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Eden Research

Eden Research poised to benefit from boost to biopesticide use as traditional agrichems get restricted

Snapshot

Eden Research's first product Mevalone, a grape fungicide which is used to target the botrytis disease, is currently being sold throughout the southern EU zone and Kenya

Grape bunches

Quick facts: Eden Research

Price: £0.10

Market: AIM
Market Cap: £21.03 m
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  • Provides sustainable solution for crop protection, animal health and consumer products

  • Product sales in 2018 jumped by 112%, driven by first launch product, grape fungicide, Mevalone

  • Currently has regulatory clearance in the top three wine producing countries worldwide

  • Second product, pesticide Cedroz has received EU product authorisation in Malta

 

What Eden Research does:

Eden Research PLC (LON:EDEN) provides biopesticides and fungicides for crop protection, animal health and consumer products.

The AIM-listed group is focused on protecting high-value crops, improving crop yields and value. The company’s products, which are based upon natural chemistries, deliver performance, ease of use, and cost on par with synthetic pesticides.

Its first product Mevalone, a grape fungicide which is used to target the botrytis disease, is currently being sold throughout the southern EU zone and Kenya.

Eden Research currently has regulatory clearance in the top three wine producing countries worldwide.

How’s it doing:

Posting full-year 2018 results on April 2, Eden Research said its revenue rose to £2.8mln, up from £1.9mln a year earlier, as product sales increased by 112% to £1.6mln, up from £0.8mln in 2017.

During the year, the group signed multiple distribution agreements with Italian firm Sipcam-Oxon SpA to distribute Mevalone in ten new territories, for which a fee of €0.9mln (£0.8mln) was paid to the group.

It said that the successful positioning of Mevalone as an early-season treatment contributed to the strong product sales growth.

In December 2018, the group announced that Sipcam had also been appointed exclusive distributor of Mevalone in the USA, Brazil, Mexico, China, Argentina, Chile, Japan, and South Africa.

The new distribution agreements covering China and Japan will mark Eden's first entry into the Far East and presents a significant opportunity as China is the largest grower of grapes in the world.

In October 2018, the firm also announced the appointment of Sipcam as the exclusive distributor of the fungicide in Australia and New Zealand, where it is marketed as Novellus, taking the total number of countries in which the firm is Eden's distributor to 12.

Eden Research posted a full-year 2018 operating profit (before non-cash items - share-based payment charge and amortisation - and one-time items - licence renewal fee and royalties refund) of £0.02mln, after a loss of £0.4mln in 2017.

At the year-end, the group had net cash of £2.5mln, down from £3.7mln at the same stage a year earlier.

Aside from Mevalone, Eden Research is moving towards a launch for its second product, pesticide Cedroz, which is designed to fight nematodes, a species that is known to cause severe damage to crops globally for both open field and greenhouse growers.

In February, the group noted that its Cedroz commercial partner, Eastman Chemical Company had received EU product authorisation from the Regulatory Affairs Directorate in Malta.

The company pointed out that, following the authorisation by Malta, the EU member states must grant their individual approvals for the sale and use of Cedroz within their jurisdictions.

It added that the pending approvals will cover Spain and Italy, for outdoor uses and will also cover France, Belgium, the Netherlands and the United Kingdom, as well as Spain and Italy, for professional greenhouse uses.

Away from agrichem, Eden Research also revealed in October 2018 that its TerpeneTech subsidiary had been given the green light from regulators to start selling its head-lice treatment in Europe.

The product, which the group said “performed very well” in clinical trials, is expected to be launched first in the UK, where TerpeneTech already has a distribution partner in place.

In March’s 2018 results release, Eden Research said the head-lice treatment’s UK launch is expected to coincide with the back-to-school schedule in the autumn of 2019.

Overall, the company said a healthy pipeline of collaborations are progressing with majors in its distributor network.

However, it added that the launch of Eden Research’s animal health products in the US by its partner, Bayer Animal Health has been delayed due to the need for additional formulation work on one of the three initial products Bayer has developed.

The company said it is now anticipated that the launch of these Animal Health products will take place in 2019.

What the boss says – chairman, Lykele van der Broek:

"We have undergone a year of significant growth at Eden in 2018, with a boost to revenue from product sales and the contribution of Sipcam SpA exercising its option for new distribution agreements in ten additional territories.”

"Behind the scenes, significant regulatory activity has been progressing with promising potential to unlock future product sales expansion for the business. The Board is currently prioritising the long-term viability and growth potential of the Company and is looking forward to making further commercial progress in 2019."

Blue Sky:

In a note to clients following Eden Research's 2018 results release, analysts at ‘house’ broker Share Capital said the numbers were broadly in line with their expectations.

They pointed out that the strong 2018 revenue performance came despite the business experiencing challenging market conditions in many southern European countries for Mevalone due to the hot and dry summer conditions.

The analysts said they will, in course, be updating their financial expectations for Eden Research and will also introduce new forecasts for full-year 2021.

The ShoreCap analysts said: “As Eden continues to build a portfolio of commercialised products through authorisations/approvals, the robust balance sheet (net cash position at year-end of £2.5mln), should further enable management to allocate resources to its product development activities going forward, which we welcome.”

The analysts concluded: “We continue to believe Eden is well-placed with a growing and diverse product development pipeline, which is capable of driving attractive prospects in the near and long term.

“The industry is seeing structural growth in demand for natural solutions as the regulatory process for traditional synthetic compounds is becoming more difficult given the concerns over consumer health and safety and environmental impacts.”

They added: “The conventional global pesticides market has an overall value of over $57bn per year, thus with higher barriers to entry, we believe Eden can drive value creation, which in turn should be reflected in the Company’s share price.”

Eden Research has a market cap of about £20.7mln based on its share price of about around 10p.

 

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