Animal Health News & Notes for February 8, 2019

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Brakke Consulting’s
Animal Health News & Notes for February 8, 2019
Copyright © Brakke Consulting

Editor: Lynn Fondon DVM MBA
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IN THE NEWS:

Brakke Consulting news
Field Sales Force Census Report
Industry Overview at WVC Pre-registration discount ends next Friday!
Market research services

earnings news
Alivira Animal Health
Central Garden & Pet
Elanco
Orion Animal Health
PetMed Express
Phibro

other news
Ashish Life Science
BabelBark
Covetrus
CVS Group
ECO Animal Health
Elanco
Henry Schein
Immunomic Therapeutics
Linnaeus
Mars Petcare
Pet Cause Media
Virbac
ZENOAQ

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BRAKKE CONSULTING
INDUSTRY OVERVIEW AT WVC
PRE-REGISTRATION DISCOUNT ENDS FRIDAY, FEBRUARY 15!

“Growth, Disruption and Innovation”:
Brakke Consulting Industry Overview 2019

Industry executives will have an opportunity to gain new insights into the events and trends that are most shaping the animal health industry by attending Brakke Consulting’s annual Industry Overview at the WVC veterinary conference in early 2019. “Growth, Disruption and Innovation” is the theme of this year’s presentation.

This year’s overview is our most data-packed ever. Topics include key drivers of change in the animal health market, 2018 industry and leading company performance, impact of factors disrupting the distribution industry, new technologies in protein development and food animal care, new data on the future of telemedicine, fresh perspectives on the veterinarian shortage, and many more.

The date for the WVC Overview is Tuesday, February 19, 2019, 2:00 – 4:00 pm, Four Seasons, followed by a cocktail reception for attendees.

Registration for the WVC Industry Overviews is now open. Seating is limited this year, so register early! This is one you won’t want to miss.

To register, go to www.brakkeconsulting.com and scroll down to the “What’s New” box. The price is $400 per person for online registration through Friday, February 15; late registration is $450. Discounts are available for multiple attendees from the same company; call 972-243-4033 for more information.

www.BrakkeConsulting.com

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COMPANY EARNINGS RELEASES

• Elanco Animal Health reported results for the full year 2018. Global revenue was $3.067 billion, an increase of 6% compared to the prior year. Reported net income was $86.5 million. (company website)

• Phibro Animal Health Corporation announced financial results for its second quarter ended December 31, 2018. Total sales were $218 million, an increase of 6%. Animal Health net sales were $140 million, an increase of 5% compared to the prior-year quarter. (company press release)

• Orion Animal Health reported results for the full year 2018. Animal health sales were EUR 80 million ($92 million), an increase of 6% compared to the prior year. (Animal Pharm)

• Central Garden & Pet Company announced financial results for its fiscal 2019 first quarter ended December 29, 2018. Net sales for the Pet segment increased 5% to $340 million, from the same period a year ago, driven by the acquisition of General Pet. Organic Pet sales were down 0.6%. The Pet segment’s operating income was $29.8 million, a decrease of 18% compared to the first quarter a year ago. (company press release)

• PetMed Express, Inc. announced its financial results for the fiscal third quarter ended December 31, 2018. Net sales were $60 million, unchanged from the year-ago fiscal third quarter. Net income was $7.8 million compared to net income of $9.1 million for the quarter ended December 31, 2017, a 14% decrease to net income. (company website)

• Alivira Animal Health announced results for the third quarter of fiscal 2019. Sales were $37.5 million, an increase of 20% over the comparable prior-year period. Operating margin was 13.1% compared to 10.0% in the third quarter of FY18. (company announcement).

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REGULATORY SEMINAR
CRO-Sponsor Relationships: Best practices to improve efficiency and regulatory process outcomes
PRESENTED BY KANSAS STATE UNIVERSITY OLATHE
MARCH 5, 2019

Kansas State University Olathe is hosting a seminar series designed to provide the latest information about regulatory affairs in animal health. “CRO-Sponsor Relationships- Best practices to improve efficiency and regulatory process outcomes” — the sixth seminar in the series — is on Tuesday, March 5, at K-State Olathe from 1 to 5 pm.

