Ron Steckel Pulmonx

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Business Summary

October 2007

1024 Elwell CourtPalo Alto, CA 94303 (USA)


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I. EXECUTIVE SUMMARY

The Company Pulmonx strategy is to develop and market creative, least invasivemedical devices for the diagnosis and treatment of pulmonary disorders and establish a

primary franchise in the emerging field of interventional pulmonology. Initially we are

developing the Endobronchial Emphysema Treatment (EET) system, a minimallyinvasive procedure for emphysema patients.

II. THE MARKETEmphysema impacts the lives of over 7.9 million patients in developed, accessiblemarkets including 3.6 million in the U.S. in 2004. Caused principally by smoking, thedisease is chronic and progressive, and is characterized by the loss of the lungs ability toexpel air and absorb oxygen. The diseased sections of the lung remain hyper-inflated,occupying space and reducing the patients ability to function. There is no

pharmacological cure. Pulmonary rehabilitation, bronchodilators, and long-term oxygen

therapy are employed to manage the disease with decreasing success over time.Emphysema is a severely debilitating disease that is caused principally by smoking. It ischaracterized by the inflammation, permanent enlargement and destruction of themicroscopic air sacs (alveoli) in the smokers lungs. Damage to the alveoli combinedwith dynamic airway collapse results in air trapping causing shortness of breath, evenwith minimal exertion or at rest. While progression of the disease may be slowed by theadoption of a healthier life style, the destruction done is irreversible. In addition to thereduced absorptive surface area caused by the breakdown of the walls between thealveoli, air is trapped in the enlarged air sacs making it difficult to evacuate duringexhalation. The trapped air takes up valuable space within the chest cavity, crowding themore normal lung and limiting its function. Emphysema and chronic bronchitis are the

principal diseases included in the category called Chronic Obstructive Pulmonary Disease(COPD). In the United States COPD has been diagnosed in 11.4 million patients and thenumber of patients at-risk is estimated at 24 million. The annual cost of treating COPD isestimated at $37.2 billion. Because the available treatments for the diseases included inCOPD are the same (and only palliative), there has been no reason for the medicalcommunity to carefully distinguish among them and no reason for companies to developdiagnostic methods that more clearly assess functionality of specific areas of the lung.

III. AVAILABLE TREATMENTSTypically newly diagnosed patients are instructed to stop smoking, to increase their nutrition and activity levels and, if appropriate, to lose weight. Secondarily physicianswill prescribe medications to enhance breathing mechanics, pulmonary rehabilitation,and, in the most severe cases, long-term oxygen therapy (LTOT). Currently in the U.S.more than 1 million people with COPD, primarily emphysema, use LTOT. The cost of medical management for emphysema including LTOT and hospitalizations can costthousands of dollars per year. For carefully selected patients there are two surgicalalternatives: bilateral lung volume reduction surgery (LVRS) and lung transplantation.


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of the balloon is similar to other CE-marked pulmonary balloons. A custom obturator inserted into the main lumen of the catheter is used for both pushability and to clear mucus that may obstruct the lumen during catheter manipulation in the airways. The only

portion of the device that comes into bodily contact is the distal tip of the catheter, whichis made from medical grade PEBAX (shaft) and a compliant elastomeric material

(balloon). Contact with the body is temporary (1-3 minutes at each isolated lungsegment). The FAS Catheter is designed to capture information at the lobar andlobular/segmental level. No medicinal substances are eluted from the catheter.

Pulmonx LungScape FAS Assessment Catheter, Distal Balloon Tip.

LungScape FAS Console

The LungScape FAS Console is an integrated, self-contained, 12 VDC powered systemdesigned to be used in the bronchoscopy suite in conjunction with the FAS Catheter. The

proximal end of the FAS Catheter is attached to a standard silicone tube whose oppositeend is attached to an input fitting on the FAS Console. The hardware components of theConsole translate air flow and pressure detected through the FAS Catheter into electricsignals. The Console displays and analyzes airflow and pressure from the isolated lungcompartment in real time. The Consoles software is designed to measure air flow and

pressure through the catheter at steady state (which takes approximately 1-3 minutes toachieve).

At steady state, mean pressure divided by mean flow is equivalent to resistance of airflowthrough collateral channels, i.e., collateral resistance (R coll). The system reports the resultof the calculation of R coll as either:

1) R coll < 100 cm H 2O/(ml/sec), deemed low collateral resistance due to the presence of collateral channels in the target compartment ( CV-POS , displayedin red on the lung diagram, see or

2) R coll 100 cm H 2O/(ml/sec), deemed high collateral resistance due to theabsence of collateral channels in the target compartment ( CV-NEG , displayedin green on diagram).


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Photograph of LungScape FAS Console. The console is shown (left) displaying real-time air flow and pressure.

Results of CV assessment displayed on console.CV-NEG is displayed in green. CV-POS is displayed in red.


