Bioniche receives funding to scale-up E. coli O157:H7 vaccine production

Feb 8 2008

Bioniche Life Sciences Inc. has announced that it has secured a $5 million commercial loan from the Business Development Bank of Canada (BDC) in support of the scale-up of vaccine production at its Belleville, Ontario facility.

When combined with the previously announced $10 million in Ontario government financing through the Ministry of Economic Development and Trade (MEDT)'s Advanced Manufacturing Investment Strategy (AMIS) and $5 million in federal government financing through the new Agri-Opportunities Program of the Department of Agriculture and Agri-Food (Canada) (AAFC), both announced in December, 2007, the Company has $20 million of the required financing for production scale-up over the next two years to provide capacity of 40 million doses of the E. coli O157:H7 vaccine. This is part of a long-term, $100 million project to create an Animal Health and Food Safety Vaccine Manufacturing Centre.

"We are pleased to have most of the necessary financing now in place to proceed with the first phase of production scale-up in Belleville," said Graeme McRae, President & CEO of Bioniche Life Sciences Inc. "The combined cost of capital is less than 5% for the next five years, followed by extremely favourable repayment terms. The BDC financing will allow us to kick-start production scale-up. This is particularly important with the notice this week by the United States Department of Agriculture that our E. coli O157:H7 vaccine is eligible for a conditional license, providing access to the U.S. market."

Bioniche has developed the world's first cattle vaccine that may be used as an on-farm intervention to reduce the amount of E. coli O157:H7 shed by cattle. This will be the first product manufactured in the scaled-up production facility in Belleville. The vaccine is unique in that it helps to reduce shedding of an organism that, while potentially lethal to humans, causes no disease in cattle. The Company obtained approval to distribute its vaccine under the Permit to Release Veterinary Biologics regulations by the Canadian Food Inspection Agency (CFIA) in December, 2006.

It remains very clear that there is a pressing need to reduce the amount of E. coli O157:H7 shed into the environment by cattle. Food recalls continue to occur on a regular basis in beef, produce and prepared food. On-farm interventions to reduce the shedding of E. coli O157:H7 by cattle, such as vaccination, may assist in reducing the potential for food and water contamination and the resulting human illnesses and deaths.

Approximately 100,000 cases of human infection with the E. coli O157:H7 organism are reported each year in North America. 2% to 7% of those people develop hemolytic uremic syndrome (HUS), a disease characterized by kidney failure (in recent outbreaks, this percentage has risen to as high as 16%). Five percent of HUS patients die, many of them children and senior citizens, whose kidneys are more sensitive to damage.

Beyond consumption of contaminated food or water, individuals can become infected from E. coli O157:H7 by visiting animal exhibits. Petting zoos, fairs, and agricultural exhibits provide many possible routes of transmission for E. coli. Direct animal contact is the obvious route, but contact with contaminated products (e.g., sawdust, shavings, soiled clothing or shoes) can also lead to human infection.

The loan from BDC matures in 2018 and bears interest at the BDC floating rate plus 2%.

About the E. coli O157:H7 Cattle Vaccine

This vaccine received international recognition in September, 2007 by the Animal Pharm Industry Excellence Awards as the best new veterinary product for livestock. The vaccine has been developed by a strategic alliance formed in 2000 between the University of British Columbia (UBC), the Alberta Research Council (ARC), the University of Saskatchewan's Vaccine & Infectious Disease Organization (VIDO), and Bioniche, which holds the rights for worldwide commercialization of the vaccine. The vaccine prevents the E. coli O157:H7 bacteria from attaching to the intestines of vaccinated cattle, thereby reducing their reproduction within the animal, and reducing the amount of bacteria that can be released through cattle manure in the environment. More than 30,000 cattle have been involved in clinical testing of the vaccine over the past five years.