By KRYSTLE CHOW
Published on the Ottawa Business Journal website.
June 6, 2011

Click here to view this article on OBJ.ca.

Parent company to take a back seat

Graham Burton, co-founder of Chemaphor.
(Photo supplied)

Like many biomedical companies before it, Chemaphor’s original plan was to develop a cure for cancer. That’s still a future possibility, but in the meanwhile, the company has adapted.

The result? A commercial version of its oxidized beta-carotene compound for the up-and-coming pet market, which Chemaphor is selling through its newly launched Avivagen Animal Health subsidiary. The first product is the chewable Oximunol tablet for dogs, intended to improve the animal’s immune system function, which can lead to better mobility for older dogs and healthier, shinier coats that shed less.

Co-founder Graham Burton says the growing pet market could also be the gateway to human applicability.

“You have to test on animals anyway to get into the human market, and if you can come up with a product that benefits animals, why not make money on it?” says Mr. Burton. “Our goal is to obtain self-sufficiency through our revenues.”

Given the long lead times and expense of clinical trials in preparation for human use, even for non-drug natural health products like Chemaphor’s, it’s a smart move, notes Cate McCready, vice-president of external affairs for industry association BIOTECanada.

“It’s not easy to make it through the elongated cycle … biotech companies are looking for ‘patient capital’ and further, for investors who’ve got a very strong knowledge base in terms of the technology. It’s a highly competitive framework to attract dollars,” says Ms. McCready. “(Chemaphor’s) been extremely nimble in adapting; as they frame their technology portfolio, they’re looking at how to pick out a couple of products which have a chance of getting into the marketplace quicker than others, and that’s the goal: to drive into the marketplace as quickly as possible.”

While Oximunol doesn’t have many paying users yet, demand is growing: pet owners have tried the product for free on approximately 2,000 dogs in Canada since Avivagen launched a 50-day challenge promotion in November, with “pretty good responses,” says Mr. Burton. He says the company has garnered a lot of useful information from questionnaires filled out by the dog owners on the status of their pet before and after the challenge, and that there have already been some interested in becoming repeat customers.

The whole process has only taken about two years, Mr. Burton notes, including both informal and lab testing, clinical trials with 50 animals, locating manufacturers and safety testing.

Still, he says the product has come a long way from the early research on beta-carotene, which is a compound found in carrots and other red-orange plants and fruit. Scientists had initially given high doses of beta-carotene to smokers to test its cancer-prevention efficacy, but the trials were a disaster, turning some subjects orange and resulting in more deaths in some cases.

However, Mr. Burton and his co-founding partner Janusz Daroszewski stumbled upon the anti-cancer benefits of beta-carotene when combined with oxygen while working together at the National Research Council. While testing the compound on pigs, they found that the pigs grew faster, used their feed more efficiently and fought off infections, much like they would on antibiotics. At the same time, Mr. Daroszewski began giving the product to his own dog, as they tend to be more susceptible to cancer as they get older, and both scientists noticed the dog had a very shiny coat as a result.

“We made a remark (about the coat) to the vet and she followed up and put her own dogs on the product. Sure enough, there was a big improvement in coat quality and a reduction in shedding,” says Mr. Burton, adding that a later expanded trial also saw older dogs that had “lost their zest for life” perking up after using the compound.

And the pet market is just one area where Avivagen can make a splash – Mr. Burton says the company is also working on getting its products into the feed animal market, which is more highly regulated since it includes pigs, poultry and cattle that are part of the human food chain. That could take at least another two to three years, as the substance will need to be manufactured to pharmaceutical standards and tested on feed animals to ensure there is no effect on offspring. However, Mr. Burton notes there’s already been interest in the European market, where steps are being taken to move away from traditional antibiotic feed additives.

In the meanwhile, Avivagen’s goal is to get into the U.S. pet market with Oximunol sometime in the next year. As well, the firm is working towards making Health Canada aware of the product, although current regulations at home mean that the compound is treated much like a drug, with more restrictions.

And in March, Avivagen became the Canadian licensee for the Vet-Stem regenerative stem cell therapy, adding to its revenue stream the $1,400 procedure for treating arthritis and tendon or ligament injuries in dogs, cats and horses.

The new opportunities mean Avivagen will become the focus for Mr. Burton and his team, with publicly traded parent company Chemaphor to take a “supporting role.” Still, Chemaphor will stay busy making specialty chemicals, such as a form of vitamin D that’s “labelled” with a stable isotope that can be tracked to see what becomes of the vitamin when it’s taken into the body. Strategic acquisitions could also be in the works as the company diversifies its business, Mr. Burton says, as could the possibility of selling off its technology to other firms, although there are no immediate plans for the latter.

Through it all, Ottawa will remain the heart of Chemaphor’s and Avivagen’s operations, although Mr. Burton remarks that the company will likely see its growth coming from its sales force elsewhere in the country in the next little while. “Ottawa’s always been where the chemistry is,” says Mr. Burton.

He adds: “It’s gratifying that we finally have a product after the idea started in my head in 1985, when Janusz joined the NRC; finally we have something to sell.”