Investor Presentation
1
May 2014
TSX:MBX
Forward-Looking Statements
Certain of the statements contained in this presentation are
forward-looking statements within the meaning of applicable
securities laws, including, but not necessarily limited to, the “safe
harbour ” provisions of the Securities Act (Ontario). These
statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or
achievements of the Company, or industry results, to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements.
Microbix does not assume responsibility for the accuracy and
completeness of these forward-looking statements. The Company
does not undertake any obligation to publicly update or revise
these forward-looking statements to reflect subsequent events or
circumstances. This cautionary language applies expressly to the
forward-looking statements included herein.
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TSX:MBX
Investment Highlights
• Commercial virology business produces and supplies the world’s
largest range of native infectious disease antigens
• 2013 financial turnaround
• Advancing major pipeline opportunity: LumiSort™ (livestock semen
sexing)
• VIRUSMAX™ (influenza vaccine yield enhancement) represents a
potential “free call option”
• Upcoming milestones should provide near- and mid-term value
inflections
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TSX:MBX
Commercial Virology Business Provides Solid
Foundation For Growth
• Founded in 1988
• Produces and supplies infectious disease
antigens, primarily for the diagnostics market
• Products enjoy “gold standard” positioning
• Customers include many of the top global
diagnostics products companies
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TSX:MBX
2013 ”Performance Improvement Program”
Key Profitability Turnaround
$7.6
$8.0
$6.1
$6.0
$6.7
$6.0
Q1 – 2014
$5.0
$4.4
$4.0
$6.5
$3.6
Revenue doubled: $1.9M
$4.0
Operating income: $214,000
EBITDA: $495,000
$2.0
$0.2
$0.1
$0.0
-$2.0
-$2.1
-$4.0
-$2.7
-$3.7
2005 2006 2007 2008 2009 2010 2011 2012 2013
Revenue
5
-$2.3 -$2.5 -$2.6 -$2.6
Loss
Profit
TSX:MBX
Growth Strategy For 2014
• Growth Strategy:
–Continue to increase share and profitability of
virology business
–Leverage resources to help drive pipeline
• VIRUSMAX™:
–Unlock value by enforcing our patents
• Lumisort™:
–Complete prototype to prove patent claims
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TSX:MBX
Influenza Vaccine Yield Enhancement Technology
TSX:MBX
Global Trends Driving Need For Improvements to
Influenza Vaccine Manufacturing
• Limited to a small number of competitors (Merk, GSK, Sanofi Pasteur,
Wyeth, Novartis)
– Insufficient capacity for emerging markets, especially in the event of a pandemic
– Governments reluctant to allow import-dependent mass vaccination campaigns
• Need for high volume/high quality domestically manufactured product
located in key emerging countries/regions
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TSX:MBX
Our Solution: VIRUSMAX™
• Proven to double output of traditional manufacturing process
• VIRUSMAX™ patents issued in 21 major markets including US, Canada,
Europe, India, China and Australia
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TSX:MBX
Unlocking Value From VIRUSMAX™
• Original plan was to bring technology to global market via JVs
• 2013 strategic review resulted in focus shifting to protection and
monetization of the VIRUSMAX™ IP
– January 6, 2014: commenced a U.S. patent infringement litigation against
Novartis in Texas
– January 23, 2014: successfully defended all of its VIRUSMAX™ patent claims
against a challenge by Novartis at the European Patent Office
• Legal activities to advance throughout 2014
• Represents a “free call option” on MBX
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TSX:MBX
Livestock Semen Sexing Technology
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Dairy Products Are a Major Source of Dietary Protein
Food Group
Meat & Alternatives
Milk & Alternatives
Grain Products
Vegetables
Food
Protein*
Beef sirloin steak, 75 g
26 g
Chicken, skinless breast, 75 g
20 g
Cottage cheese, 125 mL (½ cup)
15 g
Milk, 250 mL (1 cup)
8g
Whole-wheat bread, 1 slice
3g
Brown rice, cooked, 125 mL (½ cup)
3g
Broccoli, cooked, 125 mL (½ cup)
2g
Butternut squash, cooked, 125 mL (½ cup)
1g
*Health Canada; Canadian Nutrient File (CNF), 2007
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TSX:MBX
By 2050, the World’s Population Will Require 100%
More Protein
• As per capita income >$5,000/year, diets shift from grains to animal protein
• Increased land use can only address 20% of need for more protein
• LumiSort™ will contribute to closing the protein gap by optimizing dairy and
beef production efficiency
– Constant drive for genetic improvement to livestock
– Efficiency of converting animal feed to human food
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TSX:MBX
Sex Preselection Advantage to Farmers
• Dairy farmers want female calves
– Replace 35% of their herd every year
– Females are the only ones that produce milk
– Cows need to be constantly bred to keep producing milk
– Recent studies: cows pregnant with female fetuses produce 2.5% more milk
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TSX:MBX
Global Livestock Semen Market Is Well-Established
• Almost all dairy cows are artificially
inseminated with a “straw” purchased
from a semen distributor
Region
Sales,
USD
North America
$200M
South America
$125M
Europe
$550M
China
$40M
India
$40M
Russia
$60M
Oceania
$20M
Other
$175M
Total
>$1.2B*
* Despite strong drivers, technology limitations have
resulted in sexed semen capturing <5% of market
TSX:MBX
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LumiSort™ Overcomes the Low Yield and Fertility Rate
Issues That Hamper Competitive Technology
Lumisort™
Competitor
•
•
+
–
–
–
M
?
F
•
Fluid sprayed into
droplets
•
Undesired cells
rendered infertile
•
Continuous liquid
stream:
– Droplet size = speed
limit (~8,000 cells/sec.
maximum)
+
+
Sex identification
<50% efficient
•
Sperm cells damaged by:
Sex identification
>90% efficient
– >100,000 cells/sec
– Spray (depressurization)
– No explosive
decompression
– Charge
– No electric shock
– Sudden stop
– No collision with
collection vessel
Overall yield <30%
“Killing” Laser
Collector
Overall yield >90%
TSX:MBX
Value Proposition of LumiSort™
Segment
PRODUCERS (Farmers)
Technology
Competitor
LumiSort™
90 Straws
270 Straws
(@ $20 each = $1,800)
(@ $20 each = $5,400)
9-10 Straws/Hour
90 Straws/Hour
Accurate Sex Selection
High Fertility rates
SEMEN DISTRIBUTORS
Yield Per Ejaculate
Productivity
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TSX:MBX
Already Negotiated Term Sheet Agreements with 25%
of Global Livestock Genetics Companies
Small sales force
requirement
No entry/capital cost for
customers
Sexed semen is market
expanding
Attractive recurring
revenue model for MBX

