Tell me about Avivagen Inc.
Avivagen Inc. (TSX: V.VIV, Stock Forum) is a health and wellness company, with products that contribute to and support human and animal health. Avivagen has a breakthrough, proprietary product that has applications in three major markets. The three markets are: i) companion animals, which includes cats, dogs, horses and ornamental fish; ii) food animals, which are animals grown for food consumption and; iii) the human health market. For example, Avivagen has developed and exclusively owns a product that helps food animals utilize feed more efficiently, resulting in faster-growth potentially, using less feed - the major cost of food production - and potentially without the use of antibiotics, a widespread industry practice that needs to stop. Our product has the potential to positively change market production practices, while decreasing costs, all of which results in a more naturally grown and sourced protein. This gets us really excited! In addition, we also have a product on the market for pets and we are seeing great results. The profile for this product allowed us to partner with a major animal health company in the U.S. and they are now selling our product through veterinarians. We also have the potential to launch some really interesting products for the human health market. Stay tuned!
What is unique about Avivagen Inc.?
Avivagen is unique in a number of ways. Avivagen looks to nature to guide its decisions on its products. There are a lot of very successful products that have been derived from nature. A lot of things in use today are derived from nature. Avivagen is interesting because it has a product derived from nature and is an intellectual property protected product. Avivagen scientists have applied the rigorous science of the pharmaceutical industry to a natural product even though it is not a drug. It’s a supplement. Avivagen owns the intellectual property and has exclusive rights to the product platform. In a nutshell, what is unique about this company are those key features; using something from the natural world, yet applying rigorous science and pharmaceutical standards with intellectual property so that we have a differentiated product exclusive to Avivagen.
Why have you chosen to focus in the pet and livestock markets?
With any discovery, you can never know initially exactly how something will work. Avivagen focused intentionally on the companion animal and livestock markets because the product demonstrated effectiveness in these animals. When you look at developing a product for the human market, the safety and other studies require that you first work in the lab and then with animals. In animals, we found that the product helps these animals be healthier. When we looked at animals initially, what we saw were some incredible results in clinical studies. We ran clinical studies with dogs and found that they had decreased shedding, improved coat quality, increased mobility and better overall health. The company has made no claim for treating diseases, but the actual product demonstrated in clinical studies that it was really helping animals be healthier. Importantly, since the product has been launched, it has been given to over 2,000 dogs and the owners of these dogs are reporting lots of positive feedback, especially older dogs that were becoming lethargic, having hip problems or just general mobility issues. According to owner feedback, with this product, dogs were more mobile, more playful again, and demonstrated less shedding. That was a really compelling story to us, so we recognized an opportunity to enter the pet market first through a product for dogs.
Through a collaboration with a veterinarian at the Atlantic Vet College in PEI, in studies done with small pigs it was found that the pigs being fed their normal diet plus Avivagen’s product grew faster while eating less feed. Avivagen’s product being naturally derived and not an antibiotic or a growth hormone is a very interesting product to both producers and consumers. The small pigs were healthier at a reduced producer’s cost. The consumer would have a solution to concerns about additives such as antibiotics in meat and fish. This result led Avivagen to additional trials in poultry and beef with similar positive results, indicating a potential solution to reducing antibiotic use in food animals.
What is Avivagen’s flagship product?Can you describe it and outline its importance?
The flagship product can be described as a platform product because it can be made in various formulations for different market segments. Three markets that we are now addressing are: companion animals, livestock and human health. For companion animals there is a chewable tablet for dogs available and there will soon be a product for cats. Oximunol is our proprietary chewable product line available exclusively through veterinarians in the U.S. Oximunol Chewable Tablets are distributed by a major animal health company in the U.S. and we are currently in discussions for other international distribution agreements.
What is so special about this product(s) and why does it excite you?
This product is really exciting because of what it does. Ultimately, we all care about quality of life. Pets are often a member of the family. They’re loved, they’re named, they go on family trips, and as they age and their quality of life deteriorates, the family cares and wants to see a difference. What’s exciting for us is that this product, through independent third-party studies, shows that it really helps these animals have a better quality of life.
What stage are you at with this product?
Oximunol Chewable Tablets for dogs are on the market for sale in the U.S. A product for cats we expect will be coming in the first half of 2013 and then one for horses would follow not too long after that. Avivagen is also hard at work on the regulatory requirements for the use of the product platform in food animals. We are hopeful we can get traction and get to market sooner rather than later in the food animal market.
Are there other projects (products) within the company that you want people to be aware of?
