Tim Boreham

Anatara has the right end of the pineapple after entering negotiations with a global vet drug giant to commercial its treatment for porcine diarrhoea. Meanwhile both Anatara and vet health peer PharmAust are also eyeing human health applications.

Anatara Lifesciences (ANR) $1.22

Porkers of the world rejoice! If Anatara’s drug rollout goes to plan, soon their short lives in the sty will be healthier and just that little bit longer.

Anatara has won the support of global animal health arm Zoetis, a Pfizer spin-off company that has exercised an option to develop Anatara’s porcine treatment Detach.

The commercial terms are yet to be negotiated, but if it pans out as expected Zoetis will assume all the ongoing costs and Anatara will pocket some fat milestone and royalty cheques.

“All I can say is they are interested in the entire global rights for the animal applications,” says Anatara chairman Mel Bridges.

Detach is a natural alternative to reduce scour (diarrhoea) in pigs – a major problem for pork producers globally.

The treatment – derived from the roots of pineapples of all things – is an alternative to both antibiotics (a no-no in the food chain) and toxic zinc oxide.

Anatara’s street cred is greatly enhanced because Detach was used in the 1990s, when it was owned by Ciba-Geigy. However the company was taken over by the global drug Novartis, which was less than enthused about animal health and let the product lapse despite strong sales.

Anatara has 5000 bottles of Detach made up already at its Sydney facility, enough for 500,000 doses. “It’s easy to make and we could supply the Australian industry for a year in just for four days of manufacturing. We have bottled compliant doses ready to go and major pork producers lined up.”

Bridges is confident the relevant agent, the Australian Pesticides and Medical Veterinary Authority, will grant approval by the end of the calendar year. Such assent would also provide a gateway for Detach to be adopted in Asia, especially China (the world’s biggest pork producer).

While a decent sized local farm might husband 41,000 sows, the biggest Chinese farm houses 1.1 million Babes. The current standard of care for scour is zinc oxide, a soil pollutant.

“Believe it or not China has gone very green and they would like to take antibiotics out of livestock feed,” Bridges says.

“Meanwhile, zinc oxide is a pollutant banned in China and Europe.”

Detach’s active ingredient is an enzyme which blocks the receptor sites in the gut that the parasites attach to, thus causing the trotters … er, trots. Apparently it tastes a bit like citrus acid and the pigs (who aren’t the fussiest eaters) love it.

With the economics of pork production finely honed, Anatara is pitching on Detach being cheaper than antibiotics, with field trials pointing to weight gains of 5-35 per cent and a reduction in mortalities of up to 50 per cent.

A veteran of the biotech scene, Bridges knows the dangers of a revenue generating company squandering its funds on value-destroying product extensions. He insists that the spoils will be returned to shareholders.

Having said that, Bridges reckons that there’s a bigger game to be played in developing Detach for human health, including diarrhoea and irritable bowel syndrome.

“Apart from hokey-pokey nutraceuticals there is nothing out there for irritable bowel syndrome,” he says.

Still, the Zoetis deal was enough to push Anatara shares 28c (29 per cent) higher – yes, there was a ‘run’ on the stock -although they’re still well off their December 2016 peak of $1.78.

There’s at least one industry participant who thinks Anatara's ambitions are more than pie in the sty: the Lederer family – the founder of Primo Smallgoods – recently joined the register with a 5 per cent stake.

PharmAust (PAA) 6.4c

There are plenty of cases of human drugs being repurposed for veterinary use, but not so much the other way around. That makes PharmAust different to other early stage drug developers as it targets cancer treatments for both people and their four-legged friends.

At the heart of PharmAust is a drug called Monepantel (MPL), which has been used for eons as an anti-parasitic sheep drench.

Marketed by Eli Lilly’s animal health arm Elanco as Zolvix, the compound is nearing the end of its patent life and is being used less because of increased resistance.

Serendipitously local clinical oncologist and part-time sheep farmer Professor David Morris fiddled with the drug in the lab and stumped on its anti-cancer properties.

Enter PharmAust, which carried out an early (phase one) on dogs afflicted with lymphoma, the most common canine cancer.

Of the four dogs treated, three recorded tumour regression of between 2% and 19% (an average shrinkage of 11%).

Unlike mice, the standard lab guinea pigs, dogs are closer related to human physiology.

A subsequent human study of at the Royal Adelaide Hospital established a reduction in cancer markers. Of the eight patients who started, two discontinued because of the foul taste and two pulled out for other reasons.

We stress it’s very early days.

In seeking to repurpose and reformulate Monepantel, PharmAust hope to overcome a key detriment. In the words of CEO Richard Hopkins: “it tastes like floor polish”.

It’s been ok to deliver it down the throat of sheep via tubes, but for dogs and humans the vile taste has created compliance problems.

Under its deal with Eli Lilly’s animal health arm Elanco, Elanco has the right to negotiate to buy the animal rights after the trail data has clearly showed data regression.

As with Anatara and its deal, a wad of cash awaits if a deal is struck and these funds would be used for human health studies.

PharmAust is now canvassing vet consultancies willing to participate in further trials using the reformulated version.

PharmAust has a $2.6m cash balance which sounds light on, but its contract synthetic drug-manufacturing arm Epichem delivered just over $3m of revenues in the 2016-17 year.

Naturally, the potential human market is bigger than the canine market. But the animal health side could be a howling success given the willingness of owners in affluent markets to keep their mutts alive.

Tim Boreham authors The New Criterion


Disclaimer: The companies covered in this article (unless disclosed) are not current clients of Independent Investment Research (IIR). Under no circumstances have there been any inducements or like made by the company mentioned to either IIR or the author. The views here are independent and have no nexus to IIR’s core research offering. The views here are not recommendations and should not be considered as general advice in terms of stock recommendations in the ordinary sense.


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