Biopharmaceuticals

Focused on Autoimmune and In�ammatory Diseases

2

BiopharmaceuticalsDisclaimer

The views presented in this document are for discussion purposes only. Innovate Biopharmaceuticals, Inc. (“Innovate” or the “Company”) is not advocating any of the courses of action presented in it, which are being presented solely to illustrate a range of available options. This analysis is presented on the understanding that, apart from showing this document to those of your officers, employees or advisers who are engaged in reviewing it on your behalf, its contents will not be reproduced, redistributed or passed on, directly or indirectly, by you to any other person or published, in whole or in part, for any purpose without our written permission.This document does not constitute or form part of any offer for purchase, sale or subscription of, or solicitation or invitation of any offer to buy, sell or to subscribe for, any securities nor may it or any part of it be relied on in connection with any contract or commitment whatsoever. If you do not have professional experience in matters relating to investments you should not act or rely on it, and you should return this document. The distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. By accepting this document you agree to be bound by the terms of this notice.

This document has been prepared from information which is believed at the date of this document to be reliable. Phrases like "expects," "believes," "anticipates" and similar phrases do not constitute warranties or guarantees of any kind, expressed or implied. The information in this document is subject to change without notice. We undertake no responsibility or obligation to provide you with any additional information or to update the document or to correct any inaccuracies in it that may become apparent.The information in this document must not be used as the basis for any prescribing decisions and may not represent the approved label in all territories. Our affiliate and subsidiary companies retain the right to request the return of this document at any time. The Company’s affiliate and subsidiary companies expressly disclaim any and all liability for representations or warranties, expressed or implied, contained in, or for omissions from, this document or any written or oral communication concerning it or its subject matter transmitted or made available to any person.

3

Biopharmaceuticals

Autoimmune - Inflammation

Celiac DiseaseLarazotide

INN-202

Phase 3Ulcerative Colitis INN-108

Phase 2

First drug to market

Statistically significant Phase 2b

Highly predictive Phase 3

Platform for autoimmune diseases

Potential superiority to mesalamine

Orphan Drug Designation Grantedfor pediatric UC

Liquid oral formulation

Avoid steroids / delay anti-TNFs

4

Biopharmaceuticals

Autoimmune disease with genetic components

All patients with HLA DQ2 or DQ8 haplotype

Triggered by Gluten -> Gliadin fragments -> activate cytotoxic T Cells

Intestinal barrier weakness due to in�ammation: “Intestinal-In�ammatory Loop”

Gluten Free Foods contain up to20 ppm of gluten

Gluten found in toothpaste, mouthwash, beer, cosmetics / lipstick / gloss / balms, OTC meds/ vitamins / supplements

What is Celiac Disease?

5

BiopharmaceuticalsNo Approved Drug for Celiac Disease (Unmet Need)

Million of Patients

8M

6M6.1M

6.6M7.1M

7.6M

4M

2M

2003 2008 2013 2018

Consulted

Prevalence

3 million patients (US)3.5 million patients (EU)15 million (ROW)

Gluten Free Diet is the only therapy

Patients symptomatic on a Gluten Free Diet (GFD) su�er from :

Patient Population

abdominal pain diarrheabloating

gasabdominal cramps

loose stool

headache fatigue

nausea

6

Biopharmaceuticals

Enteropathy-associated T-cell lymphoma

Abdominal Pain Dermatitis herpetiformis

“Brain Fog” / Ataxia Neuropathy Headaches

Anemia Osteoporosis Infertility

Single environmental trigger

Many diverse consequences

Debilitating GI and non-GI symptoms

Dramatic decrease in Quality of Life (QoL)

>60% of pts su�er abdominal symptoms >1 / wk

Celiac Disease Manifestation

Paracellular Transport

Lumen

7

Biopharmaceuticals

Blood Vessels

Lumen

Lumen

Villi

Blood Vessels Lamina propia

Tight Junctions

Intestine

Intestinal Permeability: Gateway to Autoimmune Disorders

8

Biopharmaceuticals

Anti-Tissue Transglutaminase-2(tTG-2)

