap financing comes from angel investors, corporations and government rather than
venture capital firms. This financing problem has been noted by many university technology
transfer experts. “There are absolutely tremendous technology opportunities coming out of the
university,” said Michael Cleare, who is the executive director of science and technology ventures at
Columbia University. “We need more commitment and mechanisms to tap into that intellectual
capital.”
Multiple factors have led to the gap financing problem. These include:
1. A world awash in capital. One would think that more capital would mean more funding.
The opposite has actually happened. Lower interest rates have resulted in a decisive shift
toward debt-based financing.
As I commented earlier on the private equity boom, it makes no sense to apply debt
financing to innovation projects for which there is no immediate prospect of revenue to
service that debt. Every newspaper splash about the latest mega deal means a lot less money
is deployed toward earlier-stage projects.
One corollary to the debt-leveraged private equity boom is the investor preference for
acquisitions rather than equity plays. On Monday night, Charlie Rose spoke with Warren
Buffet in which Buffet outlined the Berkshire Hathaway investment strategy as being
decisively focused on acquisitions.
These days, investor sentiment (which often likes to follow Buffet) is decidedly biased
toward acquisitions. This really only makes sense when those acquisition targets are
revenue-generating concerns.
2. Mega deals. While the headlines are dominated by multibillion-dollar mega deals, there
certainly are smaller private equity and venture firms out there. Nonetheless, even the
smallest of venture funds have progressively gotten larger in the deals they are able to do.
Due diligence (and all the other attendant aspects of doing a deal) takes time and money.
As many entrepreneurs know, most venture funds will not even consider deals that are less
than $10 million in size. There is also a correlation between size of the deal and the
maturity of the underlying business.
Early stage deals typically are not large.
3. Inefficient risk assessment. As technology gets more complex and as the cost of evaluating
risk becomes greater, it is a challenge to properly evaluate risk for early stage companies
and appropriately allocate equity, value and consequent investment.
While inefficient markets harbor the possibility of great returns, capital typically stays away
and at the very least exacts an onerous risk premium on fledging projects.
The gap financing problem is a serious matter that results in projects lingering on in university labs.
Ideas that do make the leap often do so after at least a year of pitching venture funds. The
exhaustion and equity hit at the end of the tunnel is so typically great that the all-important
motivational spark becomes subtly if not actually extinguished.
The Operational Innovation Gap
An earlier column on life sciences business models highlighted how certain structural aspects of
early stage biotech and medical tech companies lay the seeds for failure or at the very least a
reluctance by investors to commit financing.
One of the most important factors behind the innovation gap is the concept that venture capital
invests more in management than necessarily the underlying ideas. There is much truth to the
venture folklore that a good management team can extract gold from dirt while there are legions of
examples in which bad management have doomed otherwise promising ideas to failure. The
corollary of this is that any project intending to leap past the innovation gap must gather about it
an absolutely world-class management team.
Assembling top-notch management has three implications:
1. It reduces the execution risk for the project and emboldens investors who would otherwise
not commit to the project.
2. It serves as a proxy to due diligence such that a VC firm gains additional confidence from
the fact that some leading individuals are also behind the project.
3. It costs money. By definition, there is only a finite pool of experienced management.
The last point is critical. It’s a major reason why most projects simply cannot move beyond the
simple invention stage. While a great management team is highly desirable (and a bad management
team certainly is abhorred), not all ideas traversing the innovation gap require a phalanx of grey-
haired executives on the team.
I am reminded of the climactic scene in the 1980s Michael Douglas film “Wall Street” in which
corporate raider Gordon Gekko struts about at the annual meeting of Teldar Paper. There is a
paradox among paradoxes. While investors demand top-notch management, such management
runs the risk of extracting more cost than value and scaring away the very same investors. A full
corporate structure accompanying top-flight management also requires substantial overhead.
Though the ascendancy of the virtual company has been heralded, systems and processes still
accompany every corporate structure that wraps itself around a fledging idea.
The increasing prevalence of life sciences incubators and science parks have helped to mitigate
some of this operational overhead. Even so, many of these incubators suffer from one fundamental
problem: They have a strong disincentive to have their rent-paying start-up tenants move out. This
mutual dependency (or “weaning”) problem has the paradoxical effect (even if psychological) of
potentially slowing down development within these incubators.
In his book entitled “Science Business,” Gary Pisano of the Harvard Business School has pointed
out how operational paradigms that may have been appropriate to software technology
development have likely encumbered early stage life sciences companies. I have argued previously
that holding companies specializing in life sciences interim management may represent one
possibility of more efficiently allocating human capital among multiple projects. Combining this
with an upgraded incubator model that addresses the weaning problem would result in what I
would term a “life sciences accelerator”.
Memorial Day Redux
Most chemical reactions involve a sequence of steps from initial reactants to final products. It is a
well-known law of kinetics that the overall rate of a reaction is determined by the slowest step in
that process. The innovation gap is more than just a sad litany of promising ideas snuffed out and
laid to rest. Instead, it’s the rate-limiting step along the arduous journey of bringing life-saving ideas
from initial concept to actual patient benefit. There are many obstacles along the path from the
bench to bedside. While it is difficult to quantify in strict kinetic terms a process that involves
multiple parallel, diverging and/or converging paths, I would say the major barrier is the
innovation gap.
While solving this problem would not necessarily prevent all ideas from suffering an untimely
death, it would at least allow more of them to reach their full potential. The tragedy of a lost idea is
nowhere near that of the ultimate sacrifice, but as Memorial Day fades into summer, let us reflect
upon those who have fallen and look to the future.
Call to Action: How to Accelerate Medical Technology in Illinois, Beyond

