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EDP BIOTECH, LLC

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US Capital Global Securities

DEAL HIGHLIGHTS


US Capital Global Securities

INVESTMENT OPPORTUNITY


US Capital Global Securities (“USCGS”) is offering 200 Membership Units in USCIM Fund XLIV EDP Biotech LLC (the “Issuer”), a pooled investment vehicle on a “best efforts” basis. Fund XLIV will be managed by San Francisco-based asset management firm US Capital Investment Management, LLC (“USCIM” or the “Manager”), investing in Class A-1 preference shares of EDP Biotech Corporation (the “Company”). The Company will use the new primarily for financing its next phase of growth.


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COMPANY DESCRIPTION


EDP Biotech Corporation (“EDP”) is a privately held medical device company whose mission is the development and commercialization of in-vitro diagnostic tests that detect disease early1 in humans and animals. The platform technology utilizes multiplexing - parallel detection of several analytes & controls - which allows looking at up to 50 proteins from a single blood draw. EDP’s first multi-marker test from the platform, ColoPlex™, will be used in the early detection of colorectal cancer.

The company’s initial target market for the product remains the European Union where 24 countries either have implemented or are in the process of implementing compulsory screening for colon cancer2. If colon cancer is detected and treated early, the survival rate is about 90% after five years3.

The company is focused on the final development and manufacturing of ColoPlex, validating the test with European clinical specimens and updating its CE Mark which permits sales and marketing of the product in 77 countries which recognize the CE Mark. EDP has drafted a research collaboration agreement with a leading global diagnostics firm, and has already entered into a revenue sharing agreement with a third-party diagnostics firm which takes effect upon successful completion that firm’s validation studies.


THE OPPORTUNITY


Transaction Description

Seeking to raise ~$5.0 Million in Equity to accelerate development and market launch of ColoPlex™ as well as retire current debt4.

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Capital Invested to Date

EDP has raised ~$17.0 million5 from inception till date in Common Equity, Convertible Preferred Equity and Debt.


PRODUCT & DISTRIBUTION STRATEGY


Key Milestones

• CE Marked and patented its early, 1st Generation technology (not commercially available).
• Initiation of robust, high-throughput ColoPlex™ product using multiplex platforms;
• Filed Provisional Patent for ColoPlex;
• Initiation of European market development for ColoPlex;
• Initiation of six (6) EU + one (1) South Korean Research Studies for multiplex ColoPlex;
• Secured distribution network covering 40 countries in ROW market;
• Research Collaboration Agreement drafted with large diagnostic company

The Product

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FIT testing, a stool test chosen by most European organized screening programs, yields approximately 50% false positives6, averaged among all countries. All of these FIT-positive individuals must currently receive colonoscopy, paid by their health service, to confirm or reject that result.

ColoPlex™ is a blood-based biomarker assay for early detection of colorectal cancer and precancer in patients aged 50-75 years that could reduce false positives from FIT testing and other organized screening programs, may be reducing unnecessary follow-up colonoscopies and costs, while still detecting nearly all the true positive patients.

ColoPlex analyses a blood sample drawn at the time of the patient’s annual physical examination, for the presence of protein-based biomarkers that would indicate that the individual should have a confirmatory colonoscopy. The multiplex product consists of a test kit containing all components necessary to measure numerous blood biomarkers for colorectal cancer in a multiplex assay format, adding state-of-the-art Machine Learning/Artificial Intelligence algorithm models to calculate the patient’s final test score7.

Product Development Plan

The company anticipates the following product development roadmap.

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• Launch ColoPlex as FIT Reflex (EU niche market)
• Generate revenue & data to expand claims/indications
• Perform FDA Trials, launch US, launch ROW (full market)

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• Build tests for other cancers (use multiplex platform)
• Initiate Strategic Partnerships for licensing and sales

Develop multiple revenue streams for EDP Biotech Early Detection of Other Cancers: The Company has conducted some very early stage investigations for early detection of other types of cancer including, lung, breast and pancreatic. The Company’s multiplex platform allows for rapid development of new tests for any of these diseases.

Future Point-of-Care Test: The Company has conducted some early stage investigations which indicates that ColoPlex could be developed into an automated Point-of-Care test. If the assay can be adapted to automated methodologies, it can become a Point-of-Care test that could be available for use anywhere there is a healthcare professional, including doctors’ offices, clinics, etc.

