Table of Contents

Executive Summary……………………………………………………………. 11. Disease Overview………………………………………………………... 2

1.1. Epidemiology……………………………………………………….. 31.2. Pathogenesis…………………………………………………………. 31.3. Current Therapy…………………………………………………….... 4

2. Target Rationale………………………………………………………….. 63. Investigator’s Brochure (Non-clinical)....................................................... 9

3.1. Physicochemical Properties and Clinical Formulation……………………..103.1.1. Description and composition of the drug product…………………..10

3.2. Non-clinical Studies………………………………………………….. 103.2.1. Non-clinical Pharmacology…………………………………….. 10 3.2.2. Pharmacokinetics and Product Metabolism in Animals……………..113.2.3. Toxicology…………………………………………………… 12

4. Phase 2 Protocol Synopsis………………………………………………. 145. Investigator’s Brochure (Clinical).............................................................. 18

5.1. Introduction…………………………………………………………. 195.2. Pharmacokinetics & Metabolism………………………………………. 195.3. Safety & Tolerability…………………………………………………. 205.4. Pharmacodynamic Effects…………………………………………….. 205.5. Efficacy…………………………………………………………….. 205.6. Guidance to Investigators……………………………………………... 21

6. Lifecycle Strategic Plan…………………………………………………. 22

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EXECUTIVE SUMMARY

Scientific Rationale

PDE4 is an important enzyme responsible for hydrolyzing cAMP within immune cells, resulting in increases of AMP. Research has shown that increases in cAMP levels directly correlate to a weakened immune response. Therefore, developing PDE4 inhibitors designed to decrease the hydrolyzation of cAMP to AMP may provide potential therapeutic benefits to a variety of immune disorders where an increased immune response is unwarranted.

Discovery The screening process identified a small molecule that selectively inhibited the clinically relevant PDE4 isoenzymes.

Pre-clinical Studies

The small molecule was found to reduce the production of key pro-inflammatory markers in vitro. UV light induced TNF-α release was reduced by 58% when treated with 1 μM of the molecule. VEGF induced AKT phosphorylation was inhibited by 40-70% when treated with 100 μM of the molecule. Similarly, oral administration of the drug in TNCB induced Ds-Nh mice showed dose dependent reduction of atopic dermatitis scores and inflammatory cytokines. Similarly, oral treatment of dust mite antigen-induced mice demonstrated inhibition of dermatitis scores and decreases of mRNA expression corresponding to atopic dermatitis biomarkers.

Toxicology Pilot toxicology studies show that monkeys responded well to single dose studies of 300 mg/kg/day. A 7-day repeated dose study in rats yielded no signs of toxicity at 50 mg/kg/day and no signs of severe toxicity at 200 mg/kg/day. A separate 4-day repeated dose study in rats showed signs of weight loss and inflammation in females at 300 and 1000 mg/kg/day. The MTD for females was deemed to be 100 mg/kg/day and the MTD for males = 1000 mg/kg/day. A 28-day GLP multi-dose study in rats showed a NOAEL of 30 mg/kg/day. Ultimately 4, 28 and 90-day studies on monkeys found no mortality or adverse effects therefore NOAEL considered to be 1000 mg/kg/day.

Phase I SAD and MAD studies were performed. Slightly more adverse events were observed in the MAD studies at all drug concentrations (50 mg – 200 mg bid to placebo). The findings indicate that the higher dosage and frequency can cause more adverse events. Ultimately, no severe adverse events were documented at the conclusion of Phase 1.

Phase II The proposed phase II schematic consists of a randomized, double blind, three-arm, dose-ranging study. By design, 30 adult patients would be receiving 200 mg BID of drug, 30 would be receiving 250 mg BID of drug staggered 2 weeks after arm 1 begins and 15 patients would be on the placebo. The decision point would be determined after 8 weeks and based on the IGA. Safety and efficacy data obtained from this study will open the doors

Phase III If the phase II safety and efficacy data meets internal and external regulatory satisfaction (i.e. no severe adverse events, no critical organ failures, no immune system defects and decrease of atopic dermatitis symptoms), phase III studies will be initiated.

NDA Filing Once phase I, II and III internal and external regulatory satisfaction/criteria are met, an investment will be made to file a NDA.

Lifecycle Plan Due to the safety and efficacy data obtained from our trials, RTG-07103 has the potential to treat a variety of disorders. At the minimum, RTG-07103 will immediately become the best orally available treatment option for patients with atopic dermatitis. With slight modifications and adjustments to increase bioavailability, RTG-07103 may be beneficial to a variety of other diseases.

