Eden Research plc (LON:EDEN), the AIM-quoted company focused on sustainable biopesticides and plastic-free formulation technology for use in the global crop protection, animal health and consumer products industries, has announced its interim results for the six months ended 30 June 2022.
Financial highlights
· Revenue for the period of £1.04m (H1 2021: £0.79m), an increase of c. 32%
· Product sales of £1.01m (H1 2021: £0.66m), an increase of c. 53%
· Operating loss for the period of £1.3m (H1 2021: £1.8m)
· Cash and cash equivalents of £1.9m (H1 2021: £5.8m)
· Cash and cash equivalents at 31 August 2022 of £2.4m following a tax refund and receipts from half-year end trade debtors
· On track to meet 2022 product sales revenue guidance of £1.4m
Business highlights
Expanding regulatory approvals in key territories, including the US, and leveraging of high-value commercial agreements
· Materially increased Eden’s global addressable market with label extensions and new regulatory approvals, most notably the addition of the US following EPA approval, post-period end
o Other notable approvals included Mevalone® label extensions in Italy (sold under the brand “3logy®”, by Sipcam-Oxon)
· Eden’s new insecticide product heading towards commercialisation with extensive registration and commercial evaluation field trials ongoing in 2022
· Commercialisation of the seed treatment product developed as part of the Corteva project remains on track with commercial launch possible in advance of the 2024 growing season (subject to regulatory approvals)
· Robust sales of Eden’s products indicating that demand is returning to pre-pandemic levels
· New distribution arrangements in key territories expected by year-end
Corporate highlights
New team additions reflecting Eden’s next phase of growth and ambition to capitalise on the abundance of new opportunities
· Appointment of Richard Horsman as Non-Executive Director, with effect from 1 September 2022. Richard brings over 25 years of AIM and Main Market experience to the team
· New Development Team Lead and Formulation Team members recruited
· Strengthening of the Commercial Team underway
Lykele van der Broek, Chairman of Eden Research, commented:
“We reached the mid-part of 2022 on a firm footing, expanding our regulatory approvals in key regions, advancing our strategic partnerships with major industry players, and delivering robust sales of our products, indicating a return to pre-pandemic demand levels.
The authorisation of Cedroz™ and Mevalone® and their associated active ingredients in the US after the period end has been a particular highlight for us. As the Environmental Protection Agency (“EPA”) continues to ban a number of commonly used conventional chemical pesticide products in recent years, US-based farmers are in need of viable alternatives to keep up with the growing demand for food. The approval of our biopesticide products, which are based on naturally occurring substances, provide this alternative, without compromising efficacy, yield or production costs.
This development opens up significant revenue and growth opportunities for us, with our total addressable market in the region of $500 million. We now turn our attention to state level approvals, focusing on California and Florida in the first instance, which we expect to see in the coming months, followed by the start of meaningful sales in 2023.
This year so far has also seen us continue to successfully develop new product ranges, including our insecticide offering, which has produced good field trial results to date in both our own hands, and in the hands of potential commercial partners. Our partnership to develop our seed treatment product with Corteva also goes from strength to strength and we look forward to successfully commercialising this offering as quickly as possible, subject to regulatory clearance.
Despite ongoing macro-economic challenges, we are pleased with the progress that has been made during the year so far. With our new board and team additions, we are confident that we have the talent and capabilities to capitalise on the significant and growing market opportunity available for Eden across the globe. I look forward to reporting further progress in the coming months as we continue to work towards our strategic and financial goals.”
Chief Executive Officer’s Statement
The first of half of 2022 has represented a period of progress for Eden, and I am delighted to say we are beginning to see the fruits of our commercial efforts with stronger sales.
Executing on our strategic objectives
At our recent AGM, we laid out four key strategic areas that we are pursuing to take the Company forward into its next phase of growth:
· Diversification of our product portfolio, geographic presence, target markets, and product uses
· Enhancing our research, development and operations, and self-reliance, through the expansion of our in-house capabilities, optimising our supply chains, and reducing our time to market
· Growth through new partnerships and collaborations with major global and regional partners, as well as regulatory clearance in new countries, crops, and diseases
· Team expansion with added capacity in key strategic areas such as development and commercial
Eden has been delivering against these objectives in the following ways:
1. Widening our global market opportunities
We are excited to be able to report federal approval from the EPA received after the period end for distribution of our flagship products, Mevalone® and Cedroz™, alongside our three associated active ingredients, in one of the largest agricultural markets in the world. This has been the result of over four years of effort by our experienced regulatory and commercial teams who worked tirelessly to ensure that Eden addressed the EPA’s extensive and evolving list of strict requirements. We are the first British crop protection company to receive such approval for a biopesticide, and we are, by far, the smallest company to achieve the ambitious goal of registering three active ingredients and two formulated products at once, thereby opening up one of the world’s most important markets for agricultural inputs.
