January 12, 2001

Contact:
Dr. Mervyn Jacobson
CEO/President, XY Inc.
970-491-4764

XY Inc. SUCCESS CONTINUES: FIRST-EVER DAIRY-CATTLE BIRTHS IN SWITZERLAND WITH SEXED SPERM

     FORT COLLINS, COLO.--Switzerland's first-ever birth of female calves whose sex was determined before conception signals the continued success of a breeding method developed by XY Inc.
      The technique, which uses sexed sperm and artificial insemination, is expected to transform the dairy industry worldwide. It could have an enormous impact on Switzerland's 50 million to 60 million Swiss Franc ($31.2 million to $37.5 million U.S.) dairy industry.
      The historic 11 female calves, born in October at several dairy farms in central Switzerland, are the first outside of the United States and Britain to be born using sexed sperm in conjunction with artificial-insemination techniques.
      Sexed sperm is derived from semen that has been separated sperm that carries either female-producing X chromosomes or male-producing Y chromosomes. The sorting procedure does not involve genetic modification in any way - it merely sorts the male- and female-producing sperm to produce a calf of the desired sex.
      The use of sexed sperm in the dairy industry is positive for several reasons: Female calves are smaller than male calves at birth, which makes first-time calving easier for a two-year-old heifer approaching delivery of her first calf; and the technology facilitates herd replacement and genetic improvement.
      BIG X AG, a Swiss biotech and genetic company headquartered in Bern, used sperm-sexing techniques developed by the U.S. firm XY Inc., to produce the 11 female calves. XY Inc. made the technology available to BIG X under a research agreement.
      XY Inc. expects to grant a license to commercialize sex-selection combined with artificial insemination in the next 12 months in Switzerland. The technique already is commercialized in Britain and regularly used by hundreds of British farmers.
     " Using this method to select for female calves has some very strong benefits," said Mervyn Jacobson, XY Inc.'s president and chief executive officer. "Breeders in the dairy industry can achieve three important outcomes: female calves for herd replacements, female calves for milk production and female calves for trouble-free heifer calvings."
      A total of 12 calves were born in the Swiss field trial, 11 females and one male -- a 90+-percent success rate that mirrors earlier successes of XY Inc. scientists and research partners in the United States, Britain, Japan, Argentina, Australia and other countries. During field trials involving thousands of pregnancies that have resulted in healthy calves, XY Inc. and its research partners routinely achieve better than 90 percent of the desired sex.
      XY Inc., is the only company in the world licensed to pursue sperm sorting in non-human mammals - such as cattle, horses, pigs and exotic species -- using U.S. Department of Agriculture methods. In the coming months, XY Inc. expects more than 25,000 dairy cattle will be born worldwide used sexed-sperm and artificial-insemination techniques.
      Using a high-speed cell-sorting machine called a MoFlo, XY Inc. and BIG X researchers can separate sperm to select for the X- or Y-bearing chromosome or both. High concentrations of the selected sperm then are used to fertilize female animals.
     " Until now, if farmers wanted to replace 30 percent of their herd each year, then 60 percent of the cows had to be pregnant for the sole purpose of replacing and updating the herd quality. It's a very inefficient system," said Dr. Peter Reichert, president of BIG X AG.
      XY Inc.'s Jacobson added, "This all will change. Breeders will be able to decide which cows will provide the replacement female calves and which will provide the male beef crosses. Using artificial insemination and sorted sperm together, every pregnancy can be a valued pregnancy."
      For more information on XY Inc., call 970-491-4764.