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1. Disease Overview

1.1 Epidemiology

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Atopic dermatitis (AD) is not necessarily a disease that most people would claim they are familiar with. This is because the disease is more commonly referred to by its common names such as eczema or just simply dermatitis. However, when trying to understand the disease, an easy way to start is to breakdown the actual scientific term. The word “atopic” is most often associated with allergies while “dermatitis” is termed for inflammation of the skin. So, one could assume that atopic dermatitis would be inflammation of the skin caused by some sort of an allergic reaction. While this is a good summary, a better definition would be that it is a chronic inflammatory disease characterized by eczematous lesions and intense itching. These breakouts are not always associated with a specific allergen and can often be quite random from a patient’s point of view due to the wide array of causative agents These can be anything from pollen, cigarette smoke, foods, stress, and/or common environmental irritants.

Atopic dermatitis is often broken down into two different types: intrinsic or extrinsic atopic dermatitis. While both forms are indistinguishable from each other from a layman's perspective, there are some differences between the two. Extrinsic atopic dermatitis is defined as atopic dermatitis that is stemmed from some sort of allergen or external factor while intrinsic is defined by an absence of allergens and often does not result certain inflammatory responses. Extrinsic atopic dermatitis is the much more common of the two which makes up about 70-85% of all known cases1. It is associated with high levels of IGE, high cytokine levels of IL-4 and IL-13, and will have a positive reaction to skin prick test. Intrinsic atopic dermatitis is much less common only making up about 15-30% of cases and is attributed with normal levels of IGE, low IL4- IL-13 levels, and a negative skin prick test to allergens. The age of onset for atopic dermatitis occurs more commonly in childhood than adults. Usually when a child is diagnosed it is because of extrinsic factors while later onset in adults are more likely due to intrinsic factors.

When diagnosing atopic dermatitis doctors and patients are often looking for rashes with dry skin. These affected areas are often dry and associated with an intense itch. If the rashes go untreated the skin can go on to begin to become darker or lighter, develop bumpy skin, or become infected. This is normally due to the patient’s common reaction of intense scratching in the areas which often leads to further irritation and/or bleeding. Common occurrences of the disease are shown to be the neck, wrist, ankles, and/or the creases of the buttocks, legs, elbows, or knees. Although it is more uncommon for adults to be diagnosed, rashes may cover much larger parts of the body including the face, and possibly to the extent of the entire body. These symptoms are considered to be very distracting for many patients and often have an effect on their quality of life.

1.2 PathogenesisCurrent research supports that one of the main biological causes of atopic dermatitis is an increase in the hydrolyzation of cyclic adenosine monophosphate (cAMP) into AMP. This hydrolyzation of cAMP is mediated by an enzyme known as phosphodiesterase 4 (PDE4). Once cAMP is broken down by PDE4, AMP plays a critical signaling role that ultimately leads to the

1 Petersen, Jennifer D., Chan, Lawrence S. “A Comprehensive Management Guide for Atopic Dermatitis.” Dermatology Nursing. (2006) 18(6):531-542.

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synthesis of inflammatory cells. Changes to the regulation of this pathway may result in an increase of these inflammatory cells. Therefore, autoimmune disorders, including atopic dermatitis often stem from these molecular pathway errors. In these cases, when a PDE4 inhibitor is introduced, it has then been shown to decrease the breakdown of cAMP. Given with this decrease in cAMP hydrolyzation results in a decreased pool of AMP and inflammatory signaling. A current example is a drug known as Roflumilast which inhibits PDE4 in patients needing treatment of inflammatory conditions of the lungs such as chronic obstructive pulmonary disease more commonly known as COPD.

1.3 Current TherapyWith respect to current therapies and treatment options, atopic dermatitis currently has no

cure. The therapies that exist serve to mask disease severity through the suppression of its symptoms. Patients are advised to follow good skin scare practices, such as moisturizing and avoiding potential irritants to help to combat dry skin and unwarranted injury. These practices are occasionally attributed with a decrease in breakouts, however, in many cases symptoms still develop despite these practices being followed. The most common advice given to patients with extrinsic atopic dermatitis is to try and identify what exactly may be triggering their breakouts. As previously discussed, potential atopic dermatitis triggers may arise from a variety of factors such as cigarette smoke, food allergies, environmental contaminants or stress. If a common trigger is identified, patients are advised to avoid those triggers if possible. Often times, and with regards to the more common atopic dermatitis inducing factors such as environmental contaminants and stress, the factors are unavoidable and the symptoms still develop.

