Animal Health News & Notes for August 8, 2003

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Brakke Consulting’s
Animal Health News & Notes for August 8, 2003
Copyright © Brakke Consulting, Inc.
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COMPANY EARNINGS RELEASES

>  Bayer reported that sales of the Animal Health segment rose by 0.9% in the second quarter of 2003 to 214 million euros ($245 million). In local currencies, sales grew by 15.1%, helped by the successful US launch of K9 Advantix.  EBIT for the second quarter 2003, at 45 million euros ($51.5 million), was a 4.7% increase over the second quarter of 2002. (company website)

>  Boehringer Ingelheim reported that first-half 2003 sales for its animal health division Boehringer Ingelheim Vetmedica were 151 million euros ($173 million), flat compared to the first half of 2002. (company website)

>  Virbac Corporation reported results for the second quarter and six months ended June 30, 2003.  For the second quarter 2003, net sales set a record, rising 22% to $19.1 million from $15.6 million in the second quarter of 2002. Net income for the period was $1.2 million compared with $0.7 million in the second quarter of 2002. (Business Wire)

>  Sound Technologies reported first half results for Ultrasound, Education, and Consulting Business Units for the six months ended June 30, 2003.  Sales increased 35.1% to $7.67 million, and income increased 68.7% to $906,899.  The Company’s strong performance resulted from increased sales and improved operating execution. Strong sales growth is a result of a successful sales force expansion, new product introductions with GE Medical Systems, and customer affirmation of Sound Technologies’ and GE Medical Systems’ ultrasound leadership. (company press release)

>  Embrex, Inc. announced consolidated revenues for the second quarter 2003 totaled $12.1 million, an increase of 12% compared to 2002 second quarter revenues of $10.8 million. Net income was $3.9 million during the second quarter of 2003, an increase of 126% compared to net income of $1.7 million for the second quarter of 2002. This includes $2.1 million for the Fort Dodge litigation settlement. Consolidated revenues totaled $23.0 million for the first half of 2003, representing an increase of 4% over 2002 first half revenues of $22.2 million. Net income was $5.2 million for the first half of 2003, which is a 30% increase over the same period in 2002 of $4.0 million. (company website)

>  Central Garden & Pet Company announced its financial results for the fiscal third quarter of 2003, ended June 28, 2003. Net sales for the third quarter increased 3% to $345 million from $336 million in the comparable fiscal 2002 period. The Company recorded net income for the quarter of $17.2 million compared with net income of $18.4 million in the comparable year-ago period. The 2002 quarter included $6.0 million of non-taxable life insurance proceeds, partially offset by a $2.8 million write down of an equity investment. Net sales for the first nine months of fiscal 2003 were $888 million, a 6% increase from $837 million in the comparable 2002 period. Net income for the first nine months of 2003 was $30.0 million compared with $27.8 million in the comparable year ago period, before the effect of adopting SFAS No. 142 on September 30, 2001. (Business Wire)

>  Nutreco reported that its income for the first half of the year remained at the same level as last year, despite avian influenza in the Netherlands and a slump in salmon prices.
Sales dropped slightly from Euro 1.835 billion to Euro 1.731 billion ($1.98 billion) and net profits grew from Euro 4.7 million to Euro 5.7 million ($6.5 million). However, with the restructuring costs of its Scottish and Norwegian aquaculture sector, the final result was a loss of Euro 186.3 million ($213 million) for the half year. (Wattnet Meatnews)

CORRECTED:
>  Heska reported consolidated financial results for its second quarter ended June 30, 2003.  The company generated $14.8 million of total revenue in the second quarter of 2003. This compares to $12.2 million of total revenue for the corresponding period in 2002.  Quarterly net loss decreased to ($1.2) million from ($2.8) million in 2002. Totals product sales for the second quarter of 2003 were $14.4 million, up 20% from the comparable quarter in 2002.  For the six months ended June 30, 2003, total product sales were $27.4 million, up 25% from the corresponding period in 2002.  (company press release)

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COMPANY NEWS RELEASES

>  PAI Partners announced the sale of its controlling stake in CEVA Sante Animale to Industri Kapital and CEVA’s management.  CEVA was acquired from Sanofi-Synthelabo in October 1999.  Financial terms were not disclosed.  (company press release)

>  The sale of Farmland Industries’ interest in Farmland National Beef Packing Company, L.P. (“National Beef”) to a group of investors led by U.S. Premium Beef Ltd. (“USPB”) has been completed for $232 million. The US cooperative Farmland Industries previously held a 71% stake in National Beef while USPB held the remaining 29%. In addition, a US District Bankruptcy Court Judge has approved the bid and auction procedures for the sale of Farmland Foods, Inc. to Smithfield Foods, Inc. for $363.5 million. That sale is expected to be completed later this autumn. (Wattnet Meatnews)

