TORONTO, June 27 /CNW/ - Toronto-based Microbix Biosystems Inc. (TSX:MBX) announced today that it has entered into an agreement to license its proprietary Semen Sexing Technology(TM) (SST) to a major commercial breeder in China.
The Chinese company - the Animal Fine Breeding Station of Hebei Province - is one of the leading suppliers to the livestock industry and will become the exclusive distributor of SST in that country.
The demand for milk and beef in China is increasing dramatically as poultry is in decline due to the spread of avian flu and diets in that country are becoming more westernized. The price of milk, for example, has risen 60 per cent over the past year in China. A new priority for the Chinese is the rapid development of their beef and dairy herds.
Microbix' technology allows producers to determine the sex of livestock offspring resulting from artificial insemination. SST will allow Chinese dairy farmers to breed only female animals for their milking herds. Likewise, the technology will ensure that beef producers end up with only the required male animals for meat production. SST will allow China to expand its beef and dairy capacity at a much faster pace.
"The Animal Fine Breeding Station sees SST as the key to its success, and it was very keen on entering into this relationship in order to have access to our technology," said William J. Gastle, CEO of Microbix." We expect to sign additional distribution agreements closer to commercialization."
Microbix is charging up-front licensing fees for exclusive distribution rights based on the relative size of each market so as not to exclude the smaller players. "While the Chinese market is underdeveloped, it represents a significant growth opportunity," said Gastle. The royalty rate of 15% and all other terms remain the same as previously announced non-exclusive agreements.
Last year, Microbix signed non-exclusive agreements with a number of artificial insemination (AI) companies based in Europe, North America and Australasia. These companies represent 13 per cent of the $2.5 billion global AI market in the commercial livestock industry.
Today, the average price for unsexed dairy semen is about $20. Microbix estimates that sexed semen will demand a premium price of approximately 2 1/2 times the price of the unsexed product.
"On a commercial scale, the market for SST would be considered a blockbuster by traditional biotech or pharmaceutical standards. Unlike biopharmaceutical drug development, however, there is no regulatory process required to bring a semen sexing product to market. The product will readily integrate into established AI facilities and procedures," explained Gastle.
Microbix announced earlier this month that the Company has been able to identify specific proteins that allow female-producing and male-producing sperm cells to be separated and that it has also developed the monoclonal antibodies that will be used to commercialize this process. This is the first time that sex-specific proteins have been positively identified. Microbix has filed a provisional patent on this discovery.
About Microbix
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 VIRUSMAX(TM)Technology which significantly boosts the yield of influenza virus from eggs; Urokinase, a thrombolytic biologic that can be used as a catheter clearing drug and has potential in new cancer drug combination; and the Semen Sexing Technology(TM).
Disclaimer
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 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. 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.
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