Editor’s note: BioResource International is one of three emerging companies that will present at the Capital Market Exchange on Feb. 22 at the Crabtree Marriott. Each company will be featured in LTW in the form of a Q&A with executive management about history, products and why investors should be interested. Legacy 2 Future Consulting Group and VetInSite will be featured in LTW on Monday and Tuesday.

Giles Shih, co-founder and president of the firm, provided the answers to LTW.

For details about the forum which is sponsored in part by Local Tech Wire, Corporate Investment Center, 919 Marketing, FOCUS Resources and Ascot Technologies, see: www.capitalmarketexchange.com
______________________________________________________________________________________

Why should an investor choose BioResource International as an investment opportunity?

We are applying biotechnology in ways that directly benefit the bottom line for the agriculture business worldwide. We have a three letter acronym to describe this–B-R-I:

B-Big markets: A major US poultry company has tested our product in commercial trials and has written a purchase order for 2 tons of our Versazyme product, with the potential to use 4,000 tons of product each year. Assuming that this one poultry company has about 10% market share, that’s 40,000 tons of product just for the US. At $3,000 per ton, we’re talking a potential of $120 million in revenues. The U.S. is one quarter of the world poultry market, so we have an addressable worldwide market of $480 million. This is just poultry–the swine market could potentially double the market (we have some preliminary evidence that supports the use of Versazyme in pig diets too).

R-Resourceful management: We are an innovative emerging biotechnology company with a strong technical team with the ability to bring technology to the marketplace. Dr. Jason Shih, co-founder of BRI, was the first to develop an enzymatic process for digesting poultry feathers (US Patents Nos. 4,908,220, 4,959,311, 5,063,161, 5,171,682, 5,186,961, 5,712,147). BRI was the first company to demonstrate that enzymatic decontamination of prions associated with Mad Cow Disease (BSE) was possible (US Patent No. 6,613,505). The US Department of Agriculture, FDA and National Cattlemen’s Beef Association has funded our breakthrough research in this field from the beginning.

I-International opportunities: We have strong ties with the rapidly growing agricultural markets in Asia, especially China. We are working on a deal that will allow feather meal to be economically processed in the US and shipped to end-users overseas. Feathers are a significant waste product of poultry processing and enzymatic treatment is an efficient way to degrade feather proteins into digestible protein sources for feed use. Dr. Shih and BRI’s expertise in this area is unmatched.

What is the “pain point” (or points) you address for your customers?

For the animal feed additive application, the poultry and swine industries are seeking natural products to replace the use of antibiotics as growth promoters in growing livestock (antibiotics are already banned in the European feed industry and are being phased out in the US feed industry).

For the BSE prion decontamination application, there needs to be practical and safe ways to ensure the food we eat is free of prions, the infectious agent responsible for Mad Cow Disease in cattle and Creutzfeldt-Jakob Disease in humans;

For the feather meal application, it is to create value from a by-product of poultry processing (the US poultry industry generates over 1 million tons of feathers each year). Enzyme-treated feather meal offers a more digestible and economical protein supplement that is of great value for overseas feed markets.

What makes your company unique? Do you have a proprietary and/or a patented technology? Please explain why it is unique and what the status is of any patent filings.

BRI owns the exclusive license rights to the seven patents that form the basis of the Versazyme• technology platform, including the enzyme, the gene encoding the enzyme and its applications in promoting animal health and inactivating infectious prions. In addition, two related patent applications have been submitted and are pending (see table below).

What makes your product(s) and/or services unique vs. your competition? (Who is your competition, and what do they offer?) If you have no competition, why not?

