Boston Millennia Partners

In 2005 Boston Millennia Partners continued to build upon prior years’ accomplishments and established solid momentum in value creation for our investors. Two portfolio companies were acquired, another company went public and is trading above its IPO price, and many encouraging events unfolded within the Millennia portfolio. The venture industry is vibrant and we are pleased to highlight a few of the positive developments of which our investors can be proud.

Portfolio Company Highlights:

CombinatoRx (NASDAQ: CRXX) completed its initial public offering on November 9, 2005 selling approximately 6 million shares at $7.00 per share. CombinatoRx is currently trading up over 50%. CombinatoRx is a biopharmaceutical company focused on developing new medicines built from synergistic combinations of approved drugs designed to attack disease on multiple fronts.

In October, CombinatoRx and Angiotech Pharmaceuticals, Inc. (NASDAQ: ANPI), a Canada-based specialty pharmaceutical company, announced a multi-year research and license agreement with a potential value of more than $500 million. Angiotech paid an upfront license fee to CombinatoRx and made an equity investment in CombinatoRx. Angiotech licensed a number of CombinatoRx compounds in return for attractive royalty payments.
Arthrosurface has developed a less invasive joint resurfacing system intended to repair lesions and cartilage damage in major bodily joints including knees, hips, shoulders and the great toe. The company continues to grow sales of its hip, shoulder and toe implants in the US and of its hip, shoulder and knee implants outside the US. Millennia led a $10.5 million Series D stock financing of Arthrosurface in the first quarter of 2005.
Nexidia is the leading provider of scalable audio mining and speech analytics software. By transforming audio data into actionable intelligence, Nexidia’s technology offers a consistent and efficient means for extracting information previously locked away in audio files.

The company has been featured in various magazines such as Red Herring and Information Week, as well as other industry publications, and was recently named one of the Red Herring 100 Private Companies of North America. Since the start of 2005, Nexidia has been honored by the following organizations:
- Software & Information Industry Association – Selected as a Codie Awards finalist for the second consecutive year in the category of “Best Enterprise Search Engine”
- KM World – Named to the list of “100 Companies that Matter” in knowledge management
- Customer Interaction Solutions Magazine – Received Speech Technology Excellence and IP Contact Center Technology Pioneer Award

Optical Solutions (OSI), a worldwide leader in fiber-to-the-home/to-the-building solutions ("FTTP"), announced in November that it will be acquired by Calix, the industry leader in broadband loop carrier (BLC) products. The addition of Optical Solutions' standards-based, field-proven GPON products to the Calix portfolio of access solutions creates a market-leading access powerhouse. According to Infonetics Research, Calix and Optical Solutions occupy the #1 positions in their respective markets. In the second quarter of 2005 Calix claimed the top slot for broadband loop carrier shipments for the eighth straight quarter while Optical Solutions continued to extend its lead in FTTP GPON deployments. Together, with over 70 production IPTV deployments and more than 175 revenue-generating FTTP customers among the joint installed base of over 300 service providers, the company will be servicing and delivering a much broader and more complete range of field-proven solutions.
P&H Solutions, the market leader in Web-based corporate cash management to financial institutions throughout North America, was named a top 100 Financial Technology Company by American Banker and research firm Financial Insights in their annual international listing of the top vertical technology vendors that derive more than one third of their revenue from financial services.

P&H signed a major, five-year contract with The Sovereign Bank to put all Sovereign’s customers, both commercial and consumer, on a single P&H platform. This contract continues the rapid growth of P&H and confirms its status as the market leader in providing Web-based cash management services to financial institutions. With this contract, bookings have surged well ahead of last year's pace, positioning P&H for strong, sustainable profitable growth.

Sale of Cornerstone Brands:

In a noteworthy event for one of our legacy funds, Cornerstone Brands was acquired by IAC/InteractiveCorp (NASDAQNM: IACI) for $720 million in April 2005. The company was built to a value of almost three-quarters of a billion dollars in just over 10 years, and generated close to a 10X return for our previous fund investors using a Core Company consolidation strategy. This success demonstrates the long maturation process that can be required for extraordinary investment results.

