IgY Exec Summary Jan 7 '16
- 1. 1 IGY Immune Technologies and Life Sciences Inc Executive Summary Nutraceuticals Today – Pharmaceuticals Tomorrow January 7th , 2016 I. Overview: IGY Immune Technologies and Life Science Inc.’s (“IGY‐LS” or the “Company”) patented platform technology solves the issue of extracting IgY antibodies from egg yolk at a fraction of the cost of current methods. These antibodies have numerous applications, including basic nutraceuticals, supplements for nutraceuticals and animal feed, pharmaceuticals, and solutions for bioterrorism and pandemic preparedness. IGY‐LS’s key differentiator lies in being the only cost‐effective commercial process that allows the extraction of broad spectrum high purity IgY from egg yolks, while preserving the remaining egg for further consumption in the food industry. The Company expects to build a $70 million base nutraceutical business over five years, and also enter several higher value specialty nutraceutical, veterinarian and pharmaceutical markets, with combined sales potential well over a billion dollars. The Company is seeking to raise capital of $5 – 7 million, which is expected to yield attractive returns to investors. II. Product and Technology For over 30 years, IgY has been available in two forms with the difference being in product purity. The first format is comprised of high purity, specialized antibodies for lab use only, with a cost of $1,500 per dose (one dose = 25 milligrams). The second format includes low‐grade powdered whole‐egg products (between 2‐4% purity), that have been available commercially in multiple forms such as spray dried powder, or inserted as a functional food ingredient into yogurt, toothpaste, etc. The lower‐grade product costs approximately $0.65 per dose and has issues with taste, added cholesterol, shelf life and the high amounts required to gain an efficacious dose. IGY‐LS’s technology allows it to extract JUST the IgY in a range of purities from 25‐95%, and cost about $.10 per dose, with the possibility of reducing this further as the Company continues to refine its manufacturing process. The Company has one issued process patent in the US, and is currently embarked on filing another global patent. In addition, the Company protects its intellectual property through trade secrets. The Company’s products are orders of magnitude more potent for the same price as its competitors, and further improvements to yield are planned. In addition, the products are free of all residual egg yolk, leaving the unused portion of yolk available to be resold to the food industry. Others have published and patented the fact that various vaccines can be combined with IgY antibodies and developed for specific diseases. Currently the Company manufactures and sells IgY antibodies in various forms. However, the Company is in discussion with various entities to develop particular vaccines, which can be injected into egg laying hens, so that the resulting antibodies would be efficacious against specific pathogens and diseases (see later). From a cost stand‐point, while a single dose of a man‐made monoclonal antibody costs $150+ per dose, IGY‐LS expects to produce antibodies for $0.10 per dose, allowing room for substantial margins. This opens the door to a wide range of applications at much lower costs than monoclonal antibodies, and only available to IGY‐LS by virtue of its particular manufacturing expertise.
- 2. 2 Matrix highlighting comparative attributes Monoclonal Antibodies High Purity IgY Powdered Egg IgY Company’s IgY Purity 99.8% 99.8% 4% maximum Up to 95% Performance Limited applications Only for lab use Very-limited Wide range of applications Injectable Not for Human Use Not Injectable Not Injectable Stability / Shelf-life Medium duration/cold storage Stable in small quantities Short-shelf life – up to one-year In excess of 10-years Scalability Not scalable for large applications Not scalable Not scalable due to lack of yolk recovery Highly scalable Cost Effective Least No Somewhat Highly Est. cost per dose $150+ $1,500 $0.65 @ 4% conc. $0.10 @ 50% conc. Pharma. R&D costs Extremely High Not Feasible Not Feasible Low Pharma. Time lines 10-years plus Not Feasible Not Feasible Less than 5-years III. Market Information: Size Nutraceutical supplements and Energy Drinks have continued to grow at double digit rates. Energy drinks have outpaced carbonates with sales at $6.67B in the U.S. with an additional $4.47B in supplements. And the Sports supplement market is trending from the gym to the grocery aisle. According to IRI, a market research firm, eight in ten Americans plan to save on medical costs by trying to stay healthy. 72% are using supplements to meet this challenge. Finally, while 50% of Americans are concerned about their immune system in general, less than 5% of the population is consistently using an immune supplement as they are concerned about efficacy. Health Supplements grew by 7% in the past year, and are now over $12.8 billion. Pharmaceutical sales for the top 25 global companies are in excess of $500 Billion. Challenges for the industry include patent infringements, the cost of drug development and the growing demand for new antibiotics. IGY LS can answer the call to all three issues. Its extraction process is protected by patents and trade secrets. And since IgY antibodies have GRAS status (Generally Regarded as Safe), the Company can develop pharmaceuticals with reduced clinical trial costs. Lastly, antibiotic resistance is quickly becoming a significant health concern of the World Health Organization and Governments around the world. Producing IgY antibodies towards bacterial pathogens is discussed in the literature, but so far cost effectiveness of the process has created a barrier to their introduction. Indirect Competitors (Powdered Eggs): Human Health: IGYNUTRITION (5% powdered egg). Animal Health: EW Nutrition (5% powdered egg IGY) IV. Sales & Marketing of Existing Products Retail Brands In 2012, the Company launched its first two commercial products, Vector450 and IgY Immune. Vector450 and IgY Immune are the same product, marketed to two specialized end users: Vector450 is for athletes to aid in recovery and performance issues, while IgY Immune is focused on the healthcare practitioner market and is positioned as an immune system supplement. After generating annual sales of less‐than $100,000 per year in 2012‐2013, IGY LS signed a $4 million contract with PhD Nutrition for distribution of Vector450 into over 700 US retail locations. To allow the contract to proceed, the company has to complete a double‐ blind clinical study which is expected to result in new product claims, at which point PhD Nutrition is expected to more than triple their initial commitment, and further sales are expected to develop from other customers.
