9 March 2007
Aqua Bounty Technologies
(“Aqua Bounty” or “the Company”)
Aqua Bounty Technologies, Inc. (AIM: ABTX), a biotechnology
company focused on enhancing productivity in the aquaculture market, announces
today a trading update on the Company’s operations and expectations for 2007,
ahead of the Company’s preliminary results announcement for the year-ended 31
December 2006, which is expected in May.
The final out-turn for 2007 will
be dependent on a number of important factors, in particular, the pace at which
registration and regulatory approval for the Company’s products are
granted. Taking this into account, the
Board believes that it should take a cautious view of the Group’s revenue.
The key points are as follows:
- Loss
for 2006 is expected to be in line with expectations
- Based
on internal management estimates of current sales prospects, the Directors
do not expect to meet their revenue expectations for 2007
- The
financial health of the Company is excellent, with several years of cash
reserves in the bank
The most significant commercial issue for the Company has
been the slow pace of regulatory approval in target markets for the Company’s
lead product, Shrimp IMS, an immunostimulant that is deployed as a feed
additive. Product registration has been found to take as much as a year or more
in many of the largest shrimp-producing countries such as China, Vietnam, Brazil, and Venezuela. Additionally, adoption in target
areas such as Asia, where 80% of the world’s shrimp is
produced, has been slowed by lack of equipment at the shrimp feed mills to
properly apply IMS to the feed. Shrimp IMS is a heat-sensitive protein added to
the feed late in the manufacturing process through specialized spray equipment.
While the process is common in Latin American feed mills, most Asian mills have
not yet adoptedit.
In countries where IMS is registered, the product continues
to meet the Company’s expectations, consistently proving in both laboratory and
commercial settings that it is capable of providing a significant
economic advantage to shrimp farmers. Shrimp that are fed with Shrimp
IMS are repeatedly shown to have notably higher survival rates than shrimp which
are not fed Shrimp IMS.
Two recent large commercial trials in Ecuador reinforce this finding:
- In
one farm, shrimp in the treated ponds had a 43% higher relative survival
rate with a 12% increase in growth rate, resulting in a 55% greater yield
for the farmer. Feed conversion improved by 52%, adding significantly to
the positive economic impact to the farmer
- In
a second farm infected with three diseases (White Spot, IHHNV and NHP),
treated shrimp had a 40% greater relative survival rate resulting in a 31%
increase in gross profit
Significantly, recent analyses carried out by independent
laboratories confirm that IMS causes shrimp to significantly enhance
physiological immune functions as indicated by increases in critical immune
system components including lysozyme, hemocyarin, and phenoloxidase, as
well as all forms of white blood cell equivalents.
IMS in Latin America
ABT has expanded its distribution
network to include the largest shrimp feed manufacturers in Mexico and Ecuador, Vimifos and Expalsa. 2007 will be
the first full year during which IMS feeds will be offered by these two
companies. The Company’s distribution agreement with Expalsa
covers Peru as well
as Ecuador. ABT also
has agreements in principle with two of Brazil’s largest
feed manufacturers to test and incorporate IMS into their product lines, but commercialisation will await registration which may take
another year. In Panama, ABT will
begin distribution through Grupo Calesa,
that country’s largest integrated larvae, feed and shrimp producer.
IMS in Asia
The Company is focusing on
registration efforts and field trials in Thailand, China, Vietnam and Indonesia.
Combined, these four countries produce 68% of the world’s farm-raised shrimp.
Local staff have been recruited to monitor extensive
field trials beginning in Indonesia and China in March,
and in Vietnam in
April. Given the pace of registration
efforts, however, and the need to introduce new equipment to major feed mills,
it is unlikely that significant revenue from these countries can be expected
before 2008.
VPX Commercial Introduction
The commercial introduction date
for the Company’s second leading product, VPX, a vaccine to prevent mortality
in shrimp from the White Spot virus, has been pushed back from late 2007 into
2008. The delay is a result of further work to determine the optimum product
form. Late stage trials of a powdered form of VPX have been successful in
reducing mortalities from the White Spot Virus by up to 80%. Dose optimization
of the dried form is the immediate objective of field trials due to take place
in Latin America starting in April 2007 and
projected to last into the autumn. With that schedule, initial commercial
efforts would be anticipated for early 2008. Customer demand for an effective
product cannot be overstated, as White Spot Virus continues to be the most
significant and difficult to treat disease for shrimp farmers. We continue to
anticipate an immediate and large demand for the product once the company is
satisfied that it passes all commercial trials.
AquAdvantage Salmon
AquAdvantage
advanced-hybrid salmon and trout continue to perform exceptionally in comparison
with all other farm-raised fish. Continued improvements through cross-breeding
with other domesticated salmon and trout lines have enhanced the growth-rate
advantage previously documented. Growth rates of AquAdvantage salmon project to a
time-to-market of 16 to 18 months compared with the existing commercial
standard of 31 to 36 months.
The US Food and
Drug Administration (FDA) is continuing its review of
ABT’s regulatory filings. As announced on 4 December 2006, several key requirements have already been
satisfied. The Company remains highly
optimistic that approval will be granted. To date, there have been no adverse
findings by the FDA as a result of studies submitted by the Company and none
are anticipated. However, the Agency can and does make requests of ABT to
submit additional supporting data or clarifications, which even though not
requiring new studies, can be time-consuming to fulfil.
At this time, the Company does not anticipate having to
produce any additional studies to satisfy FDA data requests. All studies
relevant to proving the food-safety of the salmon have been submitted. Its
technical superiority is unquestioned.
Simultaneous with fulfilling the
regulatory approval requirements of the United
States, the Company is proceeding with
plans to begin growth and breeding trials in one or more major salmon producing
countries in partnership with local firms and institutions.
Outlook for 2008
Despite experiencing slower than
anticipated commercial introductions of its two leading near-term products, the
Company remains confident in the efficacy and revenue-producing potential of
both IMS and VPX. As regulatory approvals are secured and producers carry out
their own trials we expect sales to grow strongly. We are less in control of time scales for the
commercialisation of the AquAdvantage brood-stock
line but if this product continues to make regulatory progress it should begin
to contribute in the medium term.
Financial Status of The Company
The financial health of the
Company is excellent with cash and investments presently totalling
more than $22 million. This amount is sufficient to fund operations and meet
all current and foreseeable obligations into 2010. The Company is without
significant debt obligation other than repayment of certain
government-sponsored loans that are not due for six or more years.
Elliot Entis, Chief
Executive Officer of Aqua Bounty commented:
“It is disappointing to report
that the Company will miss its targets for 2007. Although the Board is conscious of the
Company’s projected underperformance, we strongly believe that the current
strategy, if not the timing for its fulfilment, is
correct and will deliver a solid sales and marketing performance.”
For further information please
contact:
Aqua Bounty
Elliot
Entis
+1 781 899 7755
Joseph
McGonigle
Bell Pottinger Corporate & Financial
Daniel
de Belder / Amy Rajendran +44 (0) 20 7861 3232