As published by MidwestBusiness.com on May 30, 2007
My MidwestBusiness.com editor, Adam Fendelman, has asked for this column by 1 p.m. As teenage
parlance would go, I need to “get busy”! Adam is a great editor. He gives me writing freedom and
edits gently yet masterfully. He runs a tight ship, too, and if people don’t deliver, he’s not happy.
While this column usually appears biweekly, the topic of putting a fire under biopharma and
medical tech development justifies a double dose this week. What will it take to accelerate
biopharma and medical technology development?
What kind a fire can we light under the feet of already highly motivated clinicians, scientists,
investors, government and business folks? Is there more we can do?
A related problem is the relative dearth of biopharma initiatives in Illinois and the Midwest. Of
course, we have Abbott Labs and Baxter along with GE Healthcare up in Wisconsin and Eli Lilly
down in Indianapolis. Certainly there is no dearth of start-ups in the area as well.
More than a year ago and right after the mega BIO 2006 conference in Chicago, I wrote a column
about the Midwest as innovation central. Even so, most people will cite San Francisco as the
nation’s focus for biotech while route 128 outside Boston, the Research Triangle in Raleigh-
Durham and the pharma alley in New Jersey remain recognized leaders in the life sciences.
Even these storied bastions of biopharma and medical technology still grapple with the innovation
gap problem written about on Tuesday.
I’ve also previously written about how the private equity boom has potentially shunted funds from
early stage innovation, in agreement with others such as professor Gary Pisano of the Harvard
Business School about how conventional venture funding paradigms may not fully meet the needs
of fledging biotech businesses and about the need for new business models to accelerate
development.
I have mentioned how efforts by groups such as Michael Milken’s FasterCures organization could
potentially help accelerate the path to cures and solve such problems as the innovation gap. Even
FasterCures – with millions of dollars from major players such as the Gates Foundation and the
Sumner Redstone Charitable Foundation – has accomplished little with its millions.
FasterCures apparently hasn’t given a speech since January and its last posted publication was in
Oct. 2005. Its most recent president’s letter was issued last fall, which was cloaked in an
underhanded way as a politicized critique of the war in Iraq. While Iraq is an important issue, let’s
not confuse our priorities.
It’s easy to be negative. Here’s where the fire under my feet is leading me. I would like to share with
you a proposal to help accelerate biopharma and medical technology development in Illinois.
Because the problem is so deep and so important, Illinois making headway on a solution can
effectively position the state to lead the nation.
In Tuesday’s column – a Memorial Day parable headlined “The ‘Innovation Gap’: Preventing
Ideas From Untimely Deaths” – it was pointed out how the innovation gap constitutes the rate-
limiting step in the path from bench to bedside and from fledging idea to saving lives. Tuesday’s
column also discussed how conventional “incubator” models may not completely solve the
problem.
For one thing, a business model built around extracting rents from cash-strapped start-ups has its
challenges.
While many incubators are quite successful – there are about 1,500 business incubators operating
in North America, according to National Business Incubation Association CEO Dinah Adkins –
there may be significant incentives for fledging tenants not to leave and to move along at a slow
enough pace to ensure a comfortable rental income stream.
Please don’t get me wrong. Dedicated entrepreneurs in the life sciences are among the most highly
motivated people on the planet. This is not a critique of them. Still, when the system is stacked
against you, even a will of Arthur Schopenhauer proportions is but a whimper in the silence.
In the Memorial Day column, I hinted at a new model for life sciences development: a life sciences
accelerator. The concept would involve several components that have been developed in greater
detail in previous columns. Let’s outline these in more detail:
1. Development of a highly functional laboratory facility that is partly subsidized by a
combination of government funding, philanthropic donations and/or simply buying into
existing facilities at a low cost.
2. The presence of an in-house contract research organization (CRO) that would help service the
needs of accelerator tenants but would also have external clients so the business alone
would be viable in its own right. The CRO would also manage most of the equipment in
the facility and offload these tasks from the tenant companies.
3. A management company within the facility that would provide operational management
expertise to the tenant companies. In this regard, it would be important to select the
companies in such a way that conflicts of interest would not arise. If so, management
resources would need to be realigned.
4. This life sciences accelerator facility would offer below-market rental rates to its start-up
and development-stage tenants. In return for subsidized rent, the management company
would be granted a certain degree of non-controlling equity in these tenants.
Because of the combination of low rental rates and high-end facilities, the accelerator
would experience high demand for its space and allow it to be selective about its tenants
and aggressive about moving tenants out.
Here’s the kicker. Even though the management company would not have a controlling interest in
its tenants, it still would determine whether its tenants stay or go.
Like the “up or out” philosophy that has worked so well with the blue-chip management echelons
of GE and the competitive brilliance of McKinsey consultants, companies would have to reach
aggressive milestones or find somewhere else to putter along. While this may be cruel, ultimately by
accelerating biopharma and medical technology development lives will be saved.
Is this pace-setting life sciences accelerator based in Illinois just a dream?
I wouldn’t be writing about this unless I had a specific plan in the works. If you are interested,
please e-mail me. If you prefer, I am – in this column only – providing my phone number: 312-246-
5160.
As it’s now 11:45 a.m., I’m ready to hand this off to Adam. It’s nice to see what a little fire can do.
I look forward to your calls and e-mails.
The Future is Bright For Life Sciences in State of Illinois

