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Annual & Special Meeting of Shareholders November 7, 2006.

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Presentation on theme: "Annual & Special Meeting of Shareholders November 7, 2006."— Presentation transcript:

1 Annual & Special Meeting of Shareholders November 7, 2006

2 Except for historical data, the financial information circulated during this presentation contains statements that, by their very nature, are forward-looking and, therefore, involve time periods, risks and other factors, known or unknown, which are beyond the Company’s control. Each of these factors may produce results or performances that differ significantly from expectations. No liability, present or future, derived from this can be assumed by Bioniche in any investment decision made following this presentation. Safe Harbour Statement 1

3 2 Late stage development of proprietary, large market human cancer therapies. Supported by cash flow from globally marketed products in animal health. Today: revenues, Phase III product (Urocidin for bladder cancer). Our Business Model

4 3 Phase III oncology product – Urocidin TM (MCC) - for non-muscle invasive bladder cancer in humans - promising Phase II safety and efficacy Most significant pipeline products – MCC for other human cancers – E. coli O157:H7 cattle vaccine (in North American regulatory pathway) High margin animal health business – Revenues of C$25M in Fiscal ’06 – Contributes significant earnings before interest, taxes, depreciation and amortization (EBITDA) Corporate Highlights

5 4 Corporate Structure

6 Sale of Non-Core Assets 5

7 6 1.Licensing of E. coli O157:H7 cattle vaccine. 2.Signing of a marketing partnership agreement for Urocidin. 3.Successful completion of Phase III trials with Urocidin in the treatment of non-muscle invasive bladder cancer. 4.Liquidation of non-core assets to support strategic priorities. 5.Obtaining financing to complete priority projects. Areas of Focus

8 Preferred Staging of Events E. coli O157:H7 vaccine license in Canada &/or U.S. Signing of marketing partnership for Urocidin Corporate financing

9 8 Development of the E. coli O157:H7 Vaccine Brett Finlay, PhD, Professor in the Michael Smith Laboratories, and the Departments of Biochemistry and Molecular Biology, and Microbiology and Immunology at the University of British Columbia (Canada) Was conducting basic research in the laboratory in 1995 and made two fundamental discoveries: 1. The E. coli O157:H7 bacteria secrete attachment proteins; 2. When injected directly into a cell wall, one of these proteins serves as a receptor, to which the bacteria adhere, allowing them to colonize the intestine. Realized that it might be possible to immunize against the attachment proteins of the bacteria (initially thought useful in childhood vaccines; then realized that a cattle vaccine might be the better opportunity to pursue)

10 Dr. Finlay contacted Dr. Andy Potter at the Vaccine & Infectious Diseases Organization (VIDO - University of Saskatchewan, Canada) and suggested they try and make secreted proteins to immunize cows. The pair demonstrated in a pilot study that the vaccine appeared to reduce shedding of E. coli O157:H7 in cattle manure. VIDO and Dr. Finlay approached Bioniche, who has become the global commercial partner responsible for the technology transfer, development, scale-up, and commercial manufacture of the vaccine. The Company has invested $13 million to date. Development of the E. coli O157:H7 Vaccine 9

11 One of hundreds of strains of the bacterium Escherichia coli Most strains are harmless; live in intestines of healthy humans and animals O157:H7 produces powerful toxin (Shiga/Vero toxin) and can cause severe illness O157:H7 appears to be a mutant that was first seen in South America ~20 years ago and has drifted north and internationally This strain first recognized as a cause of illness in 1982 during an outbreak of severe bloody diarrhea (traced to contaminated hamburgers in the U.S.) Until recently, most infections have come from eating undercooked ground beef (beef industry has spent hundreds of millions of dollars to improve production safety by implementing post-slaughter procedures; FDA has implemented holding and testing of meat products prior to shipping) (Centers for Disease Control - CDC) About E. coli O157:H7 10

