Ham and pineapple could make Anatara Lifesciences Ltd the next CSL Limited 

Successful trials de-risk the hidden gem that is Anatara Lifesciences Ltd (ASX:ANR).

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Like many value investors, I've always had the opinion that it wasn't really possible to "invest" in early stage pharmaceutical companies. The lack of a proven product, the time consuming trial stages, the convoluted regulatory approval process and the lack of up front profits, or even revenue, meant that there was always a better option.

But I've recently had my opinion changed by Anatara Lifesciences Ltd (ASX: ANR) for the following reasons.

First of all, Anatara is currently a single product company, pursuing the commercialisation of its Detach product. The drug is formulated to use pineapple extract and other antibiotic free ingredients to reduce the incidence of death and weight loss of piglets due to gastrointestinal problems.

While it many not be glamorous, this means that the addressable market is huge, as pork is the most widely consumed meat on the planet with 1.6 billion piglets weaned every year.

Now for the really interesting parts.

Proven History

Detach is actually a drug that was developed in the 1990s for this exact purpose, and was very successful in the Australian market capturing 40% market share. However, corporate takeovers meant that Detach was eventually removed from production, as the acquiring company chose to focus on drugs for humans.

Anatara has the creator of Detach, Dr Tracey Mynott, on board as chief scientific officer. It has recently concluded a large scale Australian trial that showed that the drug reduced piglet mortality by over 40%, while improving weight gain by up to 12%.

Simple Economics

At a product level, the economics underpinning Detach and Anatara are simple. The use of Detach will allow more piglets to survive and put on more weight, which will lead to better returns on investment for farmers, meaning there will be a rapid adoption of the product in the market.

Solution to a Global Problem

The issue of antibiotic resistance creating antibiotic immune bacteria is a serious global problem with the World Health Organisation alarmed at the rise of these superbugs. Farm animals being exposed to a large quantity of antibiotics means antibiotic resistance is built in the food chain.

McDonalds became the most recent global company to respond to this threat, saying it will sell only antibiotic-free chicken in the next two years, showing a clear demand for a natural antibiotic free product like Detach.

Future Development

The problem of weight loss and death through intestinal problems is not just confined to piglets. Anatara's development pathway could include expansions into treatments for other farm animals, and eventually, humans.

Anatara has in its favour a simple, proven product, an experienced management team including the inventor of the drug, vast potential global demand and a patent protected competitive advantage.

That is the reason why I have made an exception to my rule and invested in Anatara Lifesciences, and I suspect many others investors will too as the tailwinds behind the company become better known.

Motley Fool contributor Ry Padarath owns shares in Anatara Lifesciences Ltd. 

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policyThis article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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