Excellerant Life Science Acclerator Incubator Packet 9-1-07

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
gurel@aesisgroup.com
gurel@post.harvard.edu
(312) 246-5160
1 September 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.
CONFIDENTI Æsis Research Group
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OUTLINE
EXECUTIVE SUMMARY
OVERVIEW & BACKGROUND
THE BUILDING
THE CRO
BUSINESS PLAN & REVENUES & SPACE PLAN
INVESTMENT FINANCIALS
ANCHOR RFP
LETTERS OF SUPPORT
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
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EXECUTIVE SUMMARY
1. 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).
2. 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.
3. 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.
4. Revenues to the investment parties will also accrue from equipment lease
fees, management services (shared business services) and, of course, CRO
fees to tenants as well as external clients.
5. Because rental rates can be quite low (perhaps 50% less than other
incubators which have to recoup the full cost of their capitalization) and the
facilities are of such high quality, demand for this space is anticipated be
extremely high. Only the very best companies will be permitted to lease and
stay within the building.
6. 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) representing a potentially
unlimited upside to the investment. These will not be passive equity stakes
but by virtue of the central role that the Life Sciences Accelerator plays in the
development of these companies, there exists the opportunity to manage and
optimize these equity stakes.
7. Management expertise as appropriate will also be provided to those

companies bridging the “innovation gap.” And unlike conventional business
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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.
8. 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 much

needed new approaches to accelerating biopharma
and medical technology innovation while providing
high returns to its investors.
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OVERVIEW & BACKGROUND
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.
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The ‘Innovation Gap’: Preventing Ideas From Untimely
Deaths
By Ogan Gurel, MD MPhil
As published by MidwestBusiness.com on May 29, 2007 and syndicated in
the Wisconsin Technology Network, the Redington Life Sciences Newsletter
and also found on the Life Sciences Chronicle Blog
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.
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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.
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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
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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.
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Call to Action: How to Accelerate Medical Technology in
Illinois, Beyond
As published by MidwestBusiness.com on May 30, 2007 and syndicated in
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.
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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
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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?
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.
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The Future is Bright For Life Sciences in State of Illinois

As published by MidwestBusiness.com on June 25, 2007 and syndicated in
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”
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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
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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.
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THE BUILDING
This single-story building (originally built out in 1988 by Baxter as a high-end AIDS
laboratory) is 70,000 sf in size 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
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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 o Missing Person

Identification
o 100,000 rated
cleanrooms o Mass Accident or
Terrorist Attack Victim
o Particulate Analysis
Identification
• Forensic science o Paternity Testing
o Investigation of Criminal
• Molecular Biology
Defendants
o Genetic Profiling
o Sex offender and Violent
Felon Database DNA o Complete DNA analysis
profiling o Ribotyping
o Unknown Soldier o DNA sequencing
Identification
• Manufacturing support
o Forensic DNA Analysis
(GMP)
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o Closure/Package
• Regenerative Medicine /
Integrity
Stem Cell Research
o Viable/Non-viable
o Tissue culture facilities
Environmental
Monitoring • Chemistry &
o Analytical Method Biochemistry
Development/Validation o Water Testing
• o Chemical Analysis
including D-value/z-
value Analysis
o Stability studies
o Analytical and Protein
chemistry
o USP Monograph testing
• Microbiology
o Sterile Cleanrooms For
Sensitive Analyses
o Vaccine development
o Endotoxin Identification
o Microbial Identification
o Sterility testing with
multiple sterility suites
o Bacterial and Fungal
Taxonomy
o High capacity incubators
o D-value/Z-value
Analyses
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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
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Basic Financials
2002 2006
Income $14.4M $1.8M
Expense (after add- $10.1M $3.5M
backs*)
Profit/Loss $4.3M -$1.7M
Add back legal defense fees, pension plan deposits, sales rent
Gross Income and Operating Profit (2001 – 2005)
PSI: Gross Income (2001-2005)
20,000,000.00
18,000,000.00
16,000,000.00
14,000,000.00
Gross Income ($)
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)
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PSI: Gross Operating Profit (2001-2005)
5,000,000.00
4,500,000.00
4,000,000.00
3,500,000.00
Gross Operating Profit ($)
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)
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HIGH-LEVEL BUSINESS PLAN & REVENUES

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.
5. While marketing the facility is important, the very high public profile nature of
the project, the low rental rates and high-quality facilities will greatly help in
building awareness of the Life Sciences Accelerator.
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
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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.
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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).
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Investor Aesis
Supermajority Supermajority
y
minority minority
Sterility Microbiology Fees Outside
Clients
Excellerant Excellerant
Real Estate Holdings Stability Clinical
consulting
Dividend
ExcellerantCRO
Dividend Own Own (Restructured previous CRO)
Own
Lease
option
Lease +
equipment
Building rental +
mgmt fees
Fees
Excellerant
Leasing Agent Management
Partial
equity
Company A Company C
Own
Lease +
Company B Company D
equipment
Ownership rental +
Equipment Management
Revenue fees
“Other”tenants
Management
Dr. Ogan Gurel will be directing the Excellerant 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.
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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.
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.
SG2, LLC & BOOZ, ALLEN, HAMILTON 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 BACKGROUND 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
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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 LEADERSHIP & 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.
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New Space Plan

The basic space is as follows. Common space below is probably an conservative
overestimate.
Square Feet Lab/Office ratio Office/Lab ratio