12 11 The Latest E. coli O157:H7 Outbreak September, 2006; 26 U.S. states:  199 people affected (at 10.06); 3 deaths; 31 with HUS  Linked to consumption of fresh spinach  Spinach likely contaminated with E. coli O157:H7 in irrigation water downstream from large Californian dairy operations (three counties) or with E. coli O157:H7 in rinse water used prior to packaging Common denominator in all outbreaks: the cow

13 12 What the Researchers are Saying Vaccination has been efficacious as a pre-harvest intervention in phase II and phase III studies (>25,000 doses) –Significantly reduced probability for shedding in feces –Significantly reduced colonization (terminal rectum mucosal scrapings) –Significantly reduced environmental detection/ oral exposure (ROPES) –Herd-immunity / group-regional dynamics Pre-clinical Phase I Phase II Phase III Proof of concept Clinical Trials Process Safety, Immune response, Challenge studies Safety, Dosage, Limited field studies Does it really work? Large numbers

14 “The vaccine has been efficacious in field trials, under conditions of natural exposure to E. coli O157:H7. Pens of vaccinated cattle are less likely to be colonized with E. coli O157:H7, shed the organism in feces, have environmental exposure to the agent, or have E. coli O157:H7 contaminated hides.” David R. Smith, DVM, PhD, DACVPM (Epidemiology) Department of Veterinary and Biomedical Sciences University of Nebraska-Lincoln What the Researchers are Saying 13

15 E. coli O157:H7 Vaccine Status 14 Completed: proof of concept  field studies  adjuvant withdrawal trial  pre-license serials  field safety trials  To complete: efficacy trials (ongoing) human safety study (Canada) USDA registration in progress. Canadian dossier complete later in 2006 (for CFIA).

16 The Latest from the CFIA 15 “Incoming documentation will be reviewed on a high priority basis, in collaboration with our colleagues at Health Canada …” “The Veterinary Biologics Section recently received a study report on the lack of vaccine toxicity in piglets. This study had been conducted to investigate potential adverse effects, in the event of accidental injection, using a piglet model as a potential indicator of pathologic effects in people exposed to the vaccine.” “We will be working closely with Bioniche’s manufacturing and quality assurance representatives to establish manufacturing and testing protocols to fulfill the Canadian regulatory requirements, as well as conforming with international standards where applicable, to facilitate export certification for vaccine manufactured in Canada.” Glenn Gifford, DVM, MSc National Manager, Veterinary Biologics Section

17 Bioniche Life Sciences, with the University of Nebraska-Lincoln and VIDO, has demonstrated that the vaccine is efficacious. There are no other vaccine technologies demonstrating efficacy against O157:H7. The beef, dairy and vegetable industries cannot afford ongoing lawsuits as a result of supplying adulterated food to consumers. Lawsuits are currently being filed from Canada, in addition to the U.S., as a result of the spinach contamination. Litigation will be the most effective sales tool. Vaccination is clearly the logical solution to reducing the hazard of this bacterium at the source. Management Conclusions 16

18 Market Potential for Vaccine Cattle Population (2004) Canada:14.6 million U.S.:94.8 million Australia:26.4 million Argentina:50.7 million European Union:134.8 million Japan:4.5 million Brazil:192.0 million TOTAL million Vaccine Cost (U.S. only): approximately $6 per animal Vaccine Cost (Europe): approximately 10 Euros per animal 17

19 18 Urocidin Marketing Partnership A number of companies have expressed an interest in working with Bioniche to market this technology. Ferghana Partners has been retained as agent in this partnering transaction. The Bioniche Urocidin team includes: Dr. Nigel Phillips, Chief Scientific Officer Dr. François Charette, Chief Medical Officer Ms. Gail Garland, VP, Business Development Ms. Cindy Benning, VP, Regulatory Affairs Mr. Mohamed Elrafih, VP, Manufacturing

20 19 Mycobacterial Cell Wall-DNA Complex and Bladder Cancer Dr. Nigel C. Phillips Chief Scientific Officer

