A natural replacement for antibiotics

As questions continue to mount about the prospect that taking too many antibiotics will reduce their effectiveness in fighting illness, an Ottawa-based company has developed a natural product for the meat industry.

OxC-Beta is a natural health optimizer, created through the reaction of oxygen with a specific carotene from the carotenoid family. Rather than relying on antibiotics to fight bacteria, Avivagen says OxC-beta will naturally strengthen and support the immune system and achieve optimal levels of animal health.

“It has immunological benefits to animals in terms of their health,” says Graham Burton, Avivagen’s director of commercialization science.

The company specializes in both companion animal supplements and feed additives to replace antibiotics in feed for poultry, swine and cattle.

Avivagen also markets its products to the pet industry. One supplement is called Vivamune and focuses on improving animal fur and skin.

The other supplement they offer is Oximunol. It is not available for sale in Canada yet due to changes in Canadian animal health regulations. But the company is currently working with Health Canada for a solution. Both products are currently available online through Amazon and Avivagen’s website.

“It’s a market with a large unmet need. They use steroids, but those are hardly satisfactory for a long-term basis. We’ve had good results on the market in the U.S.,” says Burton.

Benefits for pets of all ages

Avivagen’s pet products help to bring your animals, especially older ones, to optimal health. However, while this market has been successful for the company, they are currently focusing on their feed additive for livestock.

By implementing OxC-Beta to the animal feed of livestock, they hope to eliminate the use of antibiotics and help the animals grow in a more natural way.

The challenge for Avivagen, now that the product has been developed, is establishing the product on the market. It needs to introduce it as a natural product, get farmers to actually try it and compare results with the antibiotics farmers now use, Burton says.

Avivagen is currently focused on marketing to Asian producers. It recently concluded swine trial agreements in China and Vietnam to conduct a trial with OxC-Beta Livestock as a feed additive for pigs. The goal, Burton says, is to have Avivagen products tested under actual production conditions countering any skepticism farmers may have by showing them how it works.

An eye on Asia

“The thing is, in Asia, they have a number of very large producers. Once they accept it, it will be a very large uptake because of the scale that they operate at,” he says.

“We’re in the early stage; it takes a lot of time to break through. The competition is in the existing products and the need for people to stop using those products.  Our strategy is to publish scientific papers, which we’re doing, and establish strong scientific credentials for the product.”

This process is expensive. Avivagen reported a net loss of $490,276 for the third quarter ending on July 31, 2015. This is less than the loss of $552,294 in the corresponding quarter in 2014, but the company is expecting expenses to rise as it conducts more research trials and studies. However, losses are normal for a start-up company like Avivagen.

“We have first of all to develop the product, that’s where the money is needed, and then bring the product to a commercial readiness. On top of that we have to get regulatory approval. It takes a lot longer and it takes more money and that’s why it’s typical for companies to have to raise money until such time that they can begin to sell the product,” says Burton.

This is exactly what Avivagen has recently done. It has signed a deal with the Bloom Burton Healthcare Lending Trust for a $1.8-million credit facility but will initially take advantage of just $1 million of this. This money will be used to finance further product development and growth in the next four years until sales are made, says Burton.

Still a speculative investment

For investors, putting money into a start-up such as Avivagen remains risky. Thinking about long-range investment goals and considering if you can potentially lose this money are important to remember, says Vickie Campbell, a financial planner with Ryan Lamontagne Inc.

“It’s important for everyone to think about their long-range goals. [They should] make sure they plan and think to include this together with all their investments and the risk and the chance of return on it,” she says.

This challenge is something that the company acknowledges.

“There’s always the financial challenge because investors only have a certain amount of patience for when you’re going to get this product out there,” says Burton.

Despite the many challenges, Burton believes Avivagen is on the right track for future success.

“We’re making progress with demonstrating that the product actually works in real life situations. And at the same time the [business] environment is changing. There are consequences related to the use of antibiotics and I think that offers us a big opportunity,” says Burton.