Cattle Products
Dairy Market Opportunity
We believe that the bovine market, primarily dairy operations, represents the largest market opportunity of all of our current animal products to date.
The success of a modern dairy cow operation is dependent upon a number of critical factors. Several of these factors are outside the control of the dairy producer, such as milk prices and costs for feed, nutrients, and medicines. Other factors, however, are within the dairyman’s control such as size of the operation (number of head milked), labor costs, and access to high quality bulk feed. The amount of revenue derived from milk sales is a function of the quantity of milk produced and the level of milk fat contained in the milk. These factors correspond directly to the amount of time that a cow is pregnant. The more days during a year that a cow remains not pregnant (frequently referred to as "open"), the lower the annual milk production from that cow, hence the lower the revenue received.
The worldwide population of dairy cows exceeds 100 million, of which approximately 58 million cows are located in North America, Europe and the former Soviet Union. According to industry estimates approximately 70% of cows in the North American and European dairy industry are artificially inseminated ("AI"). Although there are no known published reports regarding the number of timed or synchronized cow breedings, we believe, based on discussions with industry sources, that there are an estimated 16 to 20 million artificially inseminated cows in timed breeding programs in the United States.
The average number of days per year that a cow remains open has steadily increased over a number of years. This has had a negative impact on the average milk revenue produced per head. A significant percentage of dairy cows, when artificially inseminated, do not become pregnant. There is a growing percentage, estimated currently at 70% of artificially inseminated cows that do become pregnant however, they abort or absorb prior to delivery. Lower pregnancy rates are associated with higher milk production costs.
Several reproduction drug products and breeding management programs have been introduced over the last 20 to 30 years that are designed to create more effective breeding programs for artificially inseminated cows. Despite these drugs and programs, cattle reproduction efficiencies have continued to decline. The total cost of artificially inseminating a cow, including the semen, breeder time, and the administration of Gonadorelin (e.g. Cystorelin® "GnRH", sold by Merial) and Prostaglandin ("PGF", e.g. Lutalyse®, sold by Pfizer) to promote ovulation is estimated to be in the range of $15 to $35 per head per treatment (excluding labor) before the cost of ultrasound for determining pregnancy status. The majority of this cost is incurred again with each subsequent artificial insemination, averaging at least two treatments per year to achieve successful pregnancy.
Cattle Reproduction Products
Under the world-wide agreement with Novartis Animal Health, development of both BoviPure-LH™ (single-chain LH analog for cows) and BoviPure-FSH™ (single-chain FSH analog for cows) are advancing, with the majority of the development efforts performed by led by a team from Novartis Animal Health. The scientific staff of AspenBio are working closely with Novartis on this project. These specialized products are designed to create more effective breeding programs for artificially inseminated dairy cows (LH) and to increase the efficiency of superovulation (FSH). Pregnancy is necessary for efficient milk production and effective reproduction programs increase milk production per cow and profitability of the dairies, by leaving fewer open cows.
Currently, approximately 70% of dairy cows fail to conceive or maintain a viable pregnancy after artificial insemination ("AI") resulting in significant financial and production losses to the dairy. BoviPure-LH™ utilizes our exclusively licensed "single-chain gonadotropin" recombinant drug technology which we believe will offer cost and performance advantages over conventional bovine hormone products available in the worldwide market. We believe this drug may create a totally new pregnancy maintenance market to enhance dairy economics for artificially inseminated dairy cows.
It is estimated that there are between 16 and 20 million artificial insemination attempts annually in dairy cows in the United States alone. Recent research has indicated that BoviPure-LH™ may provide additional economic benefits to expand the market potential for use with artificial insemination in dairy cows. We believe the U.S. pregnancy maintenance annual market for BoviPure-LH™ could exceed $200 million annually which would be marketed under the Novartis Animal Health agreement. We also believe there are similar potential markets outside the U.S.
