June 30th, 1999

Contact:
Dr. Mervyn Jacobson, XY Inc.
(970) 491-4764
Tim Heywood, Cogent
011 44 1244 622000

Another XY Inc. breakthrough: First births in Britain signal major transcontinental success

FORT COLLINS, COLO.-The birth of Britain's first-ever calves whose sex was determined before conception using artificial insemination is credited to the United States firm 5,000 miles away that developed the new breeding method expected to revolutionize the worldwide dairy industry.

"The birth of the three female dairy calves in Britain proves the semen-sorting technique is now sufficiently robust that it works outside the research lab," said Mervyn Jacobson, chief executive officer and president of XY Inc., the biotechnology firm headquartered in Fort Collins, Colo., that developed the technique. "Our success in Britain proves cattle breeders thousands of miles away from XY Inc. can implement the technique using artificial insemination."
      The method, which combines sorted semen with artificial insemination, has tremendous benefits to dairy farmers. Because the sex of the animal can be determined prior to conception, dairy farmers can select more female calves.
      Sorted semen is semen that has been sorted to carry female-producing X chromosomes or male-producing Y chromosomes.
      The method will help reduce the annual slaughter of more than 10 million unwanted male dairy calves in the U.S. and 600,000 male dairy calves in Britain.
      A 1997 study titled, "Report on the Welfare of Dairy Cattle" by Britain's Farm Animal Welfare Council recommended "Éthe sexing of semen should be used to reduce the number of unwanted male dairy calvesÉ"
      The historic late-May births, announced by XY Inc. and the British breeding company Cogent, are the first in the world, outside the United States, to be born using sorted semen in conjunction with the cost-effective artificial insemination technique.
      British dairy farmer Paul Moore commented, "Sorted semen available through artificial insemination is something farmers have wanted for many years. It will reduce the number of unwanted bull calves and difficult calvings."

The breakthrough births of Charity, Clover and Cloe is timely. In Britain, newly born male dairy calves are routinely slaughtered and incinerated. On July 31, British government subsidies of more than £28 million ($42 million-U.S.) that compensate dairy farmers for unwanted male calves each year are scheduled to permanently end.
     " The loss of these significant subsidies will be difficult for dairy farmers," said Tim Heywood, managing director of Cogent, a British membership-based breeding program launched in 1995 by the Duke of Westminster in Chester to improve the quality of the United Kingdom's dairy herds.

XY Inc. and Cogent expect to commercialize sex-selection combined with artificial insemination within the next three years. "It's much closer than farmers think," Heywood added. "When this happens, it will significantly reduce the number of unwanted calves."
      Heywood also noted, "Using this method to select for female calves makes the calving process much easier for cows, especially those calving for the first time as female calves are usually smaller and easier to deliver.
     " The success of Cogent's field trials certainly is a first for the UK, and we fully expect commercialization of XY Inc.'s procedure will revolutionize herd management by improving breeding efficiency and herd quality in addition to animal-welfare benefits," added XY Inc.'s Jacobson.
      XY Inc., is the only company in the world licensed to pursue sperm sorting in non-human mammals using U.S. Department of Agriculture methods.
      Using a high-speed cell-sorting machine called a MoFlo, XY Inc. and Cogent researchers separate sperm that carry the X chromosome and produce females from sperm that carry the Y chromosome and produce males. High concentrations of sperm with the selected chromosome are then used to fertilize female animals. The sorting technique has a 90 percent accuracy rate.
     " Breeders in the dairy industry want three outcomes: females calves for herd replacements, female calves for milk production, and trouble-free heifer calvings," Jacobson said. "Today, if farmers need to replace 30 percent of the herd each year, then
      60 percent of the cows must be pregnant for the sole purpose of replacing and updating the herd quality. It's a very inefficient system.
     " Using artificial insemination and sorted semen together, every pregnancy can be a valuable pregnancy," Jacobson added.
      XY Inc. has had great success combining artificial insemination and sorted semen in the United States, where the company already has produced hundreds of pregnancies and healthy calves.
     " Because of our strong track record in this field, XY Inc. and Cogent will be able to bring the artificial-insemination technique using sorted semen to market much sooner than originally projected by industry experts," Jacobson said.
     " Artificial insemination with sorted semen is what farmers want. In addition, our success in freezing sorted semen will make it as versatile as the semen presently used with artificial insemination," he added.
      XY Inc. now is planning large field trials involving some 5,000 cattle in the U.S., 10,000 cattle in Britain and 10,000 cattle in Switzerland.
     " Once we collect data from these extensive field trials, we will be in a better position to set a date for declaring this product commercial," Jacobson concluded.