In the majority of cases where the breakouts cannot be confidently identified, such as patients with intrinsic atopic dermatitis, or in cases where breakouts continue to persist, there are medications that are commonly prescribed. Most commonly doctors will recommend over the counter medications as a first line of defense such as topical steroids like hydrocortisone. These steroids come in many different forms from creams, ointments, gels, foams, and solutions. More commonly ointments are considered to be a little more potent due to their capabilities of keeping the top layer of the skin hydrated. Prescription strength topical therapies are also an option, however, many of these are expensive and not always covered by insurance. While many of these may work at a better rate than an over the counter, the cost-to-benefit ratio may not be enough in some patients’ eyes. Often times, patients avoid applying their creams according to the appropriate treatment regimen due to discomforts and inconveniences associated with the application process.

Although topical therapies are more commonly prescribed, doctors are increasingly finding the need to turn to systemic therapies as a primary or second line of defense for some patients. Many different oral treatments have been studied but most commonly given are oral antihistamines or oral steroids. While antihistamines are not seen to work as well as steroids it may relieve some symptoms and induce drowsiness to allow patients to sleep better and avoid itching while asleep. Prednisone is a common oral steroid given, however, due to side effects,

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doctors normally only prescribe this to patients who meet a milder or severe case of atopic dermatitis.

At this time there are currently no PDE4 inhibitors on the market targeted specifically for atopic dermatitis leaving it as an unmet need in this form of therapy. As previously stated Roflumilast is a PDE4 inhibitor currently on the market that is being prescribed for patients with COPD, a similar inflammatory disease to atopic dermatitis however the inflammation occurs at the site of the lungs.

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2. Target Rationale

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Target Rationale: RTG-07103 for Atopic Dermatitis

In order to provide an orally administered therapeutic treatment for Atopic Dermatitis, the proposed small molecule is RTG-07103. RTG-07103 is a PDE4 small molecule inhibitor. PDE4 is an important enzyme responsible for catalyzing the hydrolysis of intracellular cAMP, which is a secondary messenger responsible for maintaining cellular homeostasis. Once cAMP is hydrolyzed, AMP is able to promote the synthesis of inflammatory cells if improperly regulated. Below is a schematic figure that depicts the molecular mechanisms of PDE4 and PDE4 inhibitors: :

Figure 1: RTG-07103 on left (normal state) and right (diseased state)

The use of PDE4 inhibitors is designed to decrease the hydrolyzation of cAMP as shown in Figure 1 (Left). This decrease in levels of cAMP results in decreases of AMP, which help restore cells to a “normal” immune response and therefore providing potential benefits for various immune disorders such as atopic dermatitis. As shown in Figure 1 (Right), 5’AMP leads to an increased immune response through the upregulation of certain pro-inflammatory markets, which will ultimately serve to promote the recruitment of inflammatory cells. These pro-inflammatory cytokines are the basis of atopic dermatitis as well as other autoimmune disorders. Thus, using RTG-07103 for its anti-inflammatory function may prove to be beneficial therapeutic treatment for atopic dermatitis.

There have been some studies conducted to examine RTG-07103 and its relevance with atopic dermatitis. In one in vitro study, PDE4 genes were transfected into COS cells and measured for their PDE activity with a radioimmunoassay kit. From this cell-based PDE4 assay, the results indicate that the transfected cell line with PDE4 maintained a stable level of cAMP production. The cAMP production provided the initial measurement of PDE activity with any

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addition of a TSH receptor. According to Titus et al.2, without the PDE inhibitor, the balanced cAMP levels in PDE4 cell line were hydrolyzed by other PDEs, such as the PDE4 from the HEK293 cells. Titus et. al.’s study showed that with the presence of a PDE4 inhibitor, levels of cAMP could rise and trigger the opening of ion channels, which include the Na+ and Ca2+ channels.

The in vivo studies primarily use the mouse model. In Jin et al.’s3 experiment, three mouse models was used for analyzing atopic dermatitis. There were three categories; the first type were the models that were induced by an application of sensitizing, the second one were the transgenic mice that overexpressed or had an absence of the particular molecules, and finally the third category were the mice that spontaneously developed skin lesions similar to atopic dermatitis. This study aimed to provide better knowledge of how atopic dermatitis works (its pathogenesis) and how skin injury is affected by inflammation. This experiment concluded that mouse models could have a similar genetic defect and present similar symptoms as the human disease for atopic dermatitis.

