Poultry Products Frequently Asked Questions
To assist shareholders and the investment community understand the ramifications of the Merial sub-licence and the research to develop a ‘Bird Flu’ vaccine, we provide responses to many ‘frequently asked questions’.
POULTRY PRODUCTIVITY ENHANCER – Merial sub-licence
Q. Who is Merial?
A. Merial is a joint venture between two large human pharmaceutical companies – Merck & Co. and sanofi-aventis. Merial is the world’s second largest animal health company (in terms of sales), operating in more than 150 countries. Merial employs about 5,000 people and had revenues in 2007 of over US$2.2 billion – all from animal health product sales.
Q. What are the key financial terms of the sub-license with Merial?
A. For competitive advantage reasons the key financial terms of the sub-license must remain confidential. In animal health product licensing arrangements, it is usual to see single digit royalty rates.
Q. When will the Poultry Productivity Enhancer be sold in global markets?
A. The vaccine will be launched as soon as possible. The remaining steps are –
- scale up and manufacture,
- large (>10,000 bird) ‘commercial setting repeat data efficacy trials’ and
- prepare regulatory approval dossiers for each major territory.
Merial will now undertake these steps with Imugene assisting. Australia is the most advanced territory in terms of regulatory preparation and Imugene will assist Merial to conduct the remaining commercial trials and achieve product registration in Australia.
Q. What makes Merial the ideal commercialising partner?
A. Merial has highly experienced and strongly resourced global teams specialising in poultry health and performance as well as biological manufacture, regulatory approvals, marketing and distribution. Merial can quickly launch an Imugene product in all major worldwide poultry markets.
In addition, Merial is the recognised world leader in the development and approval of ‘viral vector technologies’. Merial is already using viral vectors to deliver vaccines to a number of animal species. As the Imugene platform ‘Adenoviral Delivery System’ used to develop the Poultry Productivity Enhancer is a viral vector, Merial is best placed to recognise and mobilise the technology. Merial has launched over 75% of the existing viral vector based products that prevent or treat animal diseases.
Q. What is the Poultry Productivity Enhancer?
A. The Poultry Productivity Enhancer is a vaccine that is able to be mass administered to all broilers (meat producing chickens) via drinking water, or aerosol. The vaccine boosts the chickens’ immune system, improving general health and ability to resist bacterial and viral infections.
The vaccine has been demonstrated to be much more effective in promoting health and allowing chickens to reach market weight earlier and with significantly less feed than existing in-feed treatments such as antibiotics. Unlike antibiotics and other feed additives, the Imugene vaccine leaves no residues in the meat that is consumed by humans.
Q. How significant are the benefits of the Poultry Productivity Enhancer?
A. Very significant. Studies demonstrated that chickens at 42 days of age vaccinated with the Poultry Productivity Enhancer (either with or without antibiotics also being used) were:
- 13% heavier than ‘control’ (The control group were non-Poultry Productivity Enhancer vaccinated chickens on normal feed – i.e. antibiotics pre-mixed in feed) and used 9% less feed per kg of weight than the control group, and
- 15% heavier than the worldwide industry best practice benchmark and used 11% less feed per kg of weight than the industry benchmark.
Putting this in perspective, for every 500 million chickens produced (Australia’s production is about 900 million chickens pa) the Imugene vaccine will, based on the above results:
- In the usual 42 day grow-out period, produce an additional 177,500 tonnes of weight when compared with the industry benchmark. Using an estimated farm gate price per kg of chicken meat of $1.20/kg, this is worth about $200 million additional gross profit for the producers of those 500 million chickens. or
- Produce the same market weight of chicken as the industry benchmark in 38 days rather than the standard 42 days – enabling large savings in labour and overheads per kg produced. As feed is the highest per unit cost in poultry production, the largest saving is in the reduced amount of feed required – a saving of 235,000 tonnes. Using an average feed cost of $300 per tonne, the saving on feed alone for the production of 500 million chickens is $70 million for the producers. Savings in other areas of fixed and variable costs would be received as a result of the savings arising from the reduced grow out time..
Q. How big is the world market?
A. There are over 48 billion broilers produced per annum world wide. In the major markets of the US and Europe, annual broiler production is over 9 and 6.8 billion respectively.
The industry is integrated. More than 90% of US broiler production is by the top 20 producer companies. This level of integration is similar in the other major intensive poultry markets.
Q. At what price will the Poultry Productivity Enhancer be sold?
A. The vaccine pricing will be determined solely by Merial and based on the benefits demonstrated in large commercial trials.
Q. Is the Poultry Productivity Enhancer protected by patents?
A. Yes, two separate patents apply to the product – a patent over the vector and the cytokine gene (chicken interferon gamma). Patents provide a monopoly for the vaccine in the major markets of US, Australia, Canada, Japan and New Zealand. The patent has been allowed in Europe and awaits approval in Germany, Great Britain, France, Italy, Belgium, The Netherlands. Patent applications are waiting formal patent granting in Mexico.Importantly, with Merial as the 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 has banned the use of antibiotics in animal feed and the US is under pressure to follow (only four antibiotics are currently used legally). 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).
AVIAN INFLUENZA (“BIRD FLU”) - H5N1 Highly Pathogenic Avian Influenza (HPAI)
Q. What is Imugene doing to prevent the Bird Flu?
A. Imugene has developed a Bird Flu vaccine that has been proven to be 100% effective in preventing infection of the highly pathogenic H5N1 disease. The Bird Flu vaccine uses the same platform ‘Adenoviral Delivery System’ used in the successfully licensed Poultry Productivity Enhancer. By stimulating the chicken’s immune system to produce antibodies and cell mediated immunity to the Bird Flu virus, protection from disease should be present if the chicken becomes exposed to Bird Flu. Please refer to the section detailed Avian Influenza for further details regarding the trials and current status of this vaccine group.
Q. How will this vaccine be used?
A. A successful vaccine would be used in widespread vaccination of broiler flocks in risk areas, or to protect large areas or countries from disease infiltration. In areas of disease outbreak, infected birds are culled and birds within a 25-100km of the infection site are likely to be vaccinated to prevent the spread of the disease.
A successful vaccine must be able to be administered quickly and cheaply to millions of birds. The Imugene vaccine under development can be administered to birds through drinking water, feed or by aerosol spray.
Q. What is the current treatment for poultry to prevent Bird Flu?
A. There are Bird Flu vaccines available but these have to be individually injected. This is extremely costly and burdensome.