- 3. 3 Business‐to‐Business Ingredient Sales and Joint Ventures Simultaneous to the above activity, the Company has promoted the core ingredient of its product to be formulated into the products of other manufacturers in order to provide enhanced immune properties. The product is branded as Muno‐IgY, and has attracted the attention of such companies as Blue Pacific Flavors, Herb‐a Life, Metagenics and another large corporation. The arrangements include both direct sales as well as joint venture approaches, such that the Company can obtain a bigger slice of the pie while offering sales channel exclusivity. Several such projects are in discussion or underway. In total, retail brands and ingredient sales (namely the existing products) are expected to grow to global sales of $70 million dollars in the next five‐years. V. Current R&D and Future Development of Specialty Nutraceuticals and Pharmaceuticals As mentioned earlier, going to the next level requires that IgY is extracted from hens that have been vaccinated against specific diseases. Confidentiality agreements have been signed with a number of nutraceutical and Big Pharma companies. These companies operate in the human health, pet health and agriculture sectors, and have large global presences. Current product development strategies forecast new products based on IgY antibodies to enter the market as early as 18 months, and the main projects under development are outlined below. R&D for Base Business a) IP expansion: Three additional patents to be acquired and/or executed: $150K b) Athlete Study (Winter 2016): $150K – to be completed by spring. c) Blue Pacific Flavors J.V. to develop new energy drink: $100K – to be completed by spring 2016 d) IgY Gut Health with Fraunhofer and a Pharma company– $150K to produce additional product claims. R&D for new Specialty Nutraceuticals and Pharmaceuticals These projects include both specialty nutraceutical and pharmaceutical products, and in some cases the products span both categories. The initial efforts are shown below, and the Company expects to work on those projects that can be partnered and funded by the large corporate or Big Pharma companies who have already demonstrated interest in obtaining access to an IgY platform. e) Corporate 2: STF: $250K –eighteen month project. f) ImmunoDerm Y: begins as a blended ingredient to gain market penetration, and then works toward an OTC class pharma. g) Universal Influenza IgY – The application is being developed jointly with the U.S. NIH. h) Anti‐Periodontal IgY ‐ starts in the pet care industry for dogs, and moves into the pharma industry for humans. i) Anti‐H. Pylori – enters the market as a functional food ingredient, and continues to be developed into a pharma product. Influenza 5,000$ 35.00$ 3 years 500$ NIH H.Pylori 9,500$ 0.35$ 18 months 500$ Corp. 1 24,000$ 25.00$ 3 years 1,400$ TBD Acne 4,000$ 0.40$ 2 years 250$ Pharma 1 8,000$ 20.00$ 4 years 500$ Pharma 1 Periodontal 500$ 0.35$ 18 months 80$ Pharma 2 2,500$ 35.00$ 4 years 750$ Pharma 2 C. Perfringens 3,000$ 0.25$ 18 months 40$ Corp. 2 Totals 17,000$ 1.35$ 870$ 39,500$ 115.00$ 3,150$ Long Term Annual Sales $ M Partner Specialty Nutraceuticals Pharma Products Market Size Millions Development Cost Millions Long Term Annual Sales $ M Partner Development Timeline Development Time Line Market Size Millions Development Cost Millions The first five target areas have sales potential in the multi‐billion dollars level, subject to the Company successfully partnering these opportunities and receiving sufficient funding. Three of those projects commence as specialty nutraceuticals, and could develop into pharmaceuticals, allowing sales in both regulatory categories. Development timelines for the pharma products are expected to be
- 4. 4 shorter than normal as IgY is a GRAS (Generally Regarded as Safe) regulated product, reducing or eliminating the need for extensive toxicology testing. For instance, in influenza, all mouse model testing is complete in the proof‐of‐concept study. The next step is to refine the Universal Influenza vaccine for the commercial poultry industry and move the IgY tests into a ferret model. From there the Company can proceed directly into a Phase II clinical trial. The US National Institute of Health is expected to support the development of this product as it moves toward FDA completion. The other projects are being discussed with various pharmaceutical companies (their identities can be