December 11, 2009

 

Skystar acquires exclusive aquaculture vaccine technology

 

Skystar Bio-Pharmaceutical Company has purchased an exclusive aquaculture vaccine technology from and signed a collaborative research and development agreement with China's Fourth Military Medical University (FMMU).

 

The RMB8 million (US$1.17 million) agreement grants Skystar exclusivity on the patent through 2012.

 

The vaccine has been shown to be effective in treating and preventing bacterial infections in marine life without harmful side effects. The patented technology is designed to address the company-estimated US$150 million underserved aquaculture market opportunity in China.

 

Skystar will manufacture its aquaculture vaccine in its new 51,000 square foot veterinary vaccine facility along with other vaccine products presently produced by the company. To accommodate the new aquaculture vaccine line, Skystar now expects to complete the build-out of its new veterinary vaccine facility in the first quarter of 2010, rather than the fourth quarter of 2009 as previously anticipated.

 

Based on the extended timeline, management currently expects full-year 2010 organic revenue to be between US$44 to US$46 million with gross margins between 48% and 54%.

 

Lu Weibing, Skystar's Chairman and Chief Executive Officer, said, "The purchase of this patented technology and execution of the cooperative research agreement with FMMU represent a significant opportunity for Skystar toward the Chinese aquaculture industry, which we believe represents a sizeable market that has gone underserved by pharmaceutical manufacturers. Our acquisition of this patented technology represents an important and exciting revenue opportunity."

 

"We continue to see considerable organic growth among our existing product lines and are on track to complete the build-out of our micro-organism facility by the end of this year. With the addition of this facility, we expect to see improved revenue contributions from our micro-organism products. We are now targeting approximately US$11 million in revenue with gross margins of about 70% from our micro-organism product line in 2010. We believe that the bulk of our growth in 2010 will be from our veterinary medications and micro-organism product offerings. As we ramp up our veterinary vaccine facility, we believe we will see larger contributions from this facility in future periods." said Lu.

 

Based on the addition of the aquaculture vaccine line and the resulting delay to the build-out of its new vaccine facility, Skystar now believes that its 2010 total vaccine revenue will be approximately US$6 million with gross margins of approximately 60-70%. The company had previously targeted US$14 million in revenue contribution from the new vaccine facility in 2010.

 

The Fourth Military Medical University (FMMU) is a military institution of higher learning for training middle-and-high level military medical workers for the combined armed forces of China. FMMU is among the first State Council authorised organisations which confer Doctoral degrees and Masters degrees.

 

Skystar is a China-based developer and distributor of veterinary healthcare and medical care products. Skystar has four product lines - veterinary medicines, micro-organisms, vaccines and feed additives - and over 170 products, with over 40 additional products in the developmental stage. Skystar has formed strategic sales distribution networks covering 29 provinces throughout China.