MustGrow Biologics Corp’s recently signed deal to develop and commercialize its technologies has set the company up for potential future success, according to analysts at Noble Capital Markets.
The company inked a contract research agreement with Oregon-based Bio Ag Product Strategies focused on its soil amendment and biofertility technology, including its soil conditioner TerraSante.
The deal is non-exclusive, which allows MustGrow to seek out additional partners. That’s a big deal, analysts said.
“We believe substantial opportunity exists for natural alternatives in the company’s targeted end markets, such as preplant soil fumigation, bioherbicides, postharvest food preservation, and soil amendment and biofertility,” the analysts wrote. “We believe the company’s partnerships with key companies in the space will prove fruitful, both in validating the technology but also in assisting MustGrow in the regulatory approval process.”
For now, Noble is maintaining its Market Perform rating, but there’s a clear path for an upgrade if additional partners are found and demand is strong.
“MustGrow remains in the pre-revenue stage and is dependent upon its partners to conduct the field trials,” analysts noted. “... We would look to upgrade to an Outperform based on additional favorable trial outcomes and/or movement on the regulatory front.”
The macroenvironment is favorable, as evidenced by the fact that Corteva last year announced a $1.2 billion acquisition of Stoller Group, a leading independent biologicals company. That price tag is 3 times its 2022 revenue and 12 times its 2022 projected EBITDA.
“Countries are continuing to find alternative ways of fertilizers to reduce the negative consequences of climate change,” analysts said.
“For example, Canada set a voluntary national fertilizer emissions reduction target of 30% below 2020 levels by 2030 to lower greenhouse gas emissions. Alongside this is the European Green Deal, which is targeting a 20% reduction in fertilizer use by 2030. We believe MustGrow’s products can provide a win-win situation for the company and countries when the products become commercialized.”
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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