A Phase 2 Study of Cyclo-Z in Subjects With Type 2 Diabetes

Insulin degrading enzyme (IDE) is a zinc-containing enzyme that regulates degradation of
internalized insulin and the maintenance of insulin sensitivity. Diabetic animals and humans
are zinc deficient due to impaired intestinal zinc absorption and hyperzincuria. If endosomal
IDE levels are inadequate, undigested insulin will remain in the cytosol and prevent insulin
signal transduction. Cyclo-Z enhances IDE synthesis and stimulates insulin degradation.
Although Cyclo (his-pro) (CHP) or zinc alone are somewhat effective in the control of blood
glucose metabolism, based on the available literature and previous background studies, it is
hypothesized that the combination of CHP and zinc in Cyclo-Z work synergistically to
ameliorate insulin resistance in diabetic and obese subjects mainly by stimulating IDE
synthesis.

Inclusion Criteria:

- Males or females aged 18 or older.

- Subjects diagnosed with type 2 diabetes mellitus (DM) according to the American
Diabetes Association (ADA) criteria.

- Subjects treated with stable doses of insulin and/or other hypoglycemic agent(s) for
type 2 diabetes mellitus for at least 2 months prior to randomization and who agree to
stay on stable doses of anti-diabetes agents during the study.

- Subjects whose fasting blood glucose levels are reasonably stable for at least 2
months prior to randomization and during the 2-week screening period.

- Subjects who have Hemoglobin A1c levels of 7.5 to 10.0 % at Screening and a fasting
plasma glucose less than 310 mg/dL.

- Subjects who can give written informed consent.

- Subjects who are willing and able to monitor their blood glucose concentrations with a
home glucose monitor (before breakfast and 2 hours after dinner).

- Female subjects must be either:

- Surgically sterile (i.e., have had bilateral tubal ligation, hysterectomy, or
bilateral oophorectomy) at least 6 months before randomization, or

- Post-menopausal for at least 12 months prior to Screening, or

- If of childbearing potential and sexually active, must agree to use adequate
contraception from Screening to completion of the study.

Exclusion Criteria:

- Subjects who have any significant DM-related end-organ damages.

- Subjects who have a history of diabetic ketoacidosis or hyperosmolar non-ketotic coma.

- Subjects who have any disease likely to limit life span and/or increase risks of
interventions such as:

- Carotid B-mode ultrasound test results indicating clinically significant stenosis
in the common carotid arteries requiring intervention by angioplasty or
resection.

- Cancer treatment in the past 5 years, with the exception of cancers which have
been cured, and carry a good prognosis.

- Infectious disease: HIV positivity, active tuberculosis, or pneumonia.

- Subjects with evidence of clinically significant cardiovascular or cerebrovascular
disease, including (but not limited to):

- Hospitalization for the treatment of heart disease in the past 12 months.

- New York Heart Association Functional Class > 2.

- Left bundle branch block on ECG at Screening.

- Third degree atrioventricular block on ECG at Screening.

- Stroke or transient ischemic attack in the past 12 months.

- Subjects with uncontrolled hypertension with average systolic blood pressure of ≥ 160
mmHg or diastolic blood pressure ≥ 95 mmHg at Screening and Baseline.

- Subjects with pulse rate ≥ 95 beats per minute at Screening and Baseline.

- Subjects who have or had any of the following conditions related to gastrointestinal
disease:

- Chronic hepatitis or cirrhosis.

- Episode of alcoholic hepatitis or pancreatitis.

- Inflammatory bowel disease or irritable bowel syndrome.

- Significant abdominal surgery (e.g., gastrectomy, gastric bypass) in the past 2
months.

- Serum creatinine ≥ 1.5 mg/dL for males or ≥ 1.4 mg/dL for females.

- Hemoglobin ≤ 12 g/dL for males or ≤ 10 g/dL for females.

- Subjects who have chronic obstructive airway disease or asthma requiring daily inhaled
corticosteroid therapy or home use oxygen.

- Subjects who have any of the following conditions or behaviors likely to affect the
conduct of the study:

- Weight loss of > 10% in the past 6 months.

- Unable to walk without assisted device.

- Major psychiatric disorder which would impede conduct of the research.

- Excessive alcohol intake (i.e., more than 2 drinks/day).

- Use of illicit drugs or drugs of abuse.

- Subjects who take any of the following medications:

- Psychoactive agents such as monoamine oxidase inhibitors and antidepressants
(e.g., lithium, Prozac, Zoloft, Serzone, Paxil, Effexor).

- Any insulin sensitizers (thiazolidinediones - TZDs) such as Avandia, Actos or
Duvie, etc.

- Subjects with any other clinically significant and/or unexplained abnormalities that,
in the opinion of the Investigator, could impact the subject's ability to fully
participate in or complete the study.

- Female subjects who have a positive serum pregnancy test at Screening, plan a
pregnancy during study period, or are breast feeding.