Deaminated peptides

Stro

nger

Bind

ing

T-cell Receptor

HLADQ2 or

DQ8

APC B-CellT-Cell PlasmaCell

Anti-tTG2 antibodies

secreted into bloodstream

Wheat Gluten Gliadin Peptides

Gliadin Peptides

Nucleus

Tight Junction

Z0-1

Proteases in Brush Border

Lamina Propria

Lumen

In�ammatory CytokineRelease

IntestinalPermeability: Gateway to Autoimmune Disorders

9

Biopharmaceuticals

Intestinal Permeability and Tight Junction Regulation

Chronic Kidney Disease

Environmental Enteric Dysfunction

Necrotizing Enterocolitis

Nonalcoholic Steatohepatitis

Crohn’s Disease

Irritable Bowel Syndrome

LARAZOTIDE

(NASH)

Ulcerative Colitis(colonic delivery)

(IBS)

(CKD)

(NEC)

(EED)

Proven in animal model

Courtesy of Elena Verdu, MD, PhD, McMaster University

Paracellular Transport

Lumen

10

Biopharmaceuticals

Phase 3

Gluten + Larazotide

Celiac DiseaseLarazotide / INN-202

• >800 Patients exposed• No systemic exposure• Safety comparable to placebo• Fast Track Designation Granted

H2N

NH2

HN

HN

HN

HN

HN

HN

N

O

O

O

OH

O

OO

O

O

O

Gly-Gly-Val-Leu-Val-Gln-Pro-Gly-OH

8 amino acidsProprietary formulation for small bowel delivery

Transgenic mouse model of CeliacLamina Propria

11

BiopharmaceuticalsPhase 2b / Phase 3: “Real-Life” Clinical Trial Design

1-1-2-3 0 2 3 4 5 6 7 8 9 10 11 12 13Weeks

Visit 1Visit 2

Randomization Visit 3

Visit 4Visit 5

End of Trial Visit

Visit 6

End of Treatment

Screening & Placebo Run-in Period

Placebo TID (12 weeks)

Larazotide TID (12 weeks)

Trial design for Phase 2b (Study ‘012) and Phase 3

12

BiopharmaceuticalsClinically Meaningful Phase 2b Trial (‘012) Results

31%

10% 9% 8% 14%

41%

Target 1550 mg TID

Target 2550 mg TID

Study 1100 mg

Study 2100 mg

Trial 1290 mcg

Trial 2290 mcg

Amitiza 04318 mcg BID

Amitiza 04328 mcg BID14.3%

14.3%Treatment

E�ect

28.6%Drug E�ect

Larazotide

Placebo E�ect

41%

32%

25%

17%

7%

12.1%

5.1%

6% 6%

13.8%

7.8%

13.8%

7.8%

9.7%

12.7%

3%

30%

16%

INN-202

Source: Gastroenterology 2015;148:1311–1319; p. 1315 and FDA Drug Labels

MITT population, n=340Mean on-treatment score (abdominal pain, abdominal cramping, bloating, and gas); p-values derived from CMH testCeD PRO = Celiac Disease Patient Reported Outcome. Primary Endpoint validated for Phase 3.

p = 0.022

CeD PRO - P2b Trial (‘012)

28.6%

14.3%

14.3%

Placebo0%

10%

20%

30%

0.5 mg TID

Treatment E�ect

Source: Gastroenterology 2015;148:1311–1319; p. 1315

Trial powered to 80%

13

BiopharmaceuticalsLarazotide: Development Timeline

GMP Drug Product

EU Partnership

Open Label Extension Safety Study

Phase 3 Trials: 450 pts each

NDA Filing

Phase 3 Trials: 450 pts each

Autoimmune DiseaseEnd of P2 Meeting

IBS-D

Approval & Launch

2017 2018 2019 2020

14

BiopharmaceuticalsPath Forward Agreed Upon with FDA*

Larazotide acetate is a Tight Junction (TJ) Regulator indicated as an adjunct to a gluten-free diet for the treatment of persistent abdominal symptoms (abdominal pain, abdominal cramping, bloating, gas) in adult celiac disease patients with persistent abdominal symptoms on a gluten-free diet.