As published by MidwestBusiness.com on June 25, 2007
In 2006, Chicago was the home of the successful BIO 2006 conference. I wrote this in a follow-up
column: “It was quite an event. More than 19,000 attendees – anywhere from Bill Clinton to
biotech graduate students – teemed throughout the cavernous halls of McCormick Place.” The
strong support of many of the large Midwestern drug and device companies was a factor in the
success of this conference. Very important, of course, was Chicago Mayor Richard Daley’s personal
encouragement (with both his enthusiasm as well as dollars) along with a push from Illinois
Department of Commerce & Economic Opportunity (DCEO) director Jack Lavin.
The conference also had the goal of sparking a number of initiatives to put Chicago and the
Midwest on the map with respect to the growing life sciences industry. With Abbott Laboratories,
Baxter, Takeda and many other major companies, Chicago is no lightweight. Still, there has been
the impression that many promising ideas would leave the area for Boston, San Francisco or San
Diego when it has come to start-ups and other engines of innovation and growth. With a fabulous
infrastructure, vibrant economic growth, top-notch professional services, a strong financial
community and one of the world’s leading centers of life sciences university research, there are all
the reasons for start-up and development-stage companies to stay or even come to the Chicago area.
Both city and state leaders recognize that the life sciences sector – with an aging population,
innumerable unmet needs in medicine and increasing globalization of pharmaceuticals and medical
technology – represents a strong part of commerce for the future. That means lots of meaningful
and high-paying jobs. The 2006 column also focused on one particular aspect of BIO 2006: the
rising importance of convergent or combination medical technologies. By definition, these are
technologies that straddle both the device and drug worlds and also incorporate aspects of IT and
nanotechnology. In the diagram below, areas of overlap represent potential convergent medical
technology applications. The “device” sector is indicated here as “surgical tech”
While the paradigm for convergent medical technologies (CMT) has been the drug-eluting stent
(DES), other areas have also seen recent applications such as implantable insulin delivery pumps
and programmable intracardiac defibrillators. However, it is not so easy to develop CMT as there
are significant cultural and regulatory differences between the biopharma and device sectors. Some
of these differences are highlighted in the chart below:
So what does this have to do with the Midwest? While there have been a number of significant
initiatives pushing biotech forward, the 2006 column touched on how Chicago is especially well
poised to help integrate and cross this cultural divide. Not only are we seeing a renaissance of life
sciences in the Chicago area, but more specifically, I would predict that interdisciplinary areas such
as CMT (including nanotech and smart devices) will especially find Chicago a congenial area to
move forward.
Just one example of the many initiatives that have been spawned from BIO 2006 is the recently
unveiled iBIO PROPEL project. iBIO is the Illinois Biotechnology Industry Organization. Its
mission is to strengthen the leadership position of Illinois as a globally recognized life sciences
center. The PROPEL project is an entrepreneurship coaching program designed to facilitate and
accelerate the development of management at life sciences start-ups in Illinois. I attended the
PROPEL kickoff event last Wednesday, which was written up in the Chicago Tribune. The day was
notable not only because of the importance of the program but also the fact that the kickoff itself
brought a remarkable assembly of nearly all the top industry, academic and government leaders
together in one room.
While it wasn’t as raucous as the seventh-inning stretch at Wrigley Field, you could sense the
excitement and enthusiasm in the air. Ultimately it is people and the commitment of people that
will be critical to moving the PROPEL and innumerable other such initiatives forward. I had a
chance to speak with iBIO President David Miller after the event. We both agreed that the outlook
for life sciences in Illinois is truly promising.
“Prospects are strong for the entire state because of the range of applications under
development here,” Miller said. “What’s new – and the reason I’m so confident –
is that we have engineered a phenomenal level of cooperation among the three

