(ECTE) Platinum-Montaur Proposal to Bolster Echo Therapeutics Stock

NEW YORK, Aug. 30, 2013 – Platinum-Montaur Life Sciences, LLC (“Platinum”), the largest shareholder of Echo Therapeutics, Inc. (Nasdaq: ECTE) (“Echo” or the “Company”) with approximately 20% of the outstanding common stock of the Company, today sent a letter to the Board of Directors of Echo (the “Board”) outlining Platinum’s proposals to stop the destruction of shareholder value.

Echo’s share price has collapsed over 95% in the last two years.

“We have diligently attempted on numerous occasions to work constructively with the Board,” stated Michael Goldberg, M.D., Portfolio Manager at Platinum.  “Regrettably, endless months of Board inaction force us to publicly announce a multi-point plan carefully targeted to address the shortfalls in leadership, strategy, product partnering and financing that have plagued Echo and punished its shareholders through dilution and rampant loss of market value.”

Platinum’s letter to the Board, reproduced below, proposes an immediate plan that:

• Removes ineffective directors and replaces them with professionals who bring key industry experience and informed investor community insight to a Board that has proven incapable of developing Echo’s potentially groundbreaking CGM Technology and in communicating with the shareholder base
• Presents a uniquely valuable opportunity to team with an offshore partner who will bear the burden of developing and marketing the CGM Technology on economically favorable terms
• Engages a premier consulting firm to help the new Board establish and implement a sorely needed strategic vision
• Retains a leading recruiting firm to hire a gifted permanent CEO with bona fide medical device development credentials who is not tainted by service on the current underperforming Board
• Offers financing at a premium to share price that will halt the dilution that has battered the shareholder owners of Echo

Shareholders are strongly urged to read Platinum’s letter to the Board in its entirety and draw their own conclusions about whether this proposal is right for the Company.

Platinum urges the Board to quickly work through the proposal and stands ready to assist in any way it can.  It believes that the Company has a potentially transformative product in the CGM Technology that needs to be developed without further waste of time and money.  The Board must show the market that it is no longer business as usual at Echo.  As the letter to the Board makes clear, Platinum’s proposal expires at 5 PM on Wednesday, September 4, 2013 unless accepted by the Board before then.  If the Board once again lets another prime opportunity go by, Platinum reserves all it rights to take further action.

Letter to the Board

August 30, 2013

Board of Directors
Echo Therapeutics, Inc.
8 Penn Center
1628 JFK Boulevard, Suite 300
Philadelphia, PA  19103

Gentlemen:

I write to you on behalf of Platinum-Montaur Life Sciences, LLC and our affiliated funds, beneficial holders of approximately 20% percent of the common stock of Echo Therapeutics, Inc. (the “Company” or “Echo”).  For many months now we have attempted to have a constructive dialog with the Board of Directors of Echo (the “Board”) and its former CEO who was recently and summarily terminated.  Not once in our numerous discussions has a director or executive of Echo acknowledged the Company’s free-fall and their role in it.  Do the people in Echo’s c-suite and Board room not recognize the judgment that the investing public is rendering on their leadership and oversight when the stock price plummets approximately 95% in the past two years while the NASDAQ has increased approximately 40%?   To this day we are still waiting for the Company’s leadership to assuage the market’s deepest concerns and publicly announce a plausible and immediate strategy for turning Echo around and unlocking its awesome potential.

Frankly, we would have thought you would be reaching out to shareholders and welcoming and acting on the positive ideas suggested by Platinum and others.  However, the Board’s terminal inaction convinces us that you cannot or will not right this ship without outside pressure and leadership.  We cannot wait any more, and we sense that other shareholders feel the same way.  We must now publicly advance a proposal that we believe provides a real lifeline to this troubled but potentially fantastic Public Company.

The following is a summary of our proposal:

1.         Board Composition:

a.         Vincent D. Enright and James F. Smith must resign immediately from the Board.

b.         Michael M. Goldberg, M.D. and Gary Saxton (an experienced medical device executive who has negotiated deals with many medical device companies) should be immediately appointed to the Board.

2.         Development of CGM Technology:  We have identified a potential partner (“China Partner”) for the Company for the development and manufacture of the CGM Product in China.  The Board should begin discussions with China Partner without delay.  It is anticipated that an agreement with China Partner would include:

a.         Fast Track CFDA approval of the Product;

b.         China Partner covering the entire development cost and taking responsibility for manufacturing, marketing and selling the approved Product in China;

c.         China Partner would have exclusivity for the Product in mainland China;

d.         China Partner and the Company would  split sales of the Product in China based on a high double-digit royalty arrangement; China Partner will pay all manufacturing, sales and marketing, and distribution costs from its share after the payment of royalties to Echo;

e.         The Company will retain all intellectual property; and

f.          Upon earlier of (i) approval of the Product by CFDA, or (ii) termination of the agreement with China Partner, the Company will reimburse China Partner for $1.5 million of expenses in the form of common stock of the Company (valued at a mutually acceptable price to be determined).

3.         Engagement of Consultant: The Company will engage a consulting firm, to be unanimously approved by the Board, to provide strategic consulting to the Company, including an independent, high-quality review of the Company’s product and business development positioning.  We have a candidate we would like to suggest for this role.

4.         Engagement of a Recruiting Firm.  Immediately hire a top quality executive recruiting firm with recent relevant exposure to executives with current experience in medical device business development.

5.         Future Investment: The Company will not enter into any further equity or debt financing or business development opportunities without the unanimous approval of the newly constituted Board.  Upon closing of the transaction with China Partner, we (and potentially other co-investors approved by the Board) will purchase $10 million of common stock of the Company (valued at a mutually acceptable price to be determined).  Continued depletion of cash through an uncorrected burn rate will of course negatively impact price.

Now is the time to act.  Surely the Board sees that each day it looks at the stock price and the burn rate.  Yes, you were elected by the shareholders.  Now show that their trust was justified by forcefully and publicly acting in their best interests.  Reach out to your largest shareholders and ask them what they think of this Proposal.  We stand ready to speak or meet with you to help in any way we can, and will make necessary introductions to China Partner.  However, we do expressly want a public response to this entirely sound proposal, and call upon the Board to provide that response no later than 5 PM on Wednesday, September 4, 2013 (the “Deadline”).  If the Board fails to accept our Proposal by the Deadline, then Platinum’s willingness to participate in the Proposal will expire and we expressly reserve all our rights, including by taking our case directly to our fellow shareholders.  As we have publicly expressed in the past, we reserve all rights.

Best regards,

Michael M. Goldberg, M.D.
Portfolio Manager

About Platinum-Montaur Life Sciences, LLC

Platinum-Montaur Life Sciences, LLC is the healthcare division of Platinum Partners, a New York-based investment management group with more than $1 billion in assets under management.  Platinum-Montaur  Life Sciences, LLC employs a growth equity investment strategy, taking large early-stage positions in public and private companies with promising healthcare technologies.

Safe Harbor

Cautionary Statement Regarding Forward-Looking Statements

The information herein contains “forward-looking statements.” Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “targets,” “forecasts,” “seeks,” “could” or the negative of such terms or other variations on such terms or comparable terminology. Similarly, statements that describe our objectives, plans or goals are forward-looking. Our forward-looking statements are based on our current intent, belief, expectations, estimates and projections regarding the Company and projections regarding the industry in which it operates. These statements are not guarantees of future performance and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to differ materially. Accordingly, you should not rely upon forward-looking statements as a prediction of actual results.

CONTACT: Alan Oshiki, Broadgate Consultants, 212-232-2354, aoshiki@broadgate.com