Another in vivo study also used the mouse model to analyze atopic dermatitis. Tanaka et.al’s4 experiment used the Nc/NgaTnd mouse model for atopic dermatitis. These mice spontaneously developed itchy dermatitis in an unregulated air environment from 6-8 weeks of age. According to the study, the affected NC/NgaTnd mice showed an increase of mast cells and recruitment of inflammatory cells. The results from this study showed similar clinical symptoms between the NC/NgaTnd mice and human atopic dermatitis.

Based on the in vivo and in-vitro experiments, atopic dermatitis is a chronic inflammatory disorder characterized by intense itching and skin lesions. The in vivo studies aimed to analyze atopic dermatitis and its level of inflammation in mouse models while the in vitro study showed the effect of using a PDE4 inhibitor. Patients with atopic dermatitis show high levels of PDE4 activity and thus, introducing a PDE4 inhibitor would significantly reduce the symptoms and inflammation.

2 Titus SA, Li X, Southall N, et al. A Cell-based PDE4 Assay in 1536-well Plate format for High Throughput Screening. Journal of biomolecular screening. 2008;13(7):609-618. doi:10.1177/10870571083199773 Jin H, He R, Oyoshi M, Geha R. Animal models of atopic dermatitis. The Journal of investigative dermatology. 2009;129(1):31-40. doi:10.1038/jid.2008.106.4 Tanaka AMatsuda H. Evaluation of Itch by Using NC/NgaTnd Mice: A Model of Human Atopic Dermatitis. Journal of Biomedicine and Biotechnology. 2011;2011:1-5. doi:10.1155/2011/790436.

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3. Investigative Brochure: Non-Clinical Studies

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3.1 Physicochemical Properties and Clinical Formulation3.1.1 Description and composition of the drug product RTG-07103 is a PDE4 inhibitor designed for atopic dermatitis. The composition of RTG-07103 is similar to Roflumilast white to off-white and does not have an affinity for moisture with a melting point of about 160°C. It is insoluble in hexane and water, sparingly soluble in ethanol, and completely soluble in acetone.5

3.2 Non-clinical Studies3.2.1 Non-clinical Pharmacology SummaryThe pharmacological properties of RTG-07103 have been investigated both in vitro and in vivo. RTG-07103 passively enters cells and specifically inhibits PDE4 isoforms.

In vitro activity In cell based assays, the five PDE4 isoforms are inhibited on average by over 85%, with some isoforms (PDE4B1) showing an inhibition of 100% when treated with RTG-07103 concentrations of 10 μM. IC50 values were demonstrated to be about 100 nM. Similarly, RTG-07103 showed significant reduction in PBMC TNF-a, fMLF-induced Neutrophil LTB4, CD18, CD11b and VEGF-induced HUVEC proliferation at IC50 values of 51, 10, 23, 30 and 54 nM, respectively. All aforementioned markers are clinically relevant in the development of atopic dermatitis-like symptoms. Studies also reveal that in LPS-induced PBMC assays, the IC50 of TNF-a and IL-12 production were reported at concentrations of 100 and 57 nM, respectively. Whereas a similar study utilizing Anti-CD3 mAb-stimulated primary human T cells required much higher concentrations of drug to see an inhibitory response.

In vivo/animal efficacyIn vivo, a dose dependent inhibition of dermatitis severity was observed when NC/Nga

mice were administered the drug orally beginning at week 5 and continuing for 4 weeks. Similarly, mRNA expression of atopic dermatitis related chemokines was also reduced in a dose-dependent fashion. These chemokines included, TARC, MDC and normal T-cell expressed and secreted (RANTES). The ED50 in this model was 3 mg/kg/day.

When assessing RTG-07103 in a COPD mouse model, there was a significant decrease in the total white blood cell count in the bronchoalveolar lavage (BAL). Lymphocytes and monocytes are the two cell types that were affected the most. However, RTG-07103 cannot inhibit all the inflammatory mechanisms associated with lung diseases such as the fibrotic components of the lung.

3.2.2 Pharmacokinetics and Product Metabolism in Animals

5 RxList, 12/07/2015, http://www.rxlist.com/daliresp-drug.htm.

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Clearance, bioavailability, volume of distribution, route of elimination, variability, half-lifeBased on our data from a research study determining the mean plasma pharmacokinetic

parameters of our drug in rats, the clearance when administered intravenously (1mg/kg administered) was 419 ml/h/kg and 237 ml/h/kg for male and female, respectively. When administered orally (10mg/kg), the clearances for male and female species were 4745 and 1517 respectively.