primary sectors: public, private and education/ esearch.”
Kudos to Miller and to Mayor Daley, Jack Lavin and many others who have helped to bring this
spirit of collaboration to reality. In fact, that speaks directly to why Chicago and Illinois are
perfectly poised to be the world leader in next-generation convergent medical technologies as well
as a major player in life sciences. Progress in our increasingly interconnected technologies can only
come through collaboration. We are seeing that in spades in Chicago.
The mega BIO conference (dare we say “Biopalooza”?) is scheduled to return to Chicago as BIO
2010. That fact alone speaks for itself. It’ll be interesting to see how Chicago and Illinois fit into
the growing life sciences landscape at that time.
THE BUILDING
This single-story building (originally built in 1988) is 70,000 sf with 63,400 under heat and air and the rest closed docks.
Ample employee and visitor parking spaces are also included and the total land space (included) is 130,680sf. A
satellite photo of the building and floor plan are shown below.
The building and accompanying infrastructure is extensively built out for chemical, biological microbiological and/or
pharmaceutical work with 35 separate air handling systems, over 40 labs, heavy duty ventilation, heating, electrical,
generators, clean rooms (class 100, 1000 and 10000), etc. etc. The building was also structurally engineered for a
possible 2nd floor expansion. Extensive conference room space, office space, educational spaces, etc. are also
included. Because of all the special lab and research based build-out the replacement cost may be as high as $28M
($400/sf) (or even higher given that some construction is quoted at $600/sf and the building is especially highly
capitalized. Over capitalization (namely additional high end equipment, remodeling, CRO assets and infrastructure
improvements) gives a potential overall replacement value to the building of $60M. The building is located in the
Chicago suburbs with good access to transportation (two miles west of IL-60).
Why this is such a low price The current tenant is a contract research organization (CRO) which reached a $19M
topline with margins of 45%. It was a very successful player in the areas of stability, sterility, microbiological,
GMP/GLP consulting and clinical trial consulting. Unfortunately the former CEO had serious legal troubles (involving
another company) which ended up with him being sentenced in June of 2006 to ten years in federal prison. His case is
under appeal. Because of this, two things happened, the company had to be sold (the FDA would not certify a
company led by a convicted felon) and as part of the sentence, the U.S. government took a 50% interest in the
building. The CRO was thus sold to an investor group unfamiliar with the biotech industry. To make a long story short,
they brought in another partner who had a strong reputation in the clinical consulting arena who promised to bring in
many clients. He ended not being able to spend time (he was based in Philadelphia) with the company and apparently
did not bring any clients. He has since resigned. About one month ago, the situation further deteriorated when the
company no longer could pay rent and was essentially being closed down. In addition, the owners of the building were
eager to sell the property with the CEO’s family wanting $5.5M and there is indication that the U.S. government being
satisfied (with comparables on a tear-down or warehouse basis) with $3.3M. Because the case is on appeal and there
is no desire to be adversarial with the government, a purchase price (prior to negotiation) of $4M has been proposed to
the Aesis Group. Based on average square foot for research lab buildout ($300 - $600 sf) the approximate
replacement value for the building ranges between $21M to $35M. Because the facilities are particularly built at the
high end, the total capitalization (including equipment) could be close to $60M.
Summary of Building Capabilities
 70,000 Sq. Ft. Facility with 40+ Laboratories and 32 separate air handling facilities
 High-end biochemistry, molecular biology, microbiology equipment
 Outstanding educational and training facilities
With multiple research, development and industry capabilities such as:
 Nanotechnology  Regenerative Medicine / Stem Cell

