I enjoy a bit of pork and I enjoy a bit of pineapple. I even don’t mind ’em together. So at first blush Anatara Life Sciences (ASX : ANR) is a company I should love. Also notwithstanding my personal regret that there is no possibility of covering Solagran on this site, it may surprise the reader to know that I actually quite like businesses based on natural products and nutriceuticals, especially if they genuinely work or experience some sort of unique market demand. If there is a proprietary process and the raw material chain has some degree of captivity, even better.
Anatara, however, bewilders me. This company has basically dusted off an old animal animal health product (field trials circa 1991) based on processed pineapple stems – the “Detach” product. The pineapple is actually a form of fruiting bromeliad and the proteases (enzymes) that are abundant in pineapple are purported to have a variety of medicinal and culinary uses. I must confess that I had seen “bromelain” in nutritional supplements before but didn’t realise it came from pineapples. Cool stuff! These enzymes, incidentally, are perfectly safe and is generally recongnised as such by the regulatory authourities (i.e. TGA’s ARTG).
This is unsurprising, it is basically er… pineapple.
But just because it is a natural product, doesn’t mean that it is devoid of medicinal value. Apparently lifestock, like humans, get the trots (known as “scour”). Pigs in particular. Give those piggies a little bromelain (a.k.a. “Detach”) and the scour goes away, and they are happy little campers again. The use of antibiotics in rearing lifestock is a major issue, and so any non-antibiotic alternatives that are reasonably proven to deliver a benefit is probably a good business (and anything to do with pork is good business, demand is phenomenal). Especially since we increasingly tend to want to buy meat products that are not treated with antibiotics and while the demand for antibiotic-free pork is still nascent, it is growing pretty fast. That demand is partially driven by growing consumer awareness of the potential risks of antibiotics in our food chain (irrespective of whether there is evidence that it is damaging to human health, though there have been significant concerns for at least a couple of decades), but also pressure to see animal husbandry practices that are more humane. If you want to raise pork without antibiotics, the first step is to basically dispense with ultra high-density farming practices.
As such, I would argue Anatara’s product sits at an interesting intersection between the constant need for improved farming productivity, concerns over animal health and welfare, and a growing consumer trend. The question is, with so many companies capable of producing food-grade bromelain, does Anatara have something that nobody else has? Notwithstanding that it is my general belief that Australian-made agricultural products come with the implied quality guarantee of a cleaner water/food chain than most of the world, it’s hard to see that something like product purity is a compelling differentiation to a farmer in China who is trying to maximise the yield/return equation, and where any type of feedstock cost is extremely price sensitive. With countries like China and Brazil being both top pork and pineapple producers, it’s hard to see that Anatara even has a relevant geographic nexus. Indeed, a quick look on Alibaba shows that there are plenty of Chinese manufacturers making products that look and feel like “Detach”. So, quite frankly, I don’t see the investment thesis.
I also don’t see the investment thesis to spend shareholder capital on validating the same therapeutic concept in humans. Contrary to the claims on Anatara’s website that there is no “effective prevention and treatment” for diarrhea (hey wait, what about Travelan!) it is relatively difficult to pre-empt diarrhea. This is because there are MANY things that can cause diarrhea and although E. coli is the common culprit for “traveller’s diarrhea” prophylaxis still isn’t straightforward. As for treating diarrhea, anyone who has been stuck with a nasty case of the shits whilst on vacation in Thailand will pretty much swear by loperamide (Immodium) as a life-saver. I speak from personal experience. Treating pigs for scour is one thing, treating humans for the trots, is probably a different matter. And again, if Anatara is successful in showing that it works well in people, the likely result would just be the emergence of a competing product that contains both bromelain and loperamide (one can already imagine the packaging with a little yellow tinge to it … “Immodium Pineapple for extra relief”).
Perhaps that is even Anatara’s opportunity?
Fundamentally, however, this is an opportunity that Anatara basically can’t capture exclusively for itself. So what’s the point in investing in it?