1. “Paying for clinical trials with an SBIR grant” Our experience obtaining millions of dollars through the NIH's Phase II Competing Renewal program Adapted from a presentation to: Washington Technology Center SBIR Breakfast June 12, 2007 William Ross - Director of Software Engineering, Pathway MRI & Vice-President, VPDiagnostics bill@WilliamRoss.net Dr. William Kerwin - Associate Professor, Vascular Imaging Laboratory, University of Washington bkerwin@u.washington.edu

2. Background ● Vascular Imaging Lab (VIL) researchers developed advanced imaging technology to visualize and quantify atherosclerosis (hardening of the arteries) ● Dr. Kerwin of VIL teamed up with small business Pathway MRI and submitted Phase I & II SBIR proposals to NIH to fund commercialization of the technology ● A software product, the Pathway Carotid Artery Platform (PCAP), was successfully delivered at the end of Phase II ● PCAP was intended to help physicians identify patients most at risk for stroke

3. ● #3 cause of death ● #1 cause of long-term disability ● At least 88% caused by atherosclerotic plaque (“hardening of the arteries”) ● “Vulnerable” plaque in the Carotid artery breaks off, travels to brain, blocks blood vessels, causes stroke Stroke Facts

4. MRI imaging of Carotid plaque Carotid plaque specimen Carotid plaque MRI Vulnerable plaque (Display in “Notes” view for more information)

5. PCAP 3D display of Carotid plaque Vulnerable plaque

6. SBIR Timeline ● Pathway/VIL SBIR Collaboration Agreement since 2002 ● Pathway licensed VIL Intellectual Property (IP) in 2005 ● 3 Patents Pending ● Phase I: $99K Developed image analysis algorithms ● Phase II: $940K Developed commercial product, submitted “clinical aid” 510K to FDA ● NIH/NHLBI funded Pathway MRI and VIL (Display in “Notes” view for more information)

7. Pathway MRI: ● Had completed commercial software product: PCAP ● Had exclusive, worldwide license to UW Intellectual Property ● Had no FDA approval to market ● Was out of money Result: ● Product & IP license sold to investor to create VPDiagnostics, Inc. At conclusion of SBIR Phase II (Display in “Notes” view for more information)

8. Main Barrier to Commercial Success ● FDA approval as “Diagnostic” tool requires clinical trials ● Clinical trials require years to perform, cost millions of $ NIH SBIR Phase II Competing Renewal = A way through the FDA barrier (Display in “Notes” view for more information)

9. “Activities supported by a competing continuation of a Phase II SBIR grant may include an extension and expansion of preclinical research and development, clinical testing, and other scientific research and development activities that would ultimately be useful in meeting the requirements and expectations of Federal regulatory processes.” SBIR Phase II Competing Renewal program PA-06-079 - NIH/NIMH (Display in “Notes” view for more information)

10. Who is eligible: ● SBIR/STTR Phase II grantees (still small business) ● NIH only (NIA, NIAAA, NIAID, NICHD, NIDA, NIDCD, NIDDK, NHLBI, NIMH, and NINDS) ● The product must be one for which Federal regulatory approval is required ● Product can be devices, drugs, vaccines, therapeutics, and medical implants ● Also supports continuing refinements to durable medical equipment (DME) designs SBIR Phase II Competing Renewal (Display in “Notes” view for more information)

11. What is available: ● Up to $1M/year (varies by Institute/Center) ● Up to 3 years support SBIR Phase II Competing Renewal (Display in “Notes” view for more information)

12. ● Submitted Phase II Competing Renewal proposal 8/2005 ● Enhance PCAP with: - Stroke Risk Score - 3D Surgical Planning Tool ● Perform multi-center clinical trial ● Obtain FDA approval ● Develop & validate Training Program ● Obtain procedure codes (CPT) and Medicare reimbursement codes (HCPCS) ● Requested $2.6M over 3 years Our Phase II Competing Renewal Proposal (Display in “Notes” view for more information)

13. ● Successful commercialization in Phase II ● Planned 510K FDA submission in Phase II ● Patent awarded in Phase II ● Intellectual Property license for VIL technology ● >$300K cost sharing ● Strong R&D proposal ● Training Course & Reimbursement ● Strong commercialization proposal Proposal Highlights Phase II Momentum: Keep Momentum Going: (Display in “Notes” view for more information)

14. ● CSR score of 216 ● Reviewers focused exclusively on scientific issues ● NIH FY2006 budget cut = less SBIR $ ● 12/2005 - NIH Program Director encouraged us to resubmit Proposal Not Funded (Display in “Notes” view for more information)

15. ● Addressed all reviewer comments ● Added Vascular Surgeon ● Added more patents ● Now had enhanced product with 3D display ● 510K submission to FDA complete ● Requested $2.87M Resubmitted Proposal 4/2006 (Display in “Notes” view for more information)

16. ● CSR score of 153 (63 point improvement) ● Reviewers approved requested budget ● Phase II Competing Renewal grant for $2.93M awarded April 2007 Proposal Funded (Display in “Notes” view for more information)

17. ● Significant post-Phase II funding is available from NIH ● Be patient, start process while in Phase II ● Cover all the commercialization issues, but remember that the science is what reviewers really care about ● Resubmission can pay off Conclusion (Display in “Notes” view for more information)

18. SBIR Phase II Competing Renewal Official information: PA-07-280 - NIH/CDC/FDA Omnibus Solicitation for SBIR PHS 2007-2 - Omnibus Solicitation for SBIR/STTR Grant Applications SBIR Consultant : Dr. Alan Berson aeberson@sbcglobal.com (415) 883-3773