Editor’s note: Local Tech Wire is featuring a profile each day of companies that will be presenting at the CED’s Venture 2002 event April 30-May 1 in Chapel Hill. Companies were asked to answer a survey from LTW.A lot of people hate needles. Many can’t handle pills. Doctors worry about precise controls of dosage amounts. So Respirics is developing new ways to administer drugs — through inhalers.

With nine patents won and more expected, Respirics is gearing up to make its Acu-Breathe dry-inhaler technology a major player in a market that for asthma treatment alone is expected to reach $8 billion or more within the next five years. And guiding the company, which has only five full-time employees, are three seasoned veterans from Glaxo.

Their goal is a lofty one: “Defining the future of inhalation drug delivery”.

Dr. Gil Mott, the company’s president and chief executive officer, is confident the young company will get the $3 million to $5 million to go forward. He believes Respirics can gain anywhere from 10 percent to 15 percent market share, provided it gets the funding needed to grow.

“Acu-Breathe is efficient and inexpensive to manufacture,” says Mott, who worked at Glaxo in 15 years as a vice president of marketing and managed care. It’s his belief that the inhalers will provide physicians with means of delivering a wide variety of drugs through the lungs — even insulin — and the firm also is pursing its own drug formulation ideas.

A benefit of the procedure, other than avoiding the patient falling over at the sight of a needle, is that it delivers dosages more accurately and what Mott calls “dose to does reproducibility.”

There are other dry inhalers, Mott adds, but Acu-Breathe “can deliver one or two drugs simultaneously or sequentially.”

Respirics came into being in the fall of last year, but in a sense it is a seasoned company. David Gardner, one of the three founders, helped create Innovative Devices in Chapel Hill back in 1995, and Respirics is capitalizing in part on that firm’s intellectual capital.

Mott, Gardner and Keith Johnson all formerly worked at Glaxo. Mott also has been involved in startups before, including ENACT Health Management Systems where he was a founding partner.

“Our management team has deep domain experience in advanced drug delivery, pharmaceutical development, clinical research and marketing,” Mott says. “We have worked for some of the worlds most successful companies and all have considerable entrepreneurial tendencies. We have an excellent complement of science and marketing experience in our field of endeavor.”

Q&A with Respirics:

Answers provided by Gil Mott, President and CEO

Times are tough. If you had only one chance and one paragraph to convince an investor, how would you answer this question: “Why should an investor choose your company?”

Respirics is a pulmonary delivery and development company. Said differently, Respirics develops drugs for administration via the lung, utilizing our patented Acu-Breathe inhalation delivery technology. Acu-Breathe is efficient and inexpensive to manufacture. As a result it can be used to add value to both novel and generic pharmaceutical products. Developing generic products gets Respirics to profitability faster than traditional drug development opportunities. Investors will enjoy the benefit of nearly eight years of R&D on the Acu-Breathe and a professional team of pharmaceutical executives that will maximize the opportunity.

What makes your company unique? Do you have a proprietary and/or a patented technology? Please explain why it is unique and what the status is of any patent filings.

Respirics has nine issued patents on its delivery technology and more are anticipated. We have a team of people that have worked for big pharma, biotechnology and medical device companies. We have the deep domain experience to take a drug product from formulation to FDA submission. Our team members have all been entrepreneurs for three to seven years.

What makes your product(s) and/or services unique vs. your competition? (Who is your competition, and what do they offer?) If you have no competition, why not?

There are numerous companies that offer pulmonary drug delivery. Respirics can deliver either one or two drugs simultaneously or sequentially in the Acu-Breathe. In addition, we can achieve maximal stability for our selected drug development candidates and exceptional dose-to-dose reproducibility. The flexibility of the AcuBreathe makes it ideal for the majority of small and large molecule drug candidates.

Does your company already generate revenue?

Respirics is generating some revenue at present and hopes to be at break even as early as 2003

What is your target market? What is the size of that market in terms of dollars? What share of that market do you believe you can win?

Our initial target market is the respiratory market (asthma/ COPD). The market currently represents $5 billion in US sales and is expected to grow to $8 billion by 2006. Respirics is developing products to compete in this market that could win 10-15% market share in their respective categories by 2008.

What will you do with the invested funds? What is the timeline for product delivery? If you have existing products and services, how will additional funding help you expand your company, if that is the intention, or will you develop new products?

We will use investment funds to develop speculative products to compete in the lucrative Respiratory market. Our first product will be to market in less than four years.

What do you want from an investor other than money?

We would like to work with investors who understand the magnitude of our opportunity and are willing to enable us to aggressively achieve our goals.

Why will investors be impressed with your management team?

Our management team has deep domain experience in advanced drug delivery, pharmaceutical development, clinical research and marketing. We have worked for some of the worlds most successful companies and all have considerable entrepreneurial tendencies. We have an excellent complement of science and marketing experience in our field of endeavor. We are assisted by extraordinary advisors who have run some of the most successful companies in the pharmaceutical industry.

What is the exit strategy for the investor from your company? Are there potential strategic alliances with larger companies? Do you wish to take the company public? Or do you wish to grow the company and either sell it or acquire other companies?

We will aggressively grow the Respirics opportunity and not rule out any of the listed options. If we do our job, Respirics investors will achieve liquidity and substantial ROI in a reasonable time frame.

What do you want to see in a term sheet? What would you consider “fair”?

Reasonable terms and a fair valuation.

RESPIRICS FACT BOX:

TYPE OF COMPANY: Pulmonary drug delivery and development

ADDRESS: 6008 Triangle Drive Suite 101 Raleigh NC 27617

PHONE NUMBER: (919) 789 4220

WEB SITE: www.respirics.com

MANAGEMENT TEAM MEMBERS: Gilbert S. Mott, Jr. President and CEO, David L. Gardner ,PhD. COO, Robert A. Casper, Ph.D. CTO, Keith A. Johnson, PhD. V.P. Pharmaceutical Development

BOARD MEMBERS): James R. Butler, Chairman, former Group Vice President, Alza International, David P. Wright, President, Guilford Pharmaceuticals

INVESTORS: Research Triangle Ventures, Catalysta Ventures plus numerous angel investors.

COMPANY MISSION STATEMENT: Respirics develops pharmaceutical products for delivery to the lung to the highest ethical standards.

REVENUES: Not disclosed

YEAR ESTABLISHED: 2001

NUMBER OF EMPLOYEES: Five full time