o 100,000 rated cleanrooms Research
o Particulate Analysis o Tissue culture facilities
 Forensic science  Chemistry & Biochemistry

o Investigation of Criminal o Water Testing
Defendants o Chemical Analysis including D-
o Sex offender and Violent Felon value/z-value Analysis
Database DNA profiling o Stability studies
o Unknown Soldier Identification o Analytical and Protein chemistry
o Forensic DNA Analysis o USP Monograph testing
o Missing Person Identification  Microbiology
o Mass Accident or Terrorist Attack o Sterile Cleanrooms For Sensitive
Victim Identification Analyses
o Paternity Testing o Vaccine development
 Molecular Biology o Endotoxin Identification
o Genetic Profiling o Microbial Identification
o Complete DNA analysis o Sterility testing with multiple
o Ribotyping sterility suites
o DNA sequencing o Bacterial and Fungal Taxonomy
o High capacity incubators
 Manufacturing support (GMP)
o D-value/Z-value Analyses
o Closure/Package Integrity
o Viable/Non-viable Environmental
Monitoring
o Analytical Method
Development/Validation
THE CRO
The business description included is not up-to-date but includes a fairly comprehensive review of the company and it’s
very unique capabilities.
Some of the capabilities and intellectual property resident in the CRO include:
 Intellectual Property and Databases covering decades of experience in all aspects of the pharmaceutical,
medical device, biotechnology, and generic drug industries
o Industrial Microbiology
o Sterilization
o Validation
o Quality Systems
o Regulatory Affairs
o Manufacturing Engineering
o Analytical/Protein Chemistry
o Operations Management
o Over 150 Publications
o 24 US Patents Issued, 3 Pending
 Educational Services
o Managing Regulatory Inspections
o Basic & Industrial Microbiology
o Aseptic Technique
o Biological Indicators
o D-values/z-values
o Environmental Monitoring
o Mycology
o Analytical Chemistry
o Protein Purification
o cGMPs/QSR
o GLPs
o Validation
o Manufacturing
o Steam, VHP, EO & Gamma Sterilization, SIP & Depyrogenation
o Packaging
o Pharmaceutical Engineering
o Custom Presentations
 Extensive client list locally, nationally and globally
Basic Financials
2002 2006
Income $14.4M $1.8M
Expense (after add-backs*) $10.1M $3.5M
Profit/Loss $4.3M -$1.7M
Add back legal defense fees, pension plan deposits, sales rent
Gross Income and Operating Profit (2001 – 2005)
PSI: Gross Income (2001-2005)
20,000,000.00
18,000,000.00
16,000,000.00
14,000,000.00
Gro ss Inco me ($)
12,000,000.00
10,000,000.00
8,000,000.00
6,000,000.00
4,000,000.00
2,000,000.00
0.00
1 1.5 2 2.5 3 3.5 4 4.5 5
Year (Y)
PSI: Gross Operating Profit (2001-2005)
5,000,000.00
4,500,000.00
4,000,000.00
3,500,000.00
Gro ss Op er ating Pr ofit ($)
3,000,000.00
2,500,000.00
2,000,000.00
1,500,000.00
1,000,000.00
500,000.00
0.00
1 2 3 4 5
Year (Y)
BUSINESS PLAN & R EVENUES

