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and growth stage investors attractive conditions for both new investments and exits from existing investments for the foreseeable future.

The Fund Managers view this alignment of critical market factors as unprecedented. Each of these factors individually has a direct impact on the level of risk and the potential for returns in the healthcare technology sector. However, the positive trends in all of them occurring at the same time should create a uniquely positive environment to execute NLV-III’s targeted strategy within the sector.

INVESTMENT STRATEGY
New Leaf’s investment strategy is differentiated in the venture capital industry in terms of its sector focus, specific approaches within each sector, and the depth of experience and long-term track record that supports each element of the strategy. The Fund’s primary focus will be on investments in the Biopharmaceutical and Information Convergence sectors, with a secondary focus on Medical Devices and Biological Research Tools & Infrastructure. Investments will be predominantly in the U.S., but could include a small number of investments in other parts of the world (e.g., Western Europe or Canada). The focus within each sector will be the following:

Biopharmaceuticals: As in NLV-I and NLV-II, biopharmaceutical investments will be the core focus for NLV-III and will comprise approximately 50% - 60% of the Fund. The Fund will typically invest in development stage and commercial stage private companies and in publicly traded small capitalization companies where the investments will be made mostly through structured transactions. The portfolio will emphasize companies developing targeted therapeutics that address molecular mechanisms of disease, where validated biomarkers can be utilized to positively bias probabilities of success and reduce time and cost of development compared to historical averages. These companies exemplify some of the key characteristics the Fund Managers seek across the portfolio - namely large, unmet medical needs, strong science, well differentiated technologies and high quality pre-clinical and clinical development programs led by experienced management teams.

The Fund Managers believe that NLV-III will have the opportunity to invest in compelling biopharmaceutical opportunities and that these will have attractive risk-return profiles for a number of reasons, including the following:

• For the past decade, biopharmaceutical companies have been shifting their research and development focus towards products that target mechanisms of disease at the molecular level. Clinical programs for these types of products are typically smaller, more capital efficient and have higher probabilities of success. These improvements are achievable because precise biomarker testing enables a focus on only those patients where the specific molecular mechanism is known to play an important role in the disease process. By including only these patients in the clinical programs for these targeted products, the probability of detecting critical efficacy signals is significantly increased, even with relatively small numbers of patients;

• Targeted development programs are benefiting from an improving regulatory environment, as the FDA is demonstrating clear interest in working constructively with companies to bring these types of high-impact therapeutics to market more quickly and efficiently. This spirit of cooperation was covered thoughtfully in a recent New England

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