Discovery of Pyridorin™

Mesangial expansion and capillary basal lamina thickening are the characteristic lesions of glomerular damage caused by diabetes, and are the hallmark pathological changes
of diabetic kidney disease (nephropathy). The glomerular basal lamina thickening that develops in diabetic patients
is due in part to the formation of advanced glycation
end-products (A.G.E.s) in both circulating serum proteins
and vascular basal lamina proteins. A.G.E.s are caused
by non-enzymatic glycation and ensuing glycoxidative chemical reactions that arise in the diabetic patient due
to chronically high blood glucose concentrations. The deleterious effects of A.G.E.s are believed to be a major causative factor in glomerular basal lamina thickening and the resulting break-down of the kidney's filtration barrier, which leads to proteinuria and ultimately kidney failure.

Mechanistic studies of A.G.E. formation conducted by BioStratum scientists led to the isolation of a stable
protein intermediate from the cascade of non-enzymatic reactions that produce A.G.E.s. This product, termed the post-Amadori intermediate, was subsequently used in a screening system to identify drug candidates that specifically inhibit the conversion of Amadori intermediates to A.G.E.s. The Company believes that most A.G.E.s
that form in vivo do so via the Amadori intermediate pathway, and thus, this screening procedure potentially provides for a dramatic improvement over previously used approaches to identify A.G.E. inhibitors. This screening system has identified pyridoxamine (Pyridorin™) as a potent post-Amadori inhibitor of A.G.E. formation.

Preclinical Studies

We have evaluated Pyridorin™ in several animal models
of diabetic kidney disease, a disease for which there are,
to our knowledge, very few drugs available or under development. The two commonly studied parameters
of kidney disease are, albuminuria and plasma creatinine,
as well as glomerular histopathology. In a streptozotocin (STZ) induced animal model of diabetes, Pyridorin™ inhibited the development of albuminuria compared to untreated diabetic animals (P=0.0001). It also inhibited the elevation of plasma creatinine levels compared to untreated animals (P=0.0001). Pyridorin™ exhibited a significant therapeutic improvement over aminoguanidine, a well studied AGE inhibitor, in both of these indicators of diabetic kidney disease. Pyridorin™ also reduced the plasma levels of triglycerides and cholesterol in the diabetic animals, another indication of improved performance over aminoguanidine.

The Company believes the specific post-Amadori mechanism of action exhibited by Pyridorin™ is in large measure responsible for the improved performance of this drug candidate over aminoguanidine. The Company also believes that a successful therapeutic approach to preventing the development of diabetic kidney disease
or its progression must have minimal side effects,
because this therapy will likely require daily dosing
for many years. Pyridorin™ exhibits a very favorable
preclinical toxicity profile, and exhibited no severe
adverse effects in Phase I trials.

The Company believes Pyridorin™ might also prove effective against other complications of diabetes including retinopathy (eye disease) and neuropathy (nerve disease). We plan additional animal studies to examine the efficacy of Pyridorin™ against these diabetic complications.

Clinical Development

Phase I clinical trials on Pyridorin™ are completed. Single and multi-dose administration of Pyridorin™ at escalating doses, which in some cases were well above the anticipated therapeutic dose, showed that Pyridorin™
is well tolerated. No serious adverse events were reported.

Phase II clinical trials are ongoing to evaluate the efficacy
of Pyridorin™ in inhibiting the progression of albuminuria in patients with early stage diabetic kidney disease. The trials are also monitoring plasma triglyceride and cholesterol levels and several other parameters relevant to diabetes
and kidney function.

We are currently developing protocols for Phase III
trials in collaboration with a team of clinical experts in diabetic kidney disease. The Company is seeking to establish a trial endpoint that will enable Pyridorin™ to be evaluated in diabetic patients who have early stage kidney disease, where the Company believes the prospects for demonstrating an efficacious treatment are the greatest, and where the largest number of patients will benefit from Pyridorin™'s potential efficacy in significantly retarding the development of diabetic kidney disease.

Market Analysis of Projections

There are approximately 1 million individuals in the United States with Type 1 diabetes, and an estimated 15 million with Type 2 diabetes. Up to 40% of patients with Type 1 diabetes and 15% of patients with Type 2 diabetes will develop diabetic kidney disease over the course of their lives. We expect that Pyridorin™ will be administrated daily at an estimated annual drug cost of approximately $1,200 per patient.

The size of the European market for Pyridorin™ is approximately equal to that of the United States, and the market for Japan is approximately 20-25% smaller.