CeD PRO Abdominal Domain Score (Copyrighted)Proposed Indication and Usage Primary Endpoint

n= 450 for 12 weeks (90% power)Two Phase 3 Trials:

Open-Label Extension Safety Study; n=300 for 6 monthsSafety Study

Similar to Phase 2b

Celiac disease con�rmed by biopsy and measurable serology,

GFD ≥ 12 months and still experiencing symptoms,

Biopsy at entry and at the end

Key inclusion and Safety

0.25 and 0.5 mg p.o. TIDDose Range

* Confirmed at the End of Phase 2 meeting (Jan 31, 2017)

15

BiopharmaceuticalsScientific Advisors: Larazotide (INN-202)

Professor of Medicine, Division of Gastroenterology and Hepatology Mayo Clinic, Rochester, Minnesota

Professor of Medicine, Harvard Medical School, Chief of the Herrman L. Blumgart Internal Medicine Firm, Dir. of Gastroenterology Training and Medical Director of the Celiac Center at BIDMC

Ciaran Kelly, M.D.

Former Chair and Professor of Pediatrics at the University of Tampere and Tampere University Hospital in Finland. Dr. Maki was Secretary-General of the European Society of Pediatric Gastroenterol-ogy, Hepatology and Nutrition (ESPGHAN) from 1997-2000

Markku Mäki, M.D.Professor of Clinical Medicine at the College of Physicians and Surgeons, Columbia University. Director of The Celiac Disease Center at Columbia University

Peter H. Green, M.D.

Joseph A. Murray, M.D.William Rorer Professor of Medicine, Chief of the Division of Gastroenterology and Hepatology at Thomas Je�erson University Hospital, Director, Celiac Center

Anthony Jay DiMarino, M.D.

16

Biopharmaceuticals

Ulcerative ColitisINN-108

Phase 2Our Second Program

17

BiopharmaceuticalsAzo-Bond Creates Stable Pro-Drug w/ Directed Delivery to Colon

Only disassociates in the colon Mesalamine

AZO BOND

5-ASA (mesalamine)4-APAA (Actarit)Inhibits in�ammatory Arachidonicacid metabolic pathways

Sulfasalazine (predecessor of 5-ASA)was initially approved for RA in 1950s

Inhibits pro-in�ammatory cytokines: TNF-α and IL-1

Approved in Japan in 1994 for RA

Decades of safety data

Mesalamine(TRx)

(mesalamine) 1.2gdelayed release tablets

(mesalamine)delayed-release tablets

Pentasamesalamine

(mesalamine, USP)

apriso(mesalamine) 0.375g

EXTENDED RELEASE CAPSULES

Mesalamine Reformulations �+$2Bn in US Sales

Orphan Drug Designation Granted for Pediatric UC

18

Biopharmaceuticals

Surgery

COSTS ($) COSTS ($)

Surgery

Generics

BiologicsAnti-TNFs

BiologicsAnti-TNFs

Most patients are mild to moderate.Branded 5-ASAs go generic *

Payors will put pressure on biologic pricing in spite of biosimilars.

Source: Adapted from Danese S, Siegel CA, Peyrin‐Biroulet L. integrating budesonide‐MMX into treatment algorithms for mild‐to‐moderate ulcerative colitis. Alimentary pharmacology & therapeutics. 2014 May 1;39(10):1095-103.

