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Rapid Testing Solutions for Animal Health and Agriculture

Safeguard Biosystems offers Decision Point Diagnostics™ for quick detection of pathogens in animals, food, and the environment. Our advanced technologies enable molecular-level analysis with minimal equipment, providing results in minutes.

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Rapid Testing Solutions for Animal Health and Agriculture

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  1. Rapid Testing for Animal Health and Agriculture, Food Safety and Public Health • From Research To Revenue

  2. Executive Summary • Safeguard Biosystems (SGBio) is commercializing platform technologies for rapidly detecting the presence or absence of illness and disease causing agents. • Platforms being commercialized include: • 3-D Gel Biochips and Sensor Arrays • Lateral Flow devices • Optical, Silicon based Biosensors • Applications of our products are in animal health, agriculture, food safety, environment and public health. • SGBio is focused on systems that detect DNA, RNA and proteins at a molecular level with minimal laboratory equipment and handling. • Tests can now be done in minutes or hours rather than days or weeks. We refer to our solutions as Decision Point Diagnostics™. • The company produces portable Syndrome Biochips, “Pocket Diagnostics™”, and High Throughput Systems.

  3. The Issues • Global trade has opened new ways for pathogens to enter countries. • Global warming is causing tropical diseases to move northward • Industrialization intensification of agriculture causes disease intensification. • Recent food stuffs and products contamination have led to international trade concerns. • Agricultural market entry strategy allows for technology development with income prior to move into human diagnostics. • There are massive, unexploited niches we have discovered in agriculture and food. • Changes in consumer habits will require a dramatic increase in testing.

  4. The Company • Developed business concept, plan in 2004 with U. of Texas. • Incorporated in 2005 • Signed small license agreement with Argonne National Laboratories, U. of Toronto. • Signed license agreement with U. of Toronto. • Raised $750K financing. • Finance in 2006 • Signed Development & License Agreement with Veterinary Laboratories in UK. • Secured lead investor in UK. • Registered Safeguard Holdings in the UK. • Bid successfully for purchase of UK Government spinout, Forsite Diagnostics (cash + shares). UK Government took a 2% equity position. • Raised $10.0M Series ‘A’ Preferred financing, 50% from UK, 50% from Canada. $30M post-money valuation. • Expanded Argonne License Agreement, they took a 3% equity position. • Becoming a real business in 2007 • Extended IP with Freiburg technology. Established small manufacturing centre. • Began marketing plant test kits (30 in total). • Developing first livestock test kits (AvianGuard™, CattleGuard™, PorcineGuard™, FIT™ • Developed first Human Test. HPV Screen. • Revenue beginning, will do $1-2M for fiscal 2007

  5. Partners & Relationships • Licensors of Technology, R & D Partnerships: • Argonne National Laboratory, USA. • Institute of Microsystem Technology (IMTEK), University of Freiburg, Germany. • Central Sciences Laboratory, UK. • University of Toronto, Mississauga. • Veterinary Laboratories Agency, UK. • Aurora Photonics, USA. • Canadian Centre for DNA Barcoding. • US Department of Agriculture, Berkeley. • Safeguard Offices: • London, UK. (3) • York, UK. (15) • Toronto, Canada (5) • Freiburg, Germany (2) • Calgary, Canada (1) • Palo Alto, USA (1)

  6. Research To Revenue Success Factors • Quit your day job. • Be fanatical about conserving resources. • Think globally, act globally. Practice good corporate citizenship in your target markets. • Have a Backup Plan for everything. • No one knows a thing about valuation. You have to make your own valuation.

  7. Think globally, act globally Practice good corporate citizenship • Deciding not to be a Canadian Company: • Companies are valued higher outside of Canada. • There is more investment capital outside of Canada. • You will be more “loved” outside of Canada. • The experience will make you a much better company. • Decide to invest something in every foreign major market: • Look for partnerships, licenses, R&D with leading institutions. • Personally commit the company to contribute something back to those markets. • Motivate your partnership to make introductions to revenue opportunities. • Learn the local financial community: • Lawyers, accountants, government “entrepreneurial” agencies, brokerages • Provide “success fees” for contacts. Legal work, etc. • “Work it”. Plan on spending 1 year. Having a local business partner helps.

  8. Why getting investment is tough • Investment Competition • Energy, Mining, everything else Harvard Business Review

  9. No one knows a thing about valuation You have to make your own valuation • There are three classes of “investors”: • Carnivores. These are typically resellers. Early public market plays. They buy at wholesale, sell at retail. They are very fleet of foot, but can be deadly. • Herbivores. These are Venture Capital, labour - sponsored funds, etc. They graze for investments. Incredibly big and slow moving. • Omnivores. Rare in Canada. Private equity, diversified or special situation funds. Flexible, smart, invest their own capital along with other investors. Tough to find the right one. Can often become a Carnivore or Herbivore. • Find believers in you and your business. They will be your investors. • People invest based on their past personal experiences, good and bad. Find out what these are. • Rule of “10” applies to valuations: • To sell a 10¢ share, YOU need to sell $1.00 of value visibility. • To sell a $1.00 share, YOU need to sell $10.00 of value visibility. • To sell a $10.00 share, YOU need to sell $100.00 of value visibility. • Establish a valuation base in the Angel Round - “Tied Investment” • Commit early investors to two rounds of financing tied together. • Define appropriate expectations and milestones along the way.

  10. Safeguard’s Share Structure Today • Board Makeup - 4 management, 1 investor nominee • Future Financing • Interim (pre-IPO) round late ‘07, early ‘08 ~ $2.50 - $4.00 • IPO late ‘08

  11. Other Financing Factors • The “Indiana Jones” warehouse of IP. Do the diligence and buy with a little cash and a lot of stock. • Make it “strategic”, connect the IP to the important issues in the country. • UK, Canada, cattle • Germany, cancer • USA, everything • Foreign currency competitiveness in R&D. • You would be surprised by some places in Europe and the USA. • EG. European Universities R & D is subsidized and low overhead (cost + 5%) • US Government R & D (cost + 5-15%). • Always, always, tie a portion of the acquisition price of a company to some level of performance. It will cost you less.

  12. Richard Strafehl • rstrafehl@sgbio.com • North America (647) 200 6944 Registered number: 5813853 Registered address: St Alphage house, 2 Fore St, London EC2Y 5DH

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