Skystar Bio-Pharmaceutical Company
Skystar Bio-Pharmaceutical — RENN Investor Conference, May 14, 2010
37 slides from Skystar Bio-Pharmaceutical's conference presentation, May 17, 2010
Slide 1: Investor Presentation
DE SxustarR Bio-PuHari co.LTD. INVESTOR PRESENTATION May 2010 Scott Cramer, Director Corporate Development & US Representative RENN Investor Conference, May 14, 2010
Slide 2: Safe Harbor Statement
Dsnd Safe Harbor Statement pasa SKYSTAR Statements in this presentation may be "forward-looking statements” within the meaning of federal securities laws, The matters discussed herein that are forward-looking statements are based on current ‘management expectations that involve risks and uncertainti
Slide 3: Company Overview
Company Overview *Skystar engages in the manufacture and distribution of veterinary medicines and healthcare products in China *Headquartered in Xi’an, Shaanxi Province, Central China *Only US-listed pure play in the China animal health sector *Over 200 employees Ly Skustar _wwwskystarbio-pharmaceut
Slide 4: Company Overview
Dd Company Overview yo SKYSTAR *Comprehensive suite of products serving regional micro- farms offering: =Veterinary vaccines =Veterinary medicines =Pro-biotic microorganisms *Animal feed additives =Aquaculture (fish farming) treatments anticipated to come online second half fiscal 2010 *China GMP ce
Slide 5: Key Investment Highlights
Dd Key Investment Highlights yo *Leading provider of veterinary medicines and healthcare products in China *Strong financial position and historical performance *Proven track record for growing the Company with profitability in mind & Skustar www skystarbio-pharmaceutical.com s Wl Bo Paavmaceumca. c
Slide 6: Key Investment Highlights
Key Investment Highlights pasa *Potential industry consolidator ina fragmented market *Government is supportive of free markets *Expansive sales and distribution network across all 29 farm producing provinces in China & Skustar www skystarbio-pharmaceutical.com 6 Wl Bo Paavmaceumca. co.
Slide 7: Key Investment Highlights
Dd Key Investment Highlights yo eLatest statistics from the Food and Agriculture Organization of the United Nations notes that as of 2007, China has net meat imports of +$2.8 BN (UNFAO-STAT 2009) *This statistic highlights China’s growing and unmet demand for meat consumption and is one of the key e
Slide 8: Skystar Share Snapshot
Skystar Share Snapshot you NASDAQ SKBI Stock Price (May 10, 2010) 52 Week Range Shares Outstanding Market Cap P/E (LTM) Q4'09 / Fiscal 2009 Revenues Q4'09 EPS and Fiscal ‘09 EPS $8.63, $3.90 - $13.50 7.10M 61.2M 5.14 $10.9M (unaudited)/ $33.84 $0.37 (unaudited)/ $1.62 SisstaR _wanw shystarbio pharma
Slide 9: Fiscal 2009 Highlights
Fiscal 2009 Highlights pase Expands Micro- Launched SkySwing ‘Organism Series of Poultry Product Line ; Products With Three New Secured Two Local Products Completed build-out of Caner ‘Government Preferential Tax Imicto-organism Par bies patie sbleseet Ne, manufacturing facility June July ug. sept.
