TyraTech PLC (LON:TYR) intends to focus on opportunities in the animal health sector after the sale of its Vamousse-branded hair lice treatment.
In December 2017, it was agreed that Alliance Pharma would pay up to US$17.5mln for the worldwide rights to Vamousse - with US$13mln coming upfront, followed by US$4.5mln of contingent payments tied to sales milestones.
The deal puts Vamousse in the hands of a company that is better placed to put the marketing support needed to get the product better known in the marketplace and leaves TyraTech free to focus on developing technology for the control of insects and parasites, where it sees a possible US$6bn market.
Losses were sharply reduced in the first half of 2017
The company, still in the growth stage of its development, slashed losses from operations in the first half of 2017 to US$711,000 from US$1.52mln in the same period of the previous year.
Loss before tax narrowed dramatically to £254,000 from a loss the year before of £1.52mln, helped by a £456,000 gain on the sale of intellectual property to Envance Technologies.
The sale to Envance also provided the company with an upfront payment of US$500,000, received subsequent to the half year-end. TyraTech ended the reporting period with cash and cash equivalents of US$1.3mln, down from US$1.8mln at the end of 2016.
TyraTech may have sold off some of the family silver, but the cash will undoubtedly come in useful – the company will also receive a small share of any profits from Envance’s sales of the products - and it now has a major global consumer company in its corner.
Chief executive officer Bruno Jactel believes the deal is an excellent endorsement of TyraTech’s technology by one of the largest consumer products companies in the world.
“Although the agreement is not expected to be transformational in terms of profitability, it provides us with further confidence in the significant value of our IP [intellectual property] and know-how and the potential and value of our Animal Health and Personal Care portfolios," Jactel said.
Animals have pests too
Fantastic though the Vamousse product was, the potential in the animal health market dwarfs that of the human head lice treatment market.
The world's population is expanding at a rapid rate, and with it, the need for protein, and the world simply cannot afford the loss of animal production caused by parasites.
Treatments do exist, of course, to combat parasites but again we are talking old-school solutions that come with concomitant dangers to the environment and the food chain.
No one wants to see a return to the days of mass use of DDT, for instance.
Like all of TyraTech's technology, though, its PureScience products are environmentally friendly, plus, of course, they work.
As Jactel pointed out in the company’s interim results, not all insecticides are so beneficial to the food chain.
“We also note with great interest the recent issues regarding the use of unauthorized insecticides to control red mites in poultry facilities in Europe and the resulting effects on egg production. We believe that our pesticide-free products deliver competitive efficacy against the red mite, which is a major problem in Europe. We have already initiated field studies in France and plan to progress this opportunity as quickly as resources and the regulatory situation permit," Jactel said.
“The re-formulated Outsmart equine fly repellent has been well received by customers and is on course to exceed our partner, SmartPak's, expectations for the year,” Jactel noted.
Meanwhile, the PureScience range of animal health products targeting poultry production operations also made good progress from a small base with limited marketing support.
The latter – limited marketing support – was always a problem for the company in terms of realising the product potential of Vamousse, and it is to be hoped that the proceeds from the sale of the head lice product will give the company the wherewithal to develop its animal health technology.