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Eden Research starts to bloom as Mevalone sales ratchet up

Eden has already started looking at possibilities well beyond wine
Mevalone can be used in the crucial pre-harvest period

Eden Research PLC (LON:EDEN) looks to have unearthed a winner with its natural pesticide, Mevalone.

Wine producers in France, Spain and Italy, the world’s three top producing countries, reportedly love the product as it can protect grapes right up until harvest with no issues of residues.

WATCH: Eden Research PLC keen to add US to list of markets for natural fungicide

Inspired by locals on the ground talking it up, BBC Radio and local TV stations have already run pieces highlighting how well it works.

More importantly, for Eden, significant quantities are also now starting to be bought.

Mevalone was approved in Spain and Italy in 2016 and in France and Portugal last year.

That covers most of the wine producing areas of southern Europe and product applications are now underway in other major areas such as the US, New Zealand Australia, and South Africa.

Key to Mevalone is a delivery system based on an Eden-patented technology, Sustaine, that uses yeast cells to deliver terpenes.

Terpenes are chemicals that come from essential oils and produced by plants to defend themselves but are volatile and can be difficult to control.

Encapsulated using Sustaine, however, terpenes become a naturally occurring pesticide with a slow release mechanism that leaves no residues in the soil, unlike chemical-based pesticides.

No residues

Soil residues are a critical consideration for winegrowers trying to protect against grape botrytis.

“Botrytis hits very late in the season and there are few chemical options for pre-harvest interval (21 days before) due to residue concerns,” said Sean Smith, Eden’s chief executive.

“There are no such concerns with our products,” and the fact it can be used right up to the point of harvest is ‘a real differentiator’.

Grape botrytis is a huge deal for the wine industry (and a massive market), but Smith says there are many other potential uses of Eden’s technology.

Plant treatments face regulatory controls second only to human drugs and getting European approval is tough.

But having been proved commercially with Mevalone, Smith is confident the encapsulation technology can be applied widely as a delivery mechanism.

Heavyweight partners

Eden has already started looking at possibilities well beyond wine and pulled in some heavyweight partners to help it.

Eastman Chemical, for example, is developing a way of tackling nematodes or parasitic worms that attack a range of crops and are a huge problem in many countries.

The market for nematodes alone is worth US$1.3bn and this product, Cedroz, is potentially going to be larger than Mevalone.

Cedroz is scheduled to launch in 2019 with regulatory applications in train in 29 countries including Europe and the US.

Even two products in production may just be scratching the surface of the potential, however.

Adapting for many uses

Italian head-quartered, agchem company Sipcam, another of Eden’s partners, for example, is ‘very far advanced’ on work to adapt other parts of its existing portfolio of active ingredients.

But Smith believes there are hundreds of products that can benefit through being made more efficient, more effective and more robust using its technology.

Last year, Sipcam subscribed £2.2mln for a 9.9% equity stake as part of a whole cross-section of deals with Eden.

Joint product development, exclusive distribution rights in different territories, an evaluation of the Eden portfolio and its technology and whether it can improve 20 active ingredients already being produced by Sipcam were just some aspects of the deal.

Sipcam is a €600mln revenue business well-known throughout the European agri-markets and for it to take a stake was a significant validation, Smith says.

Animals and people too

Further afield, Bayer Animal Health is developing encapsulated terpene products as treatments for health issues such as ear infections, pet coat conditioning, shampoos and so on.

Smith even believes the technology can have human care applications in combination with other mechanisms.

Excitement about the potential saw Eden’s share price surge when it received EU approval for Mevalone in 2015.

Some of the excitement has eased a little, but recent results suggest that the group is starting to deliver on the promise.

Sales rising

Revenues for the year to December rose to £1.9mln (£0.4mln) while losses fell to £763,000 (£1.91mln) as first French sales came through.

Cash at £3.7mln is seemingly enough to take it through this year at least, which will also see full contributions from France and Portugal, as opposed to only part-year in 2017.

From 2019, Cedroz will also start to contribute and take revenues up a gear further.

At 8.25p the market value is £16.5mln currently.

Given the green credentials, size of the potential markets and for that matter the fell-good factor of a product that tackles a major food production issue, that looks way too mean.

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