Slide 10: Trends
Trends +China is the world’s largest producer of poultry, fish and livestock (UN-FAO) -Government supports a free market with rapid development and modernization +New market opportunities include Company estimated $150 million aquaculture market (fish farming) Ly Skustar www skystarbio-pharmaceutica
Slide 11: Trends
mad Trends pasa *China GMP certification required for all veterinary pharmaceutical and vaccine manufacturers *China’s domestic protein consumption due to_ increasing ae living standards spur demand for | improved animal based protein sources & Skustar www skystarbio-pharmaceutical.com it Wl Bo Paav
Slide 12: Trends
Dd Trends bad SKYSTAR Consolidation of family owned/operated farms and improved technology are driving demand and growth in the animal farming industry & Skustar www skystarbio-pharmaceutical.com 2 BA Bo Pranmaceurcat.co.L70
Slide 13: Products
Dd Products pasa SKYSTAR ‘Skystar’s choice of product lines reflects a business model that addresses all key farming industry segment needs allowing the Company to capture more market share Veterinary vaccines (10 products) + Active and inactive vaccines to prevent, sickness and disease in poultry a
Slide 14: Revenues By Offering
Revenues By Offering Fiscal 2009 Revenues - $33.8M Veterinary Vaccines 4% Micro- Organisms 24% Feed Additives 4% 200+ products 42 new products approved in 2009 Targeting 40 product introductions in 2010 bt Skustar _wwwskystarbio-pharmaceutical.com “ Bo Pranmaceuncat.co..7
Slide 15: Veterinary Medications
| Veterinary Medications pad Fiscal 2009 Medications Revenue $23.0M 67.9% 40.3% $17.5M 68.5% 40.8% Total Revenue $33.8M. $25.6M 159 products + 26 new products introduced in 2009 + Focus on higher margin products Balseestsr _wwwskystarbio-pharmaceutical.com as Bo Pranmaceuncat.co..7
Slide 16: Micro-organism
Micro-organism pad scal 2009 Revenue $8.0M 23.7% 73.4% $5.9M 22.9% 69.6% TotalRevenue $33.8M $25.6 16 products + Completed construction of micro-organism facility in December 2009 + Projected capacity increase of 49% + 2010 micro-organism target: $11M in revenue; ~70% gross margins Balseestsr _wwwsk
Slide 17: Feed Additives
Feed Additives yoy Feed Additives Fis 2009 Fiscal 2008 Revenue $1.4M 4.2% 59.8% $1.2M 4.6% 55.8% Total Revenue $33.8M. $25.6 10 products * Increase yield and improve health of livestock Balseestsr _wwwskystarbio-pharmaceutical.com v Bo Pranmaceuncat.co..7
Slide 18: Veterinary Vaccines
Veterinary Vaccines Vet. Vaccines Revenue SL4aM 4.2% 89.4% $1,09M 3.9% 88.74% Total Revenue $33.8M $25.6 10 products + Constructing new production facility, targeting completion in 1H 2010 + Plans to introduce new aquaculture vaccine in 2010; expected to contribute $8-S15M in annual revenue within 3
Slide 19: R&D Facilities
R&D Facilities yoy Over 25 researchers responsible for developing new medicines and vaccines in response to epidemics, pandemics and diseases Veterinary Medicine and Microorganism Labs & Skustar www skystarbio-pharmaceutical.com 19 Bo Pranmaceuncat.co..7
Slide 20: R&D Facilities
R&D Facilities 5 researchers from the Chinese Academy of Agricultural Sciences Responsible for evaluating and implementing manufacturing and medical technology from around China and around the world Responsible for evaluating and implementing short-term and long-term planning for future medications
Slide 21: Research Affiliations
Research Affiliations pane University research affiliations include: ¢ Shaanxi Microbial Research Institute ¢ Jiangsu Microbial Research Institute, China Northwestern University; and ¢ China Northwest Agriculture and Forestry University & Skustar www skystarbio-pharmaceutical.com a Bo Pranmaceuncat.