The seminar also will be live streamed for remote viewing and recorded for post-event viewing.

Registration is $100 per person. For more information or to register, go to https://olathe.k-state.edu/professional-dev/workshops/regulatory-affairs/index.html.

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COMPANY NEWS RELEASES

• Eli Lilly and Company announced it will initiate an exchange offer on Friday, February 8, to divest its remaining interest in Elanco Animal Health. Elanco completed its initial public offering (IPO) in September 2018, with Lilly retaining an 80.2% ownership interest in Elanco. In the voluntary exchange offer, Lilly shareholders can exchange all, some or none of their shares of Lilly common stock for shares of Elanco common stock owned by Lilly. (Biospace.com)

• Immunomic Therapeutics, Inc. announced that the company has granted ZENOAQ (Nippon Zenyaku Kogyo Co., Ltd.) an exclusive license to develop and commercialize its investigational DNA vaccine, ITI-002, for canine atopic dermatitis and other companion animal allergies. The therapy was developed using ITI’s proprietary UNITE (UNiversal Intracellular Targeted Expression) platform. As part of the agreement, ZENOAQ will also receive exclusive rights to option other UNITE-based therapies and indications within animal health, including oncology. (WLNS.com)

• Henry Schein, Inc. announced the completion of the spin-off of its animal health business. As part of the spin-off, Henry Schein received approximately $1.1 billion in what is expected to be tax-free proceeds that will be used to pay down debt. (company press release)

• Covetrus, Inc. (f/k/a HS Spinco, Inc.) announced that its common stock has been approved for listing on the Nasdaq Global Select Market and, on February 4, 2019, began trading on a “when-issued” basis under the trading symbol “CVETV.” “Regular way” trading in Covetrus common stock begins on the Nasdaq Global Select Market on February 8, 2019 under the symbol “CVET.” (company press release)

• ECO Animal Health Ltd announced that it has entered a second worldwide exclusive licensing deal with the Poultry Diagnostic & Research Center, College of Veterinary Medicine at the University of Georgia (UGA). This deal allows ECO to further develop, register and commercialize a live attenuated Mycoplasmasynoviae vaccine for poultry developed by UGA. University researchers have concluded preliminary proof of concept efficacy and safety studies with this vaccine. (company press release)

• BabelBark, Inc. announced a partnership with Pet Cause Media, a service dedicated to boosting veterinary practice outcomes. Through this agreement, Pet Cause Media will promote the BabelBark pet owner app at point of care in veterinary practices to encourage app downloads and adoption. It will also include full access to the BabelVet health dashboard for vet practices who sign up for its premium Smart Exam Room program, at no additional cost to the vet practice. (company press release)

• UK Virbac announced the UK launch of Eradia, the first and only metronidazole for dogs in a flavored oral suspension. Virbac says that Eradia has been shown to be accepted by 100% of dogs, thereby alleviating any possible problems administering metronidazole. (Vetsurgeon.org)

• UK Linnaeus, a member of Mars Petcare’s Veterinary Health Group, announced it has acquired UK-based Davies Veterinary Specialists, a veterinary group based in Hertfordshire, England. Financial terms were not disclosed. (Petfoodindustry.com)

• UK CVS Group has issued a statement this morning warning that its 2019 earnings are likely to be “materially below market expectations”, and that the company has consequently introduced a number of cost-cutting measures. The company blamed the situation on the poor performance of 24 veterinary practices it bought in the Netherlands, and its new farm and equine divisions. (Vetsurgeon.org)

• INDIA Ashish Life Science announced it has raised INR450 million ($6.3 million) in a series A funding found. Ashish is focused on the export of veterinary pharmaceuticals and will use its first external round of capital to grow its business in its current locations, as well as expand its presence into new markets including Europe, Australia and South Africa. (Animal Pharm)