Total 70,000 NA NA
Covered dock 6,600 NA NA
Space 63,400 50% 50%
Common 10,000 0% 100%
Excellerant
Ofc 2,000 0% 100%
Reserved 5,000 50% 50%
CRO 8,796 50% 50%
The new space plan calls for three sections – an anchor tenant, the CRO and
incubator space. These are apportioned as follows:
Rentable sq ft
Anchor Office 8,199
Anchor Lab 4,246
Anchor Subtotal 12,445
CRO Office 4,182

CRO Lab 4,614
CRO Subtotal 8,796
Incubator Office 9,619

Incubator Lab 15,140
Incubator Total 24,759
Total 46,000
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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.
Two Holding Companies The real estate holding company (Building LLC)
will require an investment of $4M plus transaction costs to fully acquire. The
operating LLC holding company will require an investment of $1M to fully
acquire. The operating LLC will also require a total of $2M capitalization
broken out into $1M for one year’s operating costs for the Excellerant LLC
(management company) and $1M to properly capitalize the CRO.
The total investment is thus $7M.
It is anticipated that given the public and government support for the project
that non-dilutive grant funding will also be possible and will be actively
sought.
Rental Income
A minimum base master lease of $36,212 per month is planned. This represents a
blended average of a number of investment return parameters including a cap rate of
9.5%, a net rent multiplier of 7 and the mortgage payment (fully leveraged at
8%/30years). Additional rental income is shared between the Building LLC and the
Operating LLC such that under two scenarios (basic & plan) the following can be
anticipated (Improv Fund is a building improvement fund held in escrow by the
building LLC):
Basic Model
% Occupancy To Investor (yr) To Aesis (yr) To Improv Fund (yr)
25% -$301,723 -$15,880 $0
50% $106,678 $5,615 $0
75% $466,640 $75,549 $0
100% $652,818 $261,727 $57,541
Plan Model
% Occupancy To Investor (yr) To Aesis (yr) To Improv Fund (yr)
0% $23,949 $1,260 $0
25% $228,863 $12,045 $0
50% $423,850 $32,759 $0
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75% $531,699 $140,609 $0
100% $639,549 $248,459 $0
The essential idea is that rental income should more than provide reasonable returns
for the total $7M investment and that all other income (see below) are essentially
additional contributions to the bottom line.
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Additional income
Additional income sources are:
• Equipment rental
• CRO fees from accelerator clients
• CRO fees (revenue) from external clients
• Management (shared services) fees
• Consulting fees
• Returns on equity stakes in tenant companies (this represents the
highest potential upside)
CRO Business
The contract research market is growing at 10 – 15% per year and we can anticipate
with proper restructuring that given prior history, the new CRO can generate income
of approximately $2.5M/year and net income of approximately $1.2M/year.
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ANCHOR TENANT RFP
We are currently in negotiation for an anchor tenant who is seeking approximately

12,500 sf of mixed office and lab space. The plan for the NeoPharm RFP is to make it
the anchor tenant and support much of the base master lease. The are interested in
a 10K – 15K space for 5 years. The proposed space is:
ANCHOR PROPOSED SPACE
APPROXIMATE SF
F space total 8,784 Office Entry 3,660

Office Entry 3,660 F Mid 1,976
Total 12,444 F East 2,562
Total 8,199
Lab Total 4,246
PROPOSED RENTAL RATES

Per sf/year Monthly
Net Rent $16.39 $16,996
Operating Expenses (*) $12.13 $12,580
Taxes $0.94 $975
Gross Rent $29.46 $30,551
PROPOSED WARRANTS
No of shares Vesting & Exercisable
Year 1 81,701 @$0.96 7/1/08
Year 2 81,701 @$0.96 7/1/09
Year 3 81,701 @$0.96 7/1/10
Year 4 81,701 @$0.96 7/1/11
Year 5 81,701 @$0.96 7/1/12
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LETTERS OF SUPPORT
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NOTES

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EXCELLERANT

Life Sciences Accelerator

Vision/Mission Statement: Excellerant aims to be

Æsis Research Group

OVERVIEW & BACKGROUND

BUSINESS PLAN & REVENUES & SPACE PLAN

1. An unprecedented opportunity exists in the greater Chicago area to purchase

6. Furthermore, the effectively subsidized rent enables investors (through the

7. Management expertise as appropriate will also be provided to those

Excellerant will be a pace-setting paradigm for much

OVERVIEW & BACKGROUND

This section includes three articles which outline some of

 The ‘Innovation Gap’: Preventing Ideas From

 Call to Action: How to Accelerate Medical Technology

 The Future is Bright For Life Sciences in State of

The Operational Innovation Gap

The Future is Bright For Life Sciences in State of Illinois

By Ogan Gurel, MD MPhil

Summary of Building Capabilities

With multiple research, development and industry capabilities such as:

• Nanotechnology o Missing Person

• Intellectual Property and Databases covering decades of experience in all

• Extensive client list locally, nationally and globally

Gross Income and Operating Profit (2001 – 2005)

PSI: Gross Income (2001-2005)

HIGH-LEVEL BUSINESS PLAN & REVENUES

1. It would be able to provide the lowest rents to any startup or development

Conventional incubators make money by charging rent to cash-strapped startups and

Currently I am Chairman of the Aesis Group, LLC – which provides strategy

as well as in Turkey after the massive 1999 earthquake. With an extensive

New Space Plan

Square Feet Lab/Office ratio Office/Lab ratio

CRO Office 4,182

Incubator Office 9,619

Additional income sources are:

We are currently in negotiation for an anchor tenant who is seeking approximately

ANCHOR PROPOSED SPACE

F space total 8,784 Office Entry 3,660

Lab Total 4,246

PROPOSED RENTAL RATES

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