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Investor Update
July 2009
2Hexima Limited ©
Forward Looking Statements
Certain statements in this presentation relate to the future, including forward looking statements and worked examples relating to Hexima’s future expectations, beliefs, goals, plans, prospects, financial position and strategy. These forward looking statements and worked examples involve known and unknown risks, uncertainties, assumptions and other important factors that could cause the actual results, performance or achievements of Hexima to be materially different from future results, performance or achievements expressed or implied by such statements or examples. Neither Hexima nor any other person gives any representation, assurance or guarantee that the occurrence expressed or implied in any forward looking statements or worked examples in this document will actually occur and you are cautioned not to rely on such forward looking statements or worked examples.
Subject to any continuing obligations under applicable law or any relevant listing rules of the Australian Securities Exchange, Hexima disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements or worked examples in this document to reflect any change in expectations in relation thereto or any change in events, conditions or circumstances on which any such statement or example is based.
This presentation is an overview of Hexima and does not purport to be all inclusive or contain all information which its recipients may require in order to make an informed assessment of Hexima’s prospects. Recipients should make their own independent assessment and investigation in respect of any investment decisions and should not rely on any statement contained in this presentation.
3Hexima Limited ©
Contents
1. Introduction
2. Market and Value Opportunity
3. Execution
4. What to Expect – Timelines
5. Conclusion
1) In
trod
uctio
n
4Hexima Limited ©
Hexima is an agricultural biotechnology company1)
Intr
oduc
tion
Biotechnology: The introduction of genetically modified seed (GM) has transformed agribusiness
5Hexima Limited ©
Hexima is building a substantial portfolio of valuable technologies
HEXIMA’S PLATFORM
Scientists, Innovation, Intellectual Property
Commercial Agreement with DuPont in corn and soy
Major GM crops: canola, sugar beet & cotton
=
Primary focus: Disease Control
Secondary focus:Leveraging disease platform
Emerging opportunities:Technology pipeline
Pest Resistance ProteinaseInhibitors (PIs)
Multi-gene Expression Vehicle (MGEV)
+
+
1) In
trod
uctio
n
Emerging GM crops: wheat, rice, others
6Hexima Limited © Source: ISAAA, *BASF
25 nations plant GM crops commercially2 major traits: Insect resistance (Bt) and herbicide tolerance (HT)5 major crops: corn, soy, cotton, canola and sugar beet125+ million GM hectares planted in 2008 (310m ac)8% of worldwide cropping area
0
1
2
3
4
5
6
7
8
9
1996 1998 2009(f)
Global Ag-Biotech Market
GM market has grown rapidly from 1996 launch
(Market launch)
US$b
2) M
arke
t &
Valu
e O
ppor
tuni
ty
$8.3b
7Hexima Limited ©
GM technology drives growth and profitability in global agribusiness
Monsanto
DuPont
Percentage of ag sales derived from seed and traits
Dow
1998 2008
21%
50%
56%
12%*
0%
0%
Ag sales of US$8.0b in FY08
Ag sales of US$11.4b in FY08Reported margins of >60% FY08
on key trait products
Ag sales of US$4.5b in FY08
*= FY07Source: Company reports
2) M
arke
t &
Valu
e O
ppor
tuni
ty
Other principle global GM agribusinesses include Bayer, Syngenta and BASF
8Hexima Limited ©
Source: Goldman Sachs, Biotech Consulting, Wilson HTM Research, see Appendix for risks and assumptions
Well established industry model has promoted rapid uptake of GM technologies
2) M
arke
t &
Valu
e O
ppor
tuni
ty
• Yield improvement• Cost savings• Chemical displacement
• Labour savings• Insurance value• Other measurable value
VALUE TO FARMER =
Farmer~60%
Tech Fees~40%
Seed Company
Technology Provider
• Drives market share• High profit margins