Slide 22: Bringing Products to Market
Bringing Products to Market pasa *Approved by Chinese Ministry of Agriculture for the manufacture and distribution of 100 types of veterinary drugs in various formularies *Our R&D Labs uses both Traditional Chinese Medicine and Modern Western Approaches ['""" ™ (i.e. antibiotics) to develop treatmen
Slide 23: Customers and Distribution
Customers and Distribution pasa 1,465 distribution agents 518 direct customers 350+ franchised stores with exclusivity agreements Distribution to all 29 farming Provinces in China (As ote. 31,2009) & Skustar www skystarbio-pharmaceutical.com B Bo Pranmaceuncat.co..7
Slide 24: Competitive Landscape
Dad Competitive Landscape you *Largest competitors are State-owned Enterprises *Government is supportive of a free market in this niche *Majority of competitors only offer 1-2 product lines and broad “shotgun” approach to treatments *High barriers of entry for international competitors & Skustar www
Slide 25: Growth Strategy
Growth Strategy yo
Slide 26: Growth Strategy: New Products Division
px] Growth Strategy pod New Products Divisi Balseestsr _wwwskystarbio-pharmaceutical.com 6 Be Panacea.
Slide 27: Growth Strategy: Manufacturing Capacity
Growth Strategy pod Manufacturing Cap: _wanw shystarbio pharmaceutcalcom a
Slide 28: Growth Strategy: Acquisition Targets
Growth Strategy Acquisition Targets Leverage distribution network with existing product lines Non-GMP facilities with complimentary products GMP facilities Targeting highly accretive acquisitions
Slide 29: Historical Revenue
Historical Revenue pod $35.00 $30.00 $25.00 $20.00 $15.00 - $10.00 $5.00 $0.00 Revenue ($MM) & Skustar Bo Pranmaceuncat.co..7 _wanw shystarbio pharmaceutcalcom 2»
Slide 30: LTM Quarterly Revenue (Unaudited)
a LTM Quarterly Revenue (Unaudited) Yaad SKYSTAR $14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 $9.80 Qu'09 Revenue ($MM) Balseestsr _wwwskystarbio-pharmaceutical.com 30 Be Panacea.
Slide 31: Historical Gross Margins
Historical Gross Margins Revenue ($MM) 2000 si800 | $1600 $1000 51200 ‘1009 206 2007 2008 mRevenue Gross Margin —=% Gross Margin 2009 & Skustar _wwwskystarbio-pharmaceutical.com Bo Pranmaceuncat.co..7 a
Slide 32: Adjusted Net Income Growth
Adjusted Net Income Growth Reygnue ($MM) 2006 2007 2008 mRevenue —Profit Margin & Skustar _wwwskystarbio-pharmaceutical.com Bo Pranmaceuncat.co..7 2
Slide 33: Annual Adjusted Net Income (unaudited)
snd Annual Adjusted Net Income (unaudited) ppg SKYSTAR Net income (loss) Non recurring non-cash charges: Amortization of deferred financing Amortization of discount on debentures ‘Amort of deferred compensation Inducement costs for debentures converted Inducement costs for warrants exercised ‘Change
Slide 34: High Margin Products
Did High Margin Products yo SKYSTAR Veterinary Medications Micro-organism Feed Additives Vaccines Total Fiscal 200: Revenues /Gross Margin} GM % $22,920,479 $9,248,146 40% $8,021,139 $5,891,194 73% $1,411,122 $843,215 60% $1,425,465 $1,274,760 89% $33,773 $17,2: Balseestsr Bo Pranmaceunca.co..7. _wa
Slide 35: Select Balance Sheet Data
Did Select Balance Sheet Data bed za aia “er (Unaudited) Cash $11.78M $14.8M Current Assets $32.6M $36.2M Current $4.0m $3.8M Liabilities . . Balseestsr _wwwskystarbio-pharmaceutical.com 38 WBN Bo Pracmacamca. co...
Slide 36: Management
Management pane SKYSTAR Weibing Lu, Chairman and CEO Founded Xian Tianxing Bio-Pharmaceutical Co., Ltd. (our operating company in China) in 1997 BS from Wuhan University in 1985 and MBA from Xi'an Jiaotong University in 1999 ‘Awarded Outstanding Entrepreneur of Xi'an Feed Industry in 2002 Appointed
Slide 37: Thank-You
Thank-You
Skystar Bio-Pharmaceutical — RENN Investor Conference, May 14, 2010 on 6ix