Investment Firm, Intersouth Partners Lead $11 Million Investment in Equity Funding for Advanced Animal Diagnostics

Based in Durham, North Carolina, Advanced Animal Diagnostics, or AAD, has announced on March 15, 2011, that it has raised $11 million in equity funding with Intersouth Partners leading the funding round. Other investors who participated in this funding round include Novartis Venture Funds, the venture capital arm of Novartis Pharmaceuticals, and other undisclosed private investors.

AAD is a company which develops animal diagnostic tools to diagnose various diseases in livestock and other dairy animals. The company develops innovative methods to test a wide variety of farm animals for diseases and other disorders right on the farm with extreme accuracy. One of the diagnostic products that AAD already has on the market is QuickSmear. QuickSmear is a simple and rapid slide test that can check a cow’s blood for the count of white blood cells or leukocytes. These are inflammatory cells that can show the presence of an infection in the cow. The QuickSmear slide test is primarily used to check the natural immune response in the cow’s body for any signs of mastitis, a common bovine infection. Furthermore, the test is so accurate that it can show mastitis in its early preclinical stages, allowing for early and effective treatment of the infected cow.

The second product that AAD is currently developing is “Three Minutes to Better Milk.” This product is designed to accurately detect mastitis by sampling the cow’s milk. The testing kit is to come with special vials in which one can put a drop of the cow’s milk and detect the early signs of mastitis in the milk. Testing the milk allows for early detection of infection in the cow’s quarter, or the milk gland. Furthermore, studies of how this diagnostic tool is working shows great promise in the lab. The data shows that the milk test shows 95% more accuracy in detecting mastitis than the 70% or less accuracy in current methods of testing for the disease.

Mastitis is the most costly animal disease in the world, affecting the mammary glands of cows, costing dairy farmers tens of billions of dollars in lost production globally. Over $2 billion in lost production from US farmers alone. The disease itself is known as “the silent thief” because the loss of production is not noticeable in its early stages. It’s after a while, as the mastitis matures in the cows when the farmers discover the lost production and thus the lost revenues.

Mastitis comes in two different phases. The first phase is the early stage of the disease, known as the subclinical stage of mastitis and the clinical stage of mastitis. When the disease gets to the clinical phase, it begins to show symptoms. Typically, most of the testing kits available today already show mastitis in the clinical phase, and thus treatment of the cow must be done urgently with the use of antibiotics. In some cases, clinical mastitis can cause the cow to be removed from production and even worse, can cause the cow’s mammary gland to be permanently damaged, thus preventing the cow from producing any more milk in the future. This can be a devastating loss for some smaller dairy farmers. Subclinical mastitis can also cause problems for dairy farmers, because despite the fact that in its subclinical phase, the disease does not show any symptoms, it does affect the infected cow’s milk production. Besides disrupting milk production, mastitis can also cause the cow to produce a lesser quality of milk, also affecting the dairy industry.

Mastitis can be effectively treated in the subclinical phase with early diagnostic testing. The tools and kits that AAD is developing is designed to accurately test for the disease in cows while there is still no or very minimal damage done to the animal by the infection.

According to Jimmy Rosen, partner at Intersouth Partners, many food producers are under immense pressure to improve the health of their animals and the technology and products that AAD brings to the table meets a very seriously unmet need in the dairy industry.

The products that AAD is developing also got the attention of Dr. Simon Wheeler, who is the managing director of Novartis Venture Fund. He further added that his firm is confident in the technology that AAD is providing to farmers. Mr. Wheeler believes that this new diagnostic technology that AAD is currently developing will better aid dairy farmers have healthier cows and improve milk production. This together with the good business model that the management team at AAD will meet the unmet needs of the dairy industry.

Founded in 2001, AAD was begun with a grant from the USDA Small Business Innovation Research division. The SBIR grants are given to those companies who innovate new technologies to help the US agriculture industry. The company also received more funding from a grant provided from the North Carolina Biological Technology Center together with an additional grant from the North Carolina State University’s College of Veterinary Medicine. Prior to this funding round, the company raised over $1.1 million from a group of undisclosed private investors.

Intersouth Partners is a prominent investment firm in the United States and primarily invests in early stage companies who are in the communications, software, tech, semiconductor, biotechnology, medical, and pharmaceutical industries. The firm was founded in 1985 and currently has over $780 million in capital under its management. The firm’s primary geographic preference is in the Southeast of the United States with its headquarters located in Durham, North Carolina. Other companies in Intersouth’s portfolio include Clarabridge, Comstock Systems, SciQuest, Argos Therapeutics, Athenix, Calibra Medical, NovaMin Technology, and others.

The Novartis Venture Fund was established in 1996 as a venture capital arm of Novartis Pharmaceuticals and currently has over $650 million of committed capital under its management. The firm primarily invests in private companies who are in the life sciences, medical, and pharmaceutical industries worldwide. The firm especially looks for innovative companies who develop new drugs, vaccines, and other pharmaceuticals that can benefit Novartis Pharmaceuticals. Novartis does not disclose its portfolio companies.