Animalcare Share Discussion Threads

[simon gordon] 11/12/2024 17:07

Taken the CEO six years to sort out the business, develop a pipeline of new products, strengthen the balance sheet and find growth capital.

Is 2025 the year when all the hard work starts to come together so the market can see more visibility for topline growth?

Panmure - 14/10/24:

"Animalcare has been through a significant journey over the last few years, cleaning up its portfolio, honing its go-tomarket offering and moving to a significant net cash position post the recent disposals. We think its growth strategy makes a lot of sense, with the company looking to expand its platform and feed it with a regular stream of product launches. This could boost revenue and EBITDA growth to 8% and 10% respectively and should, over time trigger a significant rerating."

This article is from 2023 and shows the levels of business development required to get them to a stage for growth.

S&P Global - 24/7/23:

Animalcare claims it now has a platform to stimulate future growth

UK-listed business Animalcare has been going through a period of transition in recent years. S&P Global’s head of animal health Joseph Harvey met with director of strategic alliances and acquisitions Martin Gore at the recent VetHealth Global conference on Canada’s Prince Edward Island to find out more about the firm’s growth strategy.

Animalcare has been spending a lot of time putting together a sales and marketing team more adept at selling novel products. The business has historically been largely focused on veterinary generics for companion animals but, more recently, it has turned its attention to diversifying its product portfolio to give itself an opportunity to pursue more sustainable sales growth.

Martin Gore remarked: “Animalcare was made up of several different European companies. Animalcare bought Ecuphar, which itself was multiple companies that all had different cultures and separate portfolios. We spent a good few years bringing this all into one company and one culture."

The group previously had 330 brands. This number has been halved to help the company focus on higher-margin products with greater growth potential. Mr Gore explained: “That process took time. Under the leadership of our chief executive Jenny Winter, we’ve been adding new personnel, creating structure and creating a new culture. We’re not completely there yet but we’re in a better place than we were three years ago and in a good place to move forward.

“You take a look around at animal health and ask: ‘Is there a future for anyone our size as a pure generics company?’ It’s a tough area. You have all the big companies who manufacture themselves selling generics. There are so many generics companies now. There is a lot of low-hanging fruit that has gone and many of the good brands have already been genericized. It was clear we had to do something else. It’s easy to say we’re going to get into novel and differentiated products but it’s not so easy to achieve.

“Now we’ve done the internal work, our sales have been flat in the last couple of years but our gross margin has increased a lot after we sorted out the portfolio. We’ve now got that basis we need to grow. We now need to find products. The sales team are ready for novel products and now we need to feed them with more of these products.”

Animalcare had a head start in the innovation stakes with Daxocox – a treatment for
osteoarthritis related pain in dogs that was being developed by Spanish firm Esteve, which was previously acquired by Ecuphar. Daxocox became one of Animalcare’s top 10 selling products in 2022. The business helped refresh its portfolio by investing in STEM Animal Health, which is a joint venture with Canadian company Kane Biotech. STEM’s Plaqtiv+ oral antibiofilm range also contributed to Animalcare earnings in 2022.

Last year, Animalcare entered into a research alliance with Dutch business Orthros
Medical. The collaboration is focused on two pre-clinical VHH antibody candidates that will be developed for the treatment of canine osteoarthritis. The partners aim to add extra projects to the collaboration.

Mr Gore said this is a particularly notable deal for Animalcare, as it brings in early-stage assets to work on. The business hopes to cultivate a balanced pipeline that includes products almost ready to sell and others that have further to travel down the development pathway.

While Animalcare is seeking products that will differentiate its offering, it is sticking to items that complement its current portfolio in pet health. As major animal health businesses increasingly focus on their top brands, Animalcare hopes to offer an outlet to some of the lower-selling products.

Mr Gore noted: “The big companies have got lots of projects and many have been
stopped for commercial or strategic reasons. There are probably some really good
products in there – $20-30 million brands – that could be significant for a company like Animalcare. We could start to build a network around a product like that and grow it. The industry still needs an environment of smaller products – it’s not just about blockbuster products.”

Long journey

Mr Gore told S&P Global Animal Health: “The journey has begun but it’s a long
journey. What we learned with Daxocox is you need to change the company itself –
sales and marketing. It’s one thing selling a generic and it’s another selling a novel product. We’ve spent the last couple of years working on our internal commercial functions to give us a platform to go and find other products. This might be through developing them ourselves or licensing them in.”

Animalcare is open to all types of deals to bring in new products, including acquisitions. The firm also wants to provide a clear path for international companies to sell theirportfolios in Europe. Animalcare would take on the registration and commercialization aspects for businesses in North America and Asia.

