Shareholders in London AIM-listed Eden Research have had a hard time of it recently with its shares falling by 28.47 per cent since last September having seen a 52 week high of 25 pence.
The company describes itself as an early stage revenue company with intellectual property and expertise in encapsulation, terpenes and environmentally friendly techniques to provide solutions to the global agrochemicals industry. Eden’s encapsulation technology harnesses the biocidal efficacy of naturally occurring chemicals produced by terpenes (plants).
The group has a number of patents and a pipeline of products in various stages of development. The company has spent in the region of £12 million in developing its intellectual property and seeking regulatory approval for its future products.
The key words in appraising Eden’s situation are, “an early stage revenue company”. As Sean Smith the CEO of Eden has himself said, revenues have been modest while the company has concentrated on securing patent protection for its intellectual property.
This means the company has not been making money while finding its feet. Nothing unusual here, start-ups in technologically innovative companies often need patience amongst shareholders. Having floated on AIM in 2010 it was in the black to the tune of £3.29m pre-tax profits 2011 but had losses in each of the subsequent year; albeit comparatively modest ones the greatest being £3m in 2014.
This in turn led to the company, again in the words of Sean Smith finding itself hampered in expanding the company while ‘operating under the funding restraints to date’.
This all seems to be starting to change, with the company now having reaching the sunlit foothills. Late last week, the shares spiked a little to 12.87p (the 52 week low was 7.25p.) on news of a successful placing which has raised £2.6m before expenses with new and existing institutional shareholders. The raise was run by Shore Capital Stockbrokers, which has now registered Eden Research as a house stock, through the issue of 25,365,854 new ordinary shares of 1p each, in the company at a price of 10.25p each.
Smith said about the placing that it represents a milestone in the company since it enables it to register new products and increase the global reach of existing Eden products. The real milestone was earlier this year when Eden’s first commercial product 3AEY was approved as involving ingredients for use in plant protection products.
In February this year Eden Research took its vineyard–saving fungicide to another of the world’s largest wine producers with authorisation from Spanish authorities for the use of 3AEY in the country. Eden said 3AEY would be sold in Spain by partner Sipcam Iberia under the trade name ARAW, with Eden receiving royalties from sales.
The approval came in time for the 2016 growing season, and followed hot on the heels of approval in Italy, announced on February 11. Approval for 3AEY has now been granted in Kenya, Malta, Greece, Bulgaria, Italy and Spain.
Stewart Dalby (April 10, 2016)