Microbix Reaches a Milestone in Establishing and Capitalizing its China Vaccine Subsidiary
TORONTO, Dec. 2 /CNW/ - Microbix Biosystems Inc. (MBX:TSX), a biotechnology company focused on virology and biological technologies, today announced it has formed Crucible International Biotechnologies Corp., a wholly owned subsidiary, to facilitate the start-up and operation of its joint venture in China, to advance the commercialization of its VIRUSMAX™ technology and to increase shareholder value.
Microbix is transferring all of its influenza vaccine assets into Crucible, including an exclusive worldwide license to its VIRUSMAX technology and the Company's 50% ownership interest in the Hunan joint venture in China. Among other benefits, this subsidiary will bring VIRUSMAX to the commercial market, a successful culmination of years of development effort. VIRUSMAX is designed to increase influenza vaccine yields and has demonstrated an average yield increase of at least two-fold over current vaccine production methods.
Microbix also announced today the private placement financing of Crucible, to provide start-up capital for the joint venture in China, is over-subscribed. On closing Microbix will hold approximately 80% subject to final subscription settlement. The financing gives Crucible a post-money valuation of $ 14 million. Microbix expects that the close of this round of financing, which attracted subscriptions from investors around the world as well as management, will take place in the next several days. Crucible will invest these funds in the influenza vaccine manufacturing joint venture in Hunan Province. Microbix' Hunan partner will match this investment and extend a loan to the joint venture providing combined start-up capital of more than $7 million to begin the first phase of the three-phase development of the 120 million dose vaccine facility.
The establishment of Crucible and the successful start-up financing is a major milestone for the Hunan joint venture and for Microbix and its shareholders. Now, the first phase of the vaccine facility can move forward to complete detailed engineering of the entire vaccine facility (the world's third largest), begin site preparation, and construct the main vaccine production building. Initially, Microbix will finalize the formation of the joint venture company and install its management team of experts in global pharmaceutical and vaccine manufacturing.
In phase two, the joint venture will install its vaccine processes, complete construction of the manufacturing facility, and provide material for clinical trials. The facility will also begin manufacturing vaccine inventory for distribution once approved by the state regulatory authorities, which is expected in 2014. In phase three, the joint venture will scale up operations by adding an additional 100 million dose annual capacity. The joint venture requires approximately $50 million to build the initial 20 million dose plant, which will be financed using a combination of debt and equity. The Joint Venture expects to raise the remaining funds for the initial 20-million dose facility by mid-2011 to ensure that the facility is on track to meet the needs of the 2014 flu season.
William J. Gastle, Microbix' Chief Executive Officer, said: "The creation of Crucible captures the combined value of VIRUSMAX and the Hunan Joint Venture, and provides a means to non dilutive financing. Overall, today's transactions establish a strong financial foundation for the joint venture which will provide China with high volume/high quality domestically manufactured vaccines and offer Microbix a strong return on its investment."
In 2008, Microbix and the Hunan Biopharmaceutical Co. Ltd. (a Hunan Province state-owned enterprise) entered into a 50:50 joint venture to build and operate a new influenza vaccine facility in Changsha National Biomedical Park near Changsha City, the capital of Hunan Province. As part of this prior agreement, Hunan will purchase 75% of total vaccine output from the facility in its first seven years of operation, representing estimated revenue of $500 million.
Going forward, Hunan has committed to Microbix that it will assist in facilitating additional supply agreements with other provinces. And, as part of its broader outreach to China, Microbix expects to enter into a delivery partnership with one of the largest Chinese pharmaceutical distributors.
Entering the China market with this joint venture and its VIRUSMAX technology represents significant potential upside for Microbix because increasing China's influenza vaccine production is of vital importance where the existing seasonal influenza vaccine market is currently small and under-developed; in fact, China's 2% vaccination rate is by far the lowest of any major country. The Chinese government is committed to increasing its domestic vaccine supply which today produces about 30 million doses of flu vaccine in a country that has an estimated need of nearly 600 million doses to supply about half its population with vaccine. In addition, Chinese health authorities have stated that they do not intend to allow mass vaccination campaigns to be dependent on imported vaccines. The objective of this venture is to bring increased supply of a world-class flu vaccine into China to approach vaccination levels as recommended by the World Health Organization.
About Microbix Biosystems
Microbix Biosystems Inc. specializes in the development of biological technologies and commercializing them through global partners. The Company has intellectual property in large market biotherapeutic drugs, vaccine technologies and animal reproduction technologies. Established in 1988, Microbix is headquartered in Toronto.
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 including the risks associated with operations in Foreign jurisdictions, risks associated with construction generally and with specialized construction requirements of a flu vaccine facility, risks associated with production including control over costs, quality, quantity and timeliness of delivery of products, foreign currency and exchange rate risk, and risks of raising capital on acceptable terms or at all. These forward-looking statements represent the Companies' judgment as of the date of this press release. The Company disclaims any intent or obligation to update these forward-looking statements.
For further information: For further information:
Visit www.microbix.com or contact: William J. Gastle, CEO, (416) 234-1624 x 230; or James Long, CFO, (416) 234-1624 x 265.