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2014 Opportunities and Outlook for Growth Human & Animal Health
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Page 1: Hep ideck2014redchip conf

2014 Opportunities and Outlook for Growth Human & Animal Health

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Notice to Investors & Analysts This Business Summary, Investment Summary and any Exhibits to it contain forward-looking statements that involve risks and uncertainties. These statements reflect the Company’s future plans, objectives, expectations and intentions, and the assumptions underlying or relating to any of these statements. These statements may be identified by the use of the words “anticipate,” “expect,” “estimate,” “intend,” “believe,” and similar expressions. The Company’s actual results could differ materially from those discussed in these statements. Factors that could contribute to these differences include, but are not limited to, those discussed in this document.

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The Overview A small R&D company holds valuable intellectual property in the form of a proprietary algae culture that produces secondary metabolites, which show early promise to: Support a healthy immune response in animals and humans Promote healthy cholesterol balance in humans

Support joint health in animals and humans

Applications in food ingredients, dietary supplements, pharma

Company is poised to drive REVENUE IN MONTHS with a tiered monetizing strategy that begins with natural food/feed products and extends to future pharmaceutical potential

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Speed to Revenue Biotech firms typically are committed to a long, complex development and validation process involving a small group of related compounds. By contrast, the Company offers investors a tiered strategy:

After efficacy/safety testing and registration, the Company’s natural animal products may be monetized in a matter of months by licensing to larger, well-established brand names as healthy feed and pet treat ingredients

In parallel, the Company intends to develop and license bioactive compounds and molecules derived from its natural products to animal health companies for therapeutic use at pre-IND or post-IND thresholds to drug development firms or directly to pharma’s

Human product development/compliance as a dietary supplement starts once revenue streams from animal licenses are realized

Company spreads development risk and capital across feed, food, dietary supplement and pharma market verticals, while sprinting toward positive cash flow

Monetizing Multiple Verticals

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Market Potential Animal Health The Company’s proprietary, algae-derived bioactive compounds are found to be effective in early studies when applied to dairy cattle and dog models – our highest near-term priorities

Accelerate recovery from bovine mastitis – potentially saving US dairy farmers $2.8+ billion in lost milk production annually. The world’s 244 million dairy cows represent an untapped market

Have been shown to slow the degenerative effects of canine osteoarthritis – a proven $300 million market in the US alone

Company has already executed a Collaboration/Option agreement with world’s largest animal health company for bovine mastitis research

Near-Term Opportunities

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Research Animal Health The Company’s proprietary algal culture, its extracts and isolates, are found to be effective in pre-NDI studies as applied to dairy cattle and dog models

In-vitro testing of primary bovine mammary epithelial cells in 3D culture at University of Wisconsin-Madison Dept. of Dairy Science indicated enhanced immune response when cells were exposed to infective pathogens responsible for bovine mastitis, 2013-2014

Explant testing of canine joint tissues at University of Missouri Comparative Orthopaedic Laboratory has indicated the Company’s bioactive compounds may slow the degenerative effects of canine osteoarthritis in early 2014

A canine whole blood proof-of-concept study conducted by Covance in early 2014 showed promise in the inhibition of pro-inflammatory cytokines, a study being repeated by another large CRO in October, 2014

Collaborative dairy cow in vivo study underway at UC-Davis to evaluate efficacy in addressing bovine mastitis as initiated by staph, strep, e.coli strains and mycoplasma bovis pathogens

Recent Developments

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Licenses/Joint-Ventures Animal Feed & Health Ingredients

NATURAL PRODUCTS SYNTHETIC COMPOUNDS

Bovine Feed

Bovine Mastitis pharma

The Company expects to execute licenses as shown. Timeline “0” is close of funding

0 6 months 12 months 18 months

Canine Supplement

Canine Food

MORE REGULATED MORE REGULATED

Canine OA pharma

NATURAL PRODUCTS

Bovine Supplement (Non-US)

Canine Collaboration Option Agreement Partner TBD

HIGHLY REGULATED

LESS REGULATED

Bovine Collaboration Option Agreement Signed Dec. 20, 2013

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Market Potential Human Health The Company’s algal biomass, secondary metabolites and extracts may be developed into ingredients for these market verticals

• Dietary Supplement/Nutraceutical – a $28 billion US and worldwide market that includes spirulina, algae-derived Omega-3s, algae-derived astaxanthin, dried kelp, etc.