The plan involves converting the facility into the leading life sciences “accelerator” facility in the world (and certainly the
Midwest). The concept of an “accelerator” represents a step beyond that of conventional business “incubators.” The
factors that could make this one of the world’s leading facilities are:
1. It would be able to provide the lowest rents to any startup or development stage company. Because of the
unusually discounted acquisition, we are able to effective “subsidize” any rent coming in. Absolutely no
facility with anywhere near the capability would be able to compete on price. Note that at a monthly rent of
$10/foot, the mortgage can be easily covered with only half the building being rented out. Conventional
incubator rents run at around $40/foot or more.
2. The lab facilities are absolutely first-rate and this is not simply an “incubator” with some slate lab tables
scattered about. There are 32 separate air handling systems, most of the rooms are equipped with the
highest end hoods, there are multiple “ultra-clean” rooms, infrastructure is absolutely first rate, and so on and
so,
3. The facility will have its own top flight CRO which can serve both the tenants as well as external customers.
This new CRO will essentially be the restructured successor to the current tenant and will occupy a smaller
section of the building rather than the entire facility.
4. it is anticipated that the facility will be run and be associated with absolutely world class staff. This ranges
from the property management, to legal / IP advisory all the way to Nobel Laureate advisors.
Conventional incubators make money by charging rent to cash-strapped startups and development-stage companies.
These incubators actually are disincentivized to have their tenants rapidly succeed and move out. The unique
“accelerator” concept here would provide a combination of lower rents yet more capability. Because of the
“subsidized” rent, non-controlling equity interests will be taken in the tenant companies (depending on the space, the
discount and so forth). Because of the unique combination of low rent and greater capability, high demand for the
space is anticipated. Tenant companies that do not meet milestones and judged to be unsuccessful will not have their
leases renewed. While the accelerator will not have equity control of the companies, they effectively have control over
their presence in the facility. It’ll be “UP or OUT.” That is ultimately the unique value proposition of an accelerator over
an incubator.
Revenues Revenues to the management company and thus to the investors would accrue from four major
sources:
1. Rents from tenants (including the CRO). At approximately 50,000 sf of rentable space and a
very low price of $20/sf yields monthly rent of $83,333.
2. Ues of equipment and other such fees.
3. Fees from the tenants for use of CRO services (the management company will own the CRO
as well as the building)
4. Exit returns accruing from equity interests in tenants (yet another reason to accelerate their
development and commercialization)
Income from #1 through #3 are estimated as being substantially over $100,000 month even at absolute
cut-rent rental rates of $20sf. This does not include equity returns (#4) or income from the CROs
activities with external clients.
It may also be anticipated down the line potentially that fees can be charged to venture capital firms and
other investment firms for the right to bring their portfolio company into the facility as tenants.
Business Structure
The business structure is outlined below and represents the distribution of assets, the relationship of
investor parties to the underlying assets and relative cash flows (green) and equity stakes (red).
Proposed O rganization for new ly restructured Accelerator site
New
Investors Sterility M icrobiology
80% own
Dividend Stability Clinical

