Eden Research plc (LON:EDEN), the AIM-quoted company focused on sustainable biopesticides and plastic-free formulation technology for use in global crop protection, animal health and consumer products industries, has provided the following unaudited trading update for the half year to 30 June 2022.
· Revenue is expected to be c. £1.0m (H1 2021: £0.8m) an increase of c. 33%; on track to meet full year guidance of £1.4m.
· Product sales are expected to be c.£1.0m (H1 2021: £0.7m), an increase of c. 54%.
· Adjusted EBITDA (excluding Share Based Payments) is expected to be a loss of approximately £0.8m (H1 2021: £0.8m loss), resulting in an overall loss before tax of £1.3m (H1 2021: £1.8m loss).
· Cash position as at 30 June balance date of £1.9m (HY 2021: £5.8m), however, the Group had unaudited cash of £2.7m as of 15 August 2022 following a tax refund and receipts from half-year end trade debtors.
· Development of Eden’s seed treatment and insecticide products continue to progress well with positive, early indications from 2022 field trials received.
· EPA authorisation expected before year-end for Eden’s three active ingredients, as well as Mevalone and Cedroz, allowing for meaningful sales of both products in 2023.
Product sales growth
Sales of Eden’s fungicide product, Mevalone, have been robust in the first half of the year with the impact of Covid-19 diminishing and demand for Eden’s products returning to pre-Covid levels, despite challenging growing conditions.
Furthermore, sales into new markets and use areas have increased as the receipt of product authorisations translates into sales through our distributors. The ongoing diversification of Eden’s product uses contributes not only to sales growth but an increased level of resiliency in the business as the Company expands from one crop and disease target, to many.
In May 2021, Eden signed an exclusive Commercialisation, Supply and Distribution Agreement with Corteva Agriscience (“Corteva”), the fourth largest agriculture input company in the world. The agreement covers Eden’s first seed treatment product which uses Eden’s proprietary, plastic-free SustaineÒ encapsulation technology.
We have continued to work closely with Corteva and tests to date have shown initial indications of successful trials in the current season. We are aiming to apply for regulatory authorisation as soon as possible which, if successful, will result in sales of the product by Eden to Corteva in time for the 2024 growing season, although this time frame is currently an estimate and remains subject to submission of an application for regulatory approval by the relevant authorities.
We are focused on the EU and UK as initial markets for this product, which have a current addressable market of €40m. In time, it is expected we will be able to commercialise the product into other geographics, including the US, where the addressable market is approximately €240 million. Eden estimates peak product sales arising from the successful development and registration of this seed treatment product for a specific application in all of these territories may be at least €33m per year.
We have started to receive, collate and review results from our own insecticide field trials from 2022.
In addition, samples have been sent out to a long list of third parties who are undertaking their own field trials in the second half of this year.
At the end of the year, we shall then review the outcome of the trials and look to enter into commercial arrangements with suitable, interested parties.
Eden awaits approval of its three active ingredients, as well as Cedroz and Mevalone, in the US by the Environmental Protection Agency. The approvals are expected to significantly increase the addressable markets for Eden’s products and pave the way for future product authorisations based upon the registration of Eden’s three active ingredients.
The US has one of the largest food markets in the world and its ongoing growth presents a significant opportunity for biopesticide market participants. As the only AIM-quoted company focused on biopesticides, we believe that Eden offers a unique proposition for investors seeking to participate in the rapid growth and promising future of sustainable agriculture. The EPA approval of Eden’s products, and subsequently, the company’s insecticide offering in the future, will open significant revenue opportunities for Eden, with total market potential in the region of €500 million – approximately €94m for Mevalone, €189m for Cedroz and €237m for insecticides.
Sean Smith, Chief Executive Officer of Eden Research plc, commented:
“The first half of the year has provided positive indications that we are on track to meaningful product sales growth and we move into the second half of the financial year with confidence and a well-managed cash position.
Growing conditions may play a significant role in determining the full year’s results, but we are encouraged by the strong first half and the underlying demand for our products which these interim results represent.
We look forward to updating the market in due course on some of the exciting projects we have in train and would like to thank shareholders for their continued support.”