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TSX: FXA POSITIONING FOR GROWTH Jack Moffatt Chairman and CEO September, 2010 1.

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Presentation on theme: "TSX: FXA POSITIONING FOR GROWTH Jack Moffatt Chairman and CEO September, 2010 1."— Presentation transcript:

1 TSX: FXA POSITIONING FOR GROWTH Jack Moffatt Chairman and CEO September,

2 OUR VISION To deliver the most trusted health brand on the planet Afexa Overview WHO WE ARE Afexa Life Sciences Inc., founded in 1992, develops and commercializes innovative, evidence-based natural medicines. Our lead product is COLD-FX ®, Canada’s #1 selling cold remedy 2

3 Financial Summary 1) EBITDA – Earnings before interest, income taxes, depreciation, amortization and stock based compensation (2) 6 month period ended March 31, 2010 (new year-end) Revenue & EBITDA (1) growth ($CDN millions) 3

4 Financial Summary month period ended 03/31/10 Sales$49.4 Million$47.6 Million$34.4 Million Gross Margin65%67%68% Earnings Before Tax $7.6 Million$2.2 Million$4.3 Million Cash & Near Cash $9.4 Million$3.5 Million$17.7 Million Total Assets$42.0 Million$37.9 Million$44.0 Million Debt: Mortgage $6.0 Million$5.4 Million$5.1 Million 4

5 Canada’s Natural Health Products Industry Regulated by Health Canada Health Canada’s Natural Health Products Directorate Established in 2004 to regulate the estimated 40,000+ unlicensed Natural Health Products (NHPs) then on the Canadian market Reviews the safety, efficacy and quality of a product prior to market authorization A product licence application must be submitted and a Natural Product Number (NPN) or an Exemption Number (EN) is a requirement for all NHPs sold in Canada 5

6 Levels of Natural Product Numbers Non-traditional Monograph Traditional Unique products; usually patented. Aimed at specific health conditions and may be supported by significant clinical research. Example: COLD-FX Non-proprietary products. Not novel or patented and tend not to include therapeutic claims supported by strong clinical evidence. Example: Vitamins Products used in a traditional medicine paradigm, unsupported by scientific studies. Lower degree of certainty on potential health benefit. Example: Echinacea.

7 Afexa’s Commercialized Products 7

8 Health Canada-Approved Medical Claims for COLD-FX® The Natural Health Products Directorate issued a product license and natural product number (NPN) for COLD-FX Non-Traditional Comprehensive Treatment Claim “helps reduce the frequency, severity and duration of cold and flu symptoms by boosting the immune system.” 8

9 Canada’s #1 Selling Brand for All Cold and Flu Remedies & Natural Supplements The Nielsen Company MarketTrack National all channel service for Cold Remedies (including Antihistamines), and Natural Supplements for 52 week period ending July 3,

10 Consumer Purchases $ in Millions Source: Nielsen MarketTrack, National All Channels, Calendar Years Growing a Market Leader COLD-FX 5 year compound annual growth rate of 48 % Total COLD-FX Total Tylenol Cold/Flu Total Advil Cold/Flu 10

11 COLD-FX® ─ An Official Sponsor of the 2010 Winter Olympics 11

12 Parallel Growth Drivers Market Diversification Product Diversification 12

13 Market and Product Diversification Well Underway COLD-FX® is the Canadian market leader for flu and colds Profitable and able to self- fund full cycle of research, clinical studies, launch and marketing of new products A proven marketing and sales platform for launching new products into the Canadian marketplace A proven science-based company pioneering natural medicines that empower people to achieve their health potential Positioned to focus on opportunities outside Canada 13

14 Parallel Growth Drivers Market Diversification 14

15 Canada Expanding market penetration of commercialized products Focus of current marketing efforts Small household penetration generally across Canada Even higher growth potential in Québec Bringing new products to market Market Diversification 15

16 Market Diversification United States COLD-FX ® currently must be sold as health supplement; intended to boost immune system; this limits market potential Considering a New Drug Application (NDA) as a polymolecular botanical drug; larger market potential and expanded therapeutic claims 16

17 Market Diversification Europe Assessment of regulatory requirements 17

18 Market Diversification Asia Distributor agreement in Hong Kong Regulatory approval process under way in China Assessing Japan’s business opportunities Reviewing opportunities in other Asian countries 18