Building consulting Revenues
Partial
Holding com pany / equity
Ownership Form er CRO
VC firm O utside
Lease +
equipm ent clients
Equipm ent rental
C ontract research revenues
R evenue 65.5% own
A ssets 2 0% own
Partial Com pany C
equity Com pany A
34.5% own M anagement
Aesis company
Lease + Com pany D
G roup, LLC equipment Com pany B
rental
“Other” tenants
Management
Dr. Ogan Gurel will be directing the management company and key scientific executives of the previous
CRO will be leading individual units of that entity. Additional advisors are in the process of being
recruited and various other functions (property management, leasing, legal etc.) will be out-sourced to
top professional services firms in the Chicago area. Dr. Gurel’s bio follows.
Currently I am Chairman of the Aesis Group, LLC – which provides strategy consulting, market
forecasting, technology assessment and investment research/due diligence services to companies
and investment firms in the life sciences and healthcare sectors. Our clients have included startups,
hospitals, health systems, GPOs, private equity firms, venture capital funds and hedge funds.
Presently, I also serve as:
 Board Director at FireFly Medical - a company that designs and develops next-generation healthcare
equipment,
 Chief Medical Officer at BlueBob Analytics - which provides leading edge procedure-based financial
management software and services to hospitals, ambulatory surgery centers and other provider
groups,
 Columnist in biopharma/medtech for several online venues and a juror for the 2007 Medical Design
Excellence Awards.
DURAVEST, INC. Previously I was Chief Executive Officer at Duravest, Inc. – a publicly traded holding
company focused on developing convergent medical technologies. At that time I also 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.
SG 2, LLC & B OOZ, ALLEN, H AMILTON Prior to Duravest, I was VP and Medical Director at Sg2, LLC – a leading healthcare
intelligence think-tank and consultancy serving hospitals and health systems. As Medical Director, I led the research teams
providing thought leadership on topics such as, Surgical Services, Cancer Care, Cardiovascular Services, Procedure Centers,
Imaging, Outpatient care, Neurosciences & Orthopedics, Payment & Finance, ICU, Emergency Departments, Hospital of the Future,
Diabetes, and Asthma. Most notably, I was the principal architect and developer of the industry-leading Impact of Change™
healthcare utilization forecasting system based on a unique differential equation model integrating demographic, sociocultural,
financial and technology drivers to predict change. I also served as clinical lead for strategy consulting projects at hospitals nation-
wide, supported marketing and business development (helping to drive sales from startup to nearly $12M in three years) and
represented the company with respect to any clinical-facing and medical advisory functions. Prior to Sg2, I was at the blue-chip
management consultancy Booz, Allen & Hamilton engaged in a number of strategy projects for Fortune 500 healthcare and life
sciences clients. I have also served as an independent consultant to several medical device firms in which I was specifically
involved with European (EMEA) and FDA clinical trial development, monitoring and oversight.
SCIENTIFIC & ACADEMIC B ACKGROUND I also have deep experience in the basic biomedical sciences holding a B.A. cum laude in
Biochemical Sciences from Harvard University after which I was a Visiting Researcher at the Institut Laue-Langevin in Grenoble,
France. During this time I conducted NMR-based structural studies of DNA and neutron diffraction-based analyses of membrane
protein structure. I also hold an M.Phil. degree in Biochemistry & Molecular Biophysics from Columbia University where my
research involved x-ray crystallographic structural studies of cytokines. My work been published in the peer-reviewed scientific
literature including the European Molecular Biology Organization (EMBO) Journal and the Journal of Molecular Biology and has also
won honorable mention for the ACA Linus Pauling Prize. Additionally, I have 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. Throughout my career, I have taught a number of subjects – including cellular and molecular biology, neuroanatomy,
bioinformatics and mathematical modeling - at several universities including the Columbia University College of Physicians &
Surgeons, Roosevelt University and the Harvard Medical School; presently I am an Adjunct Associate Professor of
Bioengineering / Bioinformatics at the University of Illinois - Chicago.
CLINICAL BACKGROUND I received my M.D. with honors (Alpha Omega Alpha) from the Columbia University College of Physicians
& Surgeons and completed surgical internship at the Massachusetts General Hospital with a joint appointment as Clinical Fellow
in Surgery at the Harvard Medical School. I am 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 an extensive international background, I am
fluent in French, Turkish and German and have conversational ability in Russian.
THOUGHT L EADERSHIP & MEDIA As a healthcare technology expert and futurist, I have been a frequent conference speaker
worldwide, addressing the issue of emerging technologies and their impact on the future of healthcare. My particular focus has
been on convergent medical technologies including medical nanotechnology. My commentaries have been published in prominent
publications, including the Wall Street Journal and I am a regular columnist for Midwestbusiness.com, the Midwest’s most
prominent technology newsletter, where I provide insight into emerging medical technologies. My blog – the Life Sciences Business
& Investment Daily at http://blog.aesisgroup.com/ is a leading independent source of information and insights for the Life Sciences
sector. I am also a President’s Circle member of the Chicago Council on Global Affairs and have been active in several civic
organizations.
INVESTMENT FINANCIALS
The financials break down (referencing the organization chart above) into those relating to the holding company, the
management company and the successors business of the current CRO company. These are only preliminary figures
and subject to change.
Holding Company In order to capitalize the holding company (e.g. to acquire the assets), the total
investment would be $4M (building purchase), $900K (assumption of equipment bank loan) and $100K
(incentive payment to CRO principals). The total is thus: $4,900,000. If this were to be debt financed by a
bank (because it is mostly real estate and physical assets), a down payment (20%) of approximately
$980,000 should suffice. This would result in a monthly mortgage payment of (at 7% and 30 years) of
approximately $26,600.
In order to comfortably cover one year’s mortgage payments (conservatively estimated at $30,000/month to
include tax, etc.) then we need 12 x $30,000 plus 12 x $15,000 (for the bank loan) which is $540,000.
Finally, a cushion of $200,000 has been provided in order to properly capitalize the restructured CRO (see
below). Again, the idea is that rentals should start to cover this (even from the very first months) and
certainly fully covered by the end of the year. Nonetheless a total capital outlay of $1,400,000 should suffice
to secure this part of the deal.
Management Company In order to cover one year of operations, we need $15,000 x 12 = $360,000. With
a cushion of $100,000 plus management company salary of $100,000 makes for $560,000 for total
capitalization. This does not include any potential property tax abatements which we are currently
addressing with the County.
Restructured CRO These should not need to be capitalized any further (since they are getting revenue –
particularly if we bring in the Takeda deal into the mix). I have, however, put in $200,000 in “cushion” as
above. The holding company will own the restructured CRO and they will charge rent/equipment lease on a
schedule based on their respective revenues.
Of this, the amount that should be readily debt financed (e.g. collateralized against real assets) would be
$4,900,000 so with a 20% down payment that would imply cash of $980,000. Total cash investment required
would thus be approximately $2.2M (e.g. $980,000 down payment, + $380,000 management company +
$100,000 incentive payment + $200,000 holding company cushion + $480,000 one year holding company
monthly payments).
NOTES

