TyraTech: the ‘eco-tech’ pesticide company

The term ‘eco-tech’ often conjures up images of wind farms and other low-carbon energy-generating technologies. But eco-tech does not just apply to direct energy generation: it can stand also for technologies that ensure human beings have access to safe sources of water and food.

Man-made pesticides have come under a lot of criticism because of unwanted side effects that occur from their use, but there are a few organisations out there that are working on safe and environmentally-friendly pesticides. TyraTech, a US company that is quoted on London’s Alternative Investment Market, is one such organisation.

TyraTech is a eco-tech pesticide developer that puts “nature to work”. The company develops and commercialises insecticide products that incorporate unique blends of natural active ingredients. Its range of products addresses a range of issues, which include:
•    the control of insects in homes and businesses in a way that causes no harm to people,     pets or the environment
•    the prevention of parasitic infections in people and animals
•    safer protection of food crops and plants from insects, worms and fungal diseases

TyraTech’s proprietary development platform enables the rapid characterisation of potent mixtures of plant oil pesticides. Natural plant oils are already known to have various degrees of pesticide activity, but historically they have not been as effective as synthetic chemical-based products. However, the company’s technology overcomes this limitation with its own blends of individual oil compounds that are specifically selected for their ability to activate multiple insect neurological and olfactory receptors.

The TyraTech platform can be used to screen thousands of candidates a day, enabling prototype active formulations to be created within a week.

The consumer market for pesticides is estimated by the company to be worth more than $19bn. This market is multi-segmented and includes: home lawn and garden; institutional (business and government); the control of intestinal parasites and skin infestations in humans and pets; and mosquito and vector control.

The agricultural market for pesticides is estimated at $14bn. This includes the control of intestinal parasites and skin infestations within farm animals, as well as the control of pesticides in agriculture and horticulture.

Currently, TyraTech is commercialising its first products and has formed partnerships with a range of leading companies involved in the food, agricultural and horticultural sectors. These partnerships are a key plank in TyraTech’s overall strategy to market and sell its technology.
Since 2006, TyraTech has been collaborating with Kraft Foods, the world’s second-largest food company, to use natural oils to develop new, functional food products that will benefit people living in areas with endemic parasitic disease. Human parasitic infection is a global issue that is estimated to affect more than two billion people (source: WHO), so the two companies believe there is a market opportunity to develop safe, everyday food that can combat parasites.

TyraTech has already received milestone payments from Kraft for progress with this project and all the work needed to test the initial product in humans is expected to be completed this year.
The company also has a partnership with Terminix – the largest professional pest control company in the world, which supplies pest control products and services to more than 2.8 million homes and businesses across 45 US States and 14 countries. TyraTech has already launched a product with this partner, called SafeShield: a non-aerosol, environmentally-responsible spray for use against crawling and flying household insects. SafeShield has been provided to new pest control customers of Terminix in California, Florida, Georgia, Oklahoma and Texas since April this year.

Terminix president and chief operating officer Tom Brackett is clearly upbeat about the new product. “Consumers no longer need to turn to harsh off-the-shelf products to eliminate the occasional indoor pest,” he says.

Two other partnerships exist with Arysta Life Sciences and Chemplast. The deal with Arysta, a top-tier crop protection and horticulture company, has seen TyraTech develop new products based on the company’s proprietary compounds for the control of insects in certain horticultural markets. TyraTech has already received milestone payments from Arysta, which has funded all product development and field testing, and it expects a US launch of its lead product with Arysta later this year.

The arrangement with Chemplast, a subsidiary of McNeil International Corporation, involves a joint venture business that was founded in January 2009 and called TyraChem. This JV will use Chemplast’s market presence, as well as its expertise in developing plastic resins that incorporate pesticides, together with TyraTech’s proprietary blends of plant-derived pesticides to create innovative products that have the ability to protect against synthetic chemical-resistant insects and fungi.

In sectors such as banana and pineapple production, regulations limiting the use of new synthetic chemical pesticides mean a significant market opportunity for TyraChem.

Last year, milestone payments recognised by TyraTech amounted to $4.9m, while product revenues came to $1.1m. Total net revenues for 2008 were $5.9m (2007: $5.5m). However, the company’s net loss for the period was $17.4m (2007: $16.5m), while its cash and cash equivalents at the end of 2008 fell to $9.2m from $27.5m the year before.

TyraTech’s management says that projected revenues provided by agreements signed at the end of 2008, as well as reduced operating costs, mean that the company has an adequate base of cash resources to allow it to develop through this year.

The company appears to be very well-diversified across a range of sectors within the overall pesticide market and, thanks to alliances with several large businesses, it has developed a range of products, many of which are still to be launched.

The launch of products this spring (as well as recent director share purchases) has helped drive the share price up from below 30p a few months ago to 65p at the time of writing. Investors have clearly been encouraged by the company’s news flow since the end of March but they should also be mindful of TyraTech’s cash position and keep an eye out for further news of progress with product launches and revenues. Any slip-ups and the company might have to come back to investors for more funds.