intercept^CS™ Market Opportunity

Worldwide, the cold sore treatment category represents a multi-billion dollar industry.  With appropriate marketing strategies, advertising support and retail distribution, Jenex’s intercept^CS Cold Sore Prevention System has the potential to dominate this large and as yet underdeveloped market.

Unparalleled Technology

Jenex’s intercept^CS is the only approved product for the prevention for cold sores. The intercept^CS delivers the precise amount of localized heat required to inactivate the cold sore virus and prevent an outbreak, without risk of burning the skin.  Patents in Europe, the United States, Canada and Australia protect the technology, and currently there are no similar products available on the market.

First to Market

The intercept^CS system will gain first-to-market advantage with a clinically proven and approved product, in an underdeveloped market.  The exclusive technology and strong market potential provide an opportunity for significant sales and revenue.  The OTC products currently marketed for the treatment of cold sores have no preventative value, yet they generate substantial sales.  Consumer demand for a more effective cold sore remedy is strong.  Having been clinically proven to prevent cold sores, with no adverse effects, Jenex's intercept^CS Cold Sore Prevention System is certain to capture a significant share of the cold sore treatment market.

Current medical research indicates that 20 to 40% of the population experience recurrent cold sore outbreaks.  In the Canadian market alone, that figure translates from 5 million to as many as 10 million people who suffer recurrent bouts of cold sores.  In the United States these estimates translate to between 40 million and 80 million recurrent cold sore sufferers.  In North America, OTC remedies are the mainstay treatment for cold sores, although such products generally provide only partial symptomatic relief and do not speed the healing of the lesion or prevent the outbreak in the first place.  Currently 50% of these sufferers will use an OTC preparation to treat the lesions, while only 1 to 3% will seek doctor-prescribed agents.  The remaining 47% of recurrent sufferers do not seek a doctor prescribed product or purchase current OTC products due to their dissatisfaction with the available products.  Jenex expects to capture a significant share of the current category users, as well as those cold sore sufferers who are not currently active in the category, due to the first ever claim to prevent the outbreak of cold sores.

Marketing and Distribution

Jenex has launched intercept^CS exclusively with Shoppers Drug Mart/Pharmaprix, Canada’s largest retail drugstore chain. Shoppers Drug Mart is one of the most recognized and trusted names in Canadian retailing. The Company is the licensor of full-service retail drug stores operating under the name Shoppers Drug Mart (Pharmaprix in Quebec). With over 950 Shoppers Drug Mart and Pharmaprix stores operating in prime locations in every province and two territories, the Company is one of the most convenient retailers in Canada. The Company also owns and operates 51 Shoppers Home Health Care stores, making it the largest Canadian retailer of home health care products and services.

Product will be available in Shoppers Drug Mart/Pharmaprix stores by April 1^st, 2006. An extensive advertising campaign to create product awareness will commence in the middle of April. In addition a campaign to inform and educate the pharmacist (the key recommender in this category) is under way.

Competition

Due to the size of the market opportunity and the consumer’s general dissatisfaction with current product benefits, pharmaceutical companies are continually searching for products that offer improved clinical and/or marketing benefits.  There have been a number of recent new product announcements by large pharmaceutical companies for new cold sore creams, however, none of the products available on the market are preventative in nature.

Currently there is no direct competition in the market place.  Jenex will be the first to market with a product clinically proven and approved to prevent cold sore lesions.  In Canada, currently available treatments consist of products that provide some symptomatic relief and anti-viral agents that shorten the duration of cold sores.  The medical literature indicates that the suppressive effects of anti-virals in the treatment of cold sores are not strong.  Moreover, these prescription drugs are quite expensive and seem most effective when used in a systemic, long-term course of treatment.  Anti-viral drugs may produce side effects such as headache, nausea, vomiting, diarrhea and fatigue and more rarely, they may also cause renal damage or hallucinations.  In addition, their use in pregnancy and in young children has not been adequately studied to ensure safety and efficacy and is thus not recommended.

Due to the size of this market opportunity and the consumer’s general dissatisfaction with current product benefits, pharmaceutical companies are continually searching for products that offer clinical and/or marketing benefits.  Listed below are some significant announcements and investments made by marketers in the recent past.

Sept 24, 1996 – Denavir® becomes the 1^st drug indicated for the treatment of herpes labialis in Adults. Clinicals support shortened duration of approx. one half a day. Up and to this time anti-virals were prescribed for “off label” use only.

March 31, 2000 – GlaxoSmithKline signs license agreement with  a non-refundable $500,000 deposit and up to an additional $25 million for milestones, plus royalties for the North American rights to Abreva® with Avanir Pharmaceuticals.

July 26, 2000 – Abreva® becomes the 1^st OTC product approved by FDA with a cold sore claim. Clinicals again support a shortened duration of the episode of approx. one half a day.

October 15, 2000 – GlaxoSmithKline launches Abreva® in the United States.

December 21, 2000 – Novartis acquired two antiviral products, Famvir® (famciclovir) and Denavir®/Vectavir® (penciclovir) from GSK for 1.6 billion USD. Famvir®, had its 1999 sales reach 214 million USD, while sales of Denavir/Vectavir®,  reached 20 million USD.

(Purchase price equals 7 times sales).

October 29, 2001 – Biovail acquires exclusive promotion and distribution rights for Zovirax® Ointment and Cream for the United States. GSK will manufacture and supply Zovirax® Ointment and Cream to Biovail and, in return, Biovail will pay GSK $133 million for certain rights, subject to certain conditions.

December 10, 2001 – Avanir announces receipt of the final $5 million of the $25 million in milestone payments from GSK for Abreva®. Abreva® US sales top 2,500,000 units in the first 10 months following launch.

September 10, 2002 – GlaxoSmithKline announces that FDA has approved Valtrex® (valacyclovir) caplets for the treatment of cold sores, making Valtrex® the first one-day, oral antiviral medication proven to shorten the duration of a cold sore outbreak. The mean duration of the cold sore was about one day shorter.

December 26, 2002 – Avanir announces that it has sold a portion of its future royalty stream on North American sales of Abreva® to Drug Royalty USA for $24.1 million USD.

Abreva® continues to be the  #1 recommended and selling cold sore treatment with sales continuing to grow, selling over 4.2 million units in the year ending Sept 30, 2002.

December 27, 2002 – Biovail pays $40 million to extend its marketing rights to GlaxoSmithKlines Zovirax® Ointment and Cream from 10 years to 20 years.

January 3, 2003 – Biovail announces that it has received approval from FDA for Zovirax® Cream (acyclovir) to be sold Rx, for the shorten duration of  recurrent herpes labialis (cold sores). David Ng, an analyst at Paradigm Capital, forecast Zovirax® sales at $75 million in 2003 and $100 million in 2004. Biovail shares closed up $1.60 yesterday, adding $250 million to the company’s market cap.

This category has received significant attention by multi-national companies due to the size of the opportunity. The consumer need and demand is evident by the number of sufferers who continue to search for a solution for their problem.  

Hundreds of millions of dollars have been invested in research, licensing, royalties, and marketing of products that shorten the duration of cold sores. What is "prevention" worth?

PRODUCTS WITH APPROVED COLD SORE CLAIMS

(North America)

Prevention is the Solution