WE'RE grateful to Imugene chief Warwick Lamb for dispelling one myth about poultry production, as well as confirming another story we thought to be a fallacy.
Yes, poultry producers commonly inject chooks with saline water post-slaughter to boost their weight by up to 15 per cent. But no, they don't use growth hormones, and haven't done so for 15 years.
We also learned the average broiler chook lives for a mere 42 days before making the ultimate sacrifice for the Sunday roast. But it's quality time that counts.
Imugene's game is commercialising animal health products for the pig and poultry sectors. While Lamb moonlights as a domestic vet (his North Ryde practice is Sydney's biggest) Imugene's focus is far removed from the James Herriot image of gently tending animals under the concerned gaze of dour Yorkshiremen.
As Lamb admits, it's all about developing vaccines which are cheap enough to be economic. In the case of bird flu, it's hoped that Imugene's oral vaccine can protect chooks for 2-2.5c a bird.
In the case of its poultry productivity enhancer (PPE), it's all about increasing Betsy's weight by 15 per cent while consuming less feed: the most costly input in poultry production.
Lamb says other animal health plays have got carried away with products that are either sub-economic, or don't have a market.
Animal health products have advantages over human products: much lower trial costs and shorter regulatory approval time frame. In the US, approval is the domain of the Department of Agriculture, not the fussier Food and Drug Administration.
"If we spend $150,000 on a bird-flu trial that's an expensive trial and if we spend more than six weeks on a trial it's a long trial," Lamb says. He says Imugene has no intention of owning products through development and marketing.
In October 2005 Imugene struck a licence deal with Merck subsidiary Merial, the second-biggest animal health outfit, for PPE. It's a case of silence of the Lamb when it comes to detailing the royalty payments, but the good vet describes them as in line with the animal health standard of 4-8 per cent.
Imugene's earlier stage bird-flu work has been the real attention-grabber. In late January it announced positive preliminary results of a trial in which its vaccine protected seven of 11 vaccinated birds against a strong dose of the very nasty HVN1 strain of the virus.
While avian flu vaccines are already on the market, Imugene's selling point is that its solution is orally administered, rather than injected.
"The main market is Asia and that's where there's been very strong interest," Lamb says.
"Everyone's waiting us to prove we can give it orally in a one-dose administration."
Imugene also has agreements with top-20 firm Teva to develop a chicken vaccine for the gut disease coccidiosis -- a $US850 million ($1.07 billion) market -- and another with Merial to further a porcine respiratory disease vaccine ($US300 million).
As of December, Imugene had $1.9 million in cash and is spending at a rate of $137,000 a month. It has only four permanent staff, preferring to contract out trials to laboratories which meet the big pharma companies' standards.
The animal health sector's reputation has been blighted by a few plodders, notably the half-dead Chemeq (CHQ, 75.5c).
But we're convinced that Imugene knows what it's doing.
The stock's well off its January 19 record of 36.5c, so it's a SPECULATIVE BUY.
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