Mr Gore pointed out Animalcare’s relative size to other companies in the animal health sector makes it an ideal distribution partner. The firm represents a nimble salesforce that can dedicate more time on particular brands that do not get the focus they need at larger businesses.

While Animalcare is trying to grow the number of companies it represents in Europe,
Mr Gore is wary this is a strategy that comes with risk and distribution relationships can be cancelled after a change in approach from the originator firm. Mr Gore said it is critical to find the right partners to ensure a lasting affiliation.

Currently, Dechra Pharmaceuticals – the largest veterinary medicine business based in the UK – is subject to a major private equity takeover that indicates the current interest in purchasing animal health assets. While Dechra is much larger than Animalcare, Mr Gore noted the former’s growth and progression shows how a business can develop into a healthy size “given funding support to execute a strong strategy”.

[simon gordon] 08/12/2024 18:41

Back-of-the-envelope calculation for 2025:

-EBITDA: 18m
-EBIT: 14.5m
-Interest: -0.7m
-PBT: 13.8m
-Tax: 27% = 3.7m
-PAT: 10.1m
-EPS: 10.1m divided 68.9m = 14.65p

Forward p/e at 246p = 16.8x

-20x = 293p
-25x = 366p

[simon gordon] 07/12/2024 21:19

Here's the founder on a 2023 video called, Randlab - The Office:

[p1nkfish] 07/12/2024 20:32

I don't know but if it is it suggests the seller wanted their "baby" in the hands of Animalcare for the longer term future. Sometimes it comes down to more than just optimising for maximum personal financial return.

This reads a genuine expression of trust from the Randlab founder:

"It was important for me to find someone who was equally passionate to serve our equine veterinarian customers and through them, their clients. In Animalcare we have found that right fit........"

[simon gordon] 07/12/2024 16:26

Is this the deal of the decade or is there a catch?

Panmure - 16/10/24:

In order to provide a sense of what this strategy could do for Animalcare, we modelled a base case scenario that makes the following assumptions:

Geography – Animalcare closes a deal in January 2025, spending £40m at 17.5x EBITDA to acquire a European veterinary pharmaceutical with EBITDA margins of 15%......


ANCR - 3/12/24:

A highly profitable business with EBITDA of A$11.0 million and an EBITDA margin of 48% in FY24, expected to deliver significant earnings accretion in 2025

Acquisition multiple of 10.9x adjusted EBITDA (year ended 30 June 2024)

Acquisition expected to be materially earnings accretive - at least 20% in FY25

[simon gordon] 07/12/2024 11:39

Novel T - March 2024:

ANTIBODIES OF LLAMAS FOR OSTEOARTHRITIS MEDICINE

The current lifestyle in the Western world ensures, among other things, that the number of osteoarthritis patients continues to increase. There are already 1.5 million in the Netherlands - with all its consequences. 85% of patients experience pain and limitations in their social life every day. Orthros Medical is working on a medicine for this chronic condition - based on antibodies from llamas. CEO Robert Jan Lamers talks about this unique find and the impact it can have.

The story of Orthros Medical started when Marcel Karperien, a professor at the University of Twente, met Theo Verrips, a professor at Utrecht University. Marcel had been researching osteoarthritis for years and was looking for a way to develop a medicine that could be administered locally. At the same time, Theo was making camelid antibodies in yeast. This gave rise to the question: can a medicine for osteoarthritis be developed using antibodies from camelids? “That question was the start of Orthros Medical,” says Robert Jan.

Quick development

The advantage of the antibodies from camelids - and specifically from llamas - is that they are tiny and can be applied locally. “This means you have less chance of side effects,” Robert Jan explains. “A pill for pain relief goes through the entire body, but we can apply the antibodies locally with an injection with a delivery system. This ensures that we have a good safety profile and that patients benefit from it for a long time. This generation of antibodies is developing very quickly. We catch that wave and surf it.”

The antibodies from llamas that Orthros Medical works with are grown in yeast. This influenced the location where the company was allowed to establish itself. Robert Jan explains: “Because we work with genetically modified yeasts, we were not allowed to establish ourselves on the UT campus. That is why we are now located, with a team of 10 employees, at The Green East in Raalte, a farm complex that has been converted into a high-tech innovation center. We are still relatively close to the UT but have our own location with lab facilities.”

Strengthening the company

The company currently does not have a product on the market. “However, we are already making money from our licenses. We are now in the animal study phase,” says Robert Jan. “We will start treating the first patients in a few months. These are not people, but dogs. They are also increasingly struggling with osteoarthritis because a cookie for the owner means a cookie for the dog. It will take some time before we can treat people, as you have to jump through all kinds of hoops. That is frustrating for patients, but fortunately, we are taking many steps in the right direction. The support from the High Tech Fund is a good example of this because it enabled us to purchase expensive equipment that we needed to analyze more product candidates faster. We felt like a 'llama in a candy store'. Many investors want you to use the money for product development on the way to an exit. The fact that we could invest in equipment with the High Tech Fund has absolutely strengthened our company's foundation.”

