Animal Health News & Notes for May 3, 2019

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Brakke Consulting’s
Animal Health News & Notes for May 3, 2019
Copyright © Brakke Consulting

Editor: Lynn Fondon DVM MBA
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IN THE NEWS:

Brakke Consulting news
Market research services

earnings news
Animalcare
DS Pharma Animal Health
IDEXX
Merck
Pilgrim’s Pride
Trupanion
Zenoaq
Zoetis

other news
AAHA
Adelle Indústria de Alimentos
Altmeds
BabelBark
Chewy.com
Elanco
Elixinol
Ethos Veterinary Health
Hippo Manager Software
JBS
Modern Veterinary Therapeutics
MOPAC
Nestle Purina
PetSmart
Seara Alimentos
SmartTag
Southern Veterinary Partners
VetDC
whiskerDocs

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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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COMPANY EARNINGS RELEASES

• Zoetis reported its financial results for the first quarter of 2019. The company reported revenue of $1.5 billion for the first quarter of 2019, an increase of 7% compared with the first quarter of 2018. Net income was $312 million, a decrease of 11% on a reported basis. Revenue in the U.S. segment was $718 million, an increase of 13%. (company press release)

• Merck announced financial results for the first quarter of 2019. Animal Health sales totaled $1.025 billion, a decrease of 4% compared with the first quarter of 2018 (+3% excluding the unfavorable effect from foreign exchange). Animal Health segment profits were $415 million in the first quarter of 2019, essentially flat compared with $413 million in the first quarter of 2018. (company press release)

• IDEXX Laboratories, Inc. reported results for the first quarter of 2019. Revenues were $576 million, an increase of 7% compared to the first quarter of 2018. Net income was $103 million compared to net income of $90 million in the comparable prior-year quarter. Companion Animal Group revenue was $509 million for the quarter, an increase of 8%. (company press release)

• Nippon Zenyaku Kogyo (Zenoaq) reported results for fiscal 2018 ended March 31, 2019. The company posted sales of around JPY 36 billion ($321.8 million), a 7% improvement in revenues. (Animal Pharm)

• DS Pharma Animal Health reported results for the fiscal year ended March 31, 2019. Sales were JPY 13.2 billion ($118.2 million), a 4% increase in compared to fiscal 2018. (Animal Pharm)

• Animalcare reported financial results for fiscal 2018, its first year of trading since finalization the merger with Ecuphar. Revenues were GBP 72.5 million ($94 million), slightly higher than the company had forecast for sales excluding its divested non-core wholesale business. The firm reported a loss before tax of GBP (0.4) million compared to a profit of GBP 0.4 million the previous year; the reversal was due to high general expenses connected to the Ecuphar deal. (Animal Pharm)

• Trupanion announced financial results for the first quarter ended March 31, 2019. Total revenue was $87.0 million, an increase of 25% compared to the first quarter of 2018. Total enrolled pets (including pets from our other business segment) was 548,002 at March 31, 2019, an increase of 23% over March 31, 2018. Net loss was $(1.3) million compared to a net loss of $(1.5) million in the first quarter of 2018. (company press release)

• Pilgrim’s Pride Corp. reported results for the first quarter of 2019. Net sales for the first quarter of were $2.72 billion, down from $2.75 billion in the first quarter of 2018. Net Income was $84.0 million, down from $119.4 million the year before. (Feedstuffs)

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COMPANY NEWS RELEASES

• VetDC announced it has entered into a collaboration with Elanco Animal Health to sell TANOVEA-CA1 for the treatment of dogs with lymphoma in the US. Elanco will be responsible for all commercial activities related to the marketing, selling and distribution of TANOVEA-CA1, while VetDC will continue to be responsible for Development, Regulatory and Manufacturing activities. In conjunction with this announcement, Elanco is creating a specialty salesforce, placing a critical strategic focus on cancer and other serious diseases to help advance important new therapies like TANOVEA-CA1 into the veterinary community. (company press release)

• Chewy.com, owned by PetSmart, filed documents with regulators to prepare for an initial public offering. PetSmart acquired Chewy in 2017 for roughly $3 billion, and will remain majority owner of Chewy following the IPO. Chewy did not state how much it expects to raise in the offering. (CNBC)

• Modern Veterinary Therapeutics, LLC announced the US launch of the Medetomidine Hydrochloride, the first FDA-approved generic medetomidine hydrochloride injection for sedation & analgesia in dogs. This product follows the recent launch earlier this year of Revertidine, the first FDA-approved generic atipamezole hydrochloride injection, a reversal agent for medetomidine and dexmedetomidine. (company press release)

• BabelBark announced the launch of Alpha Pack, a paid upgrade to the free BabelBark mobile app, that gives pet owners around-the-clock access to veterinary advisers by connecting users to whiskerDocs, and the lost-and-found program SmartTag. (Todays Veterinary Business)

• Southern Veterinary Partners (SVP) announced it has acquired 2 hospitals in Maryland and Kentucky. SVP now has 79 animal hospitals in 12 states. (Veterinary Practice News)

• Hippo Manager Software, Inc., announced a new integration with Zipwhip, a leading provider of texting for business. The integration allows for greater client communications for veterinary practices by enabling them to text clients from within Hippo Manager using their existing landline, VoIP or toll-free phone number. (company press release)

