VIV Avivagen Inc

Avivagen Inc. (TSXV:VIV) (“Avivagen”) is pleased to announce its 2019 letter to shareholders by Chairman and interim CEO Kym Anthony.

To our shareholders:

As the consumer, scientific and regulatory climates continue to support the opportunity for Avivagen’s unique and propriety technology, we are committed to driving adoption of our lead product, OxC-beta™, an antibiotic free alternative. Years of validated science has gone into developing this breakthrough technology and we believe that there is no other product like this.

In 2019, we will build on our 2018 successes. We are focusing on three key categories for OxC-beta™ (Livestock, Companion Animals, and Human Health). We expect to capitalize on recent sales initiatives in Livestock, work closely with regulatory organizations to support the expansion of approved markets and add distribution deals in those markets to grow sales.

Livestock

OxC-beta™ Livestock is an antibiotic-free alternative that promotes health and sustains strong animal growth, providing better yields to producers and improving quality. Its advantages are clear: demonstrated consistent efficacy, which is supported by 26+ trials; it is economically competitive; and, it does not contribute to the development of ‘Antibiotic Resistance.’

Of note, in 2018, we completed trials with COFCO Biotech of Beijing, China, and South China Agricultural University, located in Guangzhou, China. In the first trial, we tested OxC-beta™ Livestock 10% (“OxC-beta™” or the “Product”) in dairy cattle. These efforts have the potential to expand market opportunities of OxC-beta™ beyond replacement of antibiotics used as growth promoters.  Results demonstrated that supplementation with OxC-beta™ significantly increased protein content of milk by 15.8% and improved several other indicators of milk quality when compared to the control group.

The second trial, tested OxC-beta in gestating–lactating sows. Results from the independent study demonstrated that OxC-beta™ not only benefited sow health, but also led to improvements in the health of nursing piglets. Of particular note, OxC-beta™ supplemented sows showed less weight loss during lactation and had litters that were 6-7% heavier at weaning compared to sows in the non-supplemented control group.  These significant results have sparked tremendous interest in our OxC-beta™ product from numerous current and prospective customers.

The feed market presents a global opportunity, with over one billion tonnes sold per year. Asia, the Corporation’s target market for initial commercialization, is the largest single region representing some 35% of total world animal feed consumption.

Our current partner in the Philippines, UNAHCO, a large healthcare company, has expressed tremendous satisfaction with OxC-beta™ and increased its year-over-year purchases. For the fiscal year ending October 31, 2018, 5.6 metric tonnes of OxC-beta™ has been shipped to UNAHCO. Importantly, UNAHCO’s endorsement of OxC-beta™ is attracting new and growing interest in Asia. In addition to the Philippines, Taiwan and Thailand regulators have approved the use of OxC-beta™.

In 2018, partners in Thailand moved quickly following regulatory reapproval with an initial 100kg order for OxC-beta™ which represented the first time it will be used in commercial application in sow feeds. We also signed a distribution deal with FAITH (Feed and Ingredients Technology Hub), a member of the BIS Group of Companies, to expand our distribution in Thailand.

To further efforts to gain regulatory approval in Mexico, we retained Meyenberg International Group (MIG) and expect to see movement in the process over the course of 2019.

In Malaysia, which has a total annual feed production of 4.4 million metric tonnes, we are working with TLC Veterinary Services as our distribution partner, the principal supplier to farms that supply KFC, the leading fast food chain in Malaysia with over 600 restaurants.  As part of our agreement, TLC Veterinary Services has agreed to help Avivagen with the registration process in that country.

Our regulatory efforts in Asia continue to make very good progress; as does our pursuit of GRAS regulatory approval in the United States of America. In 2018, we successfully obtained similar (GRAS) approval in New Zealand.

Regulatory approval from New Zealand was a significant accomplishment in 2018 as it has a highly-regarded reputation for producing premium agricultural products and is a significant exporter of dairy and dairy products, as well as beef. 

As markets come on line via regulatory approvals, we expect to see new distribution agreements and associated sales growth, with a path to positive Cash-Flow from Operations.

Companion Animal

The second of three market categories that offers increased sales potential is companion animal health. OxC-beta™ products have demonstrated broad utility in providing health benefits, particularly to canine companion animals. Similar to our approach to the livestock market, to drive additional sales for companion animal supplements, we are working to expand the number of countries that have approved the product and drive sales through a strong partner network.

To kick-start 2018, we announced a two-year distribution deal with PACC Pets. This was followed by our first sale of Vivamune Health Chews into the Chinese market through an arrangement with Pawllion Inc. As of July 2018, the Veterinary drugs Directorate of Health Canada added fully oxidized beta-carotene to its Veterinary Health Product (VHP) list of substances and designated it for oral use in cats and dogs.

Human Health

We continue to monitor and evaluate the human health market, which we believe to be  the largest global opportunity for Avivagen.  We expect that OxC-beta™ would be presented in the natural product category, similar to Omega 3 or COLD-FX, and not as an approved drug. Rigorous science would be applied before we effectively launch to similar channels and customers.

