Phylagen 3 Clinical Precision Medicine Vik Chandra - - PowerPoint PPT Presentation

TRANSFORMING THE FUTURE

NASDAQ : TINY

• FIRST. TRANSFORMATIVE. PROVEN.

Q2 2016 SHAREHOLDER UPDATE CALL

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SAFE HARBOR STATEMENT

This presentation may contain statements of a forward-looking nature relating to future events. Statements contained in this presentation that are forward-looking statements are intended to be made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. These statements reflect the Company’s current beliefs, and a number of important factors could cause actual results to differ materially from those expressed herein. Please see the Company’s Annual Report on Form 10-K, as well as subsequent filings, filed with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties associated with the Company’s business, including but not limited to the risks and uncertainties associated with venture capital investing and other significant factors that could affect the Company’s actual results. Except as otherwise required by Federal securities laws, Harris & Harris Group, Inc. undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties. In response to investor requests, we have invited executives from one of our portfolio companies, Muses Labs, to provide a brief overview of their company at the conclusion of today's call. Please note that any opinions or views expressed by the management of Muses Labs are strictly their own, and do not necessarily reflect the opinions or views of Harris & Harris

• Group. Similarly, Muses Labs and its management are solely responsible for the content of their presentation, including

any statements they may make or any statistics or financial information they may provide, and Harris & Harris Group expressly disclaims any responsibility for the contents of such presentation.

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WE ARE CURRENTLY BUILDING COMPANIES WHICH ARE GOING TO TRANSFORM THE DELIVERY OF HEALTHCARE

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Phylagen

Muses Labs, Inc. -- CONFIDENTIAL

9660 Falls of Neuse Road Suite 138-334 Raleigh, NC 27615 www.museslabs.com

Clinical Precision Medicine

Vik Chandra vc@museslabs.com CEO

Muses Labs, Inc. -- CONFIDENTIAL

Precision Medicine is currently impractical in the clinic

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700,000

new research papers every ry yea ear

600,000+

Gene pairs sequenced for $199 $199

8 minutes / patient

Patien tient med edic ical data and res esearch are ign ignored in in clin clinic ical l practi tice

Entire patient medical history in Electronic Health Records 1000s of possible medical tests including blood, gut biome, metabolomics

Too much information, not enough time

Muses Labs, Inc. -- CONFIDENTIAL

Essential elements of Precision Medicine

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Medical Assessments Interventions

In Invasive Phar Pharmaceutic icals ls Nut Nutraceutic icals ls Li Lifestyle yle Ge Genome Bloo lood Metabol

• lomics

Gut ut Biom iome

Patient Clinic R&D and Labs Precision Medicine Protocol

Process big data on patients, apply medical knowledge, recommend treatment

Precision Medicine Platform

Muses Labs, Inc. -- CONFIDENTIAL

Initial Solution: Precision Medicine for Cognitive Decline

A recurring revenue stream Medical Information Service Target customer: Physicians, Senior Living Facilities MENDTM Protocol Service

• Personalized protocols
• Training
• Neuropsych testing
• Cognitive stimulation

Value add

• Medical testing
• Medical visits
• Coaching
• Wellness center
• Interventions

Patient Clinic

Correctly identify and treat the 4 dozen drivers of Cognitive Decline

Pilo ilot resu esults sho how qua quantified im improvement in in mem emory fun function of

• f ear

early-symptomatic in individuals

Muses Labs, Inc. -- CONFIDENTIAL

Precision Medicine for Cognitive Decline

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• Beta-amyloid
• Metabolic issues
• Inflammation
• Toxicity
• Hormone imbalance
• Cognitive atrophy
• Poor lifestyle
• …
• Genome
• Blood tests
• Imaging
• Medical history
• Comorbidities
• Medications
• Lifestyle
• …

Personalize Simultaneously address

Pharmaceuticals Nutraceuticals Lifestyle

Software 5 Patents have been filed, additional underway

Muses Labs, Inc. -- CONFIDENTIAL

Pilot results from application of Muses Labs’ Alzheimer’s Protocol

n=1 n=19

Ear arly ly-sym ymptomatic ic: n=1 n=14 La Late-symptomati tic: n=5 n=5

Ini nitial Sc Score mea ean (SD) (SD) Mos

• st

Rec ecent mea mean (SD) (SD) MoC

• CA (be

(best=30 30)

25.9 (3.1) 17.3 (1.2) 26.8 (2.9) 17.3 (1.2)

CN CNS-VS com

• mposite mem

emory %til ile

47.9 (30.5) 3.7 (2.1) 55.2 (30.9) 2.7 (1.2)

CN CNS-VS executive fun function %til ile

50.0 (24.2) 3.3 (3.4) 49.4 (21.6) 7.0 (7.8)

Pi Pilo lot ou

• utcome sum

summary: Early-symptomatic Alzheimer’s spectrum patients

• Quantified improvement in memory

and cognitive function

• Continued study is warranted

Late-symptomatic patients

• No positive response

Base Baselin ine an and pos post t treatment cog

• gnit

itive tes test res esult lts

Higher score is better

Physician administered test: MoCA Computer administered test: CNS-VS Early-symptomatic: MoCA≥20, SAGE≥14 Average duration on precision treatment: 6 months