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BRAKKE CONSULTING
MARKET RESEARCH SERVICES

Look Before You Leap

Depend on Brakke Consulting to meet your company’s market research needs, whether it is:

• Assessing the feasibility of a new product or technology
• Identifying the opinions and trends of veterinarians, pet owners or producers
• Determining the current market for products

With our in-house database of veterinarians and the ability to custom-tailor surveys of a wide variety of target audiences, we provide reliable insights into this unique industry. We also produce multiclient reports in a number of high-interest animal health market areas. For more information, see our website or call our Dallas office at 972-243-4033.

www.BrakkeConsulting.com

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ANIMAL HEALTH NEWS

• POLAND – BSE Poland has reported a case of atypical bovine spongiform encephalopathy (BSE) among cattle on a farm near the Czech border. The outbreak does not have any influence on the official BSE risk status of Poland. (KFGO.com)

• JAPAN – SWINE FEVER Japan’s swine fever outbreak has spread to five prefectures including Osaka, and more than 10,000 pigs will be culled as part of measures to prevent further contagion. According to authorities, this is a different strain from the deadly African swine fever China has been battling. (AVMA SmartBrief – Reuters)

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BRAKKE CONSULTING
FIELD SALES FORCE CENSUS REPORT

Size Matters: Field Team Report Now Available

Now you can benchmark your sales and professional services teams against leading competitors. A new Brakke report, Field Sales and Veterinary Teams provides a comprehensive census of the field organizations for 11 leading animal health and diagnostic companies. Which ones have expanded? Scaled back? How many regions and districts to they have?

The report covers the companion animal, food animal and equine markets, and includes territory reps, inside sales reps, sales management, professional service veterinarians and management, and other field specialists, by species focus. Pharma and Diagnostic teams reported separately.

Companies included in the report include:

Bayer
Boehringer Ingelheim
Ceva
Dechra
Elanco
Heska
IDEXX
Merck
Virbac
Vetoquinol
Zoetis Diagnostics
Zoetis Animal Health

Complete report is $5,000. Companion animal and equine only is $4,000.

Order yours today by contacting London Cook, lcook@brakkeconsulting.com, (972) 243-4033.

www.BrakkeConsulting.com

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BRAKKE CONSULTING VIEWPOINT

It wasn’t that long ago when we watched Elanco being spun out of Lilly and listed on the New York Stock Exchange, listed as ELAN. Even though Elanco has been part of Lilly since 1953, you could sense the spirit of independence of the new company just by watching the Elanco team ring the opening bell back in 2018. They have now announced 6% growth in 2018 after a few slower years.

Today, the newest publicly traded animal health company rang the opening bell on the Nasdaq Stock Market under the symbol, CVET. The combination of two different businesses, Henry Schein’s animal health distribution business and Vets First Choice, a technology-based business that helps veterinary practices compete with an on-line presence of their own, will give veterinarians new ways to deliver medications to pet owners, manage inventory and offer analytical insights to drive revenue growth. We are excited to see veterinarians have options to drive growth and, hopefully, compliance.

But the competition is heating up for delivering medications to pet owners. We can see this in the third quarter results from PetMed Express, where they experienced flat sales compared to the same quarter last year. For the quarter, new order sales were down 26% and reorder sales were up almost 5%. For the last nine months, they have shown revenue growth of 6% but new orders were down 8% while reorder sales were 9%. Pricing and increased online competition were credited with the third quarter results – we think it won’t get any easier very soon.

We cover these topics and many others at our 2019 Industry Overview in Las Vegas at WVC. How veterinary clinics compete in the future with companies like Amazon, Chewy.com and others like them? Will this be good for pet owners and good for veterinarians? We are happy to see new, independent, exciting companies in our industry and wish the newest bell-ringer, Covetrus, all the best.

Bob Jones

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