The Experts in Animal Health

Brakke Consulting’s
Animal Health News & Notes for December 1, 2000

Copyright © Brakke Consulting, Inc.
Company Earnings Releases

>  PETsMART, Inc. announced financial results for its third fiscal quarter ended October 29, 2000, and for fiscal 2000 year to date. The company reported a third quarter net loss of ($2.4) million, which includes a $6 million non-cash equity loss resulting from adjusting certain balance sheet assets to current, realistic market values. As a result of its recent decision to acquire a controlling interest in, PETsMART, Inc. is required to report 100% of those losses. Those results compare with a reported net loss of ($33.2) million for the same period last year.  On a comparable basis, the company’s operating net income was $0.5 million or $0.00 per share. That compares with third quarter 1999 net operating income of $5.6 million or $0.05 per share, which excluded the equity loss on and the loss from the sale of the United Kingdom subsidiary. Net sales for the third quarter were $541.3 million, compared to $511.8 million reported for the same period last year, while North American comparable store sales for the quarter increased 1.3%. As previously announced, results for the third quarter of 2000 were hurt by slowing sales in a difficult retail environment, and by higher-than-expected shrink levels, which negatively impacted margins. (Business Wire)

>  Bioniche Life Sciences Inc. announced its 2001 first quarter results for the period ended September 30, 2000. Consolidated sales for the three month period ended September 30, 2000 climbed to $6.3 million – an increase of 25% over the corresponding period in 1999. Net loss for the period was ($1.7 million) versus a gain of $235,978 in the first three months of fiscal 2000. On a segmented basis, all three operating units reported increased revenue figures for the period over last year’s results. Vetrepharm reported three-month total revenues of $4.2 million, versus $4.0 million for the three-month period ended September 30, 1999. (CNW)

Company News Releases

>  Novartis reported that the FDA has approved Capstar flea control tablets.  Capstar contains nitenpyram, which has a claim to begin killing fleas within 30 minutes of administration, and kills up to 90% of fleas within 4 hours on dogs and 6 hours on cats.  Novartis will price Capstar so that it and Program together will be price-competitive with existing veterinary channel flea products, providing a comprehensive integrated pest management line for flea control.  Capstar will be available exclusively through veterinarians, and should begin shipping early in 2001.  (Pet Product News)

>  Bayer Corp. has formally asked the FDA for a hearing to challenge the proposed ban of its poultry antibiotic Baytril.  At issue are a family of antibiotics called fluoroquinolones. Some fluoroquinolones are sold to treat animals, but others are a leading treatment for thousands of Americans who get food poisoning from campylobacter, bacteria found mostly in chicken.  In October, the FDA proposed banning the two fluoroquinolones used in poultry. Abbott Laboratories agreed to pull its version, Sara Flox, off the market immediately. Bayer now has 30 days to provide the FDA with scientific evidence backing its claim that Baytril should stay on the market. The FDA can either decide Bayer doesn’t make a convincing case and proceed with the ban – or can let the company take its dispute to an administrative law judge, a process that can take several years. (AP)

> Fort Dodge Australia launched ProHeart SR-12, an injectable moxidectin heartworm preventative that is effective for 12 months.  The product utilizes a microsphere delivery technology that allows for sustained release of the active ingredient.  (The Veterinarian)

> The FDA has approved an abbreviated new animal drug application (ANADA) filed by Phoenix Scientific, Inc. The ANADA provides for use of ivermectin oral paste for the treatment and control of various species of harmful gastrointestinal parasites in horses. (AnimalNet – Federal Register)

>  Officials from a non-profit organization based in Fairbanks, Alaska, confirmed that The Iams Company has donated 44 tons of food to help feed the starving sled dogs in the Alaskan Interior.  The food donation — which arrived in Fairbanks on Saturday — will be airdropped to villages along the Yukon River over the next few weeks. (PRNewswire)
> PETsMART, Inc. and PETsMART Charities are joining forces with vendors to send tons of dog food to the remote area of Tanana, Alaska, in an effort to help stop the killing of Alaskan sled dogs. For the last three years, Alaska’s salmon runs have been the worst in recorded history, and residents are killing their sled dogs, rather than watch them starve to death.  Approximately 38 tons of PETsMART’s Premier Brand dog food is being shipped to Alaska. To date, Ralston Purina, Kal Kan and Hill’s have shipped a total of 73 tons of dog food to Alaska.  It is reported that the Tanana residents will then have enough dog food for the rest of the winter. (PRNewswire)

