Two Northfield, Minnesota veterinarians, Mike Strobel and Mark Werner, are in the process of raising $5 million for their two-year-old Aurora Pharmaceutical as they seek to develop niche veterinary medicine products that will allow them to compete with big pharmaceutical companies.
Aurora has already raised more than $3 million in a stock offering, which expires June 30, according to a recent U.S. Securities and Exchange Commission filing. Strobel, the company’s c-founder and CEO, said the investments so far range between $25,000 and $100,000, and are almost all from people Strobel and Werner know.
Strobel and Werner started Aurora in 2009 after a previous Northfield business they owned, Pharmaceutical Solutions Inc., shut down when two other business partners left. Much of Aurora’s funding has come from money Strobel and Werner earned from other ventures: the Cannon Valley Veterinary Clinic in Northfield that they have owned since the 1980s, a veterinary products distribution business called Vet Provisions and a veterinary pharmacy. These operations bring in $30 million in revenue annually, Strobel said.
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Aurora presently has 10 people working in a 68,000-square-foot office and manufacturing facility in Northfield; Strobel plans to hire five to 10 more people in the next year. Aurora in December started manufacturing its first product, a line of animal wound disinfectants called Barrier that relieves pain and inhibits animals from licking the wounds. Strobel expects Aurora will see $2 million to $3 million in revenue this year, with profitability in the next eight to 10 months.
Aurora has distribution deals across the country for the disinfectant, which has proved especially popular among companies running large livestock-raising operations, Strobel said. The disinfectant, he said, has proved to be an affordable way for the farms to demonstrate to animal advocacy groups that they care about treating livestock humanely.
Besides disinfectants, Aurora is also seeking to build a better horse pill, literally. The company is seeking U.S. Food and Drug Administration approval for a version of a widely used horse antibiotic that dissolves faster in the digestive tract than other pill forms, Strobel said. Horses especially rely on bacteria in their digestive tract to digest hay and other plant matter, so a quick-dissolving antibiotic gets the bacteria-killing drug out of the digestive system faster.
Strobel said he and Werner branched out of simply being veterinarians because they saw a need for better products. “We were trying to solve problems for our clients. We were using human-based products and they weren’t working very well,” Strobel said.
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Aurora is concentrating on more niche veterinary products so it can better compete with pharmaceutical giants, such as Pfizer Inc. (NYSE: PFE), Merck & Co. Inc. (NYSE: MRK ), Eli Lilly and Co. (NYSE: LLY ), and Novartis Animal Health Inc., that dominate the industry. Strobel said many of Aurora’s products will likely only bring in $10 million to $15 million a year — a drop in the bucket for a big pharmaceutical company, but not for Aurora.
“You can make a lot of money $10 million to $15 million at a time,” Strobel said.