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Endobronchial Treatment System Kit

The Endobronchial Treatment System (ETS) kit consists of 3 components:

1) ETS Endobronchial Restrictor

2) ETS Delivery Catheter 3) ETS Loading Tool

ETS Endobronchial Restrictor

The ETS Endobronchial Restrictor is a self-expanding, single use, sterile implant made of biocompatible nickel-titanium (Nitinol) mesh which is covered over most of its surfacewith a thin layer of silicone. The Nitinol component is braided and heat set in a closed-end tubular mesh configuration. The device expands to its unconstrained diameter whenreleased from the Delivery Catheter into the target airway. The Restrictor is designed tofit securely into the target airway and exert a small amount of pressure on the wall of the

bronchus in order to seal and isolate the airway. The special, asymmetrical geometry of the Restrictor is intended to minimize the potential for device migration. The Restrictor is available in 2 sizes; the larger size, 11.0mm, is intended for lobar airways and thesmaller size, 8.5mm is intended for segmental airways. The Restrictor is designed to beremovable, should the need arise. During bronchoscopy, the proximal end of theRestrictor can be grasped by a biopsy forcep and pulled out with low forces. The designof the Restrictor causes it to collapse upon pulling on the proximal end, resulting in easyretrieval.

ETS Endobronchial Restrictor. The proximal end of the Restrictor is towards the upper right in thefigures. The proximal bushing (upper right of figure on left) shows the hypotube.

Restrictor Physical Description

Restrictor Diameter(mm)

Restrictor Length,Expanded (mm)

Target BronchialDiameter Range (mm)

8.5 15.5 3.0-5.011.0 17.0 4.5-7.5


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The Restrictor incorporates a small aperture achieved by a hypotube embedded in the proximal bushing. The purpose of the hypotube is to restrict but not completely occludeairflow. The amount of restriction can be controlled by changing the diameter and lengthof the hypotube. The degree to which the Restrictor retards the flow of air can beindexed numerically as a function of its airflow resistance; hence, R 100 indicates a

Restrictor with a resistance of 100 cm H 2O/(ml/sec). Absorptive atelectasis will occur inthe target lung compartment provided that: 1) the target compartment lacks CV, and 2)the Restrictor seals the airway around its outer edge, and 3) the stent restricts air flow to arate below the absorptive capacity of the target lung compartment.

ETS Delivery Catheter

The Restrictor is delivered into the target area using the ETS delivery catheter. Thedelivery catheter is designed to fit into the 2.8 mm instrument channel of a standard 6.0mm video bronchoscope with a working length of 60 cm. The delivery catheter has aninner stainless steel flexible coil, a wire-reinforced plastic outer sheath and a handle. Theinner flexible coil terminates 3 cm proximally to the distal tip, leaving an open lumen intowhich the stent is loaded (see description of loading device below). The catheter

positioning markers show the position of the loaded stent in the distal end of the catheter and aid in alignment during delivery. The proximal end of the delivery catheter has arelease handle. Depressing the release handle pulls the outer sheath back over the inner coil, deploying the compressed self-expanding stent in the target area. A positioning-lock device is attached to the bronchoscope biopsy port temporarily so that the deliverycatheter can be locked in position prior to deploying the stent. The delivery system has anominal working length of 72 cm.

ETS Delivery Catheter

ETS Restrictor Loading Tool

The ETS Restrictor Loading Tool is used to load the Endobronchial Restrictor into thedistal end of the Delivery Catheter at the time of the procedure. The Loading Tool is

packaged together with the Restrictor and the Delivery Catheter, and is a single-patientuse, sterile, disposable device. The Loading Tool consists of several sliding elements thatcompresses the Restrictor into its collapsed state, and pushes the Restrictor into the distaltip of the Delivery Catheter. All components of the Loading Tool are fabricated fromknown biocompatible materials such as polycarbonate, stainless steel, and Teflon. To


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load the Restrictor, the Delivery Catheter is inserted into the tool. The catheter clamp isrotated to lock the tip of the catheter in the tool. The Loading Plunger is pressed towardsthe catheter clamp to collapse the Restrictor and press the Restrictor into the catheter tip,and then the Loading Plunger is pulled to return it to its original position. The catheter clamp is then rotated to release the catheter and the catheter is pulled from the tool.

ETS Loading Tool

V. CLINICAL STUDIESThe company completed two feasibility studies with earlier versions of the devices inEurope under Ethics Committee approvals. During the initial study the ETS deliverysystem was improved and the basis of the LungScape Functional Assessment System(FAS) was developed.

The second feasibility study incorporated the lung functional assessment device toidentify the target lobe of the lung to optimize treatment. The results of these analysesindicated that the ability to assess lung function and select target lung units correlated toimprovement in results in a highly statistically significant manner.

Pulmonx plans to pursue additional clinical trials in Europe to further evaluate the safetyand efficacy of the devices and to obtain CE mark for the system. In addition, a U.S.

pivotal trial under an Investigational Device Exemption (IDE) is also planned in supportof a PMA approval for the U.S. Market. This strategy allows the Company to enter thelarger U.S. pivotal trial with products that have a proven clinical benefit. We believe thatthe ability to assess lung function prior to the implantation procedure will result in better

patient selection, more predictable outcomes, and reduce the scope and cost of the study.

VI. SENIOR MANAGEMENT

Recently, Pulmonx has engaged new senior management who --------- ???????????

Ron Steckel, President and CEO


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Niyazi Beyhan, Vice President of Research & Development

Daniel Cher, MD, Vice President of Regulatory & Clinical Affairs

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Ron Steckel Pulmonx