• Elixinol LLC announced it has purchased a 25% stake in Altmeds LLC, maker of the hemp-derived cannabidiol (CBD) product Pet Releaf. The move aims to strengthen Elixinol’s relationship with a major private label partner and secure a profitable investment in the hemp-derived CBD pet products market. It will also help ensure that Pet Releaf has the financial resources to innovate, expand and scale. Financial terms were not disclosed. (Pet Product News)

• VetBloom, a digital learning ecosystem from Ethos Veterinary Health, and the American Animal Hospital Association (AAHA) announced the upcoming launch of the AAHA – Learning platform, provided as an exclusive AAHA member benefit. (company press release)

• An FDA warning letter states that the manufacturer JBS Souderton’s pure tallow from its rendering plant contain pentobarbital, a drug used to euthanize dogs and cats in the US. JBS Souderton does business as MOPAC and supplies beef tallow to several animal food manufacturers. This letter is significant because pentobarbital was found in some brands of dog food last year, including canned Smucker dog food such as Gravy Train, Kibbles ‘n Bits, and Skippy products. (AVMA SmartBrief – Foodpoisoningbulletin.com)

• FRANCE Nestle Purina is encouraging dogs to pee on its latest billboards in France, which are built with a technology to analyze the dog’s urine and detect health problems. The technology uses pheromones to attract the dogs and get them to pee against the foot of the billboard, then runs a series of tests for health problems. The test can detect four different health problems: diabetes, kidney problems, urinary infection or cholesterol. The interactive screen will then either recommend a particular Purina diet, or even recommend that their owner takes their dog to the vet for a checkup. (Adage.com)

• BRAZIL JBS S.A. has announced that its controlled entity, Seara Alimentos Ltda., along with Adelle Indústria de Alimentos Ltda. and other guarantor parties, signed a sale and purchase of assets and other adjustments agreement to acquire a pork processing plant, including its integration system, located in the city of Seberi in Brazil’s state of Rio Grande do Sul. The acquisition price of the assets is 235 million reals. (Feedstuffs)

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ANIMAL HEALTH NEWS

• WORLD VETERINARY DAY Saturday, April 27, marked World Veterinary Day, a time to celebrate the profession and recognize the positive impact veterinarians have on animals and society. The World Veterinary Association (WVA) and the World Organization for Animal Health (OIE) choose a theme each year. This year’s theme was the “Value of Vaccination,” which emphasizes the importance of vaccinations in disease prevention, animal health and welfare and reducing risks of human exposure to zoonotic diseases. (Benzinga.com)

• US – BOVINE TB Bovine tuberculosis (TB) was recently confirmed in a small beef herd in Michigan within state’s modified accredited zone for bovine tuberculosis management. The herd was identified through routine surveillance testing. (Feedstuffs)

• US – FEED REGULATION The FDA announced it withdrew three outdated Compliance Policy Guides (CPGs) pertaining to the use of certain animal-derived materials in animal food. These CPGs originally were issued in 1979-80 to explain the FDA’s enforcement priorities regarding use of certain materials in animal food. The FDA has decided to withdraw CPG Sec. 675.400 – Rendered Animal Feed Ingredients and CPG Sec. 690.300 – Canned Pet Food because of the additional regulatory tools gained through Food Safety Modernization Act. Additionally, the FDA has decided to withdraw CPG Sec. 690.500 – Uncooked Meat for Animal Food because it simply restates the adulteration provision of section 402(a)(5) of the FD&C Act. (FDA)

• US – CANNABIS REGULATION A new bill introduced to the California legislation could repeal an original ban on veterinarians recommending cannabis to their clients. The bill, SB 627, would allow licensed veterinarians to discuss the use of and recommend medicinal cannabis or related products on an animal patient for any condition for which these products provide relief. (Veterinary Practice News)

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BRAKKE CONSULTING VIEWPOINT

Last week, Elanco announced that they intend to purchase the small, specialized, publicly traded animal health company Aratana. The two companies entered a sales and marketing arrangement two years ago for the successful pain product in dogs – Galliprant – but now Elanco will market Aratana’s veterinary therapeutic products Entyce and Nocita, plus it now has the small company’s pipeline. In our newsletter this week, we report that Elanco and VetDC have announced a commercialization arrangement for Tanovea-CA1, the first FDA conditionally approved treatment for lymphoma in dogs, which is another addition to the therapeutic product line.

In Elanco’s press release, there is another interesting announcement regarding how Elanco will approach the market with these new therapeutic products, which involves people. They will now field a sales force dedicated to the specialty veterinarian market, which is estimated to number about 1,000 clinics across the US. This is a fast-growing segment of veterinary medicine and judging by recent acquisitions, a highly valued one. For example, in February, the PE firm JAB purchase of the stake of Compassion-First Pet Hospitals, a chain of 41 specialty, emergency and general practice hospitals from PE firm Quad-C Management for $1.215 billion. But back to Aratana.

Aratana seemed to be following two good of the many strategies for a small company to be successful against large competitors: have innovative products and develop your niche. For Aratana, the niche was specialty hospitals at the beginning and the innovative products treated inappetence and provided longer lasting control of post-surgical pain. We will see how successful Elanco will be, but segmenting the market, specializing in a fast-growing segment with innovative therapeutic products and deploying a specialized team of sales representatives should be effective. This strategy is yet another reminder that success in business, big or small, is “all about people”.

Bob Jones

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