>  Pethealth Inc. and Incorporated announced that Pethealth has entered into a strategic alliance with The Reader’s Digest Association, Inc and The Reader’s Digest Association (Canada) Ltd. to market a line of pet insurance products that will be exclusively endorsed by Reader’s Digest.  Pethealth plans to offer accident and illness insurance products for dogs and cats throughout the United States and Canada, beginning in spring 2001.  Pethealth is a Canadian corporation that carries on business through its subsidiary, PetCare Insurance Brokers Ltd.  PetCare is licensed, directly or indirectly, to sell its pet insurance policies throughout Canada other than Quebec and the Territories. Pethealth is seeking to obtain U.S. licensing, after which it will work with a U.S. underwriter.  As part of the three-year agreement, Pethealth plans to target millions of prospective customers in the United States through a marketing campaign that will include direct mail and advertising in Reader’s Digest properties. In addition, Pethealth is developing a marketing plan to reach Reader’s Digest customers in Canada. (CNW)


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Animal Health News

> Europe took a drastic new step to end the consumer panic over the spread of mad cow disease by proposing a destruction program for up to two million cattle and a ban on all bone and animal feed. The draconian measures follow the widespread consumer panic that has spread from France to Spain and Germany, which confirmed its first cases of BSE last week. The EU measures, which are expected to be approved by agriculture ministers when they meet on Monday in Brussels, means that all meat from cattle over 30 months will be removed from the food chain unless they have been tested BSE free.  The new EU measures are expected to come into effect on January 1. From that point older cattle will either have to be tested, after being slaughtered, or disposed of under the new scheme (emarkets – The Independent)

>  Qeva Velvet Products Corp., a subsidiary of Elk Equities Inc. focused on the sale of natural medicinal products such as velvet antler, was pleased to note the findings of a literature review conducted by Clinton J. Balok, DVM. Dr. Balok’s literature review, ’The Clinical use of Velvet Antler in Animals’, investigated relative benefits and side-effects of drug therapy and alternative therapies and concluded Velvet Antler was a successful treatment for pain and discomfort in animals affected with osteoarthritis. Over 200 animals with various conditions ranging from hip and elbow dysplasia, spinal arthritis, stifle injury and arthritic degeneration, post-surgical healing and soft tissue injuries were treated. Of the small animals treated, close to 80% responded favorably and greater than 50% of horses treated responded to the therapy.  Qeva is in the process of conducting a double blind placebo study to further validate these findings.  (CCN Disclosure)

>  The American Veterinary Medical Association is committed to the availability of food that is safe, healthy and nutritious for the consumer.  The Association supports the use of biotechnology where it benefits human or animal welfare, and/or enhances efficient production of a safe and nutritious food supply. The AVMA supports a science-based regulatory system for the approval
of products developed through biotechnology.  Current regulations require USDA, FDA and EPA to approve these products for safety and efficacy before they can be marketed for human or animal use or consumption. New products developed through biotechnology may benefit the environment and enhance the nutritional value and safety of food for humans and animals.  The AVMA urges that any additional regulation of products developed through biotechnology be risk-based and science-based. (AnimalNet – AVMA Executive Board)

>  The first two cases of mad cow disease detected in German-born cattle were announced as Europe’s BSE crisis deepened. The disclosure was a devastating blow to German claims that its home- grown cattle were free of the disease. The discovery that BSE had spread to Germany’s domestic herd – a cow born and slaughtered in Germany tested positive for BSE for the first time – prompted a decision to back French calls for an EU- wide ban on meat-and-bone meal feed for all animals. The decision came after Greece, Italy, Spain, Austria and the Netherlands imposed partial bans on imports of beef from France in an effort to calm consumers. (emarkets – The Independent)

>  According to a statistician at the USDA, U.S. farm exports rose in the recent fiscal year for the first time since 1996, reflecting unexpected demand for meat.  An estimated $50.9 billion in U.S. farm goods was sold for export in the year to Sept. 30, up $400 million from what the government had forecast in August.  Sales rose 3.7% from a five-year low of $49.1 billion in fiscal 1999. One reason for the increase was unanticipated strengthening in the last quarter in red meat sales, hides and skins. Exporters also sold more field crops, especially soybeans, than was previously expected. The USDA will publish final figures on export sales Dec. 4. (Bloomberg News)

Brakke Consulting Viewpoint

The week had limited amounts of good news for the industry. The financial markets continue to trend downward which is not good for those firms seeking for financing.  We have all been watching for some positive news in the biotechnology and the electronic technology areas. Neither is positive at this point.

The best news is the positive upturn in the feed cattle market.  The $4 to $6 per hundred weight increase is a nice surprise for those holding some heavy cattle.

Have a good weekend.

 [Ron Brakke]
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