The Experts in Animal Health

Brakke Consulting’s
Animal Health News & Notes for August 23, 2019
Copyright © Brakke Consulting

Editor: Lynn Fondon DVM MBA

Brakke Consulting news
Transaction assistance

earnings news
Kane Biotech

other news
AGL Technology
Austin Davis Biologics
Best Friend Group Oy
Consumers Supply Animal Nutrition
Hill’s Pet Nutrition
Nordic Pet Care A/S
Texas Tripe
Vital Petfood Group
VPG Wildbird A/S


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• Kane Biotech Inc. announced its second quarter 2019 financial results. Total revenues were C$221,290 (US$166,000), an increase of 97% compared to the quarter ended June 30, 2018. The loss from operations was C$(953,475) compared to a loss of C$(683,292) in the prior-year quarter. Net income for the quarter was C$1.68 million (US$1.26 million) compared to a loss of C$(684,946) for the quarter ended June 30, 2018; the 2019 period included income from a lawsuit settlement in the amount of C$2.69 million. (company website)

• JBS S.A. reported results for the second quarter of 2019. Net income for the quarter was 2.18 billion reals ($543 million), up from a loss of (911) billion reals in the second quarter of 2018. (Feedstuffs)

• Zooplus reported results for the first half of 2019. Sales were EUR 727 million ($826 million), corresponding to sales growth of 13% (currency-adjusted: 13%) compared to the same period in the prior year. Earnings before interest, taxes, depreciation and amortization (EBITDA) improved to EUR 4.5 million ($5.1 million) compared to the prior year’s loss of EUR (5.0) million. (GlobalPets)


• Elanco Animal Health Incorporated announced it has entered into an agreement with Bayer AG to acquire its animal health business in a transaction valued at $7.6 billion, creating the second largest animal health leader. Elanco will finance the transaction through both cash and equity: Bayer AG will receive $5.32 billion in cash, subject to customary purchase price adjustments, and $2.28 billion or approximately 68 million Elanco Animal Health common shares. This represents a 70% to 30% cash-to-equity mix. (company press release)

• Zoetis announced the launch of Stablelab, a handheld device designed to check a horse’s blood for biomarkers of inflammation caused by infection. The 10-minute test quantifies the biomarker serum amyloid A (SAA), enabling veterinarians to assess the severity of an infection sooner and monitor the horse’s response over the course of treatment. (Todays Veterinary Business)

• The Seventh Circuit has reinstated pet owners’ class action fraud suit against Hill’s Pet Nutrition, ruling that the FDA did not authorize the company’s “prescription” label. The complainants sued Hill’s under the Consumer Fraud Act after allegedly discovering that Hill’s Prescription Diet brand cat food does not contain materially different ingredients from regular pet food, and that no prescription is actually necessary to purchase the food. A federal judge had earlier dismissed the lawsuit, finding that their claims are barred by the safe harbor provision for conduct authorized by the FDA. (

• Covetrus announced that it is partnering with the University of New England’s College of Pharmacy (UNE) by offering an advanced pharmacy practice experience (APPE) to pharmacy doctoral candidates enrolled there. The Covetrus APPE, also known as a “rotation,” allows pharmacy students to gain experience and skills, by delivering pharmaceutical and other animal-health related work supervised by members of the Covetrus Global Prescription Management pharmacy team. The University of New England is the sixth University to adopt Covetrus’ APPE curriculum. (yahoo finance)

• Dr. Jan Pol, a veterinary professional and television personality, launched a new line of branded animal food products at SuperZoo 2019. The line, which includes dog and cat food as well as horse, chicken, goat and rabbit feed, will be manufactured by Consumers Supply Animal Nutrition. (GlobalPets)

• The FDA announced a recall of dozens of Texas Tripe raw pet food products after samples tested positive for Salmonella and/or Listeria monocytogenes (L. mono). 23 samples were analyzed, and 16 were identified as having tested positive for Salmonella and/or L. mono. FDA is advising veterinarians to alert pet owners to safely discard any recalled products and thoroughly clean and disinfect the areas where they were stored. (Veterinary Practice News)

• ezyVet announced it has entered into partnership agreements with the veterinary schools at both North Carolina State University and Ohio State University. They join Cornell University College of Veterinary Medicine, which went live with ezyVet in October 2018. (company press release)

