The global market for insulin in 2003 was estimated to be US$4.3 billion and is projected to grow to US$7.1 billion by 2010. Subsequently, demand for insulin is expected to increase from 4,000 kilograms per year to 18,000 kilograms by 2010 due to growth in the incidence and diagnosis of diabetes and the commercialization of alternate delivery technologies, such as inhalation, that requires at least five times more insulin per dose. Access to a new high volume supply of insulin at a reasonable price will be a key issue to meet this expansion in demand. We believe that our safflower-produced insulin will allow us to supply this expanding market and reduce the cost of insulin production compared with current production methods. We project safflower produced insulin will reduce capital costs by 70% or more and product costs by more than 40% through a system that can be easily scaled as demand increases.

SemBioSys has achieved commercial levels of insulin production in its Arabidopsis model and demonstrated in animals that this insulin is chemically authentic and bioequivalent to human insulin. We are currently working to attain a commercial level of production in safflower. Our objective is to initiate clinical trials in late 2006 and then enter into one or more development or commercialization partnerships.