Mr. Cameron Groome reports

MICROBIX PROVIDES BUSINESS UPDATES

Microbix Biosystems Inc. has provided an update on United States and reciprocal tariff outcomes, as well as business conditions and its outlook for the balance of fiscal 2025.

As has been widely reported, on April 2, 2025, the United States government imposed tariffs on certain goods (such as steel, aluminum and automobiles) being imported into the U.S. from Canada. More happily, Microbix currently understands that no tariffs will be applicable to any products that it is selling into the U.S., as they remain exempt under the USMCA (United States–Mexico–Canada) trade agreement. Microbix believes this is a positive outcome, particularly given that other exporting economies, such as the European Union, the United Kingdom and China, will face U.S. tariffs from 10 per cent to over 50 per cent, providing Microbix a further competitive advantage with its U.S. customers. Microbix will also pursue Canadian procurement opportunities that may emerge as a result of trade tensions.

The possibility of reciprocal tariffs by Canada on life sciences equipment and consumables made in the U.S. remains a concern. Microbix purchases approximately $1.5-million of equipment and over $4-million of consumables each year, and it is working to determine what proportion of such purchases are U.S.-made and could thereby be vulnerable to any reciprocal tariffs imposed by Canada.

Regardless of tariffs, the outlook for sales of QAPs (quality assessment products) remains positive, with strong sales growth still expected for its three segments of lab proficiency testing (EQA) agencies, test-makers and clinical labs. For the QAPs business, sales growth continues to be expected over the balance of fiscal 2025 and beyond.

The outlook for sales of test ingredients (antigens), however, has become less favourable. While sales into North America, Western Europe and elsewhere remain on track, sales into China have abruptly halted. It is believed that the main reason for this change is an unusually light burden of respiratory infectious diseases over the 2025 Chinese New Year holidays having led to fewer test sales and a reduced need for ingredients replenishment by test-makers. Other factors, such as tariff geopolitics and revisions to local testing guidelines, may also be contributing. In consequence, year-over-year antigen sales growth is no longer expected over the balance of 2025, although the company believes the longer-term outlook remains positive.

Microbix continues to broaden its capabilities and capacity in order to maximize its revenue and profit-building opportunities. Its new project and collaboration announcements, such as QAPs to support groundbreaking diagnostics test programs, its entry into supporting molecular pathology, oncology and genetics tests, its adoption of synthetic biology, and its recombinant antigen program, are indicative.

Microbix also remains strongly capitalized and highly solvent. At the end of March, 2025, Microbix retained cash and equivalents of over $14-million, even after repayment of the last $1.2-million of mortgage debt on its owned production building in late March and continuing daily share repurchases under its normal course issuer bid (NCIB). Results for the second quarter of fiscal 2025 are expected to be reported in mid-May.

About Microbix Biosystems Inc.

Microbix Biosystems creates proprietary biological products for human health, with over 120 skilled employees and annualized sales targeting $2-million or more per month. It makes a wide range of critical ingredients and devices for the global diagnostics industry, notably antigens for immunoassays and its laboratory quality assessment products that support clinical lab proficiency testing, enable assay development and validation, or help ensure the quality of clinical diagnostic workflows. Its antigens drive the antibody tests of approximately 100 diagnostics makers, while QAPs are sold to clinical lab accreditation organizations, diagnostics companies and clinical labs. Microbix QAPs are now available in over 30 countries, supported by a network of international distributors. Microbix is ISO 9001 and 13485 accredited, United States Food and Drug Administration registered, Australian Therapeutic Goods Administration registered and Health Canada licensed, and provides IVDR-compliant (in vitro diagnostic regulation), CE-marked products.

Microbix also applies its biological expertise and infrastructure to develop other proprietary products and technologies, most notably Kinlytic urokinase, a biologic thrombolytic drug used to treat blood clots, and reagents or media to support molecular diagnostic testing (such as DxTM for patient-sample collection). Microbix is headquartered in Mississauga, Ont., Canada.

We seek Safe Harbor.