>  Bayer‘s Animal Health Division won an important battle against unauthorized sellers of its Advantage topical solution. Bayer filed a lawsuit against Custom School Frames LLC after learning that the company had been selling diverted Advantage directly to pet owners through its web site, www.no-fleas.com.   Because Bayer sells Advantage exclusively through authorized and licensed veterinarians, it argued that the sale by Custom School Frames in violation of such policy would likely cause consumer confusion. The Court agreed, holding that there were material differences between the Advantage products sold by Custom School Frames and those properly distributed through veterinarians.  The Court cited several examples, including the failure of the products to comply with Federal and State labeling laws and the lack of important quality control measures. In its ruling, the Court ordered Custom School Frames to cease selling Advantage products and required it to shut down its web site.  (company press release)

>  Neogen Corp. announced that a federal court ruled in its favor in a trademark infringement lawsuit against Neo Gen Screening of Pennsylvania.  The judge granted Neogen Corp a permanent injunction and ordered Neo Gen Screening to discontinue using the sequence of letters in Neogen’s name (N-E-O-G-E-N).  Neo Gen Screening began operations in 1994 and its laboratory provides screening for metabolic disorders. (Feedstuffs)

>  eMerge Interactive Inc. announced that ATTEC Food Technology Ltd, one of the largest manufacturers of meat processing equipment in Europe, has purchased VerifEYE Solo handheld meat inspection devices for distribution throughout their markets.  The VerifEYE technology has been extensively tested in Europe over the past four months. (company press release)

>  Pyxis Genomics Inc. announced that Dr. Brendan Fox, former President and CEO of Elanco Animal Health, has joined their Board of Directors.   Pyxis is a leading animal genomics company focused on enhancing the health and performance of food and companion animals through proprietary products (nutraceuticals and non-antibiotic feed supplements) for the agribusiness and animal health sectors. (company press release)
 
>  AviGenics, Inc. announced successful production of biologically active human interferon and human monoclonal antibodies in transgenic chickens.  This significant milestone in the validation of AviGenics’ transgenic chicken platform was described at the IBC Conference, “Scaling-Up from Bench to Clinic and Beyond: Advances in Bioprocessing Strategies for Successful Commercialization” in Durham, North Carolina. (PRNewswire)

>  Novamex USA announced its intention to acquire a worldwide patent which covers testing for a prion.  This testing method was used to develop a test for BSE which can be performed on a living animal.  The patent was acquired from the scientists who developed the test.  (Business Wire)
 
>  IRELAND   Tridelta plc, an Irish-based company that develops, manufactures and markets diagnostic products for the animal health care industry, announced that dealings in the company’s ordinary shares have started on OFEX.  The company is pleased to announce that it has achieved its minimum subscription under the offer.  Tridelta will also seek to commercialize its new Acute Phase Protein, Mammary Associated Amyloid A (MAA) for “on-farm” diagnosis of Bovine Mastitis.  Tridelta also announced the University of Glasgow Veterinary School will be using Tridelta’s Canine CRP Phase and Blood Haptoglobin Phase proteins as routine tests for early stage detection of disease in dogs. These two acute phase proteins show complementary responses to disease, so that a combination of their measurement is likely to provide valuable diagnostic information. (company press release)

>  CANADA  Nymox Pharmaceutical Corporation announced a research collaboration with Health Canada’s Laboratory for Foodborne Zoonoses in Guelph, Ontario for the research and development of novel animal and related treatments for E. coli 0157:H7 (Business Wire).

CLARIFICATION:
Below are details of a study reported last week in the newsletter regarding the efficacy of Bayer’s K9 Advantix in controlling deer ticks on dogs:

Adult dogs confirmed to be free from B. burgdorferi
exposure via IFA testing were randomly assigned to two groups (K9 Advantix-treated dogs and untreated controls) of 8 animals and housed separately.  One week post-treatment (day 7), each dog was infested with 100 adult deer ticks (Ixodes scapularis) wild-caught from a Lyme-endemic area.  On day 14, all ticks were removed from the dogs, and all dogs in both groups received a dose of K9 Advantix to ensure any remaining ticks were killed.  Serum antibody titers to B. burgdorferi were confirmed via IFA and ELISA testing on days 14, 28, 42, 56, 70 and 90. The results showed that by week six, 100% of untreated control dogs had seroconverted and 100% of K9 Advantix-treated dogs continued to remain antibody negative for B. burgdorferi.  There was total agreement between the results of the IFA and ELISA tests.  In addition, no tick attachment sites were found on the dogs in the treated group, while tick attachment sites were noted on dogs in the untreated control group. (company press release & technical bulletin)