When applied orally, in rats, males and females had a bioavailability of 9.48 and 17.24%, respectively. This differed from the bioavailability found in monkeys in which there was less of a disparity between male and female with 17.8% for the male and 17.2% for the female species.

The volume of distribution is determined by the physiological conditions of the body as well as the pharmacokinetic properties of the administered drug. The volume of distribution in was 933 mL/kg and 1037 ml/kg for male and female rats, respectively while for monkeys it was 1840 mL/kg and 1750 mL/kg for male and female monkeys.

This drug will be excreted as a metabolite with other waste products of the body after being modified via a number of systemic processes. Studies showed that it has a half-life of 1.49 hours in male rats and 2.51 hours in female mice when administered intravenously. When applied orally, the drug had a higher half-life of 2.21 hours in males and 3.47 hours in female rats. Data showed that the time it took to reach maximum concentration when administered orally higher in female rats than in males. Due to the size difference and a number of other variables, the half-life was higher in monkeys, as expected, with an intravenous half-life of 3.17 hours for male and 2.30 hours for female monkeys. This number is higher when applied orally with a half-life of 6.68 hours for males and 6.21 hours for female. The time difference is most likely due to the time it takes for the drug to get to the bloodstream and to reach maximum concentration.

The drug did not show much variability within rats and monkeys. While figures varied between male and female species, the standard deviation was relatively low and showed little variability. The NOEL for this drug is 1000 mg/kg.

Potential for DDICytochrome P450 inhibition was tested in mixed gender human liver microsomes at

concentrations of 0.01, 0.1, 1.0, 10 and 50 μM. RTG-07103 was concluded to have no inhibitory effects on CYP1A2, CYP2D6, CYP2E1 and clinically insignificant effects on CYP2B6-, CYP2C9-, CYP2C19-, and CYP3A4-dependent activities with IC50 >50 μM in all cases. In vitro, RTG-07103 inhibitory activity on recombinant human phosphodiesterase enzymes at 10 μM showed minimal PDE1, PDE2, PDE3, PDE5, PDE7, PDE8, PDE9, PDE10 isoform inhibition while selectively inhibiting PDE4 isoforms.

Induction of CYP1A2, CYP2B6, CYP2C9, CYP2C19, and CYP3A4/5 isoforms was also tested in primary cultures of human hepatocytes. RTG-07013 did not increase catalytic activities of CYP to a clinically significant extent and can be concluded to not be inducers of CYP enzymes.

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3.2.3 ToxicologyPilot Toxicology Studies

The single dose in vivo study with RTG-07103 for the cynomolgus monkey (oral gavage/ 100 and 300 mg/kg) showed increased amount of acute phase proteins and liver enzymes at 300 mg/kg in one mammal. The MTD (maximum tolerated dose) was estimated to be higher than the 300-mg/kg dose.

The repeated dose in vivo study with RTG-07103 for Sprague-Dawley rat orally administered in 7-day duration showed different findings from three separate routes and doses. One course for the study consisted of the oral gavage of 0, 50 mg/kg per day with RTG-07103 showed no signs of toxicity and that all animals were administered with the drug at the seven day dosage period. The Sprague-Dawley rats were treated with RTG-07103 (200 mg/kg/day) and completed their seven-day dosage protocol. The findings did not show any signs of severe toxicity. However, there was some weight loss present. The rats that lost weight showed symptoms of diarrhea and had the appearance of porphyrin. Based on this finding, blood chemistry, and hematology exams were conducted and the RTG-07103 treated animals with the vehicle. From these testings, it was noted that there was a decrease in albumin, an increase in globulin, and an increase of monocytes associated with the RTG-07103 treated animals.

The in vivo repeated dose also conducted a study in which the Sprague-Dawley rats were orally administered 0 (0.5% methylcellulose) 30, 100, 300, and 1000 mg/kg per day during the four-day dosage period. The findings showed signs of weight loss and decreased consumption of food in females that were orally gavaged 300 and 1000 mg/kg per day. Other findings stated that there was inflammation present in the thymus, heart, or intestines that were observed in the groups treated with RTG-07103. When more doses were given, the lesions and inflammations increased and became more severe in females. Since there was minor injuries or inflammation present for males treated with the same drug, the maximum tolerated dose was considered to be 1000 mg/kg per day. In females that were treated with the same drug, the MTD was said to be at 100 mg/kg per day.