Partners, employees, and investors

With this strong foundation, Robert Jan looks to the future. “We are incredibly ambitious, and we want more and more,” he says. “Broadening our portfolio is crucial for the development of our company. So, in ten years, we want to have at least several products that can help osteoarthritis patients, even if it is only a subgroup of that 85% who suffer from pain daily. If we can offer an alternative for that group - people and animals - or perhaps even regeneration, that would be fantastic. It would be even better if we could also apply our technology to oncology. To get there, we work closely with not only the UT but also with Utrecht University, Leiden UMC, and Amsterdam UMC. Moreover, we are always looking for good employees and investors because we want to grow into a leading company in our area. Not for the money but to help patients. Then, we can ensure that patients can participate in economic and social life again. That is the impact we want to make.”

[...]

[simon gordon] 06/12/2024 16:32

Dechra certainly not holding back since they went private.

New CEO is a high-powered multi-national schooled wonderkid.


BOSTON, July 18, 2024 /PRNewswire/ -- Novo Holdings A/S, a leading international life sciences investor, today announced that its portfolio company, Invetx, has agreed to be acquired by Dechra Pharmaceuticals Limited ("Dechra"), an international veterinary pharmaceuticals business, for up to $520 million in total consideration on a cash-free and debt-free basis.

Invetx is a pioneer in creating novel, protein-based animal health therapeutics to transform standards of care in veterinary medicine. With its best-in-class, fully integrated discovery development and commercial manufacturing platform, Invetx leverages validated biotechnologies for human health to create species-specific, optimized and half-life extended monoclonal antibody (mAb) candidates to treat a wide variety of chronic and serious diseases in animals.




Jesper was appointed as Chief Executive Officer of Dechra on 10 June 2024.

Jesper has held various positions in Colgate-Palmolive since 2005, including Vice President for Global Marketing and Innovation and most recently his appointment as President for North America. Jesper was previously President of Hill’s Pet Nutrition between 2019 and 2022, where he led extraordinary growth while driving Hill’s digital transformation. Prior to that role, he served as Vice President & General Manager of Hill’s U.S. Jesper joined Colgate’s Nordic Group in 1997 as an assistant brand manager and progressed through a series of marketing and innovation roles across Europe before becoming Worldwide Director, Global Marketing & Innovation, in 2013.

[simon gordon] 05/12/2024 21:36

"Randlab has offices in Australia, Belgium, China, Dubai, New Zealand, Singapore, and most recently, the USA."

[p1nkfish] 05/12/2024 21:28

Middle East is attractive market for equine products. Geographical expansion possibilities for cross sell etc. Relatively price insensitive.

[simon gordon] 05/12/2024 21:05

Panmure - 16/10/24

Equine market is fast growing and an attractive niche, in our view

The Equine market is relatively small in terms of number of animals: the European Commission estimates there are only around 6m horses in Europe. However, spending per animal is high. Grandview estimates that the global equine healthcare market is worth $3.4bn per year, rising at a 2024-30 CAGR of just over 8%. Europe accounts for between 25% and 30% of the market by spending.

This reflects the higher cost per animal (the average cost for a recreational horse is between £3,000 and £4,000, versus £1,000 to £1,500 for a dog and £150 to £500 for a cat) and ongoing care costs, both of which make it economical to spend more on keeping an animal healthy.

In the sports market (which accounts for around 50% of the horses in Europe), the sums are even greater, and with prize racehorses worth multiple millions, the market is far less price sensitive than either the Companion or Production Animal market.

However, in many ways it is a less competitive market, with the major veterinary pharmaceutical companies concentrating on the larger Companion and Production Animal markets. Equine pharmaceuticals and vaccines account for around 30% of total equine spending, or around $1bn. This makes it more attractive for companies like Animalcare.

[p1nkfish] 05/12/2024 18:36

Over subscribed for the raise. May be further acquisition potential.

"The Fundraise will also enable the Company to maintain an appropriate leverage position that enables Animalcare to continue to invest in its growth strategy, including future inorganic investment opportunities."

[simon gordon] 05/12/2024 17:30

Third time lucky?

Business is certainly more strongly positioned with numerous growth drivers that could enable it to push through 400p and target 600p.

Quarterly chart since 2008:


free stock charts from uk.advfn.com

[simon gordon] 04/12/2024 18:08

If — and it's a significant "if" — the equine VHH (Variable Heavy Chain antibody) proves successful it could drive a re-rating of the share, potentially up to 30x. Christopher Mills, CEO of Harwood Capital, mentioned during the July 2024 Vox Markets webinar that he anticipates news on the equine VHH probably by the end of 2024.