• Tech Provider royalty based on Tech Fees• Royalties rates vary• ≤ 7.5% early out-licence• ~25%+ co-development
9Hexima Limited ©
Model provides mutual benefits for farmers and GM technology providers
Value to farmer drives GM trait adoptionUS cotton = 90% GM (Bt + HT)Australian cotton = 90% GM (Bt + HT)US soy = >90% (HT)US sugar beet = 90% 2009(f) (launched 2007) (HT)
Bt Cotton
Technology Fee 08/09 A$315/Ha
Area (5yr ave) ~212,000 Ha
Trait penetration ~85%
Technology Fee Value* A$56.7m pa
Source: NSW DPI, ABARE, ISAAA, Bt = Insect Resistance, HT = Herbicide Tolerance*Indicative value only based on publicly available inputs, all figures based on 2008-2009 seasons
2) M
arke
t &
Valu
e O
ppor
tuni
ty
Herbicide Tolerant Cotton
Technology Fee 08/09 A$51/Ha
Area (5yr ave) ~212,000Ha
Trait penetration ~90%
Technology Fee Value* A$9.7m pa
Worked Example: Value of Australian Cotton Traits
Pesticides ↓ 85%Farmer value ↓ Management risk ↓ Inputs
10Hexima Limited © Source: ISAAA, *BASF
0
2
4
6
8
10
12
14
1996 1998 2009(f) 2025*
Global Ag-Biotech Market
New Traits
New Crops
New Countries
50
GM market growth will be driven by new crops, countries and traits
Growth Opportunities
(Market launch)
US$b
2) M
arke
t &
Valu
e O
ppor
tuni
ty
11Hexima Limited ©
Disease control traits represent a major opportunity2)
Mar
ket &
Va
lue
Opp
ortu
nity
Source: Pioneer, FAPRI, Wrather & Koenning, estimates based on 2008
figures
12Hexima Limited ©
Fungal disease causes over US$10b yield loss in cornand soy each year
Corn (US)Area 32m HaAv yield 380 bu / HaPrice US$4 / HaAv value US$48.5b paAv disease loss 10-12% paValue of loss US$5.7b pa
High disease regions 25% areaDisease loss 18-20% pa
Corn (Brazil)Area 14m HaAv yield 143 bu / HaPrice US$4 / HaAv value US$8.2b paAv disease loss 25-30% paValue of loss US$2.3b pa
Soy (US)Area 30m HaAv yield 99 bu / HaPrice US$11 / buAv value US$32.5b paAv disease loss 8-10% paValue of Loss US$2.8b pa
Source: FAPRI, Pioneer, Wrather & Koenning, estimates based on 2008 figures
2) M
arke
t &
Valu
e O
ppor
tuni
ty
13Hexima Limited ©
A successful fungal disease control trait for corn could generate substantial royalties
Sources: Biotech Consulting, Pioneer, FAPRI, Wilson HTM Research, 2008 figures, photo courtesy of Pioneer. All USD.
This worked example is not an actual Hexima trait. It applies the industry model and includes ranges for disease control and market share. See appendix for assumptions and risks.
Worked Example: Potential Disease Control Trait US CornCorn Price $4 / buAv Yield 380 bu / HaYield /Ha $1,520 / Ha********Disease Loss 10 -12%% Disease Controlled by Trait 50% - 70%Trait Yield Gain ~5% - 8%Trait Yield Gain ~21 - 29 bu / HaTrait Value ~$84 - $117 / Ha*******Tech Fee 40% $34 - $47*******Tech Provider Royalty @ 25% $8.50 - $11.75 / Ha******US Market Size 32m Ha****** Potential Peak Royalties 50%-70% disease
loss controlled30% market share ~$82m - $112m pa50% market share ~$136m - $188m pa70% market share ~$190m - $260m pa
Gibberella Ear Rot
2) M
arke
t &
Valu
e O
ppor
tuni
ty
14Hexima Limited ©
DuPont partnership creates a direct path to market for Hexima’s fungal disease control technology
Key Agreement Highlights:Exclusive partner in transgenic anti-fungal protein disease in corn/soyCo-development modelHexima’s royalty based on trait value, not price chargedDuPont sublicensing obligation encourages maximum trait penetration/market shareHexima controls commercialisation of ‘other crops’Access to enabling technology and elite corn germplasm
Partnership validates our science and expertise
US Corn Area ~32m Ha US Soy Area
~30m Ha30%
25%
Source: FAPRI, Context
DuPont
Others
3) E
xecu
tion
15Hexima Limited ©
On entering into the collaboration with Hexima in August 2008, Paul Schickler, Pioneer president and DuPont vice president and general manager said:
“This agreement with world-class experts in fungal disease resistance technology is a great example of the innovative approaches we’re using to help solve these challenges.”