Based on these in vivo rat studies data, it can be concluded that RTG-07103 is tolerated with lower dosages such as given in 100 or 50 mg/kg per day. Although severe toxicity was not present in higher dosages of 200 mg/kg per day, there were minor side effects such as weight loss and decreased albumin. Results from rodents that were treated with higher dosages of 300 and 1000 mg/kg per day experienced more severe adverse effects, which may lead toxicity.

GLP Toxicology Studies During the 28-day multidose in vivo study with RTG-07103 for the Sprague-Dawley rat

(oral gavage/ 0, 3, 10, 30, 300 (males)/100 (females) mg/kg/day) there was no mortality and only minor acute inflammatory responses in the high dosed subjects. The NOAEL was observed to be 30 mg/ kg/day.

The 90-day multidose in vivo study for the Sprague-Dawley rat (oral gavage/0, 15, 45, 150(100), and 750(150) mg/kg/day) had toxic and lethal observations for the dosages at both 150

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and 750 mg/kg/day. Due to these comments, the dosages were reduced respectively to 100 and 150. These doses continued to show toxic and lethal effects. Therefore, the NOEL for this study was observed to be 45 mg/kg/day.

Both the 4-day, 28-day, and 90-day multidose in vivo studies for the cynomolgus monkey found no mortality in all doses up to 1000 mg/kg/day. Therefore, the NOAEL for all studies on the cynomolgus monkey were found to be 1000 mg/kg/day. At 15 and 45 mg/kg/day there were no adverse effects found and was well tolerated. After a 14 day dosage of 150 and 750 mg/kg/day it was reduced to 100 and 150 mg/kg/day due to severe toxicity and lethality. However, systemic toxicity was still observed at 100 and 150 mg/kg/day (53-day recovery period). The NOAEL was observed to be 45 mg/kg/day.

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4. Phase 2 Protocol Synopsis Summary

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Protocol Number 00374929

Title A Randomized, Double Blind, Three-arm Dose-Ranging, Placebo-controlled Study to Assess the Safety, Tolerability, and Efficacy of Oral RTG-07103 in Patients With Moderate-Severe Atopic Dermatitis

Brief Title Study of Safety and Efficacy of RTG-07103 in Patients with Mild-Severe Atopic Dermatitis

Sponsor and Clinical Phase

M2M PharmaceuticalsPhase 2

Investigation Type Drug

Study Type Interventional

Purpose and Rationale

This study is designed to assess the safety of RTG-07103 while identifying the optimal therapeutic dose for patients suffering from moderate-severe Atopic Dermatitis. The study is designed as a three-arm, staggered schematic to properly determine the ideal dose while minimizing possible side effects from an increased dosage. RTG-07103 will be compared with an oral placebo, as there is currently no oral atopic dermatitis therapeutics in the market. The primary endpoint will be a score of 0-1 on the Investigator’s Global Assessment, which is defined as “treatment success”.

Primary Objectives

• To determine an optimal therapeutic dose for oral administration• Provide safety, efficacy and tolerability in patients with moderate-severe atopic dermatitis using RTG-07103

Secondary Objectives

• To optimize bioavailability on solid dosage prior to developing a liquid formulation appropriate for pediatric studies.• To prove improved efficacy compared to topical agents currently in the market.

Study Design A randomized, double blind, staggered three-arm, placebo-controlled, dose-ranging study. Patients in Arm 1 treated with 200 mg BID, patients in Arm 2 treated with 250 mg BID and patients in Arm 3 given an oral placebo. Patients in Arm 2 will begin dosing 2 weeks after Arm 1 begins. Study will conclude in 8 weeks and patients will have a study visit at 4 weeks.

Population • Arm 1 – 30 adult patients• Arm 2 – 30 adult patients• Arm 3 – 15 adult patients

Inclusion Criteria • Patient must sign informed consent prior to enrollment.• Patient is a 18 – 65 year old adult with moderate-severe atopic dermatitis.

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• Patient has a medical history of atopic dermatitis for at least 3 years.• Patient with atopic dermatitis affecting at least two regions of the body >10cm2 per target area.• Patient’s Eczema Area and Severity Index (EASI) ≥10 at the screening and baseline visit.• Patient has an IGA Score ≥ 3 at screening and baseline visit.

Exclusion Criteria • Patients who are using any concomitant medication(s) that, in the investigator's' opinion, could affect the subject's Atopic Dermatitis. Patients using such medications may be included, at the investigator's discretion, if they have been stable on treatment for at least 1 month prior to the start of study treatment and no changes to these medications are planned during the study period.• Patient has serological evidence of hepatitis B virus or hepatitis C viral infections.• Patient has known history of human immunodeficiency virus infection.• Patient has concurrent diseases/conditions and history of other diseases/conditions in the selected treatment areas(s) that may have an impact on the study assessments.• Patient has evidence of tuberculosis (TB) infection as defined by a positive purified protein derivative (PPD) and/or positive interferon-gamma release assay.• Patient is pregnant or has been pregnant in the last 6 months.