Portfolio Company Liquidity Events:

Yantra Corporation was acquired for $170 million in cash by Sterling Commerce, a wholly owned subsidiary of AT&T Corp. (NYSE: T). The transaction combines Yantra, the leading provider of distributed order management and supply chain fulfillment solutions, with Sterling Commerce, which offers a variety of integration software and hosted electronic-trading-network services. Sterling Commerce is incorporating Yantra's application suite into its Multi-Enterprise Services Architecture, a supply-chain platform that businesses use to more closely collaborate with each other.
Totality, a provider of remote managed services for business-critical applications and infrastructure, was acquired by Verizon Communications Inc. (NYSE: VZ). With this acquisition, Verizon enhanced its core hosting capabilities with Totality’s proven expertise in the applications management space, accelerating Verizon’s ability to keep pace with customers as they transition to IP. The acquisition was completed in September.

Selected Portfolio Company Financings:

Athenix, a leading biotechnology company developing novel products, technologies, and processes for agricultural and chemical applications, received $13 million in a Series C stock financing. A new class of genes that Athenix discovered not only makes crops more herbicide resistant, but can also be combined with other yield improving traits like insect and grub resistance. The worldwide market for herbicide resistant crops exceeds $1 billion and is growing rapidly.
CardioMEMS raised $16 million in a Series C stock financing, as part of a partnering agreement with Medtronic (NYSE: MDT). CardioMEMs is the leading developer of innovative wireless medical pressure sensors for the management of Abdominal Aortic Aneurysm (AAA) and Heart Failure (HF) disease. CardioMEMS announced in November US Food and Drug Administration (FDA) clearance and US market launch of the EndoSure™ Wireless AAA Pressure Measurement System. FDA clearance was based upon completion of a multi-center, international clinical study in which over 100 patients in Brazil, Argentina, Canada and at nine hospitals in the United States successfully received an EndoSure sensor at the same time they had a stent-graft inserted to repair their aortic aneurysms.
Millennia was the sole investor in a Series B stock financing for Collegium Pharmaceutical, a leading specialty pharmaceutical company focused on the development of proprietary, late stage pharmaceutical products. Collegium applies customized pharmaceutical formulations and IP strategies to active ingredients that have been shown to be safe and effective, creating a portfolio of improved pharmaceutical products with potentially less development risk and shorter times to market.
Glycofi raised $11 million in a Series C stock financing. GlycoFi leverages its pioneering protein optimization technology to develop, produce and commercialize next generation biotherapeutics, alone and in partnership with other leading biopharmaceutical companies. This past quarter, GlycoFi announced a broad strategic alliance and multi-year research collaboration with Merck & Co., Inc. and an agreement with Eli Lilly & Company to initiate research on 10 protein optimization programs over the extendable two-year research term. Both companies plan to integrate GlycoFi’s technology platform internally and both have agreed to make equity investments in GlycoFi. For more details see GlycoFi’s web site at http://www.glycofi.com/.
Netifice Communications, a leading provider of flexible IP Virtual Private Network (VPN) solutions to businesses worldwide, raised $55 million in a new round of funding. Simultaneously with the funding, Netifice acquired the managed SSL VPN services business of Aventail Corporation. This acquisition makes Netifice the largest provider of managed SSL VPN services and the only US managed service provider capable of providing a full range of integrated remote access and site-to-site IP VPN services, including SSL, IPSec and MPLS.
Novalar Pharmaceuticals, an early-stage pharmaceutical company, raised $27 million in a Series C private equity financing. The company's initial product offering, NV-101, has been developed to rapidly reverse the oral numbness associated with the local dental anesthesia. In November, the company passed a key milestone by receiving written FDA approval of the pivotal Phase III clinical trial protocols for NV-101.
Predix Pharmaceuticals raised $43 million in a Series C private equity financing. Predix is a clinical stage drug development company that uses a proprietary discovery and lead optimization platform to focus on G-protein coupled receptors (GPCRs) and ion channel drug targets. Using its proprietary drug discovery technology and approach, Predix has progressed three drug candidates into clinical trials and has six additional programs in preclinical development and discovery.
Tropos Networks completed a Series E stock financing. Tropos is the leading supplier of equipment used to build metro-scale Wi-Fi mesh networks. Tropos has more than 250 customer deployments, including recent major city-wide wins in Philadelphia, Anaheim and Milwaukee. Tropos is also working with Google on a plan to bring free city-wide wireless access to Mountain View, California, where Google is based.

Looking Ahead
Boston Millennia Partners wishes to thank all of our entrepreneurs, advisors, and partners who contributed to the successes of 2005. Looking ahead to the New Year, we are encouraged by the significant progress our portfolio companies have made and the positive momentum with which they start the New Year. We anticipate that 2006 will be a dynamic and exciting year for us as we continue to support and grow our portfolio companies. Please contact us if you feel you have an investment opportunity Millennia should consider or you can assist us in helping our companies achieve their goals.

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