BoviPure-LH™
BoviPure-LH™ is a novel single-chain LH analog for cows. This new hormone analog is designed to induce ovulation and produce a phenomenon that has been shown to reduce the rate of pregnancy loss in cows. Currently, approximately 70% of dairy cows fail to conceive and / or maintain a viable pregnancy resulting in significant financial and production losses to the dairy farmer. Bovipure-LH™ analog for cows utilizes our exclusively licensed "single-chain gonadotropin" technology which we believe will offer cost and performance advantages over conventional cattle hormone products available in the worldwide market.
Novartis Animal Health established an INADA file number for this product with the FDA. That application officially commenced the FDA approval process for BoviPure-LH™ which is currently in regulatory development. The project is now being led by Novartis Animal Health under the licensing agreement we entered into with them in 2008. We believe this drug may create totally new ovulation and pregnancy maintenance applications for artificially inseminated dairy cows.
It is estimated that there are between 16 and 20 million artificial insemination attempts annually in dairy cows in the United States alone. While large scale statistically significant studies are required to definitively demonstrate its specific properties and advantages, we believe BoviPure-LH™ would be an applicable and beneficial product administered to dairy cows as part of an artificial insemination program as a therapeutic treatment to improve the quality of ovulation and help maintain pregnancy. Based upon an assumed net selling price we believe the total potential U.S. market for BoviPure- LH™ could exceed $200 million which would be marketed under the Novartis Animal Health agreement. We believe there are similar potential markets outside the U.S. Actual market penetration forecasts would depend on the drug efficacy (rate of ovulation, enhancement of fertility and pregnancy improvement) along with the ability to penetrate the total market. Such marketing advancement will be done by Novartis Animal Health under our license agreement with them. As a recombinant hormone drug, this product will be prescribed and administered by licensed veterinarians; the ultimate customers will be producer clients operating commercial dairy herds using timed (synchronized) breeding programs.
We anticipate the benefits and value of the BoviPure-LH™ product, if able to be successfully launched into the dairy industry are summarized as follows:
- Percentage of cows maintaining pregnancy may significantly increase by approximately 10 -50%;
- May save the additional cost and manipulation to the animal of repeated reproduction treatments;
- May reduce average days a cow is “open”, thereby improving overall milk production, and milk quality and calf production;
- Anticipated cost per application will be cost justified to the dairy operator;
- The product is easy to administer; and
- Technology is patented with additional patents pending.
BoviPure-FSH™
BoviPure-FSH™ is a novel single-chain FSH analog for cows. It is designed for super-ovulation for embryo transfer in dairy and beef cows throughout the world. We expect the initial usage will be greatest in the beef industry but may expand in the dairy industry with the anticipated increased use of predetermined sex semen for artificial insemination. This product is in an advanced stage of development and is expected to provide significant benefits including superior single-dose product efficacy, unmatched purity, consistent bioactivity and significant labor savings for end users, versus conventional "animal-derived" pituitary extract FSH products currently on the market. These benefits are important to users of FSH products currently on the market. Conventional FSH products, all of which are directly harvested from animal origins, have inherent problems with product safety, purity and consistency. In addition, these conventional FSH products require considerable human and facility resources with an average of 8 treatments given every 12 hours for 4 consecutive days for every animal being treated versus our single treatment product.
Novartis Animal Health established an INADA file number with FDA for BoviPure-FSH™. We have successfully completed characterization, pilot dose and pilot efficacy testing on this product. In that testing, we have demonstrated it can provide efficacy in a single dose versus conventional market leading porcine FSH drugs which require 8 injections given every 12 hours for 4 days. The project is being led by Novartis Animal Health under our agreement.
We believe the annual estimated market for this product exceeds $20 million which would be marketed under the Novartis Animal Health agreement. It is expected that as this drug becomes commercially available its uses may grow due to other developments in animal reproduction. This product will be prescribed and marketed by licensed veterinarians, the ultimate customers will be producer clients operating commercial dairy and beef breeding herds.