• AGL Technology — which uses technology to provide precision livestock farming and supply chain optimization for Animal Production Integrators and their ecosystem partners — announced it is partnering with IBM Watson IoT. IBM Watson IoT Platform Analytics Service and Blockchain Service will collect, analyze, track, learn and report AGL sensor data; IBM Maximo Production Quality Insights will drive acoustic and visual insights that help automate the application of AGL domain expertise. (company press release)

• MEXICO Avivagen Inc. announced that it has received approval in Mexico for OxC-beta Livestock for use in broiler hens and pigs. (company press release)

• EU Best Friend Group Oy and Vital Petfood Group pet food division announced they will merge to form a new company, to be named Nordic Pet Care A/S. Nordic’s wild bird, caged bird and rodent food will continue independently under Nordic Pet Care Group, but will be renamed as VPG Wildbird A/S. The merger will create one of the largest Scandanavian pet food, treat and other products companies. (Petfood Industry)

• UK Austin Davis Biologics (ADB) announced it will introduce a small redworm blood test as a diagnostic service for horses in September 2019. The blood test was developed by a research group led by the Moredun Institute and Jacqui Matthews; ADB is collaborating to develop the blood test for commercialization. This new service represents the first phase of the company’s product launches for redworms. (Animal Pharm)




• US – NEWCASTLE DISEASE California reported that ongoing surveillance and testing in the virulent Newcastle disease (VND) outbreak in southern California resulted in the detection of a new case on Aug. 14 at a retail feed store in western San Bernardino County, Cal. This is the first detection of VND since June 4. The feed store has been closed temporarily while an investigation is conducted, and the exposed birds have been euthanized. (Feedstuffs)

• US – VESICULAR STOMATITIS The Utah Department of Agriculture & Food (UDAF) announced Aug. 21 that vesicular stomatitis virus (VSV), Indiana type, has been diagnosed on several premises in Uintah and Emery counties in eastern Utah. Utah joins Texas, Colorado, Nebraska, New Mexico and Oklahoma with active VSV cases. (Feedstuffs)

• US – EGG PRODUCTION Oregon’s Governor signed new legislation into law that will make it illegal for eggs from cage-raised hens to be produced or sold in the state. The law will take effect at the end of 2023. This means all three of the US’ Pacific-bordering states — California, Washington and Oregon — will have laws against caged egg production and distribution. (Veterinary Advantage – Watt Agnet)

• US – DAIRY PRODUCTION 60% of dairies with established production histories — nearly 17,000 dairy operations — have enrolled in the Dairy Margin Coverage (DMC) program since signup opened June 17. DMC offers protection to dairy producers when the difference between the all-milk price and the average feed cost (the margin) falls below a certain dollar amount selected by the producer. (Feedstuffs)


How many of you remember the 1970s commercials for Heinz ketchup and the famous song that accompanied it, Carly Simon’s “Anticipation”? The ketchup was so thick, you had to wait and wait for it to come out. That’s when you heard the lyrics, “Anticipation…is makin’ me wait” and at the very end, you heard the phrase, “…it’s worth the wait.”

Well, we don’t have to wait any longer. This week Elanco and Bayer agreed to the terms of a deal that would send Bayer’s Animal Health business to Elanco, making Elanco the second largest animal health company in the world. The $7.6 billion transaction is 70% in cash and 30% in Elanco stock, which Bayer has already announced that it would gradually divest. According to Bayer, the price paid implies a multiple of 18.8 times adjusted core earnings.

But, really, we do have to wait a little bit longer – the two companies expect the deal to close in the middle of next year after reaching approvals from regulatory/government agencies around the world. For approval, there may be some product divestitures that may needed, but we don’t anticipate this to be a major issue for the two companies.

Elanco is now balanced between companion animal and farm animal sales and Bayer gets to focus on its pharmaceutical and crop chemical and seed business. Elanco can work on deleveraging and Bayer can work on its legal issues with Roundup.

And we will have to wait a little bit longer still to see how Elanco manages Bayer’s “top presence on Amazon” with “industry-leading e-commerce/retail capabilities”. Not all that long ago, companies were worried about embracing alternate distribution channels for pet medications. No longer.

We hope for success for Elanco. Having gone through five acquisitions myself, I know that there is quite a lot of work ahead Elanco to integrate the businesses and to reach their financial targets. Only in a few years will we know if it was worth the wait.

Bob Jones

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