MustGrow Biologics Corp. (TSX-V:MGRO, OTCQB:MGROF) has disclosed further details about its recently announced collaboration agreement with Bayer AG (ETR:BAYN, OTC:BAYZF) following questions received about the agreement, including a clarification request from the Canadian Investment Regulatory Organization.
The agriculture biotech company said the partnership involves a license and collaboration agreement enabling Bayer to explore specific soil applications for its mustard-based biocontrol technologies. The focus lies on developing, formulating, and commercializing licensed products for soil-applied, in-field uses across select European, Middle Eastern, and African countries.
The agreement includes an initial upfront payment to MustGrow, along with subsequent payments tied to achieving defined business milestones. These milestones include technical achievements such as field trials, safety studies, regulatory dossier submissions, and obtaining approvals. Once commercial sales start, MustGrow will be entitled to fees from royalties and manufacturing sales.
MustGrow noted that Bayer assumes responsibility for regulatory and market development work, such as product formulation, regulatory studies, submissions, and commercialization activities. The company said the value of the upfront, milestone payments and development work is expected to be roughly US$35 million to $40 million over the next five to seven years. However, exact timelines and values remain subject to various factors, including product development risks and regulatory matters, it added.
Also under the agreement, Bayer has secured a right-of-first-negotiation for the technology's use in specific banana applications, excluding post-harvest applications.
MustGrow said the collaboration opens avenues for exploring additional applications and potential regions for MustGrow's biocontrol technologies, extending beyond the scope of the current agreement.
MustGrow's clarification addresses inquiries, including queries from the Canadian Investment Regulatory Organization, emphasizing the minimal incremental costs incurred during the collaboration, primarily associated with providing products for testing.