Biotech firm gets $2m boost

Last updated 05:00 26/11/2012

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Wellington angel investor Movac is pumping $2 million into Kahne, a biotechnology company trialling wireless devices placed inside dairy cows to provide farmers with health and fertility data.

Founded by Gisborne farmer Michael Eivers in 2002, Kahne was run on a shoestring before hiring former American investment banker Susanne Clay as its first fulltime chief executive last year.

Kahne has about 500 of its wireless rumen and vaginal sensors implanted in dairy cows and is conducting field trials, with the technology expected to launch commercially in about six months.

Clay, who was previously chief business officer at ASX-listed Living Cell Technologies, said Kahne's products were the first to offer farmers physiological rather than behavioural evidence of breeding cycles.

The technology aimed to improve the industry's in-calf rate - the speed with which dairy cows are impregnated for the following season - which Dairy NZ says is unacceptably low. The stomach devices, meanwhile, could give farmers earlier signs on when a cow was becoming sick, or nutritional information to assist in determining supplementary feed requirements.

"If you can be more efficient with the amount of extra feed that you're providing, that means you're getting more milk and healthier animals," Clay said

In a recent funding round, Movac contributed $1m, with another $400,000 coming from outside investors. Another $1m will be provided by Movac, assuming Kahne reaches milestone agreements associated with first commercial orders of its products.

Mark Stuart, a partner in Movac's $42m early stage growth fund, said Clay had done an excellent job refining Kahne's business model to make it attractive for investment. While Movac believed Kahne's products had substantial international potential, New Zealand's substantial existing dairy industry meant it could get a return from domestic sales alone.

"Certainly the business can prosper, to the extent that we're interested in it, on just getting early adapters and the corporates [corporate farmers]. With just that part of the market we think it'll scale to tens of millions of revenue from New Zealand," Stuart said.

Ultimately the company would likely target a United States launch, where the dairy industry was larger than New Zealand's, Stuart said.

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