Regulations and Approvals

EDP needs its existing CE Mark updated prior to marketing in Europe. This process entails running 3 pilot lots of manufactured test kits on multiplex instruments for sensitivity/specificity data, testing for interfering substances, stability testing, and precision data. Pursuant to ColoPlex, six clinical research studies have been initiated throughout Europe and a seventh site in South Korea, to validate preliminary results.

EDP will need to pursue clearance from the FDA to market the multiplex in the United States market. EDP assumes that a 510(k) file will be appropriate in the US, incurring less cost and faster approval times. The Company will engage the appropriate outsourced firm or firms for the same. The Company is expecting to receive FDA approval in the next 2-3 years and launch the product domestically by ~2022.

Manufacturing & Distribution

The EDP Product Development Team members along with MilliporeSigma8 have the ultimate responsibility for the success of the project from the inception of development until they are released by executive management. The Product Development Team membership may vary as the project progresses through development. The single point of the accountability for the project along with the contract manufacturer is the EDP Biotech Project Manager.

EDP has established relationships worldwide with over 40 distribution companies9 in over 65 countries covering Europe, Southeast Asia, Canada, and Latin America.

Additionally, EDP has entered into a sales revenue sharing agreement with a third-party diagnostics firm which comes into force on successful completion of that company’s colon cancer detection technology (technology does not compete head-to-head with ColoPlex).


MARKET DISCUSSION


Target Market

EDP is initially targeting the European countries that have high incidence of Colorectal Cancer, have organized screening, and accept CE-IVD Mark.

High Incidence, Unmet Need

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The most widely used types of screening currently administered by healthcare providers are fecal occult blood tests (“FOBT”), the fecal immunochemical test (“FIT”) and colonoscopy.

FOBT and FIT are both inconvenient and can be difficult for the patient to collect the sample. Colonoscopy is expensive, invasive, and requires the patient to undergo extensive, uncomfortable preparation for the test.


MARKET SIZE


In-Vitro Colorectal Cancer Screening Tests Market size was valued over USD 785 million in 2016 and is anticipated to witness growth of over 5.0% CAGR from 2017 to 202410

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Faecal occult blood test dominated global in-vitro colorectal cancer screening tests market in 2016 and is estimated to follow similar trend over the forecast timeframe. Growing research activities pertaining to development of novel biomarker assays, growing awareness about early disease diagnosis allowing use of diagnostic biomarkers will fuel growth of biomarker test segment over the forecast timeframe.

However, the company expects to create biomarkers for more than one indication and therefore it is important to also look at the market for cancer biomarkers in general.

The global cancer biomarkers market is forecast to exhibit a CAGR of 11.8% between 2017 and 2025. At this pace, the market is expected to reach US$27.63 bn by the end of 2025 from US$10.25 bn in 201611

Addressable Niche in Europe

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FIT Reflex = 548,000 tests/year.

• Niche is unattractive for big companies to enter this space.
• Immediate Addressable Market modelled for Europe, initially.
• 50+ additional countries also accept CE-IVD tests.

Competitive Analysis13

A number of competitor products are available, however most to a greater or lesser extent, leave significant unmet needs in the diagnosis of colorectal cancer.

US Capital Global Securities14

Competitive Advantage

Because the ColoPlex test is based on protein markers in blood, it is positioned to be a less expensive test than more complex DNA testing, allowing EDP to price it competitively. Also, ColoPlex is a serum-based assay conducted in multiplex format that can be converted to run on many of the standard immunoassay systems or lateral flow readers for large-scale automated and Point-of-Care testing, creating a meaningful competitive advantage compared to more complicated, specialized DNA testing that requires samples to be run within central high complexity CLIA licensed laboratories. This increases time to receive diagnosis results as well as cost and complexity in process. Most DNA testing also requires that an individual provide stool samples, which will likely cause lower compliance than will be seen in blood-based solutions, such as ColoPlex.

Positioning

Organized nation-wide/regional FIT (faecal) screening is implemented in 24 EU member states:
• The product will be positioned to complement existing programs, infrastructure, and workflow thereby addressing a larger testing market with lower entry barriers than United States.
• EDP will test only FIT Positive people (high-risk niche) driving a higher PPV in a smaller patient pool. It will be positioned as a reflex test (and not a replacement) to:
      • Reduce FIT false positives, thus reducing system-wide costs.
      • Prioritize patients with highest need for colonoscopy, thus increasing compliance and detecting cancers earlier.


