Opportunities Abound In Biopharma
Opportunities in veterinary oncology and biopharmaceuticals were recurrent themes in presentations at the KC Animal Health Corridor’s third annual Investment Forum, held in late August in Kansas City in conjunction with its sixth annual Homecoming event and the Central Veterinary Conference.
While those opportunities perhaps reflect the presentation selection committee’s interests more than those of the roughly 180 investors and other participants attending, hey jibed with the messages of featured speakers Ron Brakke of Brakke Consulting and Ernst Heinen, vice president of research and development at Bayer.
In a somewhat dour midyear industry overview, Brakke noted that the animal health industry is maturing, that there would be fewer large products and the pipelines at the major companies were relatively empty. He also mentioned the Bayer Veterinary Usage Study, which showed declining veterinary visits on the companion animal side in part due to price resistance.
He concluded by predicting “little real market growth after inflation in 2011” for the animal health industry.
Heinen said he didn’t fully expect there to be more blockbuster drugs, especially traditional “small molecule” drugs, in animal health. However, he did see potential growth in new technology and new drugs, including bio-pharmaceuticals (such as peptides and antibodies), stem cells, individualized medicine, diagnostics and genetically engineered and cloned animals.
At the Forum
During the core portion of the forum, 14 fledging companies sought capital from investment groups and established animal health companies through short presentations.
At least two of the oncology opportunities focused on bringing oncology into the general practice: DermDx and NanoPharm.
DermDx Inc. of Fresno, Calif., plans to bring to market an optical instrument capable of rapid, accurate, non-invasive skin cancer diagnosis in a doctor or veterinarian’s office. It sought $1.5 million in funding for a clinical trial in animals and to prepare for U.S. Food and Drug Administration human trials.
The company expects the device, which would prevent unnecessary biopsies, to also be useful in diagnosing other skin diseases and other cancers.
DermDx plans to launch the instrument in 2013 in the human medical market in Europe, where the approval process is easier and quicker, followed by the U.S. human medical market and then the veterinary market.
The company estimates that about 10 percent of veterinary clinics have sufficient volume to be “very profitable” using the instrument and ultimately expects to place 5,000 units in veterinary practices.
Two Idexx Labs veterans serve on the company’s management team: CEO Sampath Srikanth, Ph.D., MBA, who was general manager for the Preclinical Research Services and Applied Data Solutions business units at Idexx from 2001 to 2006, and chairman Robert Hulsy, MBA, a former corporate vice president and division president of Idexx Reference Laboratories and Idexx Digital from 1998 to 2007.
NanoPharm LLC of Lawrence, Kan., sought $5 million to prepare for launching products using its hyaluronan-based nanoscopic drug carrier platform for use with existing and new chemotherapeutics. Hyaluronan is a natural polymer already approved for use in veterinary and human injectables.
Using the FDA pathway requirements for Minor Uses Minor Species market entry, Nanopharm expects to launch HA-cisplatin in the first quarter of 2013 and HA-doxorubicin a year later. The platform could then be used for other chemotherapeutics.
NanoPharm says its system would allow for “increased absorption of chemotherapy at the source of the cancer and associated lymph nodes” while reducing toxic side effects by minimizing exposure to healthy tissue.
“This technology has the added benefit of administration through simple injections or shots under the skin or into the tumor, which will enable smaller veterinary clinics the ability to cost-effectively provide treatment, increasing treatment availability and compliance,” the company says.
VGX Animal Health Inc. of The Woodlands, Texas, launched by parent company Innovio Pharmaceuticals, sought $10 million to $15 million to advance the regulatory studies of various products based on non-viral gene therapy for veterinary uses.
The company forecasts it could bring four products to market within the next five years.
Its lead product is a canine-specific telomerase reverse transcriptase DNA vaccine construct that has delivered high levels of killer T cells to target 85 percent of all tumor activity, which the company sees as a potential “universal cancer vaccine” for the treatment and prevention of canine cancer.
The other products target anemia associated with solid tumors in dogs and anemia associated with chronic renal failure in cats and in dogs.
VetDC Inc. of Fort Collins, Colo., sought $8 million in funding to support development of its cancer drug VDC-1101, which it hopes to launch in 2013 for dogs with lymphoma. VetDC acquired the animal cancer rights to the agent earlier this year.
VetDC is a cancer-focused product development company that plans to develop human biomedical technologies for veterinary use. In addition to its lead compound, the company has active leads for treating osteosarcoma and a cancer biomarker assay. The company expects to be acquired in about five years by a large animal health company seeking an oncology franchise.
Australian biotech Nexvet Biopharma Pty Ltd. of Southbank, Victoria, sought $6 million for proof of concept development of its Petization technology platform that converts human biotherapeutics into species-specific proteins, thereby eluding immunogenicity issues involved with foreign proteins. Biologics for humans, including such drugs as Remicade, Herceptin, Humira and Avastin, now account for more than $70 billion in revenue per year, the company reported.
