Animal Health News & Notes for July 27, 2018

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Brakke Consulting’s
Animal Health News & Notes for July 27, 2018
Copyright © Brakke Consulting, Inc.

Editor: Lynn Fondon DVM MBA
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IN THE NEWS:

Brakke Consulting news
Over-the-counter market

earnings news
Cal-Maine Foods
Elanco
PetMed Express

other news
AgriLabs
Elanco
HerdDogg
IDEXX
ImmuCell
Outward Hound
Smart Flow
TCS Biosciences Ltd
Thermo Fisher Scientific
Wholesome Pride
Zoetis

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BRAKKE CONSULTING, INC.
UNDERSTANDING THE OVER-THE-COUNTER MARKET

Whether your business is considering the OTC channels for new business opportunities or you have been distributing in the OTC channels for years, Brakke Consulting’s team can provide significant and quality assistance to businesses seeking to learn more about the details of the OTC channels of distribution. If you are looking for meaningful insights into the OTC channels, the trends found there, and the opportunities that exist, contact our Dallas office or Joel Adamson at adamson.joel@cox.net.

www.BrakkeConsulting.com

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COMPANY EARNINGS RELEASES

• Eli Lilly reported results for the second quarter of 2018. Sales for Elanco Animal Health were $792 million, an increase of 1% compared to the second quarter of 2017. (company website)

• PetMed Express, Inc. announced its financial results for the fiscal first quarter ended June 30, 2018. Net sales were $87 million, an increase of 10% compared to the comparable quarter in 2017. Net income was $12.6 million for the quarter compared to net income of $9.3 million in the prior-year quarter, a 36% increase in net income. (company website)

• Cal-Maine Foods Inc. reported results for the fiscal year ended June 2, 2018. Net sales were $1.50 billion, compared with $1.07 billion for the prior-year period. The company reported net income of $125.9 million for fiscal 2018, compared with net loss of $(74.3) million for fiscal 2017. Fiscal 2018 included 52 weeks, while fiscal 2017 had 53 weeks. (Feedstuffs)

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COMPANY NEWS RELEASES

• Eli Lilly & Co. announced that the company has completed its strategic review of Elanco Animal Health and will file a registration statement in the coming weeks with the U.S. Securities & Exchange Commission (SEC) for a potential initial public offering (IPO) of a minority ownership stake in Elanco as a separate company. The offering is expected to represent an ownership stake of less than 20%. (company press release)

• IDEXX announced that Smart Flow, a cloud-based solution that improves overall patient management through easy coordination and tracking of every step in a patient workflow, has joined the IDEXX family. Financial terms were not disclosed. (company website)

• AgriLabs announced the commercialization of KLEBVax SRP, the first vaccine licensed for dairy cattle to prevent mastitis caused by Klebsiella pneumoniae. (company press release)

• ImmuCell Corporation announced that it has closed on the sale of certain non-core assets for $700,000 to TCS Biosciences Ltd of the United Kingdom (TCS). The sale includes the cell line and intellectual property underlying the company’s diagnostic test to detect the presence of Cryptosporidium in drinking water. The company has retained the rights to all animal health, diagnostic, feed and nutritional applications of this technology. (company press release)

• Thermo Fisher Scientific announced the launch of two quantitative multiplex real-time polymerase chain reaction (qPCR) kits for rapidly detecting all mastitis-causing bacteria in fresh, frozen and preserved milk samples, including Mycoplasma spp, Staphylococcus and Streptococcus. The firm’s Applied Biosystems VetMAX MastiType Micro4 and VetMAX MastiType Myco8 multiplex qPCR kits enable the detection of multiple pathogens in a single diagnostic test. (Animal Pharm)

• Outward Hound, a portfolio company of J.W. Childs Associates, L.P., announced it has acquired Wholesome Pride. Wholesome Pride creates 100% all-natural limited-ingredient pet treats with zero additives. Financial terms were not disclosed. (Pet Product News)

• HerdDogg announced it has gained $2.3 million in funding to ramp up manufacturing, marketing and sales of its precision livestock health technology. The company sells a system that includes DoggTags attached to the animals’ ears, cloud-connected DoggBone readers placed at strategic sites around the farm for gathering real-time health data and the HerdDogg mobile app. (Animal Pharm)

• UK Zoetis announced that Equitape praziquantel-only wormer for horses will be discontinued from the firm’s UK equine product range in October 2018 due to the decision of a third-party manufacturer to cease supply of the product. The product is not marketed anywhere else in the world. (Animal Pharm)

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ANIMAL HEALTH NEWS

• US – NEWCASTLE DISEASE The USDA’s Animal and Plant Health Inspection Service has confirmed five additional cases of virulent Newcastle disease in backyard exhibition chickens in California, bringing the number of confirmed cases since May 17, 2018, to 62. Virulent Newcastle disease has not been found in commercial poultry in the United States since 2003. (Farmanddairy.com)

• BULGARIA – PPR Bulgarian authorities have euthanized thousands of farm animals in the east of the country as part of a strategy aimed at eradicating the sheep and goat plague ovine rinderpest, also known as peste des petits ruminants (PPR). At the end of June, the Bulgarian Food Safety Agency discovered that animals on livestock farms in Voden – close to the Turkish border – were infected with the highly contagious PPR, representing the first outbreak of the disease on EU territory. (Animal Pharm)

• US – VETERINARY EDUCATION Long Island University announced it is launching a four-year veterinary technologist program this fall and, in a separate but complementary initiative, is seeking to open a veterinary college of medicine next year. New York’s governor in May announced plans to invest $12 million toward the $40 million price tag for the LIU veterinary medicine college. (LIBN.com)

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BRAKKE CONSULTING VIEWPOINT

The leading story this week was the long-awaited announcement by Eli Lilly & Co. that they intend to spin off 20% of Elanco in an IPO in the second half of this year. We believe this is good news for the industry in that for the time being it avoids another major industry consolidation at the top of the list. Second, an IPO should be less disruptive to the company and employees than the sale of Elanco to another industry player, non-industry company or equity fund. We like the fact that after the IPO two of the top five companies in animal health will be stand-alone public companies.

If the Elanco IPO is successful and follows the road map established by Zoetis, will other large pharma companies decide to explore similar strategies to maximize their shareholders’ value of their animal health businesses? If the Elanco IPO goes well, this will be another indication that the financial community has a continued interest in the animal health industry.

Have a great weekend and stay cool!

Ron Brakke

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