Annual Report & Accounts 2014 - CEO Report and Operational Review
from an expanded first-rate distribution network, a very strong
competitive positioning, and positive feedback from customers.
The Company launched Guardian personal repellent online
TyraTech has developed a non-toxic, DEET-free, plant-based
insect repellent that exceeds the activity of 15% DEET products.
Independent third party testing demonstrated that the TyraTech
personal repellent, marketed as Guardian Wilderness, provides
up to 8 hours of protection against mosquitoes on human
volunteers and 4 hours of protection against ticks. Additionally,
two peer-reviewed research papers published in scientific journals
demonstrated the efficacy of Guardian Wilderness against
mosquitoes and ticks as compared to competitor products.
For its first year in the market, TyraTech focused on building a strong
customer support base for its products among outdoor enthusiasts.
To do this, we built a grassroots marketing campaign based on
samples and targeted consumer promotion to drive a prominent
listing on Amazon.com. Guardian Wilderness is now one of the
top non-DEET personal repellents on Amazon.com with excellent
ratings. This constitutes a solid base on which the Company plans
to build a broader distribution network with both online and more
traditional retailers in late-2015 and the subsequent years.
The Company entered the animal health market
Insects and parasites are a major source of productivity loss for
farmers and present an increasing risk for the public health
through the transmission of infectious diseases. The common fly,
Musca domestica, negatively affects livestock by biting and
nuisance swarming. As mechanical vectors of pathogens, flies
are estimated to cause up to $1 billion in production losses to the
worldwide meat and dairy industry. Similarly, cockroaches serve as
mechanical vectors of viruses, bacteria, and endoparasites and
can disseminate antibiotic resistant bacteria from barn to barn.
In addition, production animals living outdoors are frequently
infested by internal parasites, while dogs and cats are constantly
pestered by fleas, ticks and heartworms. Products which control
insects and parasites in the animal health market are a key target
for TyraTech and represent a global market estimated to be worth
more than $7 billion.
In 2013, the Company entered into a distribution agreement with
Novartis Animal Health to launch six products under the Natunex
brand with distributors and producers of cattle, swine and poultry.
The Company generated approximately $0.3 million of products
sales in 2014 with Novartis. On 22 April 2014 Eli Lilly (NYSE: LLY)
announced that it had entered into an agreement to acquire
Novartis Animal Health, which subsequently closed in January
2015. This change of control adversely impacted TyraTech's
product launches. However, it provided the Company with an
opportunity to reassess its distribution strategy. Currently, the
Company continues to evaluate its options for a reintroduction of
this product portfolio in 2016.
In February 2015, TyraTech entered into an exclusive distribution
agreement with SmartPak Equine to launch OutSmart Fly Spray
– a pioneering, new insect repellent. While the first of TyraTech's
products have been applied to targeting the control of insects on
humans or within livestock premises, this is the first TyraTech product
to be used directly on animals, opening the door to further
expansion into a larger segment of the animal health market.
Adjustment of TyraTech's holdings in the Envance Joint Venture
Envance Technologies, LLC, a jointly owned enterprise between
TyraTech and AMVAC, a wholly-owned subsidiary of American
Vanguard Corporation (NYSE: AVD), was originally created in
November 2012 to further develop and commercialise TyraTech's
technology in the fields of agriculture, home, and lawn and
garden. Since that time, TyraTech's primary focus, both financially
and commercially, has been on its personal care (the Vamousse
range of products) and animal health products. In line with this
area of focus, the majority of the financing for Envance has been
provided by AMVAC. Therefore, in 2015, TyraTech and AMVAC
have agreed 1) to adjust their original ownership percentage
interests in Envance; and 2) for AMVAC to purchase three percent
of TyraTech's remaining ownership interest in Envance. Post these
transactions, AMVAC owns 86.67 percent interest in Envance,
and TyraTech owns a 13.33 percent interest. As a result of these
transactions, TyraTech received approximately $0.5 million in cash
in repayment of loans and consideration.
This reduction of TyraTech's membership interest in Envance
reflects the greater focus of the Company on its core markets of
personal care and animal health.
What are the lessons of 2014?
First, our products answer significant unmet market needs. Today,
families are relying on Vamousse to treat and protect their children
against head lice infestation. Outdoor enthusiasts are using
Guardian to protect themselves against ticks and mosquitoes.
And, horse owners are discovering the benefits of the OutSmart
fly repellent. Our problem-solving approach to addressing market
needs will continue to drive our innovation engine.
TYRATECH • ANNUAL REPORT 2014 • PAGE 4
CEO Rep o r t a n d O p e rat i o n a l Rev i ew ( c o n t ' d )
