Special Report: The company’s strategic acquisition of ACE Laboratories is paying dividends as farmers seek alternatives to antibiotic health treatments.

Shares in animal health company Apiam (ASX:AHX) have almost doubled since March, amid a surge in pet ownership following the COVID-19 pandemic.

But following its strategic acquisition of ACE Laboratory Services in October 2019, the company is also positioned for growth in the lucrative animal vaccine market.

Established in 2005, ACE is one of a handful of  companies in Australia which develops custom vaccines specific to the requirements of their customer farms.

And speaking recently with Stockhead, ACE Labs Production Manager Lincoln O’Meara highlighted two factors behind the market opportunity in the space.

For starters, most generic animal vaccines are manufactured in larger markets such as the US and Europe.

“Most of the time, they’re not going to use an isolate that’s come from Australia,” O’Meara says.

“So that’s the gap the autogenous market fills. It creates the farm specific vaccine that has a much higher chance of efficacy because it’s directly related to a specific farm.”

O’Meara also flagged a “real industry and government push” to reduce the use of feed antibiotics on Australian farms.

“Ultimately it’s the consumer who drives everything and they  want less antibiotics used in the food chain,” he said.

In that context, Australia’s poultry industry is further along the curve in eliminating antibiotics than some other industries. They have also been leaders in adopting custom vaccines.

“Other industries have reduced their reliance on medications, but they also know they can improve further and work towards it and that’s what they’re doing,” O’Meara said.

Those changes reflect a broader shift in strategy towards prevention (vaccine) rather than cure (antibiotics).

 

How it works

The time frame for custom vaccine development is shorter than the clinical trial process for commercial  vaccines.

But as cattle feedlot consultant Dr Kev Sullivan explained to Stockhead, it’s still a six-to-12 month process to test for effectiveness and run trial batches for possible adverse side effects.

Bacteria which cause illness or death in cattle are often unique to specific farms.

So in many cases, “ACE can make a vaccine for an organism that there’s no alternative to”, Sullivan said.

“My job is to keep on sampling until we find those bacteria and send them all to ACE who will make the vaccine.”

“Then we’ll then get a permit, and ACE will send me a small batch to do a test in some animals.”

“Once we finish that toxicity test, I’ll send the order back to ACE and they will make however many doses of vaccine I might want – say 10,000 or 20,000.”

 

The Apiam effect

Since being acquired by Apiam last year in a $16m deal, O’Meara said ACE Labs have seen the benefit from the extra resources at its disposal.

“Apiam acquiring the business has opened us up to markets we weren’t highly exposed to previously,” he said.

While ACE already had a market footprint in the pig and poultry sector, Apiam’s network has opened up opportunities in sheep and cattle.

“And most of the new products we’re bringing to market are focused on those two industries,” O’Meara said.

“So they’ve really invested money in expanding our product range because there is a demand there.”

“We’ve put more scientists on to strictly do research work into vaccine development, and we’ve submitted two new permits.”

Looking ahead, O’Meara earlier this year undertook a  visit to the US in January where ACE is partnering to bring more advanced delivery technology back to the Australian market.

“The good thing about custom vaccines is there’s no standardised product that has to be registered.”

“We work with our customers directly and if it’s not working effectively initially, we can make changes to get these products to have them work”

“It’s still a heavily regulated industry but we have the scope to improve and change things with specific pathogens where needed.”

This article was developed in collaboration with Apiam, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

 

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