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» Animal Health News & Notes for February 22, 2019

February 22, 2019
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Brakke Consulting’s
Animal Health News & Notes for February 22, 2019
Copyright © Brakke Consulting

Editor: Lynn Fondon DVM MBA
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IN THE NEWS:

Brakke Consulting news
Transaction assistance

earnings news
Henry Schein
Pilgrim’s Pride
Trupanion

other news
Amazon.com
Avivagen
Boehringer Ingelheim
Ceva
Chuck & Don’s
CSA Animal Nutrition
Evonik Industries
Independent Pet Partners
innate.ly
Innovation in Motion
Kane Biotech
Mazen Animal Health
Nokia
Thermo Fisher Scientific
Vet2Pet
Vetsource
Wilbur-Ellis

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KC ANIMAL HEALTH CORRIDOR
2019 ANIMAL HEALTH INVESTMENT FORUM
NOW ACCEPTING PRESENTER APPLICATIONS

The KC Animal Health Corridor is now accepting applications to present at the 2019 KC Animal Health Investment Forum on August 27 in Kansas City, Missouri.

The 11th annual Forum is one of the only opportunities in the world for early-stage companies in the animal health and nutrition sectors to present their vision, business plan and technology to potential investors.

The selection committee will consider companies that meet the following criteria:
– Seeking $500,000 – $20 million in funding
– Revenue projections of $20 million within 5-7 years

Applications are due by April 9. To apply, go to http://kcanimalhealth.thinkkc.com/account/login.

For more information, contact Kimberly Young at young@thinkkc.com.

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COMPANY EARNINGS RELEASES

• Henry Schein, Inc. reported results for the full year 2018. Animal Health global sales for the year were $3.68 billion, an increase of 6% compared to the prior year. Animal Health North American sales for the year were $1.87 billion, an increase of 4%. (company press release)

• Trupanion, Inc. announced financial results for the full year ended December 31, 2018. Total revenue was $304 million, an increase of 25% compared to 2017. Net loss was $(0.9) million compared to a net loss of $(1.5) million in 2017. Total enrolled pets (including pets from our other business segment) was 521,326 at December 31, 2018, an increase of 23% over December 31, 2017. (company website)

• Pilgrim’s Pride Corporation reported results for the fourth quarter of 2018. Net sales during Q4 2018 were $2.66 billion, down 3% from the same period last year. Adjusted net income was $21 million. (Feedstuffs)

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BRAKKE CONSULTING
TRANSACTION ASSISTANCE

Let Brakke Consulting provide assistance for all your transactions.

Brakke Consulting has been the finder of record, agent of record or consultant for a number of successfully completed projects. We assist with valuations and provide due diligence on confidential transactions as well as offering executive counsel on a number of potential transactions.

Brakke Consulting has the experience, insight, ability and contacts to provide clients with the highest quality services in the animal health, pet, veterinary and specialty chemicals markets. Please contact any of our offices for a confidential consultation.

www.BrakkeConsulting.com

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COMPANY NEWS RELEASES

• Boehringer Ingelheim Animal Health announced the launch of Newxxitek HVT+ND Newcastle disease vaccine for poultry in Peru, Egypt, the Philippines and Thailand. Boehringer said the product ensures protection against velogenic (highly virulent) strains with no adverse reaction post-vaccination. (Animal Pharm)

• Ceva Santé Animale announced the launch of Ultifend IBD ND to the US poultry market. Ultifend is a vector vaccine against infectious bursal disease and Newcastle disease. (Animal Pharm)

• Thermo Fisher Scientific announced the launch of Applied Biosystems VetMAX PRRSV EU & NA 2.0 kit, a new porcine reproductive and respiratory syndrome (PRRS) test kit for pigs. The test kit is designed to simultaneously detect and differentiate European and North American genotypes of PRRS virus from various swine sample. (Animal Pharm)

• Vetsource announced it has made a significant investment in Vet2Pet, a leading mobile app client engagement platform for veterinary practices. The investment enables Vetsource to begin offering their customers a more robust digital solution. Financial terms were not disclosed. (PRWeb)

• Wilbur-Ellis Feed announced it has rebranded to Wilbur-Ellis Nutrition. The rebranding represents the company’s growing focus on being a market leader in the marketing and distribution of animal nutrients. (Animal Pharm)

• Evonik Industries introduced its second venture capital fund with a volume of EUR 150 million ($169 million), giving the company around EUR 250 million of venture funds under management. The goal of Evonik’s second fund is to give the firm access to digital technologies and support potential acquisition targets by making investments in the fields of healthcare, smart materials, specialty additives and animal nutrition. (Animal Pharm)

• Avivagen Inc. announced that it has signed a partnership with CSA Animal Nutrition providing for the sales and distribution of OxC-beta Livestock by CSA in the United States. Under the terms of the agreement, CSA will coordinate commercial scale validation research with potential customers and fulfill a sales and distribution role with OxC-beta for poultry, swine and dairy cattle in the US. (company press release)

• Innovation in Motion (iiM) announced it has completed funding for nine early-stage businesses, two of which are in the animal health space. Undisclosed amounts were provided to Mazen Animal Health – which is developing oral vaccines in a low-cost system for production and companion animals – and innate.ly – which offers cloud- and smart device-ready platforms designed to improve the business practices and processes in animal health and protein production. (Animal Pharm)

• Independent Pet Partners announced it has acquired the 45-store Chuck & Don’s retail chain, based in Mahtomedi, Minnesota. Financial terms were not disclosed. (Pet Business)

• Pet food sales on Amazon.com reached an estimated $1 billion in sales in 2018, up 20% compared to 2017, according to online sales measurement from Edge by Ascential. In a previous report, Edge by Ascential found that the pet food and feeding supplies category accounted for more than half of all pet sales on Amazon in the US. (Pet Product News)

