TORONTO, July 11 /CNW/ - Several companies providing artificial insemination to the dairy, beef and swine industries, including some of the world's largest, have signed licensing term sheets with Toronto-based Microbix Biosystems Inc. (TSX:MBX) for distribution of its proprietary Sperm Sexing Technology (SST(TM)). Microbix' technology allows breeders to determine the sex of offspring prior to the insemination of cattle or swine. "Upon commercialization, this will be the single-greatest breakthrough since the advent of commercial artificial insemination almost 50 years ago and will revolutionize the way animal production takes place," said William J. Gastle, President and CEO of Microbix. "Our market research indicates within three years of launch of this technology, close to 100 per cent of the dairy semen provided will be sexed semen." The technology is important because producers currently spend billions of dollars annually on artificial insemination, yet they can end up with animals unsuited to their particular industry's needs. In the dairy industry, for example, a certain percentage of female offspring are required annually to replace the milking herd. SST(TM) separates female-producing sperm from male-producing sperm, thus ensuring gender. The companies that have signed account for over 13 per cent of the dairy, beef and swine semen doses marketed annually. The total revenue for premium priced sexed semen sold by these companies is expected to exceed $350 million by 2010. Microbix will retain a 15 per cent royalty, or minimum unit price whichever is higher, on sales of all semen treated by SST(TM). The signed companies, based in Europe, North America and Australasia, represent a significant sales presence in all major markets around the world. These companies will have significant advantages enabling them to grow their market share over competitors. "These agreements not only pave the way for global distribution of the technology, but validate the market size, royalty rate and revenue potential," said Phil Casselli, General Manager of Microbix. Microbix' SST(TM) has significant advantages over other technologies currently in use to sex semen, making it faster, cheaper and less detrimental to the vitality of the sperm cells. The process has already been patented in the U.S. and Europe, and Microbix will continue to pursue patent protection in other countries, and over other elements of the technology. Licensing agreements will evolve from these term sheets as Microbix moves toward the launch date scheduled for 2008. "We believe this technology will become the standard in the industry and within two years, upwards of 80% of all artificial inseminations done in the dairy, swine and beef industries will be with semen sexed with the SST(TM) technology," said Gastle. Established in 1988, Microbix specializes in developing proprietary biological technologies and commercializing them through global partners. The Company currently has three large-market technologies at various stages in the product pipeline - its Vaccine Enhancement Technology which has demonstrated in independent testing that it delivers a two-fold increase in the yield of influenza virus from eggs; a new cancer drug combination, in partnership with Angiogen LLC, that has had encouraging early results in Phase I human clinical trials in destroying solid tumors; and the SST(TM) animal reproduction technology. This press release contains forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. For instance, product development and field trials may proceed slowly or not at all and may not result in products that can be commercialized, savings by producers may not reach value estimates or at all and sales may not reach sales targets or be made at all. Not all suppliers of dairy semen may convert to a sexed semen product, term sheet agreements may not lead to definitive agreements between the parties. There is no guarantee that the Company will complete development of the technology and if it does that it will perform to the levels projected by the Company. While the Company is not aware of another technology on the market, or under development, that can provide the product at competitive pricing levels compared to Microbix' sexed semen, other technologies may emerge before SST enters the market. Royalty rates may change subject to the definitive agreement, the markets may not sustain the premium for sexed product should world economies shift significantly. Market utilization rates may not be reached. Market value of products may vary. Patents may not provide adequate protection of the Company's intellectual property and may be subject to challenge. Product launch date and market utilization timetables may not be met. These forward-looking statements represent the Company's judgment as of the date of this press release. The Company disclaims any intent or obligation to update these forward-looking statements. %SEDAR: 00004220E