Arrow Ventures seeks USD $125 million for animal health

Arrow Ventures is seeking up to USD $125 million in venture funding for animal health therapeutics to support a US-focused investment strategy.

Founded late last year by veterinary pharmaceuticals specialist Nick Bova, the Australian company has already invested in five animal health biotechnology companies in Australia, New Zealand and the US. It is targeting veterinary medicines that can progress from early-stage science to regulatory approval and commercial use.

Bova said Arrow has received nearly 100 approaches from biotechnology groups developing veterinary medicines worldwide, which he said highlighted a shortage of specialist investors able to back and develop animal health treatments.

"There is a strong flow of promising animal health science globally, but very little specialist venture capital with the operating capability to take those assets through clinical development, regulatory approval and towards commercialisation. Many opportunities are too early or too specialised for the larger animal health companies, and generalist VC investors don't have the sector expertise to progress them properly," said Nick Bova, Founder, Arrow Ventures.

"Arrow is designed to fill that gap. We identify promising veterinary therapeutics companies globally and bring together the capital and an experienced drug development team to actively develop and de-risk them.

"Our objective is to advance assets towards approval in the US and create acquisition targets for major animal health companies. I see this as a repeatable model that can support innovation across the industry," Bova said.

Arrow is focused on a global animal health market it estimates at USD $50 billion to USD $70 billion a year. Its areas of interest span companion animals and livestock, with products aimed at conditions ranging from chronic pain in dogs to endocrine disease in horses, as well as feed additives for swine.

Early investments

Arrow's portfolio includes New Zealand-based Hale Animal Health, which is developing a cannabinoid-based medicine for canine osteoarthritis, and Cadmus, another New Zealand company working on a treatment for dental disease in dogs, with a possible later move into cats.

Its US holdings include Nutrivert, which is developing an in-feed product for swine as an alternative to antibiotic growth promoters, and Velo I, which is working on nonsteroidal anti-inflammatory drugs for pain management in companion animals. Arrow has also backed Cuspis, which is developing a treatment for Cushing's disease in older horses.

Bova said the investment case for the sector rests partly on lower costs and shorter development timelines than human biotechnology. Human drug programmes can cost hundreds of millions of dollars and take 10 to 15 years or more to reach market, he said, while animal therapeutics can require USD $5 million to USD $15 million and take four to eight years.

"Because assets can be tested early in target animal species, this dramatically increases their chance of success," Bova said.

"In veterinary medicine development fewer clinical trials are needed, the trials are generally smaller in size and are commonly 10-50-fold cheaper to run than Phase III human studies. Combined with a streamlined regulatory pathway, this creates an attractive investment environment between proof-of-concept studies in the animal species the medicine is being developed for and regulatory approval."

Bova said Arrow plans a second funding round after the current capital raising is completed. He added that many promising veterinary medicine programmes fail to progress not because of weak science, but because companies lack capital, regulatory expertise and manufacturing readiness at the same time.

Founder track record

The fundraising effort is led by a founder who has already built and sold a veterinary medicines business. Bova previously expanded Bova Australia into what he described as the country's largest veterinary compounder, before growing Bova UK and selling both businesses to Nextmune, part of Swedish animal health group Vimian, for $200 million in 2022.

Before Arrow, he founded Luoda Pharma, a business set up to develop veterinary product ideas, build evidence, protect intellectual property and partner with pharmaceutical companies. He said that experience shaped Arrow's model.

"Luoda taught me a lot of valuable lessons. We got products into development and struck partnerships with major animal health companies, but we partnered too early because we did not have the capital or internal development capability to carry the products further ourselves.

"And once a larger pharmaceutical company controls the program, its priorities can change, timelines can stretch and the smaller company has very little influence. In Luoda's case, that has meant delays and a much slower path to getting products to market and returning money to investors than I ever wanted.

"There are many good veterinary assets in exactly that position. The science is promising, the need is real, but the company lacks the money, development experience or negotiating position to take the asset far enough before partnering.

"Arrow was built as a much better version of that model. We want to retain control, do the hard development work properly, reach the value inflection points and only then transact with pharma from a position of strength," Bova said.