How SmartVet Aims to Revolutionize the Livestock Health Industry

Editor’s note: SmartVet is launching a campaign on AgFunder. On November 12, the company’s CEO Greg Weyer will host a webinar at 12pm PT// 3pm ET. Sign up for the webinar here, or view details about the investment opportunity here.

For many livestock managers, the process of medicating their cattle against parasites and insects is one of the most arduous tasks they face each year. It usually involves an ear tag, spray or pour-on application, requiring cattle to be herded up, penned, and then run through a special confinement facility called a chute.

This not only puts animals through severe stress, but it is dangerous. Furthermore, administration of the medication is often dictated by when the rancher has access to labor and handling facilities, rather than when it will be most effective for the livestock.

Realizing the potential to change and dramatically improve the process for livestock medication, an industry that’s expected to reach $17.5 billion in sales by 2016, SmartVet has developed a novel and patented delivery platform to medicate livestock using encapsulation technology and its VetGun.

Encapsulating pesticides and pharmaceuticals in soft gel the size of a ping pong ball, the VetGun discharges capsules to a distance of around 30 feet onto individual livestock where and when needed, and without the huge task of herding and processing them.

The capsules, called VetCaps, are engineered to burst in a specific manner when they impact animals, enabling the delivery of its formulation onto the surface of the skin while causing no injury or distress. 

While this saves time and labor expenses in the first instance, there are several other benefits to applying medication in this way, according to Grant Weyer, CEO of SmartVet, and a fourth generation cattle rancher.

“So many health products are applied when it is convenient to the farmer and not when they can have the maximum therapeutic effect on the animal. ‘Long-acting’ products have been heavily promoted in recent years. Many of these remain in the animal’s system at times when they are not actually needed to control the specific parasites they target,” said Weyer.

“In many instances the long duration is simply trying to address the reality that many producers traditionally work their cattle in spring and in fall, and try to avoid bringing them in at any other time; so the drug needs to last until the parasites actually become a problem. This is often when it is hot and wet, and when the cows have young calves at foot, which happens to be the worst time to be handling cattle. Our approach at SmartVet is to go to the root of the problem, find a convenient, simple and cost-effective way to deliver the product at the time it is most needed.”

The VetGun, and accompanying encapsulated medication, can be applied at any time of year by farmers using a precise dose, and this can lead to a 20 percent increase in animal productivity, according to SmartVet.

“We know that applying insecticide at the right time of the year can be beneficial for the yield of an animal, and the VetGun allows you to do this, creating a great business case for it,” said Randall Tosh, executive vice president at SmartVet. “The horn fly, for example, is a particular problem a few weeks after warm weather, or after cattle have been turned out onto grass. But often times, the insecticide pour-on is applied prematurely, which is wasteful and can make the drug less therapeutic when the insect does become a problem.”

Cattle with low parasitic burdens have higher conception rates, calve more successfully, and wean heavier calves, he added.

Weyer first came across the technology when working with wildlife in South Africa over 10 years ago. It was being considered as a tool to help medicate big cats without the need to anesthetize them and the danger and trauma that goes with it.

Weyer soon realized that this product could not only be used very effectively at his family-owned cattle property but that it had a huge potential scale for the global livestock industry, which represents 60 percent of the total animal health industry, which stands to exceed $33 billion by 2020.

Weyer left South Africa to develop the product further in Queensland, Australia, and later, seeking a large addressable market for the product, the company relocated to the Kansas City Animal Health Corridor – the “silicon valley” of animal health. The company is now based at the International Animal Health and Food Safety Institute in Olathe just outside of Kansas City.

“It has not been an easy task to really perfect the technology. We had to begin where nothing had previously existed and start from scratch,” said Tosh. “One of the biggest challenges was stabilizing the interaction between the formulation solvents and the gel coat and enabling the large size of the capsule to withstand the pressure of deployment through the VetGun.”

SmartVet has also partnered with global leaders in the soft gel industry on the development of its technology.

Last year, the company had its first full year of sales after releasing its first product, AiM-L, an external insecticide for horn flies, into the US market. The company works with AgriLabs, the largest production animal health product distribution network in the US, to distribute some of its products, according to Tosh.

SmartVet had $2 million worth of sales in 2014, which will more than triple in 2015 to $7 million.

The VetGun serves as a platform for multiple VetCap products and has the potential to bring in $50 million in annual revenue for each product line, according to SmartVet.

In early 2017, for example, SmartVet plans to release two new revolutionary products: a dewormer and a molecule for fly control that has not been used before in pour on type products in the US.    

“It’s important to note that it’s essential to use a range of products for effective insect management in production animals,” said Tosh. “Because of the different modes of activity and usage of product, at certain times of the year it’s imperative to control internal parasites, when at other times you need to control external pests such as horn flies. But it’s always important to use the product in rotation and never rely on one class of insecticide. Insects will genetically select and build resistance. We want to provide the product suite that will allow producers to select the right product to control this from the beginning to the end of the season in a rotational way.”

SmartVet brings a wide range of experience to the market. Weyer has a background in corporate finance and venture capital and has successfully exited two previous startups in the technology services and financial services fields. The SmartVet board includes Dr Glen Richards, who co-founded Greencross Limited, the first publicly listed veterinary company in Australia; Grant Pickering, the founder of SutroVax, a biotech firm developing novel vaccines, and previously an executive-in-residence at Kleiner Perkins; and Dr. Robert Rew, VP of Drug Evaluation and Development at SmartVet, who is an internationally respected veterinary parasitologist and a leading expert on endectocides. Rew worked at Pfizer and was on the initial team of scientists behind discoveries leading to ivermectin — a drug used by SmartVet — and a team that was recently awarded the Nobel Prize in Physiology or Medicine 2015.

SmartVet has raised around $15 million since inception: some $12 million in equity funding and $3 million in grants. The shareholder register includes individual investors from South Africa, the US, and the UK.

SmartVet is launching a $5 million convertible note on AgFunder to pay for continued R&D and expansion of its product offering.

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