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ANIMAL HEALTH NEWS
 
>  GERMANY   Researchers at the Institute for Immunology of the Federal Research Centre for Virus Diseases of Animals in Tübingen, Germany have developed an inexpensive new test that can distinguish cattle infected with FMD and those that were vaccinated against the disease, according to an article in the science journal Nature Science. The test also distinguished different strains of the FMD virus, which is prone to mutation. The fast, low-tech lab test reliably sorts the two groups and could easily be made into a strip test, such as a dipstick, according to the developer. Animals could then be checked quickly in the field. Similar kits exist, but this new version is quicker to use and costs one-fifth the price of its rivals. It uses synthetic reagents where others use biological components.  But an FMD epidemiologist at the University of Edinburgh in Scotland has warned that the test is not specific or sensitive enough. (Wattnet Meatnews)

>  US   The USDA has ended quarantines for Exotic Newcastle Disease in Arizona, Nevada and Texas, as well as most of California, allowing poultry farmers in these areas to begin shipping birds again. The Agriculture Secretary said the ban was being lifted because officials have eradicated the outbreak of the devastating bird disease. However, the quarantine remains in effect for parts of San Diego County, Calif. (Meating Place)

>  US   The most severe outbreak of eastern equine encephalitis in South Carolina history has killed about 100 horses, and lab work is under way on more preliminary cases. The state equine programs coordinator described it as the worst year ever documented, and added that the figures are probably significantly underreported. A veterinarian with the largest horse hospital in the state said that perhaps 25% of horses that die of eastern equine encephalitis are being reported, and that he has treated 22 horses for encephalitis so far this year compared with 2 for all of last year. The USDA senior staff veterinarian in equine diseases, reported that states across the Southeast are seeing a similar spike in cases this year, and the same picture has emerged in Maryland, Virginia, the Carolinas, Georgia and Florida. Florida confirmed its 183rd horse case Tuesday afternoon. (AnimalNet – Knight Ridder Tribune)

>  CANADA   As part of their efforts to help the flagging Canadian beef industry, McDonald’s Canada said it would give away 1.4 million pounds of hamburgers in a two-for-one sale on Aug. 22.  Anyone who buys a hamburger that day will receive a coupon for a free sandwich that is redeemable immediately or on a future visit before Sept. 30. The company estimates they will give away three million burgers coupons, estimated to be worth $5.4 million. On July 25, McDonald’s announced it would begin using only Canadian beef in its burgers in an effort to support the industry. Previously, it bought between 70% and 80% of its meat from Canadian suppliers. (Meating Place)

>  ITALY   Scientists in Italy reported that they have created the world’s first cloned horse, which is now two months old, weighs about 220 pounds and is in excellent health. The announcement states that this precedes the birth of a horse clone at Texas A&M University. The cloned Haflinger horse is named Prometea after Prometheus, the character in Greek mythology who stole fire from the gods and gave it to humans. In a twist for the growing barnyard of cloned animals, the Haflinger mare that gave birth to Promotea was also the source of her DNA, meaning she and her foal are identical twins. (AnimalNet – AP)

>  US   Howard Beef Processors is recalling 194,700 pounds of frozen ground beef products because they might be contaminated with E. coli bacteria that may have sickened two people in Colorado. The products were distributed to consumers at retail outlets and through door-to-door sales nationwide. Some of the recalled products were also exported to Mexico. (Meating Place)

>  US   The Pork Checkoff’s Swine Welfare Assurance Program is now available to all US pork producers as the first objective and voluntary program to measure welfare of swine on the farm.  This educational assessment will allow producers to evaluate and benchmark the care and welfare of their animals, and address any welfare concerns in a scientifically sound manner.  The on-farm voluntary assessments will be performed by Certified SWAP Educators (CSEs), who have been trained and tested on evaluating animal welfare to assure they are familiar with the program and how it applies to pork producers. (PRNewswire)

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AGRIBUSINESS NEWS

>  The USDA will require biotech companies to get permits for the genetically engineered crops that help make chemical compounds for products like detergent, now that there has been a sharp increase in such crops. Until now, the department simply asked companies to notify federal officials before planting industrial crops and randomly checked the crops. The department received five such notices in 2003 alone; between 1993 and 2001 it received just 10 notices. The crops will be routinely tested under the new rule. Each site where a test crop is planted will be inspected seven times – five during the growing season and twice after harvest.  (AP)
>  The Bush administration requested formation of a World Trade Organization dispute panel as the US pressed ahead with a case against the European Union over genetically modified food.  The formal request for a WTO hearing panel had been expected after the US and its partners in the dispute – Canada and Argentina – had been unable in June to narrow their differences with the EU over a European moratorium on importation of genetically modified crops.  The EU imposed the moratorium because of concerns about food safety, which the US contends are not supported by various scientific studies showing that genetically modified food poses no risks to humans. (AP)

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BRAKKE CONSULTING VIEWPOINT

There was a nice mix of news for the first week in August.  Evidently, not everyone is on vacation this month.  Most of the financial reports were positive compared to last year in either sales or earnings.

We also like to see the announcements related to new products or technology.  We believe the long-term growth of the animal health industry is dependent on innovations from basic research.  These new technologies will make their way to the marketplace and increase the revenue stream to all participants.

Keep up the good work and stay cool this weekend.

Ron Brakke

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