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how to profit from the coming boom in biotechnolog Q. How big is the world market?
A. There are over 40 billion broilers produced per annum world wide. In the major markets of the US and Europe, annual broiler production is over 8.5 billion and 6.0 billion respectively.

The industry is concentrated. More than 90% of US broiler production is by the top 20 producer companies. This concentration is similar in the other major markets.

Q. At what price will the Poultry Productivity Enhancer be sold?
A. The vaccine pricing will be determined by Merial. One of the ‘industry standard’ valuation methods that the Imugene management has used in a theoretical model to determine pricing is for the vaccine seller to charge up to 33% of the ‘financial productivity gain’ achieved. For example, should the Poultry Productivity Enhancer be determined to deliver a financial gain (in terms of weight gain, feed conversion, labour and other overhead savings) of say 20 cents per bird, then the vaccine selling price would be about 6.5 cents per bird.

On this basis and assuming that the Poultry Productivity Enhancer is used in half the15 billion chickens hatched in the US, Europe and Australia annually, sales could exceed $500 million. Given the highly concentrated nature of the poultry production industry, Imugene expects that the vaccine will achieve a significantly greater market share than 50% in each major territory.

However the actual selling price will be determined solely by Merial, based on the benefits demonstrated in large commercial trials and the above example is hypothetical.

Q. Is the Poultry Productivity Enhancer protected by patents?
A. Yes, two separate patents apply to the product. Patents provide a monopoly for the vaccine in the major markets of US, Australia, Canada, Japan and New Zealand. Patent applications are waiting formal patent granting in Europe and Mexico.

Importantly, with Merial as the vaccine’s commercialising entity, the vaccine has the ability to quickly secure a dominant market share in non-patented jurisdictions thereby reducing encroachment by generic producers.

Imugene receives royalties on sales in patent protected and non protected jurisdictions.

Q. What are the costs of production of the Poultry Productivity Enhancer?
A. A key benefit of this technology is its very low cost of manufacture.

The Imugene vaccine is biological and differs from chemicals – ‘biologicals’ are grown not manufactured. There is no need for expensive or dedicated capital equipment. The vaccine will be produced under standard GMP (Good Manufacturing Practice). A master batch of highly concentrated vaccine will be produced and from this, millions of doses will be produced and distributed to all global markets.

Q. What about competitors?
A. There are no direct competitors to the Poultry Productivity Enhancer. This vaccine boosts chickens’ immune systems against viral and bacterial diseases without the use of chemicals or antibiotics.

Existing antibiotic treatments assist with bacterial diseases only and are routinely mixed into poultry feed. The effectiveness of antibiotics has reduced over time and some important infectious bacteria have developed resistance to some antibiotics. Europe is banning antibiotics to animal feed from 2006 and the US is under pressure to follow as soon as viable alternatives are available. The Poultry Productivity Enhancer is a viable alternative.

Poultry producers continue to evaluate alternative additives to poultry feed including ‘enzymes’ and other ‘antimicrobials’. Imugene’s Poultry Productivity Enhancer can be used with all of these additives.

From the poultry producer’s point of view, the costs of the inputs (health additives and feed) are measured against the output (financial return from sales).