In the last few years, the use of phytase as a feed enzyme to replace dietary phosphorus has been well-received by the industry because of its environmental, nutritional and cost benefits. Other feed enzymes besides phytase are increasingly used in countries that use poorly digestible grain feedstuffs such as wheat, barley and rye. Although corn-soybean diets are widely used in North and South America and Asia, efforts to develop feed enzymes that are effective in these types of diets have not been successful. Versazyme•, because of its strong performance in corn-soy diets, fills an important need in the global feed enzyme market. According to the Vice President for Research at a major US poultry company who has tested Versazyme•, our product’s performance is “in the top 25th percentile of all the products he has tested.” The major players in the global feed enzyme market include BASF, Danisco, DSM/Roche, Alltech and Addisseo. Many of these companies obtain their enzymes from European-based manufacturers. Because they are subsidiaries of large multi-national companies or have established business partnerships, these companies tend to be risk-averse, preferring to compete in established markets with lower margins.

Does your company already generate revenue? If so, how much? Are you cash flow positive?

We have received $750,000 in grant revenues from the USDA (SBIR Phase I and Phase II, IFAFS grants) FDA and National Cattlemen’s Beef Association. We have a purchase order from a major US poultry company and have sold a purified enzyme product (Versazyme-SP) to some biotechnology companies for specialized applications (tissue culture, forensics).

What is your target market? What is the size of that market in terms of dollars? What share of that market do you believe you can win?

As mentioned above, the feed additive target market is $120 million in the US. Considering that poultry industry is global, the addressable worldwide market is $480 million. We believe 10% market penetration in the US in 3 years is reasonable (our current poultry customer alone constitutes 10% market share).

What will you do with the invested funds? What is the timeline for product delivery? If you have existing products and services, how will additional funding help you expand your company, if that is the intention, or will you develop new products?

BRI is seeking working capital to secure scale up production of Versazyme• at the industrial level. The product is derived from standard microbial fermentation processes and BRI has identified manufacturing partners in the US and in Asia with existing fermentation capacity sufficient to meet the future global needs for Versazyme•. The first product delivery is scheduled for June of this year. The enzyme product can also be used for treating feather meal.

What do you want from an investor other than money?

Connections to or experience in the feed and/or food industry.

Why will investors be impressed with your management team?

Dr. Jason Shih, Chairman and Co-founder of BRI, has been a researcher at NCSU for 28 years and has studied the industrial applications of enzyme technology for over 15 years. BRI is managed by Co-founder and President Giles C. Shih, Ph.D., son of Professor Shih. Dr. Shih holds undergraduate and graduate degrees in Microbiology from Cornell University and Emory University, respectively, and is currently enrolled in the Executive MBA program at the Fuqua School of Business (Duke University). The company employs two full-time Ph.D.-level Principal Scientists and two M.S.-level Research Assistants.

What is the exit strategy for the investor from your company? Are there potential strategic alliances with larger companies? Do you wish to take the company public? Or do you wish to grow the company and either sell it or acquire other companies?

Because Versazyme• is a new product with superior performance and proprietary technology, higher margins can support the development of sales and marketing channels for the near term (approximately 3-5 years). BRI will also seek marketing and distribution partnerships for its products in the rapidly growing poultry and swine industries in South American and Asia. In the long term (>5 years) is likely that BRI would be acquired by one of the large multinational firms mentioned earlier or the technology could be licensed out to another company, as BRI seeks new market opportunities.
________________________________________________________________________________________

FACT BOX: BioResource International, Inc.

MISSION STATEMENT: Harnessing the natural power of enzymes to enhance and protect animal and human health

TYPE OF COMPANY: Biotechnology

ADDRESS: 840 Main Campus Drive, Suite 3510, Raleigh, NC 27606

PHONE NUMBER: (919) 424-4467

WEB SITE: wwww.briworldwide.com

MANAGEMENT TEAM MEMBERS: Giles C. Shih, Ph.D.
Co-founder and President; Jason C.H. Shih, Ph.D., Co-founder and Chairman; Dr. Jeng-Jie Wang, VP for Research & Development, Dr. Nasser Odetallah, Director of Nutrition

BOARD MEMBERS: Dr. Jason Shih, Chairman, Dr. Jerome Shen, Dr. Giles Shih

INVESTORS (and amounts raised, if possible): $2,200,000 in private equity raised through Series A and B round financing.

REVENUES: $750,000 in grant revenues

YEAR ESTABLISHED: 2000

NUMBER OF EMPLOYEES: 5