19 Parallel Growth Drivers Product Diversification 19

20 Founder and CSO Dr. Jacqueline Shan Heads a Strong Scientific Team that is Driving Product Diversification 20

21 Branching Out With New Polymolecular Botanical Drugs 21

22 Polymolecular Botanical Drugs: Creating a New Class of Natural Medicines Also known as “botanical drugs” or “herbal drugs” In Canada considered to be novel proprietary botanical products with therapeutic claims supported by specific clinical trials Fundamentally differentiated from traditional herbal medicines COLD-FX belongs to this category of over-the-counter, non-traditional botanical products 22

23 Required to meet high clinical standards, similar to conventional pharmaceutical standards Track is multi-year to approval involving rigorous pre-clinical and clinical studies as well as toxicology testing, chemical standardization and scrutiny of plant sources and manufacturing processes Polymolecular Botanical Drugs: Creating a New Class of Natural Medicines 23

24 Development Pathway Traditional vs. Polymolecular Drug Discovery Preclinical Development Clinical Trials Approval & Launch File INDFile NDA Basic Research Typically 3.5 years Clinical Typically Up to 9 years Approval/Launch Typically 0.5 to 2 years Discovery & Preclinical Clinical Trials Approval & Launch File INDFile NDA Basic Research 1 to 2 years Clinical 3 to 5 years Approval/Launch 0.5 to 2 years Traditional Drug Development Potential Polymolecular Drug Pathway for Afexa 24

25 ChemBioPrint Proprietary Technology Biological Fingerprinting Polymolecular active constituents are tested for multiple biological or pharmacological responses indicating health and/or therapeutic benefit Chemical Fingerprinting Multiple chemical analysis combining different chromatographic detectors provides precise chemical identity of multiple active constituents of a product Consists of two-dimensional fingerprinting 25

26 ChemBioPrint Proprietary Technology Patented technology Applicable to evidence-based multi-active component natural therapeutics For both discovery and standardization Pharmacologic and clinical validation Batch-to-batch consistency 26

27 Product Diversification: Multiple Paths Commercialize existing product candidates beyond COLD-FX ® Advance multiple products through clinical trials Increase R&D into products with targeted applications In-license third-party products that fit the Afexa profile 27

28 Product Pipeline DiscoveryPre- Clinical Approval End-Product Launch 1 – 2 years3 – 5 years6 months – 2 years Cholesterol Management COLD-FX ® Pediatrics Seasonal Allergy Cancer Support Oxidative Stress & Brain Health Glucose Management Blood Pressure Management TLR Therapeutics Anti-Viral Cancer Management Vaccine Adjuvant 28

29 Approval End-Product Launch New proprietary formulation Lip-01 to improve cholesterol levels Pilot open clinical study in progress Preliminary data signals suggest similar efficacy as pre-clinical studies Cholesterol Management Pre-ClinicalDiscoveryClinical Photo: Yellow plaque deposits in artery 1 – 2 years3 – 5 years6 months – 2 years High cholesterol affects ~40% of Canadian adults 29

30 ClinicalDiscoveryPre-Clinical COLD-FX Pediatrics Children 3-12 years old First clinical trial Safety Complete and successful Second clinical trial planned; randomized, double-blind, placebo-controlled Approval End-Product Launch 1 – 2 years3 – 5 years6 months – 2 years 30

31 DiscoveryPre-ClinicalClinical Allergy Clinical Trial Positive pre-clinical lab studies complete Randomized, placebo-controlled, double-blind clinical trial in progress Targeted to be completed in next 12 months Approval End-Product Launch 1 – 2 years3 – 5 years6 months – 2 years 31

32 DiscoveryPre-ClinicalClinical CLL Cancer Clinical Trial Clinical trial in Chronic Lymphocytic Leukemia (CLL) – National Cancer Institute and Wake Forest University Available preliminary data presented at American Society of Clinical Oncology (ASCO) June 2010 Available results indicating positive signals – further analysis in progress Reduced sore throat and trend of reduced incidence of moderate- severe Acute Respiratory Illness Reduced serious adverse events (SAE) suggesting improved disease tolerability Exploring potential effect on immune system through strengthening mucosal integrity Next clinical trial in CLL in planning phase with Wake Forest University Approval End-Product Launch 1 – 2 years3 – 5 years6 months – 2 years Positive pre-clinical lab studies in leukemia model – McGill University 32

33 DiscoveryPre-ClinicalClinicalApproval End-Product Launch Brain Health Proprietary active ingredients for REMEMBER-FX ® and MEMORY-FX ® HT1001 Clinical trials have shown: Improves memory in normal adults Improves working memory in schizophrenia patients Reduces oxidative stress Planning additional clinical trial for oxidative stress and brain function 1 – 2 years3 – 5 years6 months – 2 years 33