revealed under NDA), all of whom approached IGY‐LS to express their interest in working together. VI. Management Bios / Resumes and Track Records Backgrounds of Top Personnel: CEO: Terry Dyck – Studied both Science and humanities at University of Manitoba. Then spent twenty‐years building a multimillion dollar financial services business and sold it. Purchased the predecessor company, now re‐branded as IGY‐LS. Interim CSO: John Mason – Both a scientist and a C.A ‐ the creator of our extraction technology. Manufacturing Consultant: David Mason ‐ Industry expert in protein extraction; has designed and sold protein extraction models worth many millions of dollars to fortune 500 companies. VP Sales: Trevor Dyck ‐ Been in sales and real estate development for fifteen‐years; has built the Company’s sales from the ground up. Director of Marketing: Jit Mistry ‐ His eye for creativity has been applied to create the corporate websites, marketing materials and corporate logos; previously built and sold a hedge‐fund business. Operations: Jeff Stubbings ‐ Adept at both procedures and processes, making him perfect for developing GMP guidelines; also manages Ontario’s Registry Business. Science Team & Collaborators: Dr. Huan Nguyen – Principal Investigator at the International Vaccine Institute and a world expert in vaccine development in the areas of pandemic preparedness, emerging diseases and influenza. Dr. Paul Kilgore – Epidemiologist at Wayne State University with global expertise in tropical and infectious disease; is part of the Universal Influenza IgY development project. Christopher Olkrug, PhD – Recognized expert at McMaster University in Oncology pharma development; focused on gut health, leading a team of scientists on three separate IgY targets. Dr. Doug Korver – Lead Poultry Researcher at the Poultry Research Institute, University of Alberta; lead developer for the C.Perfringens program. Dr. Paul Hodgson, Associate Director, Business Development – VIDO InterVac Dr. Anthony Iacopino ‐ Dean of the School of Dentistry, University of Manitoba; leads a team of four scientists developing periodontal IgY strategies for both pet and human applications. Key Hires: Dr. Huan Nguyen – will bring two patents with him and begin work on IgY‐Influenza and Ebola. Kevin Sommervile – has a decade of sales expertise in the field of IgY and a large client list. Plant Manager and Operators for the Airdrie manufacturing plant Representatives for sales of the products of the base business. Connie Luthy, PhD. ‐ Principal Investigator & Product Development Specialist ‐ Vector450 clinical trial VII. Risks: The egg industry will need to be a key player as the Company develops. Currently three large egg breaking companies are interested in supplying eggs to the Company, and as IGY‐LS grows, other suppliers will have to brought on. Another risk is in the resale of egg yolk, or what is referred to as High Ratio Yolk. While High Ratio Yolk has many upside properties, at some point there will be a need to sell it as plain yolk. Current market regulations do not allow this since water has been introduced to the yolk, though later removed. An amendment to the industry guidelines would be necessary for the Company to sell into plain yolk markets, a change that would likely be supported by the industry.
- 5. 5 VIII. Financial Forecast and Capital Required Forecast for Base Business Only (excluding Specialty Nutraceuticals and Pharmaceuticals) Year 2016 2017 2018 2019 2020 Revenue 1.1 17.9 40.2 57.7 72.7 Expenses 3.8 17.0 30.3 46.9 56.1 EBITDA (2.7) 0.8 9.9 10.7 16.5 Capital Required and Use of Funds Licensing and Product Development $1,000,000 Key Hires (9) $700,000 Operations and Logistics $500,000 Working Capital $750,000 Infrastructure (Airdrie Equipment Purchase) $1,400,000 Sales and Marketing $900,000 Total $5,250,000 Share Structure Shares Outstanding – 16.7 million; Fully Diluted – 21.2 million (no options issued as yet) Last round financed at ‐ $1.00 Pre‐money Valuation – The Company seeks an increase from the last round Investment type ‐ Class B common shares or other instrument IX. Conclusions: IGY‐LS possesses a superior, patented technology for the manufacture of IgY antibodies from hen eggs. The Company is poised to build a $70 million base nutraceutical business from its existing products, and also has the opportunity to expand into specialty nutraceuticals and pharmaceuticals with multi‐billion dollar sales potential.