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Brakke Consulting’s
Animal Health News & Notes for December 8, 2000
Copyright © Brakke Consulting, Inc.
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Company Earnings Releases
> PetQuarters, Inc. announced the financial results for the first quarter ending September 30, 2000. Revenues grew to approximately $4 million for the period compared to $2.5 million for the same period of a year-ago. Revenue growth can be attributed to an increase in sales through the Company’s website located at www.allpets.com as well as continued sales increases through the catalog division. Net operating loss for the quarter was approximately ($3.2) million as compared to ($1.26) million for the same period of the previous year. (PRNewswire)
> Heinz reported results for the second quarter and first six months ended October 27, 2000. Pet Products revenues were $288 million in the second quarter, a decrease of 7% over the comparable period in the prior year. In the first six months, Pet Products sales were $564 million, a decrease of 6.6% over the prior year. (PRNewswire)
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Sign up to attend Brakke Consulting’s 2001 Animal Health Industry Overview
Inaugural presentations of the 2001 Overview will be open to general admission at two major upcoming veterinary conferences.
– North American Veterinary Conference: Monday, January 15, 2001
9:30 am
1:30 pm
– Western Veterinary Conference: Monday, February 12, 2001
10:00 am
These presentations, which are approximately three hours, are always very popular, and seating is limited, so please register early!
The cost is $275.00 for the first registrant from a company and $195.00 for each additional registrant from the same company. You may register online by visiting our website homepage at https://brakkeconsulting.com/ and clicking the caption for the 2001 Animal Health Industry Overviews located below the world map. You may also register by telephone at (972) 243-4033.
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Company News Releases
> Bayer has signed a marketing agreement with Anitech, paying Anitech a marketing fee to participate in Anitech’s new PetNet Partners Marketing Program that includes being a featured sponsor of the PetNet Internet site. Anitech’s PetNet microchip ID system for pets is distributed at 80% of all Canadian veterinary clinics. The PetNet system helps return lost pets home and the new web site expands PetNet’s functionality as a pet registry and recovery service. Anitech’s Livestock Technology Division sells proprietary hardware and software that helps the meat industry trace meat as its being processed. (company press release)
> Tyson Foods, Inc. announced an offer to acquire all outstanding common stock of IBP, Inc. through a part-cash, part-stock transaction. Under the proposal, IBP shareholders will receive $26.00 for each share of IBP common stock, with 50% of the consideration in cash and 50% in Tyson Class A common stock. The proposed transaction would have a total transaction value of approximately $4.2 billion, including the assumption of $1.4 billion of IBP debt. Tyson proposes to commence a cash tender offer for 50.1% of the outstanding IBP common stock. After conclusion of that tender offer, Tyson would merge with IBP and each remaining share of IBP common stock would be converted into shares of Tyson Class A common stock. Tyson’s proposal follows two previously announced proposals to purchase all of IBP’s outstanding common stock. (PRNewswire)
> Farnam Horse Products Group announced that it has acquired Sure Nutrition horse products, expanding its current line of superior over-the-counter horse supplements. The Sure Nutrition line includes standouts such as Next Level Joint Fluid, Cough Free, Sure Flex and OTC, an electrolyte/vitamin supplement. The cornerstone of the product line is Next Level, a liquid combination of active ingredients including glucosamine, Perna mussel, Ester C, MSM, shark
cartilage and bromelain for building and maintaining healthy joints and connective tissue. (company press release)
> Canada’s Caprion Pharmaceuticals is developing ways to detect the presence of mad cow disease in live animals, a prospect that lured more than $33 million into the company’s coffers in a private placement. The cash will let Caprion develop a database of proteins at the sub-cellular level, allowing drug developers to pinpoint which proteins are responsible for a particular disease.
The first protein discovered by Caprion, the prion protein, is licensed to IDEXX Laboratories Inc., and the companies hope their collaboration will lead to a veterinary diagnostic tool to determine if a live animal carries mad cow disease. Previous tests were carried out after animals died or were slaughtered. Caprion should be generating royalty revenues based on its protein discoveries within three years. (Reuters)
> Cargill announced that it will acquire feed maker Agribrands International for $54.50 per share, provided two-thirds of Agribrands shareholders agree. Agribrands’ board has already approved the merger. Cargill is paying a 24.4% premium over Friday’s trading price for Agribrands. Earlier this year, Agribrands had announced it would merge with Ralcorp. As part of breaking that agreement, Agribrands will pay Ralcorp a $5 million termination fee. The agreement between Cargill and Agribrands includes a $10 million termination fee, and the companies expect the transaction to be completed by April 2001. Agribrands International was spun off from Ralston Purina in 1998. (DirectAg)
> AVANT Immunotherapeutics, Inc. announced that it has completed its previously announced acquisition of privately held vaccine company, Megan Health, Inc. Megan will now operate as a wholly owned subsidiary of AVANT. In connection with the acquisition, AVANT will issue approximately 1.9 million shares to Megan Health’s current shareholders in a transaction valued at approximately $18 million. AVANT also announced it has closed a partnership agreement with Pfizer Inc, who will develop animal health and food safety vaccines based on the Megan Health technology. Under the agreement, Pfizer will pay an up- front license fee of $2.5 million and make a $3 million equity investment in AVANT. (PRNewswire)
> AviGenics, inc. announced that it has been awarded a key patent in Europe for generating transgenic poultry. The patent, previously allowed in the United States, covers what can be described as “Windowing Technology”. The technology involves creating an aperture or “window” through an egg’s shell for the purpose of introducing foreign genetic material into the egg. Combined with other AviGenics proprietary technology and know-how, this “Windowing Technology” forms the basis for creating transgenic chickens. Transgenic chickens can be used for producing large quantities of valuable human drugs in egg whites and for enhancing food safety. (AnimalNet)
> Pets.com Inc., one of the highest-profile Web-retail failures this year, is selling its Web address to former rival Petsmart.com. Starting Monday, Web surfers who try to use Pets.com’s URL will be taken to a page on the Petsmart.com site that welcomes them and offers first-time Petsmart.com buyers $10 off a $25 purchase of certain supplies. The purchase price wasn’t disclosed. The deal doesn’t include any other operating assets of the San Francisco company, including its famous Sock Puppet character or its product inventory. (Wall Street Journal)
> PETsMART.com withdrew its planned $115 million initial public offering, citing unfavorable market conditions. The firm said in a filing with the Securities and Exchange Commission it had sought to trade its shares on NASDAQ. It had not set how many shares it would offer or the estimated price range since filing its preliminary prospectus in February. PETsMART.com, which began operations in June 1999, is the latest in a string of companies that have decided to forego the IPO market due to a downturn in the financial markets. (Reuters)
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BRAKKE CONSULTING, INC.
Serving the Worldwide Animal Health and Pet Care Industries
Providing a complete range of consulting services, including:
> General Management Consulting
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* Headquartered in Dallas, TX (972) 243-4033
* Other US Offices in Kansas City, Chicago, Asheville NC, & Charleston SC
* International Offices in Munich, Osaka & Sydney
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Animal Health News
> European Union agriculture ministers have decided to buy and destroy millions of older cows — all cattle over 30 months old that haven’t been tested and cleared of mad cow disease will be destroyed — at a potential cost of around $1.11 billion. The EU would provide 70% of the money and individual countries would foot the rest of the bill. Countries that are free of BSE want to be exempt from the plan. (Wall Street Journal)
> South Africa has lifted a ban on livestock imports from the 14-nation Southern African Development Community (SADC), but will intensify border inspections. South Africa has reported foot-and-mouth outbreaks caused by different viruses in two provinces since mid-September.
South Africa suspended all SADC livestock imports last week on fears that the SAT 1 virus originated from the region. (Reuters)
> Researchers at The Ohio State University found that when stressed cats were exposed to a synthetic form of a feline facial pheromone (FFP), they ate more and seemed more comfortable in a hospital than did cats not exposed to the pheromone. FFP is one of a variety of pheromones, chemicals that animals use to communicate with others of the same species. FFP seems to signal comfort and amicability. Increases in grooming, interest in food and food intake exhibited by cats exposed to FFP suggest that the pheromone had an anxiety-reducing effect on some cats. (AnimalNet – The Ohio State University)
> Scientists who cloned Dolly the Sheep have created designer chickens whose eggs may help produce drugs to fight cancer. The scientists have altered the hens’ genetic make-up so the whites of their eggs are rich in tailored proteins, which will form the basis of new drugs that could be commercially available within two years. Each chicken should lay about 250 eggs a year, producing huge quantities of the necessary proteins. (AnimalNet – PA News)
> Queensland, Australia DPI has developed a test that can determine if cattle have been vaccinated against tick fever. The test detects the antibodies to Anaplasma centrale, a component of the vaccine. The test will be used as a research tool to measure potency and efficacy of the vaccine. It will also be used in certification of cattle for export markets that demand disease-free cattle. (The Vet – Australia)
> The university of Melbourne in collaboration with AgResearch, NZ, have produced an effective vaccine against Echinococcus Granulosis and propose building a manufacturing plant in China. Trials are also being conducted in Argentina where high infection rates are common. (The Vet – Australia)
> A recent report from the Food and Agriculture Organization (FAO) stated that more than 2,200 farm animal breeds are likely to be extinct by 2020. According to the report, every week the world loses two breeds of its valuable domestic animal diversity. The FAO released its latest “World Watch List for Domestic Animal Diversity, ” a compilation of data from 170 countries covering 6,379 breeds. This would further deplete the world’s precious pool of animal genes. As much as novel biotechnology may attempt to improve breeds, it is not possible to replace lost diversity. (Agence France-Presse)
> Now assisting pet owners in 34 metro areas across the country and expanding daily, PeopleWithPets.com is the Internet’s only directory of pet-friendly apartments. Many of the apartments recommended by PeopleWithPets.com are not listed in newspapers or apartment directory books, and most do not have their own Web sites. PeopleWithPets.com’s service is free to pet owners. Apartment owners are charged a small monthly fee for a full-page listing. A listing typically includes photos, contact information, a description of the apartment community and its amenities, and an online form apartment hunters can send directly to the leasing agent. (Business Wire)
> The EPA has finalized a voluntary agreement with diazinon’s primary manufacturer, Syngenta, to phase out all home and garden applications of the pesticide over the next four years. Diazinon has been an effective ingredient in such household applications as ant and roach killers, in addition to grub-control lawn sprays. Diazinon is largely marketed under the Ortho, Spectracide and Real-Kill brands. This phase out over several years effectively marks the end of organophosphates, or OPs– chemicals derived from nerve gas agents developed during World War II. Under the Food Quality Protection Act of 1996, Congress ordered sweeping safety reviews of all pesticides, starting with OPs. Diazinon manufacturers have argued the product poses no health threat with normal application, but appear ready now to give up the battle and begin the mandated phase-out. EPA, which considers diazinon less risky than other banned OPs, will continue to allow some commercial crop uses for the time being. (AgWeb)
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Agribusiness News
> On the heels of new seed laws enacted or in the works in some states, Monsanto has chosen to address the issue of seed and technology liability through its technology agreement rather than through the courts. By signing Monsanto’s 2001Technology Agreement, growers agree to binding arbitration as the sole method of settling any disputes that might arise involving performance of the seed or the technology traits within that seed. Taking Monsanto or the owner of the seed variety to court is no longer an option. Under the new contract, growers have 15 days from the time any issue regarding performance or non-performance of the gene technology and/or the seed in which it is contained is first observed to contact a Monsanto representative. (DirectAg)
> A class-action lawsuit accuses Aventis, the developer of StarLink of harming American farmers through negligence. The suit, filed in US District Court in Illinois, on behalf of farmers, is the first to seek damages. It contends that the developer of the corn, Aventis CropScience, a unit of Aventis S.A., was negligent in bringing StarLink to market. The suit alleges that Aventis failed to inform farmers that StarLink had been approved by the EPA for use only in animal feed and for industrial purposes out of concern that a protein in the genetically altered corn might set off allergies in humans. The suit continues that many StarLink farmers, who were unaware of the planting or selling restrictions, allowed their crops to cross- pollinate with traditional crops in nearby fields. They also allowed their crops to be mixed up with regular corn supplies at grain elevators and processing plants. As a result, the suit contends, the crops of many corn growers who did not plant StarLink were contaminated by StarLink corn and the subsequent crisis in the nation’s grain-handling system closed off foreign markets and depressed the price of American corn here and abroad. (AgWeb – New York Times)
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Brakke Consulting Viewpoint
The financial markets are taking their toll on the technology areas. Small companies seeking financing for startup technologies are being greeted with a big “no interest.”
It makes little difference whether it is related to biotech or to e-commerce. Funding for innovation and change is hard to find. When this is coupled with reduced R&D activity in the leading animal industry companies, in both dollars and projects, it is difficult to project future market growth due to new technologies. We suggest you all take a good hard look at the cost and productivity of your R&D groups. You’re going to need them!
[Ron Brakke]
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