Carl Deirmengian, MDScientific Founder and Chief Scientific Officer

January 18, 2011 - PCCI

OVERVIEW

Two Epidemics

Joint Replacement need

Periprosthetic Joint Infection:The Economic Impact of

Methicillin-Resistant Infections

Journal of Arthroplasty

The orthopedic community has begun to witness a worrisome rise in the incidence

of periprosthetic joint infections (PJIs) caused by resistant organisms.

Cost: $107,000 per case

1 - Arthritis 2 - Infection

The ProblemInfections are not obvious

Antibiotics alone do not curedeep joint infections

The U.S. standard of care involves a two-stage surgical procedure over three months

Standard Diagnostics• Blood tests – CRP, ESR

• Intuitively suboptimal

• Joint Tests – WBC count, Cultures• Subjective, inconsistent

• Radiographic – MRI, Bone scan, PET scan

THE SURGEON IS LEFT WITHOUT CONFIDENCE

Cygnasure r

Addresses an unmet clinical market need

• Tests the local joint fluid• Objective analytic laboratory test• Rapid point-of-care• Improved accuracy

Technology Based on antibody technology (ELISA)

• > 25 year history• No technological barriers• Multiple platforms• Low cost of development

3 Clinical Studies#1 – Coventry Award Publication

12 knees – defined genetic signature for infection

#2 – Confirmation study16 knees – confirmed genetic signature

#3 – Clinical Orthopaedics51 knees – ELISA benchmark study

The Technology

The TechnologyMarker

CandidatesFold

Elevation Accuracy

1 258 1.00

2 27 1.003 120 0.964 112 0.945 2 0.86

6 24 0.94

CRP 13 0.82

ESR 3 0.76

WBC 31 0.86

Clinical Awards• 2006 American Academy of Orthopaedic Surgery Poster Award

• 2005 The Knee Society, Mark Coventry National Award (1st)

• 2005 OREF/Zimmer Career Development Award

• 2004 OREF Resident Research Grant/Award

• 2004 The Smith & Nephew National Research Award (1st)

• 2004 National Arthroscopy Association Resident Award (1st)

Intellectual PropertyUSPTO # 7598080

October 6, 2009

Diagnostic Assay for the Source of Inflammation

Management TeamCEO

Search UnderwayJanuary, 2010

CMOCarl Deirmengian, MD -Scientific Founder -Princeton University, Harvard Medical School, -Rush Presbyterian Orthopaedic Surgery Fellow

COOMike Behr -20 years in medical device industry - J&J, Zimmer -CEO of CD Diagnostics since founding in 2008

CFO Greg Lumpkin -25 years as operations/finance manager -Tarsa Therapeutics, Tobira Therapeutics, Cortria

Board of DirectorsChairman

Richard P. Schwarz, Ph.D. -32 years in the Pharmaceutical & Biotech industry -Senior Management Experience -Immunomedics, Astra Pharmaceutical, Texas Bio -Interim CEO for numerous start-up companies

MemberDave Pfeiffer -20 years in the life sciences industry -COO, Nitric Bio -VP, Collagenix. -SmithKline Beecham, Zeneca.

MemberRobert E. Booth Jr., MD -International leader in total joint replacement surgery -Lead designer of the Legacy® total knee system -Sir John Charnley Award

Scientific Advisory BoardJavad Parvizi, MD – International Leader in Orthopaedic Infection

BOD – Orthopaedic Research Society and Musculoskeletal Infections

Jess Lonner, MD – International Leader in Orthopaedic InfectionBOD – Orthopaedic Research Society

Craig Della Valle, MD – International Leader in Orthopaedic InfectionChairman AAOS Infection Guidelines Committee

Alan Wu, Ph.D. – Chief Clinical Chemistry, UCSF>20 awards in the field of molecular diagnostics, protein biomarkers

Sam Niedbala, Ph.D. – Founder and Chief Scientific Officer, Orasure

Synovial fluid – second most tested body fluid

Primary Joint Replacements – 2010 – 1 million

Revision Joint Replacements – 2010 – 100K

Operating room, Emergency room, MD office,Hospital Laboratory ($50-125 per test)

Market Potential

Synovial fluid – second most tested body fluid

Rheumatoid arthritis, Lupus, Lyme disease, Gout, pseudoseptic infection, pseudogout

Market Potential

Funding StrategyFunding & Source Use of Funds

2010

$700KConvertible notes

Research and Development, Legal fees, Operations

2011

$2.7M venture/grants

Product DevelopmentRegulatory Strategy

CMS strategyFDA study design and pre-meeting

2012-

2013

$4.6M Corporate Partners

Clinical Trial Completion, Regulatory submission, Completion

of licensing/partnering deal

Successful ExitCD Diagnostics – The Synovial Fluid Company

- Intellectual property portfolio

Inflection point – FDA approval

1. Licensing to a corporate partner - large diagnostics

2. Strategic buyer - mid-range diagnostics, orthopaedics

3. IPO

Next Step• Identify and hire CEO

• Create and Execute- Product development plan- Clinical trial plan- Regulatory strategy

• Close additional financings

Questions1.                 CD Diagnostics has a solid technology with a strong patent that might increase in scope with a patent continuance that looks promising.  Is it a better idea for CD Diagnostics to put all of it’s energy into developing one product and selling the company, with it’s technology, to a potential buyer or would it be better to develop an extended line of applications for this technology and then approach a potential buyer/partner? 2.                 CD Diagnostics has been approached by a couple of  large companies that might be interested in a strategic partnership.   Is a strategic partnership a good idea at this point for CD Diagnostics?  What models for a strategic partnership would make sense? 3.                 CD Diagnostics is looking at models for pricing of Cygnasure®.  What models exist to determine an appropriate price for a product like Cygnasure®?  How should we begin to determine a price for Cygnasure®.