Investigational and Reference Therapy

Investigational Therapy: 200 mg BID, 250 mg BIDReference Therapy: Hydrocortisone cream and ointment 2.5%

Efficacy Assessments

"Treatment Success," a static endpoint defined as a score of 0 to 1 at Week 8 by the Investigator's Global Assessment (IGA) scoring system for atopic dermatitis status.

Eczema Area Severity Index (EASI) score changes of individual atopic dermatitis signs at each visit from Day 1 pre-treatment. Time Frame: 8 weeks

Pruritus Self-Assessment score changes of atopic dermatitis related itching/scratching at each visit from Day 1 pre-treatment. Time Frame: 8 weeks

Safety Assessments

Physical examination to assess vital signs (BP, pulse, temperature).

Clinical laboratory tests (CBC and CMP) to measure biomarkers and avoid toxicity/drug-drug interactions.

Adverse experience as reported by patient, including pain and dermatologic/skin toxicity (incidence, severity, frequency, duration and causality).

Other Assessments Food effect studiesMeasurement of PDE4 at baseline and 8 weeks

Data Analysis 75 patients will be screened and enrolled at baseline to participate in a double blind

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dose ranging study. In the first arm of the study, 30 patients will be randomly selected to receive 200 mg BID of RTG-07103 for 8 weeks in concurrence with 15 patients receiving a placebo. Within 2 weeks of the study, if there are no adverse events reported/observed, Arm 2 of the study will commence and 30 remaining patients will be treated with 250 mg BID.

At 4 weeks, patients will report for a study visit in which safety will be assessed by adverse events, physical and dermatological examinations, vital signs, laboratory assessments and electrocardiograms. Patient’s Investigator’s Global Assessment (IGA) and Eczema Area Severity Index (EASI) will be measured.

At 8 weeks, patients will report for their final study visit; safety assessments, IGA and EASI will be recorded. In addition, patients will complete a Pruritus Self-Assessment Score to report improvement, stagnation, or worsening of their atopic dermatitis.

Data will be analyzed by evaluating and comparing IGA from baseline, 4 weeks and 8 weeks. In this study, IGA is the key determinant of efficacy for RTG-07103.

Key Words Atopic Dermatitis, PDE4 Inhibitor, RTG-07103, Randomized Double Blind Three Arm Dose Ranging, Oral Therapy, Investigator’s Global Assessment

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5. Investigator's Brochure: Clinical Section

5.1 Introduction

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Two clinical studies were conducted in Phase 1 of this drug’s development process. These were; a Single Ascending Dose (SAD) study and a Multiple Ascending Dose (MAD) study. The SAD study was a randomized, double blind study and was conducted in order to assess safety and tolerability of a single dose of RTG-07103. In addition, it was imperative that a number of other factors were assessed secondarily such as the single dose of RTG-07103, effect of this drug on pharmacodynamic markers in the blood and the effect of RTG-07103 on QTc interval following single oral doses. The MAD study was a randomized, double blind, single-centered study and was conducted to assess similar effects, however, a few primary and secondary objectives differ from that of the SAD study. Objectives such as, our desire to identify dose(s) of RTG-07103 for Phase II evaluation in patients with moderate-severe Atopic Dermatitis and evaluation of the pharmacokinetics of RTG-07103 as well as to describe preliminary evidence of efficacy.

Our SAD study was conducted with 60-70 healthy volunteers (~20 placebo) with ages ranging from 18-67 so as to get a look at these effects in all age groups of adults. The starting dose was 10mg once a day and with seven dose escalations, we ended with a maximum dose of 150mg twice a day. We had a number of endpoints to ensure safety of the volunteer and to show us certain effects of the drug on the body. Endpoints included physical exams, laboratory evaluations, the half-life of the drug, and strength of immune response. Our MAD study, while having similar endpoints, used different logistics. This study comprised of 40-50 healthy volunteers (~10 placebo) with a starting dose of of 50mg once a day and after 4 dose escalations, we administered the maximum dose of 200mg twice a day. Following the MAD, we decided to run an expansion cohort in ten patients with moderate to severe Atopic Dermatitis. This cohort would prove preliminary efficacy over the span of a 90 day trial that showed improvement in the EASI (index indicating severity of disease) over the trial in all of the patients.