This is a product platform opportunity and we think that there could be an application in human health. The caveat is that we don’t yet have sufficient studies for the human market, and it’s not approved for human use. We think that we can develop a health supplement for the human market. Based on the properties that we are seeing demonstrated with dogs and cats and the overall health improvement that we are seeing in livestock, we believe that this could be a product that could help maintain daily health and perhaps make you more resilient in the face of a cold or a virus. We have some results in studies that showed some anti-inflammatory effects on the skin, which could perhaps lead to some cosmetic applications. The company is looking to explore these markets and we will collaborate with leading, recognized companies to address these multi-billion dollar markets.
Are you working in partnership with other companies?If so, which ones?
Avivagen is working with Teva Animal Health as the exclusive distributor in the U.S. to veterinarians of the Oximunol product. In 2013, we are looking to do additional distribution and partnership agreements for other territories, including Europe, Asia, Australia and New Zealand.
What are the key challenges that you face in your business?
When you invent something new and you are a small company, it is hard to get awareness and recognition. Importantly, the company has decided to address that by seeking out partners. That’s really the biggest challenge when you have a new product and you are a small company. Markets tend to be skeptical of why they’d want to use those products - when it comes from a small company whose name they don't recognize. The data alone isn’t enough usually to convince people. Partnering with name brand, leading and recognizable companies who are specialized in the niche market that we are going after, will de-risk it further for us by using their name brand and marketing muscle and know how to get the product penetration that we all think is possible.
What is the greatest risk factor?
Execution. Normally when you talk about biotech or life science companies, the biggest risk would be technological or regulatory. For instance, is the product going to work? Is it going to do what it says it is going to do? Avivagen now no longer needs to prove that the product works. We are out of the trial phase. We are really now at an execution stage. If this company rolls out the products to the right partners, and those partners have the right business plan to penetrate the market, that should be the biggest single factor in bringing success to the shareholders.
Can you describe your most important achievement last year?
The most important achievement in 2012 was related to the launch of Oximunol chewable tablets for dogs in the U.S. In February 2012, Avivagen announced the signing of the distributorship with Teva Animal Health, which then led to our first, sizeable order. We are expecting additional orders throughout 2013. It was a great moment to have gone from discovery, then developing a product, partnering it, getting it to market and seeing that your product is generating sales because it helps quality of life. There is nothing more rewarding than that.
What are the key goals for 2013?
We start any new year like everyone else - with great optimism. 2013 could see Avivagen:
-bring to market a new product for cats
-bring to market a product developed for horses
-multiple orders from our distributor
-sign up other distributors in other markets and get orders for those markets
-we also think we will get our first approvals in some countries in Asia, for the food animal product.
We don't know if we can achieve or when we achieve all of these things, but we think we have a pretty exciting series of news flow events coming in 2013.
Do you have any funding to finance these plans?
We do and fortunately, part of the funding is revenue from our distribution partner and other product sales. We also have funding from NRC-IRAP, as well as a federal agency called the Atlantic Canada Opportunities Agency. We also have equity funding and the capital markets so that we leverage all sources of capital to help us grow. Fortunately, we don't need a lot of capital to execute our plan.
What do you think you could do with the company (products) over time? What would the goals for it be?
What we want to do with the company’s products is develop a significant and diversified revenue stream from all these different markets (companion animals, food animal market, and the human health market). All of these are high margin businesses for the company, which could generate substantial cash flow potentially. Ultimately, the company could bring in other products that are complimentary or it would not be out of the question to think that one day the company could be sold to any number of potential customers. While the company isn’t up for sale, there may be opportunities to either grow this organically, and bring in other products, or potentially be sold to the right partner for the right price at the right time.
Why should an investor be interested in Avivagen Inc.?
An investor should be interested in Avivagen because it can appeal to almost any investor through the three markets; companion animals, food animals and human health. If you have a pet, this product could be very meaningful to their quality of life, particularly as they age. If you eat meat or fish, you certainly care about how the animals are treated and the quality of the product that you are eating. Many care about the level of antibiotics used in food animals. On that basis, we think you would care about a natural solution, that’s intellectual property protected, to have a healthier and better quality more natural source of protein. Finally, we talk about human health and wellness. If confirmed through further studies, that the product as a supplement supports the human immune system and decreases inflammation it would be quite beneficial. We think that would be a great product that could be applicable to anyone. If an investor cares about health and wellness, and quality of life, here’s an opportunity where this company can actually generate significant cash flow over time at very nice margins, while doing good.
Is there anything else you would like to say?
The total markets that we are addressing are in the billions of dollars of opportunity range. As the company executes and rolls out with partners, we are really talking about very large markets and a better quality of life. It’s a rare opportunity to address quality of life, a feel good opportunity, and potentially make money. While we can’t comment if we are under-valued or over-valued, we think the opportunities ahead are very exciting.
Disclosure: Avivagen Inc. is a Stockhouse client