Animal health startup Applied LifeSciences & Systems (ALSS) closed an $8 million Series A round of equity financing co-led by Merck Animal Health and Mountain Grou Partners. Oval Park Capital, a Raleigh-based early stage investment firm, also participated in the round.
In response to increasing studies showing that the widespread use of antibiotics in livestock production has created antibiotic-resistant superbugs, consumers are demanding that meat producers eliminate sub-therapeutic uses in food production. Many food companies have made public commitments to reducing or eliminating meat raised with the use of antibiotics from their supply chains, but this leaves producers looking for new ways to keep their herds and flocks protected from diseases that can decimate entire populations if a poultry house or hog house is compromised.
ALSS uses high-speed imaging, feature recognition, artificial intelligence, robotics, and microfluidics in a system that can individually vaccinate up to 100,000 chicks per hour against diseases such as coccidiosis, infectious bronchitis, and Newcastle, according to the company.
“We are making a machine system that will deliver vaccines to chicks the day they are born in the hatchery at a rate of 100,000 chicks per hour and on an individual basis, which is important for ensuring that each chick is vaccinated,” company founder Ramin Karimpour told AgFunderNews. “This will significantly reduce the need for any kind of antibiotics or chemicals because the immune system of the chick will be doing the job.”
Current vaccination methods involve mass applications that aren’t always effective at covering every chick, leaving some unprotected and requiring the use of antibiotics. In ALSS’ system, the chicks entire the machine, get positioned properly using the imaging technology, and receive a targeted dose of vaccines.
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The investment will allow ALSS to accelerate the development of its automated and individualized poultry vaccination system. The system marries several disciplines including robotics, AI, high-speed imaging, and microfluidics to ensure that each newborn chick receives the right dosage of vaccinations without getting hurt in the process.
“When delivering a very small amount of fluid directly to a target, there are challenges — especially when the target is a moving animal. We had to plan for this and we have successfully handled tens of thousands of chicks through our prototypes in the last two-to-three years. Not a single one has been hurt and this is probably why we were able to raise our Series A. We have proven our technology and now we are at the stage of integrating these technologies into a single system,” Karinpour explains.
The company is aiming for a commercial offering of its in-hatchery vaccination machine by 2021.
Efficiency, animal welfare, and reducing the use of antibiotics in poultry production are all pervasively discussed issues in the industry, yet ALSS doesn’t see any competitors. When asked what’s enabled his company to crack the issue before any others, Karinpour attributes their R&D success to a unique interdisciplinary approach.
“We are a marriage of virologists and engineers. Normally, these groups don’t get together too often. So, we happen to be fortunate that we have people who are either from a highly technical background on the engineering side as well as the imaging and software side, as well as people on the poultry science, animal health, and virology side. We have come together and we understand the parameters necessary to be tolerated on both sides to develop an effective vaccination delivery machine,” he says.
“Merck Animal Health seeks to identify and invest in companies with early-stage technologies, devices and solutions with the potential to augment and complement our own portfolio of vaccines and pharmaceutical products to improve animal health, welfare and performance,” said Stephen Murray, head of the Merck Animal Health Ventures team, in a press release announcing the funding. “Leveraging Merck Animal Health’s knowledge of poultry vaccination processes, our investment with ALSS will enable the development of its innovative technology that has the potential to significantly increase vaccination rates and enhance poultry production for our customers.”
The Antibiotic-Free Conundrum
Consumers have made it clear that they want to see fewer antibiotics used in poultry production, especially antibiotics that are important for human health. At the same time, meat consumption is climbing around the globe, with Americans’ meat consumption hitting a new record in 2018 of an estimated 222.2 pounds per person according to US Department of Agriculture data.
When antibiotics are removed from the production process, animals not vaccinated or not fully vaccinated are susceptible to infections leading to sickness and death. As livestock production industrialized and animals were confined to houses containing thousands of animals, antibiotics became essential to helping them reach their target weights while staving off disease. Poultry producers started providing sub-therapeutic levels of antibiotics to birds in order to protect them from diseases that can devastate an entire flock. Antibiotics are also used in pork production, broiler production, and cattle production.
Plus, antibiotics have the added benefit of stimulating growth, leading to meatier, faster-growing animals.
In recent years, however, studies have shown that the use of antibiotics on farms has created strains of antibiotic-resistant bacteria called superbugs. While most bacteria are susceptible to antibiotics, the bacteria that are not susceptible survive and pass on their resistance. This creates an entire crop of bacteria that cannot be remedied with conventional antibiotics. The superbugs spread from farms on workers’ clothing, on trucks hauling livestock to market, or in runoff posing a major threat to human health.
Although many members of the livestock industry feel these claims are exaggerated or scientifically incorrect, consumers are increasingly only interested in purchasing meat produced without the use of antibiotics. Chipotle, Panera Bread, and McDonalds are only a few examples of restaurants who have recently made varying pledges to remove meat raised with antibiotics from their supply chains. McDonald’s and Kentucky Fried Chicken’s pledges state that the companies won’t use medically important antibiotics, meaning medicines essential for treating humans.
And while many companies are labeling their products as free of antibiotics, some of these label claims can be misleading.
Although this has created quite the predicament for livestock producers, its created a major opportunity for animal health startups to develop new innovations that assuage consumers concerns while providing meat producers and their livestock with the protection they need.
“There is definitely a movement of having no antibiotics in protein and no chemicals in feed. This is something that will continue to be challenging for the industry and agriculture at large because everyone wants it that way,” Karinpour says. “The cost of removing all chemicals and antibiotics from the food chain has an impact on sustainability. If you lose 10-15% of production because of illness, then you need to produce 10-15% more, which can be a very significant number. You can easily see that when you purchase ‘no antibiotic ever’ meant at $6-$7 per pound compared to $2.30 per pound. That is really the cost difference of taking antibiotics and other non-organic stuff out of production.”
For now, ALSS is focused on poultry, but they are aiming for different species down the road, with the aquaculture industry next on the list.
Animal Health Startups are Searching for Alternatives
Animal health is a growing sector in the agtech world, shaking its antiquated and technologically inept image as more and more startups step into the space to provide solutions for everything from tracking individual animals to the early detection of mastitis.
Recombinetics, the gene editing company operating in agriculture and human therapeutics, recently spun off its agriculture business into a new company called Acceligen, which will focus on gene editing animals to improve their health reducing the need for antibiotics in swine among other things.
Pure Cultures is a custom probiotics early-stage start-up, which has a probiotic product on the market that they claim has “the same anti-pathogen properties as antibiotics.” After receiving seed funding from biotech accelerator Indie Bio in 2016, they claim to have a partnership with the “largest food company in the world” — for legal reasons they will not specify the name — as well as $500,000 in revenue booked for 2017.
Agroflux, a Dutch company producing seaweed-based supplements for livestock, claims to get the milk production and growth-promoting effects of antibiotics in livestock without the unwanted knock-on effects.
Avivagen, listed on the Canadian Venture Exchange (CVE) since 2004, has a patented product called OXC-Beta, which they claim increases feed efficiency and weight gain, meaning the cattle gain more weight while eating less.