Presented at Alzheimer’s Association International Conference in July, 2016

Muses Labs, Inc. -- CONFIDENTIAL

GTM for initial solution: Direct and Contract Sales

Healthcare Providers

• Individual Physicians
• Concierge Medicine
• Clinics and Hospitals
• Executive Health

Continuing Care / Senior Living Facilities

Target networks

• Telemedicine
• Partner networks
• Medical associations
• Assisted living facilities

Muses Labs, Inc. -- CONFIDENTIAL

Market opportunity for Cognitive Decline solution

Source: Muses Labs estimate based on data from Alzheimer’s Association, US Census, Mayo Clinic and Alzheimer’s International

US Worldwide MCI Patients (over 65) - Millions 6.2 84.0 Early stage AD patients - Millions 1.8 11.9 Total - Millions 8.0 95.9

Targeted cognitive decline population US Chronic disease opportunity

• > $100B for Precision Management Clinical Solutions
• 86% ($2.5T) of all health care spending was for people

with one or more chronic diseases (CDC, 2010) 20% of the US patient base results in an annual opportunity of $3.4B.

Source: Muses Labs estimate based on data from CDC

Muses Labs, Inc. -- CONFIDENTIAL

Capturing the broader Precision Medicine opportunity

2016 2017 2018 Target customer Disorders Geographic Physicians Senior Living, Consumers Alzheimer’s Diabetes US UK, Canada China EU Australia Auto Immune Depression UnDx

Muses Labs, Inc. -- CONFIDENTIAL

ACCOMPLISHMENTS

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• Improved financial performance:
• Q2 2016 vs. Q2 2015
• Investment income increased by 60 percent
• Net operating loss decreased by 34 percent
• H1 2016 vs. H1 2015
• Investment income increased by 77 percent
• Net operating loss decreased by 39 percent
• Four portfolio companies, Mersana, Lodo, HZO and NGX Bio, completed rounds of financing.
• Two monetization events: Bridgelux and Magic Leap.
• Two initial investments in precision health and medicine companies: Fleet Health Alliance and Muses Labs.
• Two initial co-investment opportunities launched: D-Wave Systems and HZO.
• Interome was an organizer of the UnDx Consortium.
• Significant developments at a number of our portfolio companies including, ORIG3N, Ensemble, Nanosys,

Enumeral, TARA Biosystems and Metabolon.

CHALLENGES

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• Net Asset Value per share (“NAV”) decreased from $2.88 at December 31, 2015, to $2.67 at March 31, 2016, to $2.63 at June

30, 2016.

• Our share price decreased from $2.20 as of December 31, 2015 to $1.61 as of June 30, 2016 and $1.58 as of August 8, 2016.
• Increases in value due to financings may not be reflected in full in our values owing to other rights and preferences afforded

to investors in those rounds of financing.

• IPOs of small companies are difficult to complete, and when they are completed, they often occur at valuations lower than

publicly traded comparable companies and rounds of private financing.

• The values of public equities, particularly those of microcapitalization companies, are highly volatile.
• The downturn in the oil and gas sector continues to negatively affect the business operations of at least one of our portfolio

companies, Produced Water Absorbents, Inc.

BALANCE SHEET

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June 30, 2016 December 31, 2015 Venture Capital Portfolio $75,020,758 $77,152,904 Cash and US Treasuries $11,841,767 $17,922,630 Total Assets $88,428,366 $96,461,286 Debt $5,000,000 $5,000,000 Net Assets $81,284,282 $88,711,671 Shares Outstanding 30,880,829 30,845,754 Net Asset Value Per Share (NAV) $2.63 $2.88

INCOME STATEMENT

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Three Months Ended June 30, 2016 Three Months Ended June 30, 2015 Six Months Ended June 30, 2016 Six Months Ended June 30, 2015 Total Investment Income $460,042 $288,195 $762,084 $431,027 Total Expenses $1,508,348 $1,873,502 $2,972,319 $4,052,679 Net Operating Loss $1,048,306 $1,585,307 $2,210,232 $3,621,652 Net Realized Gain/(Loss) from Investments $234,885 $3,230,518 $(4,174,893) $2,947,112 Net Increase in Unrealized Depreciation

• n Investments

$327,707 $3,116,377 $764,135 $4,587,158

FOCUS AREAS

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• 1. Precision health and precision medicine as majority owned subsidiaries or

controlled partner companies.

• 2. Cultivating our maturing companies and increased returns to shareholders.
• a. Offer opportunities to limited numbers of accredited investors to co-

invest with us.

• 3. Substantial reduction of our net operating loss and increases of short-term

income.

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UNDX CONSORTIUM

H&H CO-INVESTMENT PARTNERS, LLC

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There is a limited time remaining to subscribe to our two current open co-investment offerings:

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