Avivagen bets on OxC-beta to unlock global livestock supplement markets

An Ottawa life sciences firm that’s developed a natural immune-boosting compound for livestock, pets and humans has the green light to test the product in the world’s most populous country as it looks to reverse years of sustained losses.

Avivagen announced this week that its livestock feed supplement has been approved for use in China. It’s the culmination of a years-long push to get the product, dubbed OxC-beta, into the world’s No. 1 market for commercial animal feed – a process that was repeatedly delayed due to the COVID-19 pandemic.

“It made it very difficult to get through the labyrinth of government bureaucracy there,” Avivagen chief Kym Anthony told executive OBJ on Thursday. “Whole departments were shut down for periods of time.”

Breaking through in China would be a major lift for Avivagen, which already sells some products in the US and Brazil, the world’s second- and third-largest markets for animal feed.

Still, Anthony cautioned that this week’s news won’t provide much immediate benefit to Avivagen’s balance sheet. The approval clears the way for OxC-beta to undergo large-scale commercial trials on dairy cattle and other animals, but it could be a while yet before the product is in widespread use on Chinese farms.

“It won’t mean anything overnight,” Anthony said. “Medium to longer term, it’s going to mean quite significant revenues.”

Now at 18 employees, Avivagen trades on the TSX Venture Exchange in Canada and the OTCQB Venture Market in the US

The company currently focuses on supplements aimed at replacing antibiotics in cattle and pig feed. Avivagen’s products are derived from carotenoids, organic pigments produced by plants and algae that give fruits and vegetables such as bananas, carrots and tomatoes their bright colours.

Various studies have suggested carotenoids can help reduce the risk of various types of cancers as well as conditions such as Parkinson’s disease in humans.

Avivagen officials say they’ve conducted dozens of tests that prove the natural antioxidants boost the immune systems of livestock, helping to ward off disease without the use of antibiotics – a key selling point at a time when health experts are calling the of antibiotics- resistant “superbugs” a simmering global health crisis.

But regulatory approval and market acceptance of OxC-beta have been slower to come than Anthony and his colleagues would have liked.

Founded in 2005, Avivagen has racked up more than $40 million in accumulated losses as it has poured hefty sums into R&D while waiting for its products to gain regulatory approval around the world.

The firm generated revenues of $271,000 in the quarter ending Jan. 31, up from $262,000 a year earlier. But its losses continued to pile up – Avivagen posted a net loss of nearly $1.6 million in the three-month span, compared with $1.3 million in the same quarter in 2021.

Anthony cites a number of factors for the firm’s ongoing struggles.

Deals with customers in Mexico, another major market, fell apart and had to be restructured after the companies ran into financial difficulties.

Meanwhile, the shot in the arm Avivagen expected from a new version of the product unveiled last year that’s targeted at people has not materialized. Anthony said the company has yet to conduct clinical trials on humans, meaning it can’t legally make claims about the product’s health benefits.

“We need to spend a lot more money on marketing and clinical trials before we can see revenues (from the human market),” he said. “It’s been marginal at best. The nutraceuticals space is quite crowded.”

On the flip side, Anthony said the pet market is showing promise. A line of dog treats fortified with Avivagen’s immune booster and developed in partnership with Toronto-based supplement manufacturer Mimi’s Rock Corp. is gaining traction in Taiwan and the company just signed a deal to distribute a chewable line of pet products in Mexico.

But Anthony knows the livestock market will likely be the company’s main money-maker as it tries to stem the tide of red ink.

To that end, the firm recently signed a deal to distribute OxC-beta in Brazil and expects to start marketing it more widely in the US soon. Avivagen is also in a trial with a distributor in Turkey and has feelers out in a bid to keep expanding its global footprint.

“We’re trying to tackle each major market that we can and always have a couple of new markets in the pipeline,” Anthony said.

The firm, which had roughly $800,000 in cash on hand at the end of January, recently restructured millions of dollars in debt and is in the midst of closing a multimillion-dollar non-brokered private placement to help replenish its coffers.

Anthony is well aware of the firm has yet to deliver on expectations. But he’s confident that better days are ahead for Avivagen.

“We’ve got to move into profitability – we all know it,” he said. “You’re going to see that from the livestock side. I can’t give forecasts or predictions, but as you see the revenues increasing on the livestock side, you’ll be able to … draw a line out into the future on that.”

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