*The �rst generic launch of a branded mesalamine was by Zydus Cadila on July 19, 2017 of Shire’s Lialda

Generic MesalaminesBranded

Branded ASAsBranded Mesalamines

AZA/6-MP

Mild to Moderate UC

MethotrexateAZA/6-MP

Methotrexate

SteroidsBudesonide-MMX

SteroidsBudesonide-MMX

INN-108 Opportunity

19

Biopharmaceuticals

Sulfasalizine

INN-108

INN-108 Showed Significant Benefit in Animal StudiesToxin A induced Colitis Model in Rats

1 mg/kg

Normal

Toxin A

10 mg/kg 100 mg/kg

1 mg/kg 10 mg/kg 100 mg/kg

Sulfasalazine is a prodrug composed of mesalamine (5-aminosalicylic acid (5-ASA)) linked via an azo-bond to sulfapyridine (a side chain without any therapeutic e�ect).

20

BiopharmaceuticalsINN-108: Development Timeline

GMP ManufacturingEx US Partnerships

Phase 2 Trial

Adult orphanPhase 2b/3 Trial

Phase 2 meeting

2017 2018 2019

21

BiopharmaceuticalsPhase 1: Safety and tolerability at highest dose

Dosing Poor Absorption Phase 1/2 Continuation of Safety Study

24 subjects

Safety and tolerability demonstrated at highest dose (10x)

Minimal systemic exposure (absorption <3%)

Azo bond achieved delivery of intact 5-ASA and 4-APAA

5-ASA and 4-APAA are acetylated and rapidly cleared

1.5 g on day 1 for PK

4.5 g (1.5 g TID) for 3 days

INN-108 is poorly absorbed (<3%)

INN-108 broken down into 5-ASA and 4-APAA

No serious adverse events reported

Both plasma PK and urinary recovery data; similar to healthy volunteers

The absence of fecal recovery of INN-108 indicates INN-108 was cleaved in the colon

Individual components recovered (5-ASA & 4-APAA) indicating distal delivery

22

BiopharmaceuticalsScientific Advisory Board: INN-108

William Sandborn, M.D. Roger Liddle, M.D.

Brian Feagan, M.D. Aida Habtezion, M.D., M.Sc.

Assoc. Prof. of Medicine, Div. of Gastroenterology and Hepatology; Vice Chair for Basic and Translational Research. Dr. Lipkin is a board certi�ed Medical Geneticist with a focus on genetic testing for gastrointestinal diseases

Dr. Liddle is currently Professor of Medicine at Duke University Medical Center and former Chief of Division of Gastroenterology. Worked with early development of INN-108

Head of Department of Gastroenterology at UC San Diego. World-recognized thought leader in IBD

Dr. Habtezion is currently an Assistant Professor in the Division of Gastroenterology & Hepatology, and Immunology Program at Stanford University. She is a member of NIH study section and Stanford In�ammatory Bowel Disease Program

Dr. Feagan is a specialist in Internal Medicine, with training in clinical epidemiology and gastroenterology. CEO of Robards Clinical Trial Research Group. World-recognized thought leader in IBD

Steven Lipkin, M.D., PhD

23

BiopharmaceuticalsLeadership Board of Directors

Chief Executive O�cerChris Prior, PhD

Founded and sold Biorexis to P�zer (2001-08)

Sold Principia to Human Genome Sciences (1999-2000)

PhaseBio (2009-2014)

Sano�-Aventis, Biogen

PhD: Columbia University

Post-Doc: Rockefeller Univ.

Reliance Life Sciences

Millipore

Dade Behring

Goodwin

Washing State Univ.