Additional highlights of accomplishments Avivagen realised in fiscal 2018 include the appointment of Mr. Aubrey Dan, Principal of the Dancap Family Investment Office, to the Board of Directors on November 22, 2017; the closing of a $4 million Private Placement on November 30, 2017.

Our efforts in 2019 – secure additional country regulatory approvals, distribution deals and growing sales in livestock; expand approved markets for companion animal and our partner network; and watch the human health opportunity closely – will strengthen revenue and cashflow.

With a growing client base and increased revenues that we believe will not only be increasing but recurrent, Avivagen is ideally positioned to capitalize on critical mass with customers in 2019 and 2020, leading to expanding revenues and cash flow over the coming years.

Sincerely,Kym Anthony Chief Executive Officer

About AvivagenAvivagen is a life sciences corporation focused on developing and commercializing products for livestock, companion animal and human applications that, by safely supporting immune function, promote general health and performance.  It is a public corporation traded on the TSX Venture Exchange under the symbol VIV and is headquartered in Ottawa, Canada, based in partnership facilities of the National Research Council of Canada and Charlottetown, Prince Edward Island. For more information, visit www.avivagen.com. The contents of the website are expressly not incorporated by reference in this press release.

About OxC-beta™ Technology and OxC-beta™ LivestockAvivagen’s OxC-beta™ technology is derived from Avivagen discoveries about carotenoids, compounds that give certain fruits and vegetables their bright colours, and is a non-antibiotic means of maintaining optimal health and growth. OxC-beta™ Livestock is a proprietary product shown to be effective and economic in replacing the antibiotics commonly added to livestock feeds. OxC-beta™ Livestock is currently registered and available for sale in the Philippines, Taiwan, New Zealand and Thailand.

Avivagen’s OxC-beta™ Livestock product is safe, effective and could fulfill the global mandate to remove all in-feed antibiotics as growth promoters. Numerous international livestock trials with poultry and swine using OxC-beta™ Livestock have proven that the product performs as well as, and, sometimes, in some aspects, better than in-feed antibiotics.

About Vivamune™ Health Chews (Vivamune) Vivamune is an all-in-one chew that can dramatically simplify a pet’s supplement routine. Featuring a newly-discovered, novel immune-supporting active ingredient, OxC-beta™, Vivamune targets joints, skin and digestive health all in a single, tasty chew a pet will love. For more information, visit www.vivamunehealth.com.

Forward Looking StatementsThis news release includes certain forward-looking statements that are based upon the current expectations of management. Forward-looking statements involve risks and uncertainties associated with the business of Avivagen Inc. and the environment in which the business operates. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking, including those identified by the expressions “aim”, “anticipate”, “appear”, “believe”, “consider”, “could”, “estimate”, “expect”, “if”, “intend”, “goal”, “hope”, “likely”, “may”, “plan”, “possibly”, “potentially”, “pursue”, “seem”, “should”, “whether”, “will”, “would” and similar expressions. Statements about the categories Avivagen will focus on; Avivagen’s ability to capitalize on sales; the potential to expand applications, markets, geographic regions and distribution channels; potential sales growth; the potential market for Avivagen’s products; future regulatory approvals sought or anticipated;  the type or category of regulatory approval that may be granted; revenue growth and cash flow and OxC-beta’s ability to fulfill the global mandate to remove in-feed antibiotics as growth promoters are forward looking statements. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. For instance, Avivagen may not be able to capitalize on prior sales in the manner anticipated; prior sales may not lead to additional sales; Avivagen’s plans to expand into different applications, including human applications, markets, geographic regions may not be as successful as Avivagen hopes, if at all; Avivagen may not be successful in entering into new distribution agreements or distribution agreements may not result in anticipated sales; regulatory approvals may not be granted in the territories or timelines anticipated, if at all; anticipated sales, revenue and cash flow growth may not materialize within the time frames anticipated or at all and Avivagen’s products may not the gain market acceptance or regulatory approvals necessary to fulfill the global mandate to remove in-feed antibiotics as growth promoters. Except as required by law, Avivagen assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements. Please refer to the risk factors relating to Avivagen’s business as outlined in Avivagen’s latest Management’s Discussion and Analysis of Financial Condition and Results of Operations and other securities filings available at www.SEDAR.com

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

For more information:Avivagen Inc.Drew BasekDirector of Investor Relations100 Sussex Drive, Ottawa, Ontario, Canada K1A 0R6 Phone: 416-540-0733E-mail: d.basek@avivagen.com

Kym AnthonyChairman & Interim CEO100 Sussex Drive, Ottawa, Ontario, Canada K1A 0R6 Head Office Phone: 613-949-8164Website: www.avivagen.com

Copyright © 2019 Avivagen Inc. OxC-beta™ is a trademark of Avivagen Inc.