• Nokia announced the launch of off-the-shelf internet of things (IoT) packages, including one involving animal health. The Livestock Management as-a-Service package includes tracking devices and biosensors that monitor animal health and welfare to provide ranchers with early alerts if abnormalities are detected. The packages are built on the Nokia Worldwide IoT Network Grid (WING) infrastructure. (Animal Pharm)

• CHINA Kane Biotech Inc. announced that it has signed a non-exclusive Distribution Agreement with an undisclosed major Chinese distributor and secured its first order. The order includes Kane’s StrixNB Water Additive for the Chinese Veterinary market as well as its bluestem Water Additive and Oral Spray for the Chinese pet specialty market. (company press release)

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ANIMAL HEALTH NEWS

• US – BRUCELLOSIS The US Centers for Disease Control and Prevention (CDC) is investigating potential exposure to an antibiotic-resistant strain of Brucella in 19 states. The incident is connected to the consumption of raw milk from Miller’s Biodiversity Farm in Pennsylvania. The CDC has already confirmed one case of brucellosis in New York, which is only the third known instance of an RB51 infection connected to raw milk in the US. Since the infection was confirmed in November 2018, the CDC and state health officials have determined people in 19 states bought or consumed raw milk from the farm and could have also been exposed to the pathogen. (Animal Pharm)

• BELGIUM – ASF Regional authorities in Belgium have again extended their protective zones after a boar infected with African swine fever (ASF) was found outside of the original buffer area. A new case of ASF was detected in a wild boar found dead in the Luxemburg province, north of the previous zones. The most recent cases were found within a few hundred meters of French territory. (Animal Pharm)

• US – DIET-BASED CARDIAC DISEASE The FDA has provided an update on its investigation into reports of dilated cardiomyopathy (DCM) in dogs eating certain pet foods. The update covers reports of DCM received by FDA through November 30, 2018; this update does not include reports received in December and January. Based on the information gathered as part of its investigation to date, the FDA’s advice to pet owners remains consistent. The agency has not identified specific recommendations about diet changes for dogs who are not displaying DCM symptoms, but encourages pet owners to consult directly with their veterinarians for their animal’s dietary advice. The FDA continues to encourage pet owners and veterinary professionals to report both symptomatic and asymptomatic cases of dogs suspected to have DCM connected to diet by using the electronic Safety Reporting Portal or calling their state’s FDA Consumer Complaint Coordinators. (FDA)

• WORLD – ANTIBIOTIC USE Efforts toward improving stewardship of antibiotics in livestock production have gained momentum worldwide. A new report from the World Organization for Animal Health (OIE) show positive global progress in two key goals: more countries reporting data and fewer participants allowing use of antibiotics for growth promotion. In 2017, the third round of data collection, 155 countries, including 153 OIE Member Countries (85% of 181 Member Countries) and two non-OIE Member Countries completed reports. Reported use of antimicrobials for growth promotion has declined from 60 to 45 countries since the last round of data collection. The full report can be viewed at http://www.oie.int/fileadmin/Home/eng/Our_scientific_expertise/docs/pdf/AMR/Annual_Report_AMR_3.pdf . (Drovers)

• US – ASF RESEARCH US researchers have found that contaminated feed may be a higher risk factor than previously thought in the transmission of African swine fever (ASF). Findings showed the level of ASF virus required to cause infection in liquid was extremely low. In addition, the research showed that although greater concentrations of virus were required to cause infection through feed, the high frequency of exposure may make contaminated feed a more significant risk factor. The research was published in the journal Emerging Infectious Diseases. (Animal Pharm)

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WESTERN VETERINARY CONFERENCE
FEBRUARY 17 – 20, 2019
LAS VEGAS

Veterinarians, technicians, students, exhibitors and others attended the Western Veterinary Conference this week in Las Vegas. The conference offered over 1,000 CE credit hours to choose from, including traditional lectures, workshops, hands-on laboratories, and more. Attendees had the opportunity to see over 500 vendors in the Exhibit Hall.

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BRAKKE CONSULTING VIEWPOINT

Thanks to bad weather and airplane mechanical issues this week, it took a lot longer than expected to arrive back in North Carolina from the Western Veterinary Conference in Las Vegas. But it gave me more time to reflect on some of the topics being discussed this past week. The one that kept rising to the top was the future role of distribution in the animal health industry. John Volk covered this topic very well in our annual Industry Overview – thank to all of you that attended, by the way – but I am still thinking about how pet owners will buy veterinary products in the future.

In today’s newsletter, we report that Amazon sold an estimated $1 billion dollars in pet food in 2018, up 20% over the prior year. The numbers of dogs and cats are not up that much, so they are taking share from somewhere else, most likely the majority is taken from retail stores. Speaking of retail stores, Petco had a large booth at the WVC offering services to veterinarians. (No mention of the Drs. Foster and Smith business just shuttered this month.) Both Petco and PetSmart are competing for services to veterinarians because they can already manage the products.

There seemed to be plenty of discussion about Covetrus, the newly listed business that is a combination of Henry Schein’s animal health distribution business and Vets First Choice. Henry Schein’s global animal health distribution business grew 6% last year and 4% in North America, bracketing our estimate of 5% industry growth in 2018, so the business was still going in the right direction as it was merged.

Can Covetrus move or improve the traditional veterinary product distribution business by offering an array of services and information to veterinarians and pet owners? What competitive responses will they see? One just happened, with Vetsource announcing an investment in Vet2Pet that strengthens their digital service offerings.

Spring is around the corner and this is the traditional start to the flea, tick and heartworm season. In a few months, we’ll get an idea how fast the changes will arrive. Can’t wait.

Thanks,

Bob Jones

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