~40 semen distributors
service global market


We provide equipment
Producers operate
We maintain

Significant distributor mark-up

$1 per sexed semen straw
+ 15% of the gross sales


TSX:MBX
Significant Revenue Potential Even at Low Penetration
Rates
Estimated Straws Purchased
Worldwide
~ 200 Million
Average Lumisort™ Revenue
Per Straw Sold
$4.15
LumiSort™Annual Revenues ($ in millions)
Annual Revenue Level
$50
$100
$200
$400
Market Share Required
6.0%
12.1%
24.1%
48.2%
TSX:MBX
Strong Patents Will Help Drive Widespread Market
Adoption
• LumiSort® U.S. patent 8,004,661 granted August 24, 2011
– Sexing Technologies has twice challenged the patents
– USPTO has rejected these challenges both times
•
Patent filed internationally in large dairy and beef producing countries
– Canada, Europe, Mexico, China, Brazil, Chile and others
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TSX:MBX
2014 Strategic Plan for LumiSort™
• Prove our patent claims work in practice
• Prototype will process sperm cells by year’s end
– Dedicated funding in place
• Lathrop Engineering engaged to build and test prototype
• Target completion end of 2014
– Industry showcase event upon completion
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TSX:MBX
Summary
In Summary
• Growing and profitable commercial virology
business
• Well defined, significant new LumiSort™
market opportunity
• VIRUSMAX™ potential “free call option”
• Strong management team with a record of
industry success
• Near- and mid-term value inflections
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TSX:MBX