APPENDIX


Capitalization Chart15

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*Contingent on successful $5 million raise.


EXIT STRATEGY


• M&A/Sale: There are ongoing discussions with Large Diagnostic Companies for initial licensing and/or downstream M&A. In addition, The Company’s shareholders and/or the Company’s Board of Directors may elect to sell the Company or certain of its assets to one or more buyers prior to or after the closing of the Offering at a selling price which is less than the immediate post-Offering valuation of the Company.

• Potential for IPO with revenue traction


RISKS & DISCLOSURES


Below mentioned Risk Factors are not exhaustive and the list is only indicative of most significant risks.

• Limited operating history and substantial need for Funding
• No assurance of when the products will find market acceptance
• Dependence on Agreements with Distributors and/or Licensees/Joint Ventures
• Technological Change may render product obsolete
• Clinical Trial and Regulatory approval
• Reliance on key personnel
• Dependence on service providers
• Patent rights & trade secrets
• Infringement of third party IP
• Competition
• Product liability
• No Public Market for shares



1. See SCOPE of file 01.EDP-SOI-RSP-005 RevB
2.https://ec.europa.eu/health/sites/health/files/major_chronic_diseases/docs/2017_ cancerscreening_2ndreportimplementation_en.pdf
3.https://www.cancer.org/cancer/colon-rectal-cancer/detection-diagnosis-staging/survival-rates.html
4.Debt retirement – First Bank Line of Credit
5.See ledger
6. See file 04_International Journal of Cancer_Stegman showing 65% False positive (FP) rate; See file 05_Colorectal cancer population screening worldwide 2016, TABLE 2 take the total Positive N#, subtract Adenoma N# and subtract CRC N# to determine FP rate (#All Positives - # True Positives = # False Positives); See file 06_UEG Journal Klerk, Results take the total Positive N#, subtract Neoplasia (true positives). (#All Positives - # True Positives = # False Positives); See file 07_False Positive Results in Catalonia Spain_Garcia showing 55% FP in this country.
7.See SCOPE of file 01.EDP-SOI-RSP-005 RevB; See Provisional Patent Application.
8. See file 09_2017-04-13 NDA MTA EDP Millipore – this is the material transfer agreement; See file 10_Custom Development Work Plan – this is not signed (we are still working on the draft revisions) but shows the MilliporeSigma development plan, milestones, and estimated costs for development (per analyte) and kit costs.
9.See file 03_Clinical Study Tracking Log – TAB Distributor By Country, and TAB EDP Distributors Contracted which shows all totals and territories; see distribution agreements.
10. https://www.gminsights.com/industry-analysis/in-vitro-colorectal-cancer-screening-tests-market-report 11. https://www.transparencymarketresearch.com/cancer-biomarkers-market.html
12. Table extracted from file 11_European Council Screening 2017 TABLES 4.14 thru 4.23
13. These results represent preliminary feasibility data utilizing a limited serum sample set, was generated with a large number of variables, and was assessed using cross-validation without a hold-out set. EDP has initiated six studies with European hospitals to validate the product. Future study data results may vary from current data.
14. VolitionRx/NuQ - https://volitionrx.com//resources/downloads/ISOBM-Poster.pdf; Epigenomics/Epi ProColon & Beckman Coulter/FIT- http://www.epiprocolon.com/us/patients/test-accuracy; Beckman Coulter/FOBT- Lohsiriwat, V. 2014; Novigenix/Colox- https://novigenix.com/wp-content/uploads/2017/10/Novigenix-brochure-A4-4p-Doctor-Leaflet-EN_P-P.pdf
15. 01. 18 06 20 Investors - Latest Position 8.6m - Under USCP V21cLarge

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BrokerCheck

Securities offered through US Capital Global Securities, LLC, member FINRA, SIPC.

IMPORTANT: All investing is risky, and no investor should decide to commit funds without first consulting with a competent professional adviser. Some or all invested funds can be lost. The past performance of any investment, investment strategy or investment style is not indicative of future performance. Future results may vary, and are not guaranteed. The value of investments and their income may increase or decrease, and a loss of principal – including all principal – may occur.

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