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8 .� Manufacturing Raw Material Procurement and Processing GalaGen produces its antibodies through a highly efficient system that links local veterinarians, dairy farmers and Land O'Lakes transportation systems with the GalaGen technical operations center. All such dairy farmers are members of the Land O'Lakes cooperative system and their farms are certified Grade A dairy producers and meet a set of rigorous standards defined by the FDA. Local veterinarians are trained to immunize dairy cows at regular intervals during their"dry period"—the end of their pregnancy when they are no longer producing milk. Colostrum is collected under special conditions from the first six milkings after the calf is born. After giving the calf all it can consume, the dairy farmer delivers the remainder to GalaGen, where it is screened for quality and processed. The end product is a spray dried powder that is stable for several years at room temperature and that can be formulated into final medication, e.g. capsules, tablets or powders. Quality Control Systems GalaGen's procurement system is a critical element in the regulatory approval process for pharmaceutical uses of colostrum. Because this procurement system is rigorously controlled and documented, and each participant in the process is highly trained, every batch of GalaGen antibody products can be traced back to the individual cows that provided the starting materials. i Source of Raw Material Supply The Land O'Lakes system provides a tremendous reservoir of raw materials. A cow calves yearly and produces over a pound of antibody in the first several milkings after the calf is born. Cooperative member farms comprise over 250,000 cows and provide the potential for producing more than 150 tons of GalaGen's finished product per year. GalaGen's long-term supply contract with Land O'Lakes will ensure raw material supply well into the next century. Immunization Technology for Optimal Specific Antibody Yield Modern dairy cows, which have been bred for high milk production, also produce large quantities of colostrum, and, therefore, antibodies. These same attributes result in highly efficient production of antibodies in colostrum and milk, compared with far more costly systems developed for producing therapeutic antibodies, such as monoclonal antibodies. GalaGen's immunization technology maximizes the antibody yield from each cow. Colostrum naturally contains antibodies active against a broad spectrum of pathogens, including the human pathogens that GalaGen is interested in treating. Antibody levels for specific pathogens can be increased through the use of booster immunizations,just as tetanus booster shots remind our immune systems to be vigilant against tetanus. GalaGen's proprietary technology includes immunization regimens which provide economically important increases in specific antibody levels. For example, a single dose of one of GalaGen's products provides about a thousand times more antibodies for the targeted disease than a glass of milk purchased from the dairy case at the supermarket. Using new technology introduced over the past three years, GalaGen has been able to increase antibody levels in colostrum against the parasite Cryptosporidium parvum more than thirty times . higher than the level typically seen in dairy cows as a result of their natural exposure.