Why did DuPont choose Hexima? 3)
Exe
cutio
n
INNOVATIVE TECHNOLOGY
Value creation
Value capture
Market share
16Hexima Limited ©
HXL’s fungal resistant cotton trial against Fusarium Wilt
TransgenicConventional Conventional
• 2-3 times survival rate• Up to a 4 fold increase
in lint yield• Equivalent lint quality
FUSARIUM WILT
VERTICILLIUM WILT
HXL’s fungal resistant cotton trial against Verticillium Wilt
• Up to a 2 fold increase in lint yield
• Equivalent lint quality
ConventionalTransgenic
Proof of concept in cotton was an important factor in DuPont’s decision to partner with Hexima
3) E
xecu
tion
17Hexima Limited ©
3) E
xecu
tion
The first corn plants grown from
DuPont/Pioneer seed
Corn and cotton growing in glasshouse
Corn embryos ready to harvest
Establishing a world class corn transformation facility in partnership with DuPont
18Hexima Limited ©
• Expected completion Q1 2010• World class facility• Access to elite germplasm and enabling technology• ~5x existing glasshouse capacity• ~3x existing growth room and tissue culture• Potential new alliances and partnerships
Corn transformation facility is fundamental to progress and will generate new opportunities
3) E
xecu
tion
19Hexima Limited ©
MGEV technology is critical to the success of the disease program
Single vehicle delivers multiple disease control proteins
Will provide broad spectrum disease protection
Tailored to hit multiple targets for sustainable disease protection
MGEV has applications outside disease protection
Pursuing licensing opportunities
3) E
xecu
tion
C2
EEKKNlinker
T1
T2
T3
T4
C1
T1
T2
T3T4
C2
C1
T1X
X
20Hexima Limited ©
Hexima’s Proteinase Inhibitors have the potential to protect and extend market share of current Bt traits
Transgenic cotton expressing Hexima’s PIs were protected from insect damage in the field
Sustainable insect protection requires a “stack” of insecticidal genes
Stacking of PIs with Bts will broaden the spectrum of insecticidal activity and delay emergence of resistant insects
Climate Ready Grant of $1.4m will support continued development of the PIs and stacking with Bt genes
Economic value created for farmers (2007)Bt cotton ~ US$3.3bBt corn ~ US$2b
Environmental benefits Reduced CO2 emissions by 1.1billion kg = 0.5m less carsReduced chemical insecticide use – down 82% Australian cotton
3) E
xecu
tion
Source: ISAAA, Brookes & Barfoot 2009
21Hexima Limited ©
Hexima has built a portfolio of ~100 patents and patent applications
0102030405060708090
100N
umbe
r
92-99
99/00
00/01
01/02
02/03
03/04
04/05
05/06
06/07
07/08
08/09
Year
Applications Granted Patents
Number of Patents (Cumulative)
3) E
xecu
tion
22Hexima Limited ©
Next 12 Months and beyond4)
TIm
elin
es
23Hexima Limited ©
We have the financial resources to reach key milestones
CASH BALANCE $31.8 million at 31 Mar 09
DEBT Zero
ANNUAL SPEND $7-8 million projected operating cashflow p.a.
CLIMATE READY GOV T GRANT $1.38m over three years
R&D TAX CREDITS Worth over $2m pa when implemented
EXPORT MARKET DEVELOPMENT GRANT
Up to $200k pa
Hexima’s cash will now reach further
4) T
Imel
ines
24Hexima Limited ©
Summary
In the last 10 years ag-biotechnology has transformed agriculture and created a high value multi-billion dollar business.
DuPont delivers commercial path in two largest crops corn & soy, and leverage to other crops & technologies.
Achieving objectives over next 12-18 months will further validate science, expand commercial opportunities and build assets.
Disease control traits present a valuable opportunity for Hexima.
5) C
oncl
usio
n
Hexima is an ag-biotech company delivering innovative technologies.
Future industry growth will be driven by new and innovative technologies.
25Hexima Limited ©
Appendix: Assumptions and Risks
This presentation includes “forward-looking statements” and worked examples. The Company has tried to identify such statements and examples by the use of such words as “could”, “potential”, “estimated”, “approximately”, “assumptions”, “may” and other similar expressions. Accordingly, you should not rely on these forward looking statements and worked examples as a prediction of actual future results and no assurance or guarantee can be given that the assumptions made in this presentation will actually occur.
Valuation statements
Commercial success
Future commodity prices
Future crop areas
Royalty rates
Scientific success
Future financing requirements
External competition
Anti-GM restrictions
Development delays
Launch restrictions
Patent invalidity
Value capture
Pricing pressures
Disease losses
Regulatory restrictions
Crop failures
Risks may include, but are not limited to: