The Experts in Animal Health

Brakke Consulting’s
Animal Health News & Notes for April 14, 2000

Copyright © Brakke Consulting, Inc.
Company Earnings Releases

>  IDEXX Laboratories, Inc. reported net income of $8.0 million for the quarter ended March 31, 2000, compared to net income of $7.3 million for the same period in the prior year. Revenues for the first quarter increased to $90.9 million from $89.6 million for the first quarter of 1999.  According to David E. Shaw, Chairman and CEO, revenues in the first quarter were relatively flat, due largely to lower sales of veterinary practice management systems and the disposition of the food microbiology testing business; practice management system sales were exceptionally high in 1999 due to Y2K-related purchases. (BW HealthWire)

>  IGI, Inc. reported results for the year ended December 31, 1999.  Revenues for 1999 were $34.6 million versus $33.2 million for 1998, an increase of 4%.  Net loss was ($1.6 million) compared with a loss of ($3.0 million) for the corresponding period of 1998.  Companion Pet Product sales increased 9% compared to 1998, while Poultry Vaccine sales decreased 5% compared with 1998. (PRNewswire)

>  Synbiotics Corp. announced that its one-time licensing fee of $1.5 million related to the amendment of a supply agreement with Merial Limited in exchange for giving Merial broadened U.S. distribution rights would be recorded as revenue ratably over the remaining six-year life of the related supply agreement, and not in the first quarter of 1999 as previously reported.  Revenue for the year ended Dec. 31, 1999 was $30.8 million compared with previously reported revenue of $32.0 million.  Net loss for the year was ($1,566,000) or compared with previously reported net loss of ($749,000). (BW HealthWire) 

Company News Releases

>  South Dakota is the 50th state where owners of cats and dogs can obtain Veterinary Pet Insurance for their pets. Veterinary Pet Insurance, the nation’s oldest, largest and number-one pet insurance plan, has been approved by the South Dakota Department of Insurance for sale in the state as of March 15, 2000.  Since 1982, more than 1 million Veterinary Pet Insurance policies have been issued to help U.S. pet owners with the $8 billion that the American Animal Hospital Association estimates they spend each year for veterinary services. (PRNewswire)

>  The FDA has approved Milbemite Otic Solution, a new topical product by Novartis for the treatment of earmite infestations in cats and kittens.  The product contains 0.1% milbemycin oxime solution.  (Federal Register)

>  Embrex, Inc. announced that Fort Dodge Animal Health has received marketing authorization from the Veterinary Products Committee in the United Kingdom for the in ovo administration of Bursamune In ovo to broiler chickens.  Bursamune In ovo combines Fort Dodge’s bursal vaccine with Embrex’s patented VNF technology exclusively licensed from the University of Arkansas.  Embrex and Fort Dodge have a non-exclusive marketing agreement that gives Fort Dodge rights to market Bursamune In ovo in Europe, the Middle East and Africa.  Currently, it is being marketed in France and Spain.  Combined, France, Spain and the United Kingdom produce in excess of two billion broilers annually. (PRNewswire)

>  Diversa Corp. and Aventis Animal Nutrition announced that, based on progress made in the program to date, they have extended their research agreement beyond the initial six month period to develop a biocatalytic process used to manufacture a key Aventis product for animal nutrition.    Aventis has developed a unique manufacturing process, and Diversa is using a combination of its proprietary evolution and screening technologies to optimize the biocatalyst. The extension resulted in additional research funding to Diversa, although specific financial terms were not disclosed. (BW HealthWire)

>  A recent canine weight management study conducted by Purina Pet Products and the North Carolina Sate University College of Veterinary Medicine, helped create the Fit & Trim Weight Loss Kit.   The free kit includes a meal plan, progress report, measuring cup and tape measure to keep track of weight loss, background information on the study and tips on helping dogs shed excess weight. (PRNewswire)

>  PetMedExpress, Inc. announced that its common stock has been relisted on the OTC Bulletin Board under the symbol PETS.  PetMedExpress also announced it had changed its name from, Inc. to PetMedExpress, Inc.  (Business Wire)

> announced that it has formed a strategic alliance with, which recently launched its Web site to consumers, provides pet owners with in-depth health, wellness and medical information, including a multi-media, interactive library, illness- and symptom-driven databases and direct access to the veterinary community.  As part of the agreement, has made an equity investment in and entered into an exclusive marketing partnership with the company. In addition, the sites are now fully integrated. founder and CEO Jon Rappaport, DVM, has been named chief medical officer of (Business Wire)  

> announced the signing of a definitive agreement to acquire WeRPets, Incorporated.  Based in Nashville, Tennessee, WeRPets is an emerging online pet owner and pet professional company that has the worldwide exclusive license to selected content produced by The Health Network in HTML and streaming video formats.  The Health Network is the first 24 hour-a-day cable channel dedicated to health care that includes programming on animal care, behavior and training provided by veterinarians and other professionals.  (PRNewswire)

Animal Health News

>  Foot-and-mouth disease has spread further from western to central South Korea despite government efforts to contain the deadly epidemic. The latest discovery brought the number of infected areas to 12 farms in two western and one central province since the symptoms of the disease were first reported in Paju, 31 miles north of Seoul, around March 20.  South Korea has slaughtered about 900 cattle and pigs and inoculated 200,000 others. It plans to inoculate all 11 million cloven-hoofed animals in the nation. Most livestock markets were closed to prevent the further spread of the disease. In a related news item, Japan’s Agriculture Ministry stated that it has discovered a new case of suspected foot-and-mouth disease among cattle at a farm in southern Japan, raising fears of an epidemic that could threaten the nation’s livestock industry. (AP, Reuters)

>  COMISA, the global animal health body, last week launched its new website.  The site is divided into a public and member area that is accessible only by username and password.  The member’s area contains a calendar of meetings and events, COMISA document archive and links to relevant external documents (VICH, Codex, JECFA, etc). The site can be found at  (Avcare newsletter)

>  A University of Nebraska researcher is performing field testing on sperm-sorting techniques to control the sex of cattle. The sorting technique involves binding a dye to DNA in sperm cells. The dye causes the female sperm cells to separate from the male cells because of differences in the amount of DNA.  The technique can sort about 3,000 sperm per second with 90 percent accuracy. With current methods, sorting enough sperm to inseminate one cow takes about one hour.  The potential benefits to agriculture are widespread; the dairy industry in particular would have an interest in sperm sexing.  XY Inc. will market the technology, and has a goal of introducing a product by the end of 2000. (U-WIRE)

>  A new Internet Web site that allows beef industry customers to track orders throughout delivery and make better decisions on inventory management is now available online from Farmland National Beef.  This unique tracking system is accompanied by a range of industry information, plus an order-tracking system that allows meat buyers and merchandisers to trace their order from placement to delivery.  The site is linked to the USDA’s daily livestock reports, commodity futures, weather and other business information sites. (AnimalNet)

>  IBP, Cargill and its red meat business (Excel Corporation), Smithfield Foods, Tyson Foods, Gold Kist, and Farmland Industries’ red meat businesses (Farmland National Beef and Farmland Foods) have signed a letter of intent to create an on-line, business-to-business marketplace for meat and poultry products, service, and information. The marketplace will be a neutral web-based exchange that will provide a single, convenient place for buyers and sellers of meat and poultry products to connect with each other.  The marketplace will be open to buyers and sellers of meat and poultry products. Together, the founding members have combined meat and poultry sales of over $40 billion. The initial capitalization for the company is $20 million.  The exchange is expected to be launched this summer. (PRNewswire)

>  The Iowa legislature has approved a pseudorabies eradication plan that will require producers in infected regions to vaccinate their hogs and decrease infected herds.  More than 400 Iowa herds have been identified as having pseudorabies. According to the USDA, the disease costs U.S. producers an estimated $30 million each year for vaccinations, diagnostic services and lost production. (Reuters)

>  PPL Therapeutics, which last month successfully cloned five piglets, has claimed that some porcine organs could be available for human transplantation in seven years. The company is initially only looking at growing pig hearts, kidneys, and lungs for use in humans, and is forecasting that the transplants would be tested in primates in about four years’ time. (AnimalNet)

Agribusiness News

>  Novartis AG expects anti-trust approval for its proposed agribusiness merger and spinoff with AstraZeneca Plc soon without making major concessions, according to Chief Financial Officer Raymund Breu.  Breu said Novartis had always expected U.S. and European Union competition authorities to take a close look at the Syngenta agribusiness merger, announced in December, which would create the world’s largest crop protection business. The merger should take place in the second half of this year. (Reuters)

> A coalition of more than 50 consumer, environmental, scientific, farm and health groups filed a legal petition with the FDA in late March 2000 demanding establishment of stringent pre-market safety testing regulations for genetically engineered foods. The legal action aims to replace the FDA’s current voluntary and informal consultation guidelines on GE foods. The submission of the petition has created an official rule making docket that allows the public to write in and support the action. A spokeswoman for the FDA said the agency would review the petition and “carefully consider” it. The FDA is still analyzing some 25,000 public comments it received after a series of public hearings in November and December 1999 on genetically modified foods, she said. (PANUPS)

>  The European Parliament has rejected major changes to proposed laws governing genetically modified crops, which would make producers liable for environmental damage and outlawed “gene pollution.” The changes, rejected in a series votes in the 626-member assembly, had been attacked by Europe’s biotech industry, which warned they would saddle companies with an intolerable financial and regulatory burden, costing jobs and forcing the fledgling sector out of Europe. (Reuters)

Brakke Consulting Viewpoint

Other than the normal amount of dotcom and Internet noise it was a reasonably quiet week in the animal health and pet business. Many of the high valuations of the e-commerce companies got a dose of reality in the market this week.  As we have discussed with a number of you the last two weeks, we believe that the Internet will have an impact on your businesses.  Just how this will all shake out in two to three years is still a big question.  How do each of these e-commerce companies intend to add value to the industry in their business model?  A number of them have some rather shallow assumptions about the industry and a rapidly declining treasury.

[Ron Brakke]
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