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EXCELLERANT

Life Sciences Accelerator

Vision/Mission Statement: Excellerant aims to be the world’s leading Life

Æsis Research Group

OVERVIEW & B ACKGROUND

BUSINESS PLAN & R EVENUES

incubator model is to be the leading Life Sciences Accelerator in the nation.

medical technology innovation while providing high returns to its investors.

OVERVIEW & B ACKGROUND

 The ‘Innovation Gap’: Preventing Ideas From Untimely Deaths

 Call to Action: How to Accelerate Medical Technology in Illinois Beyond

 The Future is Bright For Life Sciences in State of Illinois

The ‘Innovation Gap’: Preventing Ideas From Untimely Deaths

Call to Action: How to Accelerate Medical Technology in Illinois, Beyond

The Future is Bright For Life Sciences in State of Illinois

By Ogan Gurel, MD MPhil

is that we have engineered a phenomenal level of cooperation among the three

Summary of Building Capabilities

 Nanotechnology  Regenerative Medicine / Stem Cell

 Forensic science  Chemistry & Biochemistry

 Extensive client list locally, nationally and globally

Gross Income and Operating Profit (2001 – 2005)

PSI: Gross Income (2001-2005)

PSI: Gross Operating Profit (2001-2005)

BUSINESS PLAN & R EVENUES

Proposed O rganization for new ly restructured Accelerator site

Dividend Stability Clinical

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