21 20 Bladder Cancer – Treatment Issues CIS/TCC OF THE BLADDER PROGRESSION, METASTASIS AND DEATH MUTATIONAL STATUS AND INTRINSIC RESISTANCE TO THERAPY RESIDENCE TIME IN THE BLADDER (1-3 HOURS) CARCINOMA IN SITU ± TCC FIELD EFFECTS VS CLONALITY

22 21 Normal Urothelium TCC Low Grade TCC High Grade Carcinoma in situ GENETICALLY UNSTABLE, INVASIVE CARCINOMA HyperplasiaHyperplasia/DysplasiaDysplasia GENETICALLY STABLE, NON-INVASIVE CARCINOMA Chromosomal deletion, mutation "FGFR3 pathway" "p53/p21/pRb pathway" Adapted in part from Knowles, M.A. Carcinogenesis 27: , 2006 Bladder Cancer Pathways

23 22 p53/p21/pRb status 5 year recurrence rate 5 year survival rate No alterations23%70% Any one altered32%58% Any two altered57%33% All three altered93% 8% Bladder Cancer and p53/p21/pRb Chatterjee, S.J. et al., J. Clin. Oncol. 15: (2004). Combined effects of p53, p21 and pRb expression in the progression of bladder transitional cell carcinoma.

24 23 MCC is a mycobacterial cell wall composition containing DNA oligonucleotides The DNA is associated with immune stimulant and anticancer activity The cell wall functions as a biological drug delivery system (recognition by cell receptors such as TLR2, TLR9) Commercial name: Urocidin (MCC suspension for bladder cancer) Mycobacterial Cell Wall-DNA Complex

25 24 Bladder Cancer Cell Lines RT-4HT 1376 Benign papillomaHigh grade TCC Wild type p21/p53Mutated p21/p53 pRb undetectable FGFR IIIb + 8-10 (trace)FGFR  IIIb + IIIc Chemotherapy responsiveMultidrug resistant

26 25 MCC Antiproliferative Activity

27 26 MCC Versus Chemotherapeutic Drugs Inhibition of proliferation, 3 h assay

28 27 MCC -Cytokine/Chemokine Induction MCC SUSPENSION INDUCES: –IL-1 –IL-2 –IL-6 –IL-10 –IL-12 –IL-18 –IFN- –TNF- –IL-8 –MCP-1 –RANTES MCC SUSPENSION DOES NOT INDUCE: –IL-4* –IFN-* *In vitro PRIMARY CELL TARGETS –Macrophages –Monocytes –Dendritic cells –Cancer cells

29 28 MCC suspensionBCG SterileViable NobiocontainmentrequirementBiocontainmentrequired No infectionPotential for infection Defined doseVariable dose (~10 fold range inCFU) Inhibition of proliferationWeak inhibition Induces apoptosisDoes not induce apoptosis Anticancer cytokines/chemokinesInflammatory cytokines Independent of p21/p53/pRbDependent on p53/p21/pRb? BifunctionalagentImmune stimulant Formal toxicology studiesVaccine  bladdercancer MCC Versus BCG

30 MCC – Mechanism of Action “INDIRECT”“DIRECT” Monocytes, Macrophages, Dendritic cells Cancer cells Activation Monokine synthesis IL-6, IL-12, IL-18, TNF-  NK-cell activation T-lymphocyte activation Cellular cytotoxicity Interaction and uptake Cytokine-mediated anticancer responses ? Inhibition of proliferation, cell cycle arrest and apoptosis  N.C. Phillips, 1997 MCC 29

31 The Phase III Bladder Cancer Clinical Program Dr. François Charette Chief Medical Officer 30

32 31 Bladder Cancer Facts –A frequent cancer 4th in men 8th in women –A difficult to treat cancer 30-40% do not respond to therapy Few are able to tolerate full dose treatment –An under-researched cancer No new treatments for decades Patients left with unmet needs

33 32 The Road to Market Pre-clinical: Scientific basis  Studies in the laboratory  Studies in cell lines  Studies in animals Clinical Phase I-II: Proof of concept trials  Is it safe?  Does it work? Clinical Phase III: Registration trials  Confirmation of safety  Confirmation of efficacy

