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Microbix Biosystems research and analysis

Contributed by eResearch

By Bob Weir

Microbix Biosystems Inc. and Zydus Cadila (“Zydus”), a global pharmaceutical company headquartered in India, have signed a Letter of Intent to market the thrombolytic drug Urokinase in North American markets.

According to Microbix, the estimated market size for Urokinase in the USA alone is expected to be about $400 million by 2020, for three indications:

- Pulmonary embolism;

- Catheter clearance; and

- Catheter prophylaxis.

Urokinase, which was withdrawn from the market for three years (1999-2002), was acquired by Microbix in 2008, and the Company has been working since then to reintroduce the drug in North America with manufacturing infrastructure, raw materials, and technical expertise. The Company has acquired the approved NDAs (New Drug Approvals) for both Canada and the USA.

Terms of the Agreement

The agreement between Microbix and Zydus Cadila requires Zydus to provide the funding needed to relaunch Urokinase in the United States and Canada. The funding will comprise an initial, commitment plus milestonebased payments. Microbix will also receive a milestone payment upon reaching a certain sales target, as well as being guaranteed a profit margin, and the earning of a royalty fee based on sales. Zydus will receive an option on the rights to all future indications, including in the areas of oncology and ophthalmology.

Microbix had received approval in October 2011 for a Base Shelf Prospectus to help fund its development pipeline, including Urokinase. Consummation of the agreement with Zydus Cadila will reduce Microbix’ need for funds to be raised, and the prospectus will be amended to reflect the Zydus Cadila funding.

Definitive Agreement

A definitive agreement between Microbix and Zydus Cadila is expected to be signed early in 2012, with the anticipated timeline for FDA and Health Canada approval being late 2014.

Zydus Cadila

Zydus Cadila, headquartered in Ahmedabad in India, develops, manufactures, and markets a broad range of healthcare projects. The group has operations in four continents, and over 13,500 employees worldwide. Its subsidiary in the United States, Zydus Pharmaceuticals USA Inc., is ranked 12th among the top generic companies in the USA., with 51 million prescriptions dispensed with Zydus generics.

THE COMPANY

Microbix Biosystems Inc. is a biotechnology company, focused on leveraging its Core Base Business unit that has commercialized over 60 products in the virology and cell culture technologies, in order to finance its morelucrative large-market pipeline of products. These include: Kinlytic (Urokinase), VIRUSMAX™ (Virus Yield Enhancement Technology), and LumiSort™ (livestock sex selection technology). Microbix continues to work towards establishing a joint venture in Asia, including China, to commercialize its VIRUSMAX™ technology.

RECOMMENDATION AND TARGET PRICE

Our July 7, 2011 Initiating Report on Microbix rated its shares as a Speculative Buy with a Target Price of $1.15 per share. With strong growth opportunities in large markets, Microbix is ready to make the  breakthrough in realizing on its long-term vision. Our Target Price reflects our expectations that the Company will achieve its strategic objectives.

Research Analyst
Bob Weir, B.Sc., B.Comm, CFA