ANCR on the Randlab acquisition - 3/12/24:

Provides the opportunity to maximise the potential of Animalcare's current equine developments (e.g. VHH antibody programme) and enhances future equine partnering opportunities alongside other commercial and new product development synergies

[gopher] 04/12/2024 14:38

Another good point of the deal is company edges closer to AIM100, which ignites a little more institutional interest

[simon gordon] 04/12/2024 11:08

Company is getting closer to their £100m t/o target where the flywheel effect kicks in harder - as discussed by the CFO from the 34-minute mark:

IMC - 17/10/24

ANIMALCARE GROUP PLC - Interim Results 2024




The Director of Supply Chain, Alex Sugden, looks top quality:

-9 years at Colgate Palmolive

-12 years at GSK

[p1nkfish] 04/12/2024 10:17

A good acquisition, solid management and over subscribed at 5% discount.
Geographic expansion possible.
Nothing to criticise imho.
Glad to hold.

[gopher] 04/12/2024 09:59

Investors champion reckons this a solid looking acquisition and I agree. I would like to see a presentation from Company but this is the major deal they have wanted to do throughout 2024.

[74tom] 03/12/2024 14:58

Spot the difference;



"Dechra Pharmaceuticals PLC

12 December 2007


PROPOSED ACQUISITION OF VETXX, PLACING & OPEN OFFER OF 11,624,544 NEW ORDINARY
SHARES AT 303 PENCE PER SHARE ON AN 11 FOR 50 BASIS

* Proposed Acquisition of VetXX for a total cash consideration of �61.7
million on a cash free, debt free basis, funded by the Placing and Open Offer of
11,624,544 New Ordinary Shares to raise �35 million (before expenses) and the
new Facility Agreement."


Post deal Dechra had 64.6m shares in issue, so at 303p they were valued at ~£190m, went on to 15 bag over the next dozen or so years. Can the same thing happen again? Given some of the same protagonists are involved & the DCH money will have gone into the hands of some of the original backers, I wouldn't be surprised if it does something similiar!

[74tom] 03/12/2024 13:01

Hi redwing1. I based the accretion on FY24 numbers, so the below corrects that to FY25. I've also tweaked the EPS numbers to account for the new share issue.

The result is accretion of ~37%, it's likely that the actual FY25 accretion will be lower due to legal costs & the exact timing of the deal completing (i.e. end of Jan would lose 1/12th of economic value). We will also have small adjustments for finance costs, however balance sheet cash should help offset this.

High level my numbers are;

Pre deal EPS forecast 12.2p, reduces to 10.7p with the 14% dilution

Acquired EPS estimate (£5.6m EBITDA * 0.75 to remove tax = £4.2m / 69m = 6.1p)

New pro forma EPS = 16.8p

So at 245p it's on 14.5x pro forma EPS

Last night it traded at 245p on 12.2p forecast = 20x

Parity would therefore be somewhere over 300p IMO.

Bigger picture, it's a real statement of intent and means they are going places...

[redwing1] 03/12/2024 11:08

74tom - I agree that it looks potentially an interesting deal but I can't see how your p/e calculations can be correct here? If the deal is 20% accretive to earnings in FY25 (as the announcement suggests) then surely the PER moves to 18.75x?

[74tom] 03/12/2024 08:20

That's a cracking deal - PER pre deal was ~22.5x, I estimate it's 14.5x post acquisition (at 232.5p placing price). Consequently, to be trading at the same rating shares need to re-rate to 356p.

The beauty of putting cash to good use - this has the potential to become another Dechra...

[gopher] 18/10/2024 15:45

Key points from recent presentation by CEO and FD include:1 - Steady organic growth of 5% continues 2 - no special divs, buybacks etc planned. Money will be spent on acquisitions, credit facilities recently extended.3 - Very useful slide indicating the multiple ways investment may happen and progress to date. Hinted they lost a deal to PE recently so looking at 2025 now. Have ex Dechra deals guy on board as non exec, his contacts invaluable.4 - like so many haven't understood recent share price weakness

[gopher] 24/9/2024 14:42

Solid results with some limited organic growth- trading on a PE of circa 20, 2% yield, market cap of £145ml with £33ml of cash, credit facilities extend to 2029.I am expecting some earnings enhancing deals to move the share price but until then there is not going to be much action.

[gopher] 29/7/2024 09:28

Nothing too much in the results other than mention of pipeline of investment opportunities. CEO well thought of and has requisite experience.

[p1nkfish] 23/7/2024 11:18

Mention by Chris Mills on Youtube vid, possibly.
Good move, tightly held.
Hesitated buying into this but was ultimately a very decent decision and looks pretty solid to me.
Even higher we go?