Elanco and Royal DSM Announce Strategic Alliance in U.S. for Bovaer® – A Revolutionary, Methane-Reducing Feed Product for Cattle

•  The strategic alliance connects two sustainability leaders, Elanco, a leading animal health company, and Royal DSM, a health, nutrition and biosciences company, to accelerate tangible sustainable solutions in the U.S., supporting the Global Methane Pledge goal of cutting emissions 30% by 2030.
• Elanco gains exclusive licensing rights to develop, manufacture, and commercialize Bovaer^® in U.S.
• Royal DSM will receive royalty income from Elanco’s U.S. Bovaer^® sales, including a single-digit millions upfront payment, as well as a portion of product supply from Elanco.
• Bovaer^® is expected to have blockbuster revenue potential for Elanco in the U.S. market in excess of US$200 million, in the estimated $1-2 billion global market for methane reduction from cows.
• This alliance will nearly double the announced global supply potential of Bovaer^®, giving more farmers the opportunity to reduce methane emissions, creating value and positive environmental impact, contributing to health for the planet.

Elanco Animal Health Incorporated (ELAN: NYSE) and Royal DSM have created a strategic alliance connecting two leading, sustainability-focused companies to address one of society’s most significant opportunities of the decade, mitigating climate change by reducing greenhouse gas emissions from farming. Elanco has secured the exclusive U.S. licensing rights to develop, manufacture and commercialize Bovaer^® for beef and dairy cattle.

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Elanco and Royal DSM Announce Strategic Alliance in U.S. for Bovaer® – A Revolutionary, Methane-Reducing Feed Additive for Cattle (Photo: Business Wire)

Bovaer^® is a first-in-class methane-reducing product for beef and dairy cattle approved in Europe, Brazil, Chile and Australia. As part of its authorization in those countries, more than 50 peer-reviewed studies and 48 on-farm trials in 14 countries show Bovaer^® consistently reduces enteric methane emissions by approximately 30% for dairy cows and even higher percentages for beef cattle¹.

DSM and Elanco intend to seek U.S. authorization for the product to provide farmers, dairy and beef companies, and retailers with a solution to substantially lower the carbon footprint of beef and dairy production, supporting the animal protein industry’s ESG efforts and helping secure a sustainable future for the planet. Based on published research, the methane reduction from feeding a million cows Bovaer^® is equivalent to planting 45 million trees or removing 300,000 cars from the road. With 9 million dairy cows and 14 million beef cattle on feed in the U.S. alone, the product, if authorized in the U.S., would contribute to a significant and immediate reduction of the environmental footprint of meat and dairy products, supporting the Global Methane Pledge to cut emissions 30% by 2030.²

The strategic alliance is expected to enable both parties to maximize the opportunity for the product in the U.S. market, once approved, while also nearly doubling previously announced Bovaer^® production capacity globally. Elanco will be responsible for the U.S. approval process, commercialization strategy and product supply, supporting DSM supply in markets outside the U.S. Elanco will assess and evaluate the regulatory submission and manufacturing options with the intent to bring Bovaer^® to the U.S. market as quickly as possible. Already the State of Indiana, for example, has indicated its support for expanded manufacturing investment in the state as it continues to build public-private partnerships supporting the state’s growing agriculture economy.

“We are excited to partner with DSM to start the process of bringing this game-changing innovation to U.S. livestock producers,” said Jeff Simmons, president and CEO of Elanco. “It will further strengthen Elanco’s efforts to create the livestock sustainability market and the next era of value for farmers by adding to our efforts to reduce, measure and monetize emission reductions, including Experior™, Uplook™ and Athian. We are eager to work with regulators to bring a unique innovation like DSM’s Bovaer^® to the U.S. market as quickly as possible to support farmers and positively impact the climate crisis.”

Geraldine Matchett and Dimitri de Vreeze, Co-CEOs of Royal DSM, commented: “This agreement marks an important milestone for DSM, Elanco, and the climate change mitigation efforts of the U.S. We believe Elanco, as a company that shares our determination to revolutionize the sustainability of the cattle industry, is the ideal partner to help us increase and accelerate the total impact of our game-changing feed additive by bringing us closer to customers across the U.S. This alliance will help us realize Bovaer^®’s potential as a powerful solution with a significantly positive impact on the planet. In addition, and fully aligned with our purpose-led performance-driven strategy, the alliance enables us as DSM to monetize our long-term innovation faster.”

With an estimated global market opportunity for livestock methane reduction of $1 billion to $2 billion, Elanco expects Bovaer^® to have blockbuster annual revenue potential in excess of US$200 million in the U.S. market with initial contribution by mid-decade. This alliance is not expected to impact Elanco’s previously stated financial commitments.

ABOUT ELANCO

Elanco Animal Health Incorporated (NYSE: ELAN) is a global leader in animal health dedicated to innovating and delivering products and services to prevent and treat disease in farm animals and pets, creating value for farmers, pet owners, veterinarians, stakeholders, and society as a whole. With nearly 70 years of animal health heritage, we are committed to helping our customers improve the health of animals in their care, while also making a meaningful impact on our local and global communities. At Elanco, we are driven by our vision of Food and Companionship Enriching Life and our Elanco Healthy Purpose™ Sustainability/ESG Pledges – all to advance the health of animals, people, and the planet. Learn more at www.elanco.com.

ABOUT ROYAL DSM

Royal DSM is a global, purpose-led company in Health, Nutrition & Bioscience, applying science to improve the health of people, animals and the planet. DSM’s purpose is to create brighter lives for all. DSM’s products and solutions address some of the world’s biggest challenges while simultaneously creating economic, environmental and societal value for all its stakeholders – customers, employees, shareholders, and society at large. The company was founded in 1902 and is listed on Euronext Amsterdam. More information can be found at www.dsm.com.

DSM has launched a series of quantifiable commitments aimed at addressing urgent societal and environmental challenges linked to how the world produces and consumes food. DSM’s Food System Commitments including a double-digit reduction of on-farm livestock emissions by 2030. The market introduction of Bovaer® is a major step toward delivering on this commitment as well as the strategic initiative of DSM’s Animal Nutrition & Health business group, We Make It Possible, with its mission to lead a robust and achievable worldwide transformation in sustainable animal protein production. Learn more at www.dsm.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 , including, without limitation, statements concerning expected regulatory approval, product commercialization and revenue from Bovaer^® and the strategic alliance with Royal DSM. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements.

For additional information about the factors that could cause actual results to differ materially from forward-looking statements, include the ability and timeline to [successfully complete required clinical trials and] obtain regulatory approval; competition to create products with similar effects; the ability to successfully commercialize the product and scale production capabilities; and other factors listed in Elanco’s latest Form 10-K and subsequent Form 10-Qs filed with the Securities and Exchange Commission. Although we have attempted to identify important risk factors, there may be other risk factors not presently known to us or that we presently believe are not material that could cause actual results and developments to differ materially from those made in or suggested by the forward-looking statements contained in this press release. If any of these risks materialize, or if any of the above assumptions underlying forward-looking statements prove incorrect, actual results and developments may differ materially from those made in or suggested by the forward-looking statements contained in this press release. We caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements that are included elsewhere in this press release. Any forward-looking statement made by us in this press release speaks only as of the date thereof. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or to revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

¹ https://www.dsm.com/content/dam/dsm/corporate/en_US/documents/summary-scientific-papers-3nop-booklet.pdf

² https://www.globalmethanepledge.org/

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