AgGenetics is Answering Global Beef Demand with New White Angus Breed

February 18, 2016

Editor’s Note: AgGenetics is raising up to $5 million through a private offering listed on AgFunder. Find the profile here.

It’s a widely recognized fact that global demand for beef has been rising dramatically along with the middle class in emerging countries. In fact, predictions from Rabobank say demand will increase by 40 percent over the next 20 years. But with an industry beset by health scares, defined by century-old breeding techniques, battling consumer distaste for the use of hormones and antibiotics, and struggling to expand with declining natural resources, it’s unlikely the current system can meet this growing demand without disrupting markets.

AgGenetics, a startup from Nashville, Tennessee, says it can help. Using modern biotechnology techniques used in human medicine — gene discovery and editing — the company is developing technologies to help farmers combat common ailments that impact livestock production and that also increase the productivity of beef in hot climates. These technologies will come in the form of a low-cost test for brisket disease (also called Bovine high-mountain disease), a copper deficiency and toxicity test, and a new breed of heat tolerant cattle.

Across all three products, the company’s defining feature has been its ability to identify the right genes in a timely fashion, using genomic and data analysis approaches never before used in animal health.

“The easiest way to solve problems instead of thinking of the solution is to let biology tell you the answer and that involves collecting and analyzing huge amounts of data to let the natural answer fall out,” said Dr. James West, chief science officer of AgGenetics and an expert in genetics. West is the head of an independently-funded laboratory at Vanderbilt University and has been using data collection and analysis to identify genes for human medicine for many years.

West turned his attention to animal health when co-founder and CEO Dr. Warren Gill, a cattle rancher, animal nutrition professor and close friend of his approached him with this project. Gill was determined to find a better way of testing for copper deficiency in cattle after experiencing first-hand the intrusive and expensive liver biopsy test currently used by cattle farmers.

Copper deficiency is one of the most prevalent nutritional issues facing cattle and affects about one-third of them, impacting weight gain, fertility, and milk yields. AgGenetics estimates that this costs the livestock industry $2.8 billion a year in lost productivity, yet there is still no cost-effective, accurate and non-invasive procedure out there for detecting this condition.

“I knew it was such a huge problem and so it became my itch that needed scratching! I also knew James was using advanced techniques to solve similar problems in human medicine, where they’re quite common compared to animal agriculture,” said Gill.

So Gill asked West to help develop a decent test for copper deficiency in cattle, and with help of a group of advisors including Dr. Jerry Caulder, who is known as the “father of agricultural biotechnology” and is a member of the AgGenetics Advisory Board, the company is now using gene marking technology to develop low-cost, effective testing kits for farmers.

“The standard blood tests that farmers currently use are really misleading,” said Gill. “They look for signs of failure in the body that could indicate copper levels are low. But this doesn’t work because animals are good at staying alive and you won’t start seeing failure until just before they die. So instead of looking for the effects of failure, we looked for how animals adapt to lower copper levels; how they were changing to try and maintain their health in the face of falling copper levels.”

Through a partnership with Zinpro Corporation, a mineral nutrition livestock company, AgGenetics has discovered that 2-5% of ranchers test their animals for copper deficiency, and of this subset they typically only test one or two animals at a time due to the cost and inefficiencies. Research, however, points to the need for around 8 percent of a herd of cattle to be copper tested in order to more accurately determine the copper status of the herd, underlining the potential for a cheaper method to gain traction in the industry.

The other test AgGenetics is developing is for brisket disease, which can be fatal for cattle. It affects about 5 percent of cattle at altitudes above 5,000 feet, when they suffer right heart failure leading to swelling in the chest from fluid retention. AgGenetics estimates there are around 8.8 million cattle at these altitudes and that the disease has a $130 million a year economic impact.

AgGenetics is aiming to provide a similar testing kit for farmers as for copper deficiency test and expects to release one into the market in the first half of 2017.

Currently the only test for brisket disease is another invasive procedure involving threading a catheter through the jugular vein into the right heart, and imposes the costs of bringing cattle down from high plains on the producer, not to mention the cattle that go undiagnosed and risk death.

While there is no guarantee that AgGenetics will be successful in developing an effective, inexpensive test, the principals believe that they can apply the same techniques they utilized to develop the copper deficiency test.

AgGenetics’ third product is a potential game-changer for the many cattle farmers in the warmer climes of Brazil, Australia, India, and much of the Southern Hemisphere. Faced with hot temperatures for much of the year, these farmers can only produce certain types of beef, often with Brahma cattle, which have thin, white fur to help keep them cool. Unfortunately, this breed is far less productive than Northern Hemisphere breeds such as the Aberdeen Angus, and its meat is also less desirable.

The Angus breed is native to Scotland in the UK. They are usually black or red and have thick fur to help withstand the region’s cool climate, and many argue they produce more superior beef meat than other breeds. In warmer climates, Angus cattle cannot thrive as it’s too hot for them. There have been several failed attempts to introduce them in countries like Australia.

There are some hybrid breeds such as the Brangus, which is usually 3/8 Brahman and 5/8 Angus, and they have produced some improved results. But AgGenetics is taking the breeding process one step further and genetically editing traits into Angus cows to provide the animal with short, white hair to keep it cool, and black skin to help prevent sunburn and melanoma. It’s doing so using proprietary gene discovery and editing techniques and has filed more than 20 U.S. and international patents covering every aspect of their technologies.

“Angus cows have far superior genetics than Brahma,” said Gill. “They also produce tasty marbling and heavier meat, but when you breed them, they come out black because the Angus genes are dominant. What we’re doing is making the Angus cow heat tolerant without sacrificing the meat quality. This is particularly relevant for smallholder farmers in Africa, which can only grow Brahma cattle.”

AgGenetics has already identified the gene for short hair, performed the editing, and grown White Angus embryos up to 60 days. The company expects to produce the first White Angus cattle later this year or early 2017.

“From a legal point of view, genetic modification is defined as introducing either synthetic genes or genes from another species. After conversations with regulators, we realized that we could accomplish our goals using nothing but native cattle genes,” said West. “We are not doing anything to the cattle that 30 years of crossbreeding couldn’t do. We’re just doing it a lot faster and cheaper.”

Moving technology out of the lab and into the market is never an easy process.  Unforeseen delays, education barriers, distribution issues and cost overruns, not to mention the normal risks and threats facing all startups, can prevent a scientific breakthrough from becoming a commercial success.  But AgGenetics believes it is uniquely positioned to commercialize its innovative research and development.

AgGenetics is now raising up to $5 million to fund the commercialization of its technologies through a private offering listed on AgFunder. If you’re interested in learning more, you can find a link to the profile here.

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Disclaimer: Not an offer to sell or the solicitation of an offer to buy securities. Such an offer may only be made through the Offering Materials available through the AgFunder platform. Securities are offered by North Capital Private Securities, member FINRA and SIPC. All investments involve the risk of loss.

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