5.2 Pharmacokinetics and Metabolism in Humans

Both the SAD and MAD studies had similar pharmacokinetic indications. This data showed that at higher dosage levels, the concentration levels increased within the first few hours when RTG-07103 was administered. Pharmacokinetic variability had an increase during the first hour after drug administered but began to decrease over time. This implied that variability occurred during the absorption phase. We concluded that our dosage level required for efficacy is 200mg administered twice a day as we needed a dose level that would be able to achieve 50ng/mL in a safe manner. Our bioavailability was about 25% which is significantly lower than anticipated and also saw that when co-administered with a lipid rich diet, our bioavailability almost doubled, indicating that the food increased the lipid solubility of our drug. Interestingly, our studies also showed that as dosage increased, bioavailability decreased, Upon observation of this finding, we decided to reformulate RTG-07103 in order to increase bioavailability.

5.3 Safety and Tolerability

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Our Phase I data showed overall safety with minimal adverse events in volunteers. RTG-07103 was tolerated in both studies with slightly more adverse events in the MAD study than the SAD study. Some of these were mild such as nausea & abdominal pain and there were fewer more moderate adverse events such as diarrhea and headaches. There were 12 adverse events in the SAD study with 25% of these coming from the placebo group. In the MAD study however, there were 44 adverse events with 14 of these events occurring at the highest dose level of 200mg twice a day and 10 of these events occurring in the placebo group. These numbers of adverse events indicated the evident occurrence of the placebo effect within both of our studies in healthy volunteers. The fact that 13 of the 56 adverse events that occurred were by the placebo group showed us that only roughly three-quarters of these adverse events were really a consequence of the drug and one quarter were negligible. When comparing both SAD and MAD studies, the findings indicated that high dosage in high frequency can cause more adverse events. This data concluded that RTG-07103 was safe for Phase I since there were no severe adverse events and thus, can proceed to phase 2 with no major specific conditions to monitor.

5.4 Pharmacodynamic Effects

Our phase I studies concluded that RTG-07103 decreased the inflammatory response of the body. The levels of cytokine release in both our SAD and MAD studies showed were decreased indicating that RTG-07103 is performing its function. We observed release levels for cytokines such as IRF7, MXA, LY6E, CXCL9 and many others. The decreased release of these cytokines was to be expected because upon the drug reaching the target, the exerted effects should inhibit inflammation and thereby reduce and inhibit, release of numerous cytokines and other immune response cells.

5.5 Efficacy

While concerned about bioavailability, we were optimistic and not surprised to see that our efficacy data showed our drug to be very effective. Our SAD and MAD studies both showed that RTG-07103 caused a substantial decrease in pruritus. In addition, we saw that within the expansion cohort, almost 80% of the patients had a 50% improvement in the severity of the disease. EASI-50 assessment showed that most patients with moderate to severe Atopic Dermatitis saw improvement to EASI-50 scores of less than 50. Because the EASI is scored from 0-72, this is indicative of less than severe conditions and closer to mild conditions of the disease. All patients saw a reduction in the severity of their which showed us that despite the inevitable variability of any drug, RTG-07103 appears to be efficacious for all adults.

5.6 Guidance to Investigators

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On the basis of the preclinical data and phase I clinical data, there are no major concerns with the safety of the drug in the treatment of Atopic Dermatitis. While RTG-07103 has shown fairly low bioavailability, there is a plan to reformulate in order to increase this by adding components that will make the drug more lipid soluble. This will allow the drug to reach the target in a higher dose and thereby reduce the dosage or increase its exerted effects so as to decrease the time taken to positively affect severity of atopic dermatitis in adults. The probability of overdose is low because our data shows that even when the drug is taken in proportions of ten times more than the prescribed or recommended dose, adverse effects were still moderate and minimal. This is true for undesirable effects as well. We have seen that a minimal number of volunteers saw any problems while taking the drug. Furthermore, the repeated occurrence of these events were also minimal. While we do not have data on drug abuse/dependency or effects of drug use during lactation, there are future plans to research these effects and observe clinical outcomes. We have concluded that there is little to no potential for drug-drug interactions based on DDI studies conducted during phase II. RTG-07103 has an oral method of administration. This is the first drug for atopic dermatitis that will be administered orally and we believe that this administration will more effectively target the disease and lead to life changing benefits for those with moderate to severe atopic dermatitis which also treating and completely absolving patients with mild forms of the disease.

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6. Lifecycle Strategic Plan

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