34 33 Evaluation of the efficacy and safety of Urocidin in patients who are refractory to BCG. First patient today! (Victoria, B.C.) We will recruit 105 patients within one year. All patients will be followed for one year. The data will be reviewed on a fast track basis by the U.S. Food and Drug Administration (FDA). First Registration Trial

35 Centres: -BCG Oncology (AZ) -Can-Med Clinical Research Inc. (BC) -Center for Urologic Care (NJ) -Centre for Advanced Urological Research (ON) -Clinical Research Solutions (NV) -Columbia Presbyterian Medical Center (NY) -Connecticut Urological Research at Grove Hill (CT) -Dr. Steinhoff Clinical Research (BC) -Hopital St. Luc (QC) -La Clinique d’Urologie Berger (QC) -McGill University Health Centre (QC) -Memorial Sloan Kettering Cancer Center (NY) -Johns Hopkins Brady Urological Institute (MD) -London Health Sciences Centre (ON) -Princess Margaret Hospital/University Health Network (ON) -Sunnybrook & Women’s Health Science Centre (ON) -The Male/Female Health Centre (ON) -University of Miami (FL) -University of Rochester (NY) -University of Texas MD Anderson (TX) -Urology of Virginia at Devine – Tidewater Urology (VA) -Urology San Antonio Center for Clinical Trials (TX) -Vanderbilt University Medical Center (TN) -Winter Park Urology Associates P.A. (FL) Refractory Trial Sites 34

36 Second Registration Trial Evaluation of the efficacy and safety of Urocidin in all patients who have bladder cancer at high risk of recurrence or progression. Comparing directly with BCG. First patient next year. We will recruit 700 patients worldwide. All patients will be followed for two years. 35

37 – Monique Champagne – Zvi Cohen – Sylvie Devost – Brigitte Robert – Poonam Tanwani – Jason Singh – Kevin Darbyson – Liz McGunnigle – Sylvia Filadelfi – Caterina Beddia Strong Clinical Team 36

38 The Bladder Cancer Market Opportunity Ms. Gail Garland VP, Business Development 37

39 Urocidin TM 38 What will a New Entry Mean to the Bladder Cancer Market? Urocidinwill deliver: Branded pricing in a ‘generic’ market Significant price premium over existing standard of care Peak worldwide net sales of $500M to $1.5B % increase in the size of the entire bladder cancer market

40 Bladder Cancer Market 39

41 Bladder Cancer Treatment 40

42 Market for Urocidin 41

43 42 1.Urologists are anxiously awaiting a product which will replace BCG. 2.Urocidinwill be reimbursed at a price premium to generic products. 3.World-wide market potential of more than $1B annually. Market for Urocidin

44 43 Financial Highlights for Fiscal 2006 announced September 28, 2006 Revenues remained flat at C$26.7M Gross margin constant at 57% Positive EBITDA before R&D of C$1.9M Gross R&D stable at C$12.9M Gains from sale non-core assets totalling C$17.8M Net loss for the year was of (C$1.1M) or (C$0.03) per share; compares to (C$ 15.6M) or (C$0.43) per share in 2005.

45 44 Strategic Corporate Financing Completion of non-core asset sale (December, 2006). Pursuing financing options:  Debt  Equity  Investment in Animal Health to grow revenues Completion of Urocidin marketing partnership deal.

46 45 Value Creating Events anticipated timing – subject to change TimingEvent Q4, st patient enrolled in Urocidin TM Phase III refractory trial 2007Partnership agreement for Urocidin TM 2007Registration of E. coli O157:H7 cattle vaccine in U.S. 2007Submission of INDs for Phase I/II intraperitoneal and intravenous studies with MCC 2007Out-licensing of oligonucleotides to strategic partner Q4, month Urocidin TM Phase III trial refractory data available

47 Please join us for a Wine & Cheese Reception in Trinity IV (this level, opposite)


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