34 Discovered a potential polymolecular formulation extracted from two herbs Active constituents showed synergistic effect on increasing glucose uptake in cultured skeletal muscle cells Reduced blood glucose levels observed in another clinical trial of HT1001 Clinical trial planned: open label, dose ranging, safety and effect size finding Glucose Management Approval End-Product Launch Clinical DiscoveryPre-Clinical 1 – 2 years3 – 5 years6 months – 2 years Approx. 285 million people worldwide are affected by diabetes Growing by approximately 7 million per year 34

35 Approval End-Product Launch Two possible polymolecular based formulations extracted from various plants discovered in lab testing Planning further pre-clinical studies Blood Pressure Management ClinicalDiscoveryPre-Clinical 1 – 2 years3 – 5 years6 months – 2 years Approximately 25% of people worldwide are affected by hypertension 35

36 TLR (Toll-like receptors) Modulators – a class of molecules targeting multi-organs and tissues including immune cells TLR Modulators have shown promising therapeutic potential and supportive treatment for: Cancer Infectious diseases Adjuvants for vaccines Afexa’s research has discovered potential botanical TLR Modulators Preliminary lab studies have been promising and further research is under way TLR Therapeutics ClinicalApproval End-Product LaunchPre-ClinicalDiscovery 1 – 2 years3 – 5 years6 months – 2 years 36

37 Investing in Afexa Maturing Canadian science company with highly accepted commercial products with potential to leverage proven science across new medicines and markets Board of Directors, composed of strong and knowledgeable individuals from a wide range of disciplines, provides oversight and guidance Laboratory and clinical breakthroughs and development well underway Strong future growth potential Market and product expansion well underway Full spectrum of in-house professionals capable of building strongly branded products from conceptualization to commercialization 37

38 Our Company is profitable and able to self-fund full-cycle research, clinical studies, launch and market new products Investing in Afexa 38

39 Forward-Looking Statements Advisory Regarding Forward-Looking Statements This presentation contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words “expect”, “anticipate”, “continue”, “estimate”, “objective”, “ongoing”, “may”, “will”, “would”, “project”, “could”, “should”, “contemplate”, “potential”, “depend”, “forecast”, “believe”, “plans”, “targets”, “intends” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements reflect the Company’s beliefs and are based on information currently available to us. These statements require Afexa to make assumptions that it believes are reasonable and are subject to inherent risks and uncertainties. Actual results and developments may differ materially from the results and developments discussed in the forward-looking statements as certain of these risks and uncertainties are beyond Afexa’s control. The forward-looking information and statements included in this news release are not guarantees of future performance and should not be unduly relied upon. Examples of such forward-looking statements in this presentation include, but are not limited to: the expectation of positive and sustained growth and diversification for the Company and increased market penetration within Canada and internationally; the Company’s goal to bring to market a basket of natural health products; the Company’s belief that it will continue to be profitable and self-fund product development; whether the Company’s product candidates, including in the areas of cholesterol management, COLD-FX pediatrics, allergy, cancer support, brain health, glucose management and TLR modulators will be successful in clinical trials leading to regulatory approvals and commercialization; the expectation that Afexa will continue as a market leader in Canada; whether Afexa will seek US botanical drug registration in the U.S. for one or more of its products and, if it does, whether Afexa will be successful in gaining such regulatory approval; whether international market diversification will take place and if it does, whether Afexa will be successful in penetrating international markets; whether Afexa will be successful in achieving suitable collaborations for international marketing; whether the Company will meet its timelines for new product candidates; whether Afexa will maintain its uniqueness in the marketplace; and whether or not all of the corporate initiatives will lead to value creation and strengthening of the share price. The Company believes the expectations and assumptions reflected in the forward-looking information and statements contained herein are reasonable. However, no assurance can be given that these expectations and assumptions are correct and that the results, performance or achievements expressed in, or implied by, forward-looking statements within this disclosure will occur, or if they do, whether any benefits may be derived from them. All forward-looking statements are expressly qualified in their entirety by this cautionary statement. The forward-looking information and statements contained in this presentation speak only as at the date of this presentation and the Company assumes no obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws. Investors are encouraged to consult SEDAR filings for more details on forward-looking statements and associated risks. 39

40 Corporate Head Office and Research Centre Avenue Edmonton, Alberta T6N 1G1 Investor Relations Contact: Jane Tulloch Senior Director Board Affairs and Investor Relations X724 –

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