Nexvet is developing novel biologics for dogs, cats and horses in the areas of inflammation, pain and oncology. Its primary focus is on pain, with expectations that monthly (or less frequent) injections of a biological would manage pain without the liver toxicity issues of small-molecule drugs.
Nexvet expects its share of the veterinary pain market could be worth more than $300 million a year within six years of launching a product. The company is targeting 2016 for possible market entry.
Rapid Diagnostek Inc. of Hudson, Wis., sought $7.5 million in funding to commercialize its rapid diagnostics system in the animal health industry. The company’s system consists of a cell-phone-size instrument and single-use disposable sensors that measure molecules or other substances. The sensors feature a biological coating that specifically binds the molecules to be measured in blood, urine, saliva, milk or any other liquid. The instrument then detects and measures the substance using radio frequency signals.
The company hopes to bring the system to the veterinary market in the third quarter of 2012 through two partnerships. It recently signed a development and commercial agreement with Heska Corp. to cover companion animals and in August entered negotiations with a large animal health company to cover production.
Early tests will target heartworm and influenza. The company estimates the animal health rapid test market could be worth $500 million.
Oblato, a company to be formed in the U.S. by CHA Bio & Diostech Co. Ltd. of Korea and other investors, sought $15 million to support its establishment in the U.S. The company will commercialize oral thin film technology for oral delivery of prescription and over-the-counter human and veterinary drugs.
The company first expects to enter the human market in 2012 and launch its first of six companion animal applications in 2013. Oblato expects its first veterinary application will be an ivermectin/pyrantel oral thin strip that will be compared with Heartgard; it projects animal health revenue of $16.2 million in 2013, growing to $71.5 million by 2015.
Argenta Ltd. of Auckland, New Zealand, sought strategic partnerships and alliances instead of direct equity investments to support its establishment of research and development laboratory services in the U.S. and increased staffing for its AlcheraBio clinical research support provider unit.
Argenta estimates it will spend about $4.5 million over three years establishing its U.S. presence, money it expects to recoup during that period through increased U.S. R&D contracts.
An estimated 750 animal health executives and public officials celebrated the region’s animal health sector during the Homecoming event. A highlight was Argenta’s announcement that it had selected the KC Animal Health Corridor as the location of a new U.S. R&D lab facility and office and its wholly-owned clinical research support provider, AlcheraBio, would open an 11-job facility in Kansas City, Kan.
Argenta, which provides drug development services and contract product manufacturing for the animal health industry, will open a facility in the Bioscience and Technology Business Center at Kansas University in Lawrence, Kan., creating 27 jobs and investing $500,000 in laboratory equipment.
To help land Argenta, the Kansas Bioscience Authority will invest up to $400,000 over five years to support the establishment of Argenta’s Kansas operations.
“Argenta brings added credibility and prestige to the growing animal health industry cluster in our KC region,” said Bob Marcusse, president and CEO of the Kansas City Area Development Council, which recruits new business for the corridor.
“We can now say that over the past six years, we have attracted 21 new animal health companies pledging to create more than 1,300 new jobs and nearly $900 million in capital investment.”
HealthyMouth LLC of Malibu, Calif., was seeking to be acquired and/or enter a licensing agreement for its natural dental health water additives and gels for dogs, cats and horses.
The dog and cat products have been awarded the Veterinary Oral Health Care Seal of Acceptance for plaque control, the company reported. The dog and cat water additives were launched in 2010 and HealthyMouth expected to launch gels for dogs and cats in September. The products were being sold by about 250 practices in the U.S. and Canada as of late July. Founder and CEO Karen Albert forecast that number would grow to 7,000 by 2014, generating $56 million in revenue.
Other presenting companies included:
• AndroLogika of Columbia, Mo., which sought $550,000 to help commercialize its proprietary technologies for bull fertility testing and semen purification by removing defective sperm cells from semen used for artificial insemination;
• Aptimmune Biologics of Champaign, Ill., which sought $3.275 million (including $500,000 initially) to help develop better swine vaccines, beginning with a porcine reproductive and respiratory syndrome virus vaccine;
• Intrepid Bioinformatics of Louisville, Ky., which sought $3 million to ramp up operations for its data storage and management solution for genetics experts;
• NBO3 Technologies LLC of Manhattan, Kan., which sought $2 million to $5 million for commercialization of its proprietary animal feeding system designed to produce meat and dairy products with high levels of omega-3 fatty acids;
• Tetragenetics Inc. of Cambridge, Mass., which sought $10 million for developing its recombinant vaccines for human and veterinary use, with an initial target of an infectious salmon anemia vaccine.
The investment forum also included an overview of the Center for Animal Health Innovation, which began operations in spring at the Olathe campus of Kansas State University. The center provides funding and support to animal health projects in the proof of concept phase.
Also during the event, Joerg Ohle of Bayer was presented the 2011 Iron Paw Award for seeding initial efforts of the KC Animal Health Corridor. The presentation was broadcast via video from Switzerland.
Former rodeo star Ty Murray spoke at the event.