Univ. of Mumbai

Alba Therapeutics

Onyx Pharmaceuticals

Proteolix , VP Operations

Praecis Pharmaceuticals,

VP, Alkermes

Amgen Subsidiary

Jay P. MadanGary Musso, PhDPresident & Corp DevelopmentCMC

CMO, AstraZeneca/ZS Pharma,

Head Clinical Dev., Novo Nordisk

Advisor/CMO, Genvec, Nabi Pharma, Alba Therapeutics

Henrik Rasmussen, MD, PhDChief Medical O�cer Director

Lorin Johnson, PhD

Sandeep “Steve” Laumas, MDDirector

Rose CraneDirector

Bearing Circle Capital

North Sound Capital

Goldman Sachs

Yale School of Medicine

Dana-Farber Cancer Institute

Albany Medical College

Cornell University

Founder, Salix Pharmaceuticals

Salix sold to Valeant (2015) for $16 B

Chief Scientist at California Biotechnology (Scios)

Stanford University School of Medicine and UCSF

Member, Board of Directors: Teva Pharmaceutical (Israel)Zealand Pharma (Denmark)

Group Chair, J&J

Head Primary Care, Bristol-Myer Squibb

Epocrates (Former CEO) and Mela Biosciences

24

Biopharmaceuticals

S I G N I F I C A N T A P P E T I T E F O R N E W P R O D U C T S

Nestle Health & Sciences Publicly announced that they want to be the

largest player in GI by 2020

IBD Blockbuster: Entyvio

Former world-class GI franchise with PPI Drugs

$25 Bn

$1 Bn

$3 Bn

$16 Bn

$3 Bn

$7 Bn

$3 Bn$5 Bn

World-class GI franchise with Remicade

25

Biopharmaceuticals

Focused on Autoimmune and In�ammatory Diseases

8480 Honeycutt Road, Suite 200 | Raleigh NC 27615 | Tel: (919) 275-1933 | info@innovatebiopharma.com | www.innovatebiopharma.com

26

Biopharmaceuticals

Appendix

27

Biopharmaceuticals

Tall Villi Flattened Villi Lymphocyte In�ltration

Shallow Crypts

“Crypt Hyperplasia”

* Rubio-Tapia A, Rahim MW, See JA, Lahr BD, Wu TT, Murray JA. Mucosal recovery and mortality in adults with celiac disease after treatment with a gluten-free diet. The American journal of gastroenterology. 2010 Jun 1;105(6):1412-20.

Long Crypts

Celiac Disease patients have �attened villi

Celiac Disease �attened villi, areas of IELs in�ltrate and crypt hyperplasia

After starting on a Gluten Free Diet (GFD) it takes several years to recover the normal villi architecture

Even after 5 years on a GFD, up to 1/3 of patients continue to show histology characteristic of Celiac Disease *

Histological improvement is a variable and long-term measure of recovery

Urgent need for symptoms relief

Endoscopy

Healthy Celiac Disease

Normal Celiac Disease

Histology

28

BiopharmaceuticalsPrimary Endpoint Confirmed For Phase 3 Trials

* Confirmed at the End of Phase 2 meeting (Jan 31, 2017)** CeD PRO is copyrighted for 99 years and is the only validated Celiac Disease endpoint

A patient with at least a 50% reduction from baseline in weekly mean CeD PRO** Abdominal Domain score in at least 6 out of 12 weeks

Agreed Upon Primary Endpoint *

Comprised of the 4 abdominal symptoms: abdominal pain,

abdominal cramping, bloating, and gas

Calculated by adding the 4 individual abdominal

symptom scores and dividing them by 4

Is the weekly average of the 7 daily diary scores for each

patient

Has a range of “0” to “10” with higher scores, indicating

greater symptom severity

29

Biopharmaceuticals

2 mg

1 mg

0.5 mg

15 mins 30 mins

Dos

e Act

ivit

y

Time 0.5 mg 1 mg 2 mg Dose

Higher a�nity AP selectively saturates local binding sites

AP: Active (Intact) PeptideIP: Inactive (Degraded) Peptide

IP acts as an inhibitor by displacing AP at a threshold concentration ~1mg. Excess AP IP

Threshold [IP]

[IP] acts as inhibitor and displaces IP

Graph of vs. Dose

[AP][IP]

[AP][IP]

Graph of vs. Activity[AP][IP]

= 1 [AP][IP]

= 0.5 [AP][IP]

= 0.25

Potential PK Model for Larazotide’s Mechanism of Action