Eden’s naturally derived products represent a compelling proposition for American farmers looking to navigate the increasingly restrictive landscape of regulations whilst still maintaining or increasing food production in a sustainable way. We estimate this one addressable market alone to be worth in excess of $500 million per annum. The next step in the process will be to focus on local regulatory approval in the key states of California and Florida, where many of the country’s high-value crops are grown. We expect these regulatory processes to be relatively short, as we target the 2023 growing season.
Eden also received a label extension for Mevalone® in Italy which is sold under the brand name “3logy®” by our commercial partner Sipcam Oxon. This label extension has allowed Eden and Sipcam to target two new fungal pathogens and add a wide range of new crop types to the label. We estimate that this expansion of the label for 3logy adds thousands of hectares of high-value crops to our addressable market.
We are currently hard at work to further optimise our distribution network, and we anticipate announcing new partnerships in the coming months; all aimed at adding new territories or expanding our market access in existing countries.
2. Expanding our product line and applicable uses
Our product development pipeline continues to progress. Examples include our forthcoming insecticide product which we have been conducting extensive field trials on this year. We are now at the stage of receiving trial results and, in the meantime, we have sent our product to a long list of third parties, including several industry leaders, to undertake field trials of their own. We look forward to sharing the outcome of these field trials in due course as we prepare for registration and commercialisation.
In addition, field trials this growing season on our seed treatment product, developed for commercialisation by Corteva, have so far proven successful. We are looking to move forward with the regulatory process in key markets as swiftly as possible. Our aspiration is to launch this important new product in time for the 2024 growing season, although the process is subject to regulatory approval by the relevant authorities across our targeted geographies.
We are continually assessing applicable use of our biopesticide products across crops outside our existing remit such as cannabis, as well as the use of our proprietary technologies in the consumer products and animal health industries.
3. New team additions to drive next phase of growth
Post-period, we welcomed Richard Horsman as a new Non-Executive Director. Richard possesses an abundance of industry, commercial and corporate acumen and expertise which will help drive Eden through our next phase of growth. This not only applies to maximising the potential of our existing opportunities, but also in driving new opportunities that share synergies with our core business.
Strong revenue and sales performance against year-end guidance
Revenues for the first half of the year increased by approximately 32% to £1.04m compared to £0.79m for H1 2021.
The focus for the business remains to grow revenue through product sales which will ultimately provide a sustainable, consistent source of income for the Company. Product sales increased by approximately 53% to £1.01m compared to £0.66m for H1 2021.
Earnings improved against H1 2021 with overall loss before tax of £1.3m (H1 2021: £1.8m loss), but were flat against H1 2021 Adjusted EBITDA (i.e. EBITDA excluding Share Based Payments) with a loss of £0.8m (H1 2021: £0.8m loss).
The cash position at half-year was £1.9m (H1 2021: £5.8m) and £2.4m at 31 August 2022 following a tax refund and receipts from half-year end trade debtors.
Our cash generation is supported by the material progress made along various development lines, as well as the growing number of additional commercial agreements and regulatory approvals in new territories.
We continue to aggressively manage our cash position and always aim to achieve operational efficiencies. Much of the work that has been brought in-house was previously contracted to third parties, and so many of our internal costs have offset what were previously larger third-party expenditures. By bringing certain strategic capabilities in-house, we have also been able to significantly reduce development time whilst building internal know-how and strengthening our strategic capabilities in support of future growth.
Dividend
At present, there is currently no near-term plan to pay a dividend. However, the Board continues to review the company’s dividend policy.
Maintaining a cautious approach against a promising outlook
The commercial foundations for the remainder of the year have been set in place by the interim period and we remain on track to meet full year product sales revenue market expectations of £1.4 million. As ever, we continue to monitor conditions of the current growing season and any impact this may have on our product sales. Generally dry weather conditions across the south of Europe have, once again, reduced demand for botryticides and certain other agrochemicals. Ultimately this can result in higher-than-desired inventory levels.
Whilst it is premature to assess what impact this will have on the post-season selling period, we are monitoring this situation closely as we are with various supply chain-related issues, including increasing raw material prices. The well-known potential impact of weather in the short-term, and climate change in the longer term, further highlights the need to expand our product range and the diseases and pests that we target in order to achieve a diversification of risks across the product portfolio. We have made good progress in this area in the last five years, and we will continue to focus upon these efforts as a matter of priority.
On behalf of the Company, I’d like to thank our staff for their outstanding efforts so far this year as well as our shareholders for their continued interest and support.
Sean Smith
Chief Executive Officer
29 September 2022