• Functional Food Ingredient – over 400 good-for-you food and beverage categories need powerful ingredients to support their product claims – dozens of licenses can be created

Refined isolates and bioactive molecules for therapeutic applications

• Medical Food – a specialized but stable and profitable market niche for ingredients in prescribed foods and beverages

• Pharmaceuticals – as potential lead compounds for drug development

Natural Products/Future Therapeutics

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Research Human Health The Company’s proprietary algal culture extracts were found to be beneficial in pre-NDI/pre-IND studies as applied to human and hypercholesterolemic hamster models

In-vivo testing of hypercholsterolemia at Wayne Statue University Dept. of Nutrition and Food Science found test subjects treated with culture extracts dropped total cholesterol by 32% and increased HDL cholesterol counts by 5% in studies conducted 2009-2012

In-vitro testing of human HEP-G2 and PBMC cell lines revealed early promise in addressing inflammatory cascades resulting from lipid peroxidation in repeated studies at Wayne State University School of Medicine conducted 2010-2012

Company commenced isolation and characterization efforts of bioactive components in 2012 as potential cholesterol management, autoimmune and anti-inflammatory ingredients in human food and dietary supplements

Natural Products/Future Therapeutics

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Licenses/Joint-Ventures Human Nutrition & Health Products

BIOPHARMACOLOGICAL OR SYNTHETIC COMPOUNDS

Cholesterol Balance

Autoimmune Modulation

The Company expects to execute licenses as shown. Timeline “0” is close of funding

0 12 months 18 months 24 months

Cholesterol Balance

Joint Health

Immune Response

NATURAL PRODUCTS

Joint Health

Human Nutrition Ingredient JV or License

PHARMA REGULATIONS

FOOD SAFETY REGULATIONS

Human Therapeutic Lead Compound Option Agreement

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Active

• Natural Bioactive(s) • Cholesterol

Pending

• Synthetic Development • Cholesterol

Active

• Natural Bioactive(s) • Anti-Inflammatory/Autoimmune

Active

• Single-Strain Algae Natural Product • Cholesterol/Anti-Inflammatory/Autoimmune

Pending • Bacterial Natural Product (Pre/probiotic) • Anti-Inflammatory/Autoimmune

Pending • Synthetic Development • Anti-Inflammatory/Autoimmune

Product Platforms

Human Animal

Human Animal Pharmaceutical

Human Only

Human Only

Human Animal

Human Animal

Pharmaceutical

Food ingredient Dietary Supp.

Food ingredient Dietary Supp.

Food ingredient Dietary Supp.

Food ingredient Dietary Supp.

Potential Multiple Licenses

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Business Model Company builds the value of intellectual property by:

Validating a specific application, i.e., bovine mastitis feed ingredient, through safety/tox testing, in vitro and in vivo studies and then patenting uses, production methods, administration modes

Creating a valuable dataset for such a specific application, to shrink risk and development time for a potential licensee, such as an animal feed manufacturer, dietary supplement marketer, animal health co.

Executing royalty agreements, joint ventures and licenses to boost market value and earning power of the intellectual property

Core Business: Monetizing Early Results

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Prioritized Objectives Potential Revenue Streams

Near-Term < 24 months

Bovine Feed Ingredient Canine Diet Supplement

Porcine Feed Ingredient Human Diet Supplement

Longer-Term > 24 months and beyond

Bovine Medicinal App Canine Medicinal App

Pharmaceutical Lead Compound

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Company Snapshot Publicly traded, fully-reporting since 2003

New management and $5.75 million new capital infusion beginning January, 2012

New business model adopted in January 2012 – Company primarily engaged in R&D and subsequent licensing/JV of Intellectual Property

Actively acquiring intellectual property Acquired assets of metabolic testing company August 2013 – WellMetris

subsidiary currently in FDA pre-submission, preparing for market launch and active partnering

Optioned libido-enhancement drug candidate August 2014 – newly formed Derivlan Bioscience subsidiary to test compounds in Brazil

Company launched $4.5M capital funding initiative Q2 2014

Trading symbol: OTC:HEPI.QB

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Company Snapshot WellMetris Profile: Pre-clinical screening tool for insurers, employers and accountable care organizations

Subsidiary Product Pipeline

Point-of-Care Reporting Software

Analyzer Device

Test Cartridge

Cloud-Based Records Management

WellMetris

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Company Snapshot Derivlan Biosciences is investigating non-steroidal libido enhancement drug candidates for animal and human applications Potential use in pork production, where artificial insemination

continues to increase as 30-40% of male swine don’t exhibit breeding behavior

Potential use in addressing female hypoactive sexual dysfunction disorder, affecting 30+million women in the US alone

Proof-of-concept testing indicates bioactivity in rodent model

New studies in planning stage

Company intends to commence license marketing post-IND application

Subsidiary Product Pipeline

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Prospects & Projections

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

6 12 18 24 30 36

Revenue Estimates in (000’s)

Months

The Company anticipates income streams to begin developing in late 2014/early 2015, consisting initially of advances or options, based on required funding, and then ramping to sustainable revenues from long-term royalty agreements, licenses and private labeling

All sources of revenue

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Exit Strategy Health Enhancement Products, Inc. is a publicly-traded Nevada corporation. Once revenue is optimized, the options to consider are:

Sell the entire Company to a larger, well established JV or licensee for a healthy multiple

Spin out the revenue-generating licenses or subsidiaries into another public entity and conduct an IPO, distribute proceeds to Company shareholders pro-rata

Continue to operate the Company in its current form and develop new applications from the Company’s proprietary algal cultures, metabolic testing platforms and new drug candidates. Move listing to NASD

Realizing the Potential

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Management Since taking over in late December of 2011, the new management team has focused on reorganizing and revitalizing the enterprise:

• Andrew A. Dahl – President & CEO, former Fortune 500 marketing executive and consultant with 20+ year track record, previously in private consulting practice

• Philip M. Rice II – Chief Financial Officer, former DeLoitte CPA, former CFO Stahl’s, 20+ years management consulting, corporate finance and turnaround

• Scott M. Freeman, MD – Chief Science Officer, former COO/Clinical Studies Director, Onyx Pharmaceuticals with 20+ years in drug development, clinical trials management, compliance and regulatory affairs

• Amy E. Steffek, Ph.D.,-- Director, Research & Development, with 14+ years in scientific research experience spanning neurology, cardiology, oncology, psychiatry, and endocrinology

• Scott Forsberg – Director, Product Development, former Director of R&D for Solaray and Director of Marketing for Nature’s Way with 20+ year history in nutrition and supplement industry

Core Team

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Summary The Company holds valuable intellectual property that can be exploited across several market verticals and potentially dozens of licenses within:

• Functional food/feed ingredients • Dietary supplements • Medical foods • Drug development lead compounds

These distinctly different market verticals substantially increase the odds that any one market may be successful. Acquiring related IP provides opportunities that may help mitigate risk and amortize internal resources across other platforms

Realizing the Potential

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Healthy Outcomes Health Enhancement Products, Inc. is dedicated to the discovery, re-purposing